LAWRENCE J. HOGAN, JR., Governor Ch. 293
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Chapter 293
(Senate Bill 431)
AN ACT concerning
Corporations and Associations – Revisions
FOR the purpose of revising laws relating to the formation, organization, and operation of
corporations; repealing certain redundant and obsolete provisions; correcting certain
references; authorizing a certain dissent to be submitted by electronic transmission;
adding limited liability companies to the list of entity types that certain persons may
serve in certain capacities and be eligible for insurance provided by certain other
corporations; clarifying certain procedures relating to the abandonment of certain
proposed consolidations, mergers, or share exchanges; allowing a corporation to
dissolve, subject to a certain limitation, at the time established under the articles of
dissolution; and generally relating to corporations and associations.
BY repealing and reenacting, with amendments,
Article – Corporations and Associations
Section 1–101(f)(1)(iv) and (p)(1) and (4), 2–103(1), 2–104(b)(9) and (10), 2–208(a)(2),
2–208.1(a)(2), 2–410, 2–411(a)(2), 2–418(k)(1), 2–503(b) and (c), 2–509(b),
2–606.1(a), 3–105(a), 3–106.1(e)(1), 3–108(a) and (b), 3–109(b)(8), 3–408(a),
and 8–501(h)(1)
Annotated Code of Maryland
(2014 Replacement Volume and 2021 Supplement)
BY adding to
Article – Corporations and Associations
Section 2–104(b)(11)
Annotated Code of Maryland
(2014 Replacement Volume and 2021 Supplement)
BY repealing
Article – Corporations and Associations
Section 2–502.1
Annotated Code of Maryland
(2014 Replacement Volume and 2021 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – Corporations and Associations
1–101.
(f) (1) “Charter” includes: Ch. 293 2022 LAWS OF MARYLAND
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(iv) Articles of restatement[, if approved as described in § 2–609 of
this article];
(p) “Governing document” means:
(1) The [articles or certificate of incorporation] CHARTER and the bylaws
of a Maryland corporation or a foreign corporation;
(4) The declaration of trust or governing instrument of a business trust OR
A REAL ESTATE INVEST MENT TRUST ; or
2–103.
Unless otherwise provided by law or its charter, a Maryland corporation has the
general powers, whether or not they are set forth in its charter, to:
(1) Have perpetual existence[, although existence may be limited to a
specified period if the limitation is stated in a charter provision adopted after May 31,
1908];
2–104.
(b) The articles of incorporation may include:
(9) A provision that allows the board of directors, in considering a potential
acquisition of control of the corporation, to consider the effect of the potential acquisition of
control on:
(i) Stockholders, employees, suppliers, customers, and creditors of
the corporation; and
(ii) Communities in which offices or other establishments of the
corporation are located; [and]
(10) A provision that contains a future effective date for the articles of
incorporation that is not later than 30 days after the articles are accepted by the
Department for record; AND
(11) IF ADOPTED AFTER MAY 31, 1908, A PROVISION STATING THAT:
(I) THE EXISTENCE OF THE CORPORATION IS LIMITED TO A
SPECIFIC PERIOD; OR
LAWRENCE J. HOGAN, JR., Governor Ch. 293
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(II) THE EXISTENCE OF THE CORPORATION SHALL BE LIMITED
TO A SPECIFIC PERIOD THAT SHALL BE CONTINUED , EXTENDED, OR TERMINATED ON
THE OCCURRENCE OF AN EVENT, AN ACTION, OR A DETERMINATION SET FO RTH IN
THE CHARTER .
2–208.
(a) (2) The [board] CORPORATION may not issue any of the stock that is
classified or reclassified prior to the time the articles supplementary are effective, as
provided in this section.
2–208.1.
(a) (2) The [board] CORPORATION may not issue any of the newly authorized
stock prior to the time the articles supplementary are effective, as provided in this section.
2–410.
(a) A director of a corporation who is present at a meeting of its board of directors
at which action on any corporate matter is taken is presumed to have assented to the action
unless:
(1) [He] THE DIRECTOR announces [his] THE DIRECTOR’S dissent at the
meeting; and
(2) (i) [His] THE dissent is entered in the minutes of the meeting;
(ii) [He] THE DIRECTOR files [his written] THE dissent to the
action IN WRITING with OR BY ELECTRONIC TRA NSMISSION TO the secretary of the
meeting before the meeting is adjourned; or
(iii) [He] THE DIRECTOR forwards [his written] THE dissent within
24 hours after the meeting is adjourned[,] TO THE SECRETARY OF THE MEETING OR THE
SECRETARY OF THE COR PORATION by [certified]:
1. CERTIFIED mail, return receipt requested, bearing a
postmark from the United States Postal Service[, to the secretary of the meeting or the
secretary of the corporation]; OR
2. ELECTRONIC TRANSMISSI ON.
(b) The right to dissent does not apply to a director who:
(1) Voted in favor of the action; or
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(2) Failed to make [his] THE DIRECTOR’S dissent known at the meeting.
2–411.
(a) The board of directors of a corporation may:
(2) Delegate to these committees any of the powers of the board of directors,
except the power to:
(i) [Issue] AUTHORIZE THE ISSUANC E OF stock other than as
provided in subsection (b) of this section;
(ii) Recommend to the stockholders any action which requires
stockholder approval, other than the election of directors;
(iii) Amend the bylaws; or
(iv) Approve any merger or share exchange which does not require
stockholder approval.
2–418.
(k) (1) A corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the corporation, or who, while
a director, officer, employee, or agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust, LIMITED LIABILITY CO MPANY,
other enterprise, or employee benefit plan against any liability asserted against and
incurred by such person in any such capacity or arising out of such person’s position,
whether or not the corporation would have the power to indemnify against liability under
the provisions of this section.
[2–502.1.
(a) Unless restricted by the charter or bylaws of the corporation, a corporation
may allow stockholders to participate in a meeting by means of a conference telephone or
other communications equipment if all persons participating in the meeting can read or
hear the proceedings of the meeting substantially concurrently with the proceedings.
(b) Participation in a meeting by the means authorized by subsection (a) of this
section constitutes presence in person at the meeting.]
2–503.
(b) If the board of directors is authorized to determine the place of a meeting of
the stockholders, the board OF DIRECTORS may determine that the meeting not be held at LAWRENCE J. HOGAN, JR., Governor Ch. 293
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any place, but instead may be held partially or solely by [means of] remote communication,
as authorized by subsection (c) of this section.
(c) If authorized by the board of directors and subject to any guidelines and
procedures that the board adopts, stockholders and proxy holders not physically present at
[a] THE meeting of the stockholders, MAY, by [means of] remote communication:
(1) [May participate] PARTICIPATE in the meeting of the stockholders;
and
(2) [May be] BE considered present in person and may vote at the meeting
of the stockholders, whether the meeting is held at a designated place or solely by [means
of] remote communication, if:
(i) The corporation implements reasonable measures to verify that
each person considered present and authorized to vote at the meeting by [means of] remote
communication is a stockholder or proxy holder;
(ii) The corporation implements reasonable measures to provide the
stockholders and proxy holders a reasonable opportunity to participate in the meeting and
to vote on matters submitted to the stockholders, including an opportunity to read or hear
the proceedings of the meeting substantially concurrently with the proceedings; and
(iii) In the event any stockholder or proxy holder votes or takes other
action at the meeting by [means of] remote communication, a record of the vote or other
action is maintained by the corporation.
2–509.
(b) (1) Shares of a corporation’s own stock owned directly or indirectly by it
may not be voted at any meeting and may not be counted in determining the total number
of outstanding shares entitled to be voted at any given time unless they are held by it in a
fiduciary capacity, in which case they may be voted and shall be counted in determining
the total number of outstanding shares at any given time.
(2) Shares of its own stock are considered owned indirectly by the
corporation if owned by another corporation OR ENTITY in which the corporation owns
shares OR INTERESTS entitled to cast a majority of all the votes entitled to be cast by
HOLDERS OF all shares OR INTERESTS outstanding and entitled to vote.
2–606.1.
(a) A [board] CORPORATION may not issue any of the stock that is classified,
reclassified, or newly authorized by an amendment before the time the amendment is
effective, as provided in § 2–610.1 of this subtitle. Ch. 293 2022 LAWS OF MARYLAND
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3–105.
(a) A consolidation, merger, share exchange, or transfer of assets shall be
approved in the manner provided by this section, except that:
(1) A merger of a 90% or more owned subsidiary with or into its parent
need be approved only in accordance with the provisions of § 3–106 of this subtitle;
(2) A merger of a Maryland corporation in accordance with § 3–106.1 of this
subtitle need be approved only in the manner provided in § 3–106.1 of this subtitle;
(3) A MERGER OF A MARYLAND CORPORATION IN ACCORDANCE WITH
§ 3–106.2 OF THIS SUBTITLE NEE D ONLY BE APPROVED IN THE MANNER PROVIDED
IN § 3–106.2 OF THIS SUBTITLE;
[(3)] (4) A share exchange need be approved by a Maryland successor only
by its board of directors and by any other action required by its charter;
[(4)] (5) A transfer of assets need be approved by a Maryland transferee
corporation only by its board of directors and by any other action required by its charter;
[(5)] (6) A foreign corporation party to the transaction shall have the
transaction advised, authorized, and approved in the manner and by the vote required by
its charter and the laws of the place where it is organized;
[(6)] (7) A merger need be approved by a Maryland successor corporation
only by a majority of its entire board of directors if:
(i) The merger does not reclassify or change the terms of any class
or series of its stock that is outstanding immediately before the merger becomes effective
or otherwise amend its charter and the number of its shares of stock of such class or series
outstanding immediately after the effective time of the merger does not increase by more
than 20% of the number of its shares of the class or series of stock that is outstanding
immediately before the merger becomes effective; or
(ii) There is no stock outstanding or subscribed for and entitled to be
voted on the merger;
[(7)] (8) A business trust party to a merger shall have the merger advised,
authorized, and approved in the manner and by the vote required by its declaration of trust
and the laws of the place where it is organized; and
[(8)] (9) A consolidation, merger, or share exchange shall be approved by
a Maryland corporation registered as an open–end investment company under the LAWRENCE J. HOGAN, JR., Governor Ch. 293
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Investment Company Act of 1940 only by a majority of the entire board of directors and in
the manner and by the vote required under the Investment Company Act of 1940.
3–106.1.
(e) (1) Unless waived by all stockholders who, except for the application of this
section, would be entitled to vote on the merger, at least 20 business days before the articles
are filed with the Department[,] an acquiring entity that owns less than all of the
outstanding shares of the subject corporation as of immediately before the effective time of
the merger must have given notice of the transaction to each of the subject corporation’s
stockholders of record who, except for the application of this section, would be entitled to
vote on the merger on the date that notice is given or on a record date fixed for that purpose
that is not more than 10 days before the date that notice is given.
3–108.
(a) A proposed consolidation, merger, or share exchange may be abandoned before
the effective date of the articles:
(1) If the articles so provide, by majority vote of the entire board of directors
of any one corporation party to the articles [or of], the entire board of trustees of any one
business trust party to the articles, OR THE GOVERNING BOD Y OF ANY OTHER ENTIT Y
PARTY TO THE ARTICLE S; or
(2) Unless the articles provide otherwise, by majority vote of the entire
board of directors of each Maryland corporation party to the articles [and of], the entire
board of trustees of each Maryland business trust party to the articles, AND THE
GOVERNING BODY OF EA CH OTHER MARYLAND ENTITY PARTY TO THE ARTICLES.
(b) If the articles have been filed with the Department, notice of the abandonment
shall be given promptly to the Department BY:
(1) IF ABANDONED PURSUANT TO SUBSECTION (A)(1) OF THIS
SECTION, ANY ONE PARTY TO THE ARTICLES ; OR
(2) IF ABANDONED PURSUANT TO SUBSECTION (A)(2) OF THIS
SECTION, EACH PARTY TO THE AR TICLES.
3–109.
(b) Articles of consolidation, merger, or share exchange shall contain the terms
and conditions of the transaction and the manner of carrying it into effect, including:
(8) A statement that the terms and conditions of the transaction set forth
in the articles were advised, authorized, and approved by each corporation, partnership, Ch. 293 2022 LAWS OF MARYLAND
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limited partnership, limited liability company, or business trust party to the articles in the
manner and by the vote required by its charter [or], declaration of trust, OR OTHER
GOVERNING DOCUMENT and the laws of the place where it is organized, and a statement
of the manner of approval; and
3–408.
(a) Except as provided in subsection (b) of this section, the corporation is dissolved
[when the Department accepts its articles of dissolution for record] ON THE LATER OF :
(1) THE TIME THE DEPARTMENT ACCEPTS TH E ARTICLES OF
DISSOLUTION FOR RECO RD; OR
(2) THE TIME ESTABLISHED UNDER THE ARTICLES , NOT TO EXCEED
30 DAYS AFTER THE ARTIC LES ARE ACCEPTED FOR RECORD.
8–501.
(h) (1) The [board of trustees] REAL ESTATE INVESTME NT TRUST may not
issue any of the shares that are classified, reclassified, or newly authorized by an
amendment to the declaration of trust before the time the amendment is filed with the
Department.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
October 1, 2022.
Approved by the Governor, May 12, 2022.