MD
Maryland House Bill HB209

Maryland 2023 Regular Session

Maryland House Bill HB209 Compare Versions

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1- WES MOORE, Governor Ch. 560
21
3-– 1 –
4-Chapter 560
5-(House Bill 209)
62
7-AN ACT concerning
3+EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4+ [Brackets] indicate matter deleted from existing law.
5+ Underlining indicates amendments to bill.
6+ Strike out indicates matter stricken from the bill by amendment or deleted from the law by
7+amendment.
8+ *hb0209*
89
9-Corporations and Associations – Revisions
10+HOUSE BILL 209
11+C1 3lr1160
12+ CF SB 58
13+By: Delegate Watson
14+Introduced and read first time: January 20, 2023
15+Assigned to: Economic Matters
16+Committee Report: Favorable
17+House action: Adopted
18+Read second time: February 26, 2023
1019
11-FOR the purpose of altering certain provisions governing the issuance of stock, convertible
12-securities, and scrip; clarifying the authority of corporations to hold annual meetings
13-by remote communication; clarifying the application of certain provisions of law to
14-the conversion of a corporation; requiring a real estate investment trust that
15-voluntarily dissolves to file a notice of termination with the State Department of
16-Assessments and Taxation; authorizing the charter or bylaws of a nonstock
17-corporation to provide for the service of certain ex officio directors; providing for the
18-application of certain provisions of law regarding voting rights to statutory trusts;
19-and generally relating to corporations and associations.
20+CHAPTER ______
2021
21-BY repealing and reenacting, with amendments,
22- Article – Corporations and Associations
23-Section 2–203, 2–210, 2–214, 2–501(b), 2–503(c), 4–601, 4A–402(a)(5), 5–202(b), and
24-8–502
25- Annotated Code of Maryland
26- (2014 Replacement Volume and 2022 Supplement)
22+AN ACT concerning 1
2723
28-BY repealing and reenacting, without amendments,
29- Article – Corporations and Associations
30-Section 2–501(a), 2–503(a), and 4A–402(a)(8)(viii) and (9)
31- Annotated Code of Maryland
32- (2014 Replacement Volume and 2022 Supplement)
24+Corporations and Associations – Revisions 2
3325
34-BY adding to
35- Article – Corporations and Associations
36-Section 12–307
37- Annotated Code of Maryland
38- (2014 Replacement Volume and 2022 Supplement)
26+FOR the purpose of altering certain provisions governing the issuance of stock, convertible 3
27+securities, and scrip; clarifying the authority of corporations to hold annual meetings 4
28+by remote communication; clarifying the application of certain provisions of law to 5
29+the conversion of a corporation; requiring a real estate investment trust that 6
30+voluntarily dissolves to file a notice of termination with the State Department of 7
31+Assessments and Taxation; authorizing the charter or bylaws of a nonstock 8
32+corporation to provide for the service of certain ex officio directors; providing for the 9
33+application of certain provisions of law regarding voting rights to statutory trusts; 10
34+and generally relating to corporations and associations. 11
3935
40- SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
41-That the Laws of Maryland read as follows:
36+BY repealing and reenacting, with amendments, 12
37+ Article – Corporations and Associations 13
38+Section 2–203, 2–210, 2–214, 2–501(b), 2–503(c), 4–601, 4A–402(a)(5), 5–202(b), and 14
39+8–502 15
40+ Annotated Code of Maryland 16
41+ (2014 Replacement Volume and 2022 Supplement) 17
4242
43-Article – Corporations and Associations
43+BY repealing and reenacting, without amendments, 18
44+ Article – Corporations and Associations 19
45+Section 2–501(a), 2–503(a), and 4A–402(a)(8)(viii) and (9) 20
46+ Annotated Code of Maryland 21
47+ (2014 Replacement Volume and 2022 Supplement) 22
48+ 2 HOUSE BILL 209
4449
45-2–203.
4650
47- (a) Before the issuance of stock or convertible securities, the board of directors
48-shall adopt a resolution that:
49- Ch. 560 2023 LAWS OF MARYLAND
51+BY adding to 1
52+ Article – Corporations and Associations 2
53+Section 12–307 3
54+ Annotated Code of Maryland 4
55+ (2014 Replacement Volume and 2022 Supplement) 5
5056
51-– 2 –
52- (1) Authorizes the issuance;
57+ SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 6
58+That the Laws of Maryland read as follows: 7
5359
54- (2) Sets the minimum consideration for the stock or convertible securities
55-or a formula for its determination; and
60+Article – Corporations and Associations 8
5661
57- (3) Fairly describes any consideration other than money.
62+2–203. 9
5863
59- (b) In the absence of actual fraud in the transaction, the minimum consideration
60-stated in the charter or determined by the board of directors in its resolution is conclusive
61-for all purposes.
64+ (a) Before the issuance of stock or convertible securities, the board of directors 10
65+shall adopt a resolution that: 11
6266
63- (c) For purposes of this section, the consideration for stock issued as a stock
64-dividend is the resulting capitalization of surplus.
67+ (1) Authorizes the issuance; 12
6568
66- (d) This section does not apply to the issuance of stock or convertible securities as
67-part of:
69+ (2) Sets the minimum consideration for the stock or convertible securities 13
70+or a formula for its determination; and 14
6871
69- (1) A reclassification of stock effected by amendment of the charter; or
72+ (3) Fairly describes any consideration other than money. 15
7073
71- (2) A consolidation, merger, [or] share exchange, OR CONVERSION ,
72-including a consolidation, merger, [or] share exchange, OR CONVERSION to which a wholly
73-owned subsidiary of the corporation is a party.
74+ (b) In the absence of actual fraud in the transaction, the minimum consideration 16
75+stated in the charter or determined by the board of directors in its resolution is conclusive 17
76+for all purposes. 18
7477
75- (e) If its issuance is authorized in accordance with this subtitle, stock with par
76-value and securities convertible into stock with par value may be issued as full paid and
77-nonassessable even if the price or value of the consideration received is less than the par
78-value of the stock issued or the stock into which the securities are convertible.
78+ (c) For purposes of this section, the consideration for stock issued as a stock 19
79+dividend is the resulting capitalization of surplus. 20
7980
80- (f) Notwithstanding any other provision of this section or § 2–204 or § 2–206 of
81-this subtitle, a corporation may issue stock or other securities of the corporation pursuant
82-to § 2–103(13) of this title without consideration of any kind.
81+ (d) This section does not apply to the issuance of stock or convertible securities as 21
82+part of: 22
8383
84-2–210.
84+ (1) A reclassification of stock effected by amendment of the charter; or 23
8585
86- (a) Except as provided in subsections (b) and (c) of this section, each stockholder
87-is entitled to stock certificates [which] THAT represent and certify the shares of stock [he]
88-THE STOCKHOLDER holds in the corporation.
86+ (2) A consolidation, merger, [or] share exchange, OR CONVERSION , 24
87+including a consolidation, merger, [or] share exchange, OR CONVERSION to which a wholly 25
88+owned subsidiary of the corporation is a party. 26
8989
90- (b) A stock certificate may not be issued until the stock represented by it is fully
91-paid.
90+ (e) If its issuance is authorized in accordance with this subtitle, stock with par 27
91+value and securities convertible into stock with par value may be issued as full paid and 28
92+nonassessable even if the price or value of the consideration received is less than the par 29
93+value of the stock issued or the stock into which the securities are convertible. 30
9294
93- (c) (1) Unless the charter or bylaws provide otherwise, the board of directors
94-of a corporation may authorize the issue of some or all of the shares of any or all of its
95-classes or series without certificates.
96- WES MOORE, Governor Ch. 560
95+ (f) Notwithstanding any other provision of this section or § 2–204 or § 2–206 of 31
96+this subtitle, a corporation may issue stock or other securities of the corporation pursuant 32
97+to § 2–103(13) of this title without consideration of any kind. 33 HOUSE BILL 209 3
9798
98-– 3 –
99- (2) The authorization under paragraph (1) of this subsection does not affect
100-shares already represented by certificates until they are surrendered to the corporation.
10199
102- (3) For shares issued without certificates, on request by a stockholder, the
103-corporation shall send the stockholder, without charge, a statement in writing or by
104-electronic transmission of the information required on certificates by § 2–211 of this
105-subtitle.
106100
107- (D) A CORPORATION MAY NOT ISSUE A STOCK CERTIF ICATE IN BEARER
108-FORM.
101+2–210. 1
109102
110-2–214.
103+ (a) Except as provided in subsections (b) and (c) of this section, each stockholder 2
104+is entitled to stock certificates [which] THAT represent and certify the shares of stock [he] 3
105+THE STOCKHOLDER holds in the corporation. 4
111106
112- (a) A corporation may, but is not obliged to:
107+ (b) A stock certificate may not be issued until the stock represented by it is fully 5
108+paid. 6
113109
114- (1) Issue fractional shares of stock;
110+ (c) (1) Unless the charter or bylaws provide otherwise, the board of directors 7
111+of a corporation may authorize the issue of some or all of the shares of any or all of its 8
112+classes or series without certificates. 9
115113
116- (2) Eliminate a fractional interest by rounding up to a full share of stock;
114+ (2) The authorization under paragraph (1) of this subsection does not affect 10
115+shares already represented by certificates until they are surrendered to the corporation. 11
117116
118- (3) Arrange for the disposition of a fractional interest by the person entitled
119-to it;
117+ (3) For shares issued without certificates, on request by a stockholder, the 12
118+corporation shall send the stockholder, without charge, a statement in writing or by 13
119+electronic transmission of the information required on certificates by § 2–211 of this 14
120+subtitle. 15
120121
121- (4) Pay cash for the fair value of a fractional share of stock determined as
122-of the time when the person entitled to receive it is determined; or
122+ (D) A CORPORATION MAY NOT ISSUE A STOCK CERTIF ICATE IN BEARER 16
123+FORM. 17
123124
124- (5) Issue scrip or other evidence of ownership which:
125+2–214. 18
125126
126- (i) Entitles its holder to exchange scrip or other evidence of
127-ownership aggregating a full share for a certificate which represents the share; and
127+ (a) A corporation may, but is not obliged to: 19
128128
129- (ii) Unless otherwise provided, does not entitle its holder to exercise
130-voting rights, receive dividends, or participate in the assets of the corporation in the event
131-of liquidation.
129+ (1) Issue fractional shares of stock; 20
132130
133- (b) The board of directors may impose any reasonable condition on the issuance
134-of the scrip or other evidence of ownership, including a condition that:
131+ (2) Eliminate a fractional interest by rounding up to a full share of stock; 21
135132
136- (1) It becomes void if not exchanged for a certificate representing a full
137-share of stock before a specified date;
133+ (3) Arrange for the disposition of a fractional interest by the person entitled 22
134+to it; 23
138135
139- (2) The corporation may sell the stock for which the scrip or other evidence
140-of ownership is exchangeable and distribute the proceeds to the holders; or
136+ (4) Pay cash for the fair value of a fractional share of stock determined as 24
137+of the time when the person entitled to receive it is determined; or 25
141138
142- (3) The proceeds of a sale under paragraph (2) of this subsection are
143-forfeited to the corporation if not claimed within a specified period not less than three years
144-from the date the scrip or other evidence of ownership was originally issued. Ch. 560 2023 LAWS OF MARYLAND
139+ (5) Issue scrip or other evidence of ownership which: 26
145140
146-– 4 –
141+ (i) Entitles its holder to exchange scrip or other evidence of 27
142+ownership aggregating a full share for a certificate which represents the share; and 28
147143
148- (C) A CORPORATION MAY NOT ISSUE A CERTIFICATE REPRESENTING SCRIP
149-IN BEARER FORM .
144+ (ii) Unless otherwise provided, does not entitle its holder to exercise 29
145+voting rights, receive dividends, or participate in the assets of the corporation in the event 30
146+of liquidation. 31 4 HOUSE BILL 209
150147
151- (D) FOR SCRIP ISSUED WITH OUT A CERTIFICATE , ON REQUEST BY A
152-SCRIPHOLDER , THE CORPORATION SHAL L DELIVER TO THE SCR IPHOLDER,
153-WITHOUT CHARGE , A STATEMENT IN WRITI NG OR BY ELECTRONIC TRANSMISSION OF
154-THE INFORMATION REQU IRED TO BE ON A CERT IFICATE UNDER § 2–211 OF THIS
155-SUBTITLE.
156148
157-2–501.
158149
159- (a) Each corporation shall hold an annual meeting of its stockholders to elect
160-directors and transact any other business within its powers.
150+ (b) The board of directors may impose any reasonable condition on the issuance 1
151+of the scrip or other evidence of ownership, including a condition that: 2
161152
162- (b) (1) If the charter or bylaws of a corporation [registered under] THAT IS AN
163-INVESTMENT COMPANY A S DEFINED IN the Investment Company Act of 1940 so
164-provides, the corporation is not required to hold an annual meeting in any year in which
165-the election of directors is not required to be acted upon under the Investment Company
166-Act of 1940.
153+ (1) It becomes void if not exchanged for a certificate representing a full 3
154+share of stock before a specified date; 4
167155
168- (2) If a corporation is required under paragraph (1) of this subsection to
169-hold a meeting of stockholders to elect directors, the meeting shall be designated as the
170-annual meeting of stockholders for that year.
156+ (2) The corporation may sell the stock for which the scrip or other evidence 5
157+of ownership is exchangeable and distribute the proceeds to the holders; or 6
171158
172-2–503.
159+ (3) The proceeds of a sale under paragraph (2) of this subsection are 7
160+forfeited to the corporation if not claimed within a specified period not less than three years 8
161+from the date the scrip or other evidence of ownership was originally issued. 9
173162
174- (a) Unless the charter provides otherwise, meetings of stockholders shall be held
175-as is:
163+ (C) A CORPORATION MAY NOT ISSUE A CERTIFICATE REPRESENTING SCRIP 10
164+IN BEARER FORM . 11
176165
177- (1) Provided in the charter or bylaws; or
166+ (D) FOR SCRIP ISSUED WITH OUT A CERTIFICATE , ON REQUEST BY A 12
167+SCRIPHOLDER , THE CORPORATION SHAL L DELIVER TO THE SCR IPHOLDER, 13
168+WITHOUT CHA RGE, A STATEMENT IN WRITI NG OR BY ELECTRONIC TRANSMISSION OF 14
169+THE INFORMATION REQU IRED TO BE ON A CERT IFICATE UNDER § 2–211 OF THIS 15
170+SUBTITLE. 16
178171
179- (2) Set by the board of directors under the provisions of the charter or
180-bylaws.
172+2–501. 17
181173
182- (c) If authorized by the board of directors and subject to any guidelines and
183-procedures that the board adopts, stockholders and proxy holders not physically present at
184-the meeting of the stockholders, may, by remote communication:
174+ (a) Each corporation shall hold an annual meeting of its stockholders to elect 18
175+directors and transact any other business within its powers. 19
185176
186- (1) Participate in the meeting of the stockholders; and
177+ (b) (1) If the charter or bylaws of a corporation [registered under] THAT IS AN 20
178+INVESTMENT COMPANY A S DEFINED IN the Investment Company Act of 1940 so 21
179+provides, the corporation is not required to hold an annual meeting in any year in which 22
180+the election of directors is not required to be acted upon under the Investment Company 23
181+Act of 1940. 24
187182
188- (2) Be considered present in person and may vote at the meeting of the
189-stockholders, whether the meeting is held at a designated place or PARTIALLY OR solely
190-by remote communication, if:
191- WES MOORE, Governor Ch. 560
183+ (2) If a corporation is required under paragraph (1) of this subsection to 25
184+hold a meeting of stockholders to elect directors, the meeting shall be designated as the 26
185+annual meeting of stockholders for that year. 27
192186
193-– 5 –
194- (i) The corporation implements reasonable measures to verify that
195-each person considered present and authorized to vote at the meeting by remote
196-communication is a stockholder or proxy holder;
187+2–503. 28
197188
198- (ii) The corporation implements reasonable measures to provide the
199-stockholders and proxy holders a reasonable opportunity to participate in the meeting and
200-to vote on matters submitted to the stockholders, including an opportunity to read or hear
201-the proceedings of the meeting substantially concurrently with the proceedings; and
189+ (a) Unless the charter provides otherwise, meetings of stockholders shall be held 29
190+as is: 30
202191
203- (iii) In the event any stockholder or proxy holder votes or takes other
204-action at the meeting by remote communication, a record of the vote or other action is
205-maintained by the corporation.
192+ (1) Provided in the charter or bylaws; or 31
193+ HOUSE BILL 209 5
206194
207-4–601.
208195
209- (A) [A] SUBJECT TO SUBSECTION (B) OF THIS SECTION , A consolidation,
210-merger, share exchange, [or] transfer of assets, OR CONVERSION of a close corporation
211-shall be made in accordance with the provisions of Title 3 of this article.
196+ (2) Set by the board of directors under the provisions of the charter or 1
197+bylaws. 2
212198
213- (B) [However, approval] APPROVAL of a proposed consolidation or merger, a
214-transfer of [its] assets, A CONVERSION , or an acquisition of [its] stock in a share exchange
215-requires the affirmative vote of every stockholder of the CLOSE corporation.
199+ (c) If authorized by the board of directors and subject to any guidelines and 3
200+procedures that the board adopts, stockholders and proxy holders not physically present at 4
201+the meeting of the stockholders, may, by remote communication: 5
216202
217-4A–402.
203+ (1) Participate in the meeting of the stockholders; and 6
218204
219- (a) Except for the requirement set forth in § 4A–404 of this subtitle that certain
220-consents be in writing, members may enter into an operating agreement not inconsistent
221-with the articles of organization to regulate or establish any aspect of the affairs of the
222-limited liability company, the conduct of its business, or the relations of its members,
223-including provisions establishing:
205+ (2) Be considered present in person and may vote at the meeting of the 7
206+stockholders, whether the meeting is held at a designated place or PARTIALLY OR solely 8
207+by remote communication, if: 9
224208
225- (5) (i) The right to have and a procedure for having a member’s
226-membership interest evidenced by a certificate issued by the limited liability company,
227-which may NOT be issued in bearer form [only if specifically allowed by the operating
228-agreement];
209+ (i) The corporation implements reasonable measures to verify that 10
210+each person considered present and authorized to vote at the meeting by remote 11
211+communication is a stockholder or proxy holder; 12
229212
230- (ii) The procedure for assignment, pledge, or transfer of any
231-membership interest represented by the certificate; and
213+ (ii) The corporation implements reasonable measures to provide the 13
214+stockholders and proxy holders a reasonable opportunity to participate in the meeting and 14
215+to vote on matters submitted to the stockholders, including an opportunity to read or hear 15
216+the proceedings of the meeting substantially concurrently with the proceedings; and 16
232217
233- (iii) Any other provisions dealing with the certificate;
218+ (iii) In the event any stockholder or proxy holder votes or takes other 17
219+action at the meeting by remote communication, a record of the vote or other action is 18
220+maintained by the corporation. 19
234221
235- (8) Procedures relating to:
222+4–601. 20
236223
237- (viii) Any other matter with respect to the exercise of voting rights by
238-members; or
239- Ch. 560 2023 LAWS OF MARYLAND
224+ (A) [A] SUBJECT TO SUBSECTION (B) OF THIS SECTION , A consolidation, 21
225+merger, share exchange, [or] transfer of assets, OR CONVERSION of a close corporation 22
226+shall be made in accordance with the provisions of Title 3 of this article. 23
240227
241-– 6 –
242- (9) That a membership interest, an economic interest, or a noneconomic
243-interest may or shall be transferred or assigned in whole or in part to one or more persons,
244-including on the occurrence of any of the events described in § 4A–606 of this title,
245-regardless of whether the persons to whom the interest is transferred or assigned are
246-members.
228+ (B) [However, approval] APPROVAL of a proposed consolidation or merger, a 24
229+transfer of [its] assets, A CONVERSION , or an acquisition of [its] stock in a share exchange 25
230+requires the affirmative vote of every stockholder of the CLOSE corporation. 26
247231
248-5–202.
232+4A–402. 27
249233
250- (b) Notwithstanding any other provision of this article, the charter or bylaws of a
251-nonstock corporation may:
234+ (a) Except for the requirement set forth in § 4A–404 of this subtitle that certain 28
235+consents be in writing, members may enter into an operating agreement not inconsistent 29
236+with the articles of organization to regulate or establish any aspect of the affairs of the 30
237+limited liability company, the conduct of its business, or the relations of its members, 31
238+including provisions establishing: 32
252239
253- (1) Divide the directors or members of the corporation into classes;
240+ (5) (i) The right to have and a procedure for having a member’s 33
241+membership interest evidenced by a certificate issued by the limited liability company, 34 6 HOUSE BILL 209
254242
255- (2) Prescribe the tenure and conditions of service of its directors, but no
256-class of directors may be elected to serve for a period shorter than the interval between
257-annual meetings unless:
258243
259- (i) All or a class of directors must be members; and
244+which may NOT be issued in bearer form [only if specifically allowed by the operating 1
245+agreement]; 2
260246
261- (ii) Qualifications for membership have the effect of shortening their
262-tenure of service;
247+ (ii) The procedure for assignment, pledge, or transfer of any 3
248+membership interest represented by the certificate; and 4
263249
264- (3) PROVIDE THAT AN INDIV IDUAL MAY SERVE AS A DIRECTOR BY
265-REASON OF SERVING IN A SPECIFIED OFFICE O R POSITION WITHIN OR OUTSIDE THE
266-CORPORATION AND PRES CRIBE THAT THE INDIV IDUAL SHALL SERVE AS A DIRECTOR
267-DURING THE INDIVIDUA L’S SERVICE IN THE SPE CIFIED OFFICE OR POS ITION;
250+ (iii) Any other provisions dealing with the certificate; 5
268251
269- (4) Prescribe the rights, privileges, and qualifications of its members;
252+ (8) Procedures relating to: 6
270253
271- [(4)] (5) Prescribe the manner of giving notice of any meeting of its
272-members;
254+ (viii) Any other matter with respect to the exercise of voting rights by 7
255+members; or 8
273256
274- [(5)] (6) Provide for the number or proportion of voting members whose
275-presence in person or by proxy constitutes a quorum at any meeting of its members;
257+ (9) That a membership interest, an economic interest, or a noneconomic 9
258+interest may or shall be transferred or assigned in whole or in part to one or more persons, 10
259+including on the occurrence of any of the events described in § 4A–606 of this title, 11
260+regardless of whether the persons to whom the interest is transferred or assigned are 12
261+members. 13
276262
277- [(6)] (7) Provide that any action may be taken or authorized by any
278-number or proportion of the votes of all its members or all its directors entitled to vote;
263+5–202. 14
279264
280- [(7)] (8) Deny or limit the right of its members to vote by proxy;
265+ (b) Notwithstanding any other provision of this article, the charter or bylaws of a 15
266+nonstock corporation may: 16
281267
282- [(8)] (9) Provide for the right of members to vote by mail or by electronic
283-transmission on a stated proposal or for the election of directors or any officers who are
284-elected by members;
285- WES MOORE, Governor Ch. 560
268+ (1) Divide the directors or members of the corporation into classes; 17
286269
287-– 7 –
288- [(9)] (10) Regulate the management of the business and affairs of the
289-corporation; and
270+ (2) Prescribe the tenure and conditions of service of its directors, but no 18
271+class of directors may be elected to serve for a period shorter than the interval between 19
272+annual meetings unless: 20
290273
291- [(10)] (11) Regulate the exercise or allocation of voting power between or
292-among the directors and members.
274+ (i) All or a class of directors must be members; and 21
293275
294-8–502.
276+ (ii) Qualifications for membership have the effect of shortening their 22
277+tenure of service; 23
295278
296- (a) A real estate investment trust may terminate its existence by voluntary
297-dissolution[. The Department shall be notified of the effective date of the dissolution.] IN
298-ACCORDANCE WITH SUBS ECTION (B) OF THIS SECTION.
279+ (3) PROVIDE THAT AN INDIV IDUAL MAY SERVE AS A DIRECTOR BY 24
280+REASON OF SERVING IN A SPECIFIED OFFICE O R POSITION WITHIN OR OUTSIDE THE 25
281+CORPORATION AND PRES CRIBE THAT THE INDIV IDUAL SHALL SERVE AS A DIRECTOR 26
282+DURING THE INDIVIDUA L’S SERVICE IN THE SPE CIFIED OFFICE OR POSITIO N; 27
299283
300- (b) [A real estate investment trust may curtail or cease its trust activities by
301-partially or completely distributing its assets.]
284+ (4) Prescribe the rights, privileges, and qualifications of its members; 28
302285
303- (1) IN ORDER TO TERMINATE ITS EXISTENCE , A REAL ESTATE
304-INVESTMENT TRUST MUS T FILE A NOTICE OF TERMINATION WITH THE DEPARTMENT
305-THAT INCLUDES :
286+ [(4)] (5) Prescribe the manner of giving notice of any meeting of its 29
287+members; 30
288+ HOUSE BILL 209 7
306289
307- (I) THE NAME OF THE REAL ESTATE INVESTMENT TRUST ;
308290
309- (II) 1. A STATEMENT THAT THE T ERMINATION OF THE RE AL
310-ESTATE INVESTMENT TR UST BY VOLUNTARY DIS SOLUTION WAS APPROVE D IN THE
311-MANNER AND BY THE VO TE REQUIRED BY LAW A ND BY THE DECLARATIO N OF TRUST
312-OF THE REAL ESTATE I NVESTMENT TRUST ; AND
291+ [(5)] (6) Provide for the number or proportion of voting members whose 1
292+presence in person or by proxy constitutes a quorum at any meeting of its members; 2
313293
314- 2. A STATEMENT DETAILING THE MANNER OF
315-APPROVAL;
294+ [(6)] (7) Provide that any action may be taken or authorized by any 3
295+number or proportion of the votes of all its members or all its directors entitled to vote; 4
316296
317- (III) ALL OTHER PROVISIONS THE BOARD OF THE REA L ESTATE
318-INVESTMENT TRUST CON SIDERS NECESSARY TO DISSOLVE AND TERMINA TE THE
319-REAL ESTATE INVESTME NT TRUST; AND
297+ [(7)] (8) Deny or limit the right of its members to vote by proxy; 5
320298
321- (IV) A STATEMENT THAT THE R EAL ESTATE INVESTMENT TR UST
322-IS DISSOLVED AND TER MINATED.
299+ [(8)] (9) Provide for the right of members to vote by mail or by electronic 6
300+transmission on a stated proposal or for the election of directors or any officers who are 7
301+elected by members; 8
323302
324- (2) THE NOTICE OF TERMINA TION SHALL BE EXECUT ED BY:
303+ [(9)] (10) Regulate the management of the business and affairs of the 9
304+corporation; and 10
325305
326- (I) THE CHAIRMAN OR VICE CHAIRMAN OF THE BOAR D OF
327-TRUSTEES;
306+ [(10)] (11) Regulate the exercise or allocation of voting power between or 11
307+among the directors and members. 12
328308
329- (II) THE CHIEF EXECUTIVE O FFICER;
330- Ch. 560 2023 LAWS OF MARYLAND
309+8–502. 13
331310
332-– 8 –
333- (III) THE CHIEF OPERATING O FFICER;
311+ (a) A real estate investment trust may terminate its existence by voluntary 14
312+dissolution[. The Department shall be notified of the effective date of the dissolution.] IN 15
313+ACCORDANCE WITH SUBS ECTION (B) OF THIS SECTION. 16
334314
335- (IV) THE CHIEF FINANCIAL O FFICER;
315+ (b) [A real estate investment trust may curtail or cease its trust activities by 17
316+partially or completely distributing its assets.] 18
336317
337- (V) THE PRESIDENT OR A VI CE PRESIDENT; OR
318+ (1) IN ORDER TO TERMINATE ITS EXISTENCE , A REAL ESTATE 19
319+INVESTMENT TRUST MUS T FILE A NOTICE OF TERMINATION WITH THE DEPARTMENT 20
320+THAT INCLUDES : 21
338321
339- (VI) IF AUTHORIZED BY THE BYLAWS OR A RESOLUTI ON OF THE
340-BOARD OF TRUSTEES , ANY OTHER OFFICER OR AGENT OF THE REAL ES TATE
341-INVESTMENT TRUST .
322+ (I) THE NAME OF THE REAL ESTATE INVESTMENT TR UST; 22
342323
343- (C) (1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS SUBSECTION ,
344-THE REAL ESTATE INVE STMENT TRUST IS DISS OLVED AND TERMINATED ON THE
345-LATER OF:
324+ (II) 1. A STATEMENT THAT THE T ERMINATION OF THE RE AL 23
325+ESTATE INVESTMENT TR UST BY VOLUNTARY DIS SOLUTION WAS APPROVE D IN THE 24
326+MANNER AND BY THE VO TE REQUIRED BY LAW A ND BY THE DECLARATIO N OF TRUST 25
327+OF THE REAL ESTATE I NVESTMENT TRUST ; AND 26
346328
347- (I) THE TIME THAT THE DEPARTMENT ACCEPTS TH E NOTICE
348-OF TERMINATION FOR R ECORD; OR
329+ 2. A STATEMENT DETAI LING THE MANNER OF 27
330+APPROVAL; 28
349331
350- (II) THE TIME ESTABLISHED BY THE NOTICE OF TER MINATION,
351-NOT TO EXCEED 30 DAYS AFTER THE NOTIC E IS ACCEPTED FOR RE CORD.
332+ (III) ALL OTHER PROVISIONS THE BOARD OF THE REA L ESTATE 29
333+INVESTMENT TRUST CON SIDERS NECESSARY TO DISSOLVE AND TERMINA TE THE 30
334+REAL ESTATE INVESTME NT TRUST; AND 31
335+ 8 HOUSE BILL 209
352336
353- (2) THE REAL ESTATE INVES TMENT TRUST CONTINUE S TO EXIST FOR
354-THE PURPOSE OF :
355337
356- (I) PAYING, SATISFYING, AND DISCHARGING ANY EXISTING
357-DEBTS OR OBLIGATIONS ;
338+ (IV) A STATEMENT THAT THE R EAL ESTATE INVESTMEN T TRUST 1
339+IS DISSOLVED AND TERMINATED . 2
358340
359- (II) COLLECTING AND DISTRI BUTING ASSETS; AND
341+ (2) THE NOTICE OF TERMINA TION SHALL BE EXECUT ED BY: 3
360342
361- (III) TAKING ALL OTHER ACTI ONS REQUIRED TO LIQU IDATE AND
362-WIND UP ITS BUSINESS AND AFFAIRS.
343+ (I) THE CHAIRMAN OR VICE CHAIRMAN OF THE BOAR D OF 4
344+TRUSTEES; 5
363345
364- [(c)] (D) (1) The Attorney General may institute proceedings to dissolve a
365-real estate investment trust [which] THAT has abused, misused, or failed to use its powers.
346+ (II) THE CHIEF EXECUTIVE O FFICER; 6
366347
367- (2) The proceedings shall be brought in the manner and on the grounds
368-provided in Title 3, Subtitle 5 of this article with respect to dissolution of a corporation for
369-misuse of its franchise.
348+ (III) THE CHIEF OPERATING O FFICER; 7
370349
371- [(2)] (3) The venue of an action under this subsection is in a county where
372-an officer or resident agent of the real estate investment trust is located.
350+ (IV) THE CHIEF FINANCIAL O FFICER; 8
373351
374-12–307.
375- WES MOORE, Governor Ch. 560
352+ (V) THE PRESIDENT OR A VI CE PRESIDENT; OR 9
376353
377-– 9 –
378- (A) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE PROVISIONS OF
379-TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPLY TO A STATUTORY TRUST FORMED ON
380-OR AFTER OCTOBER 1, 2023, THAT IS A CLOSED –END INVESTMENT COMPA NY AS
381-DEFINED IN THE INVESTMENT COMPANY ACT OF 1940.
354+ (VI) IF AUTHORIZED BY THE BYLAWS OR A RESOLUTI ON OF THE 10
355+BOARD OF TRUSTEES , ANY OTHER OFFICER OR AGENT OF THE REAL ES TATE 11
356+INVESTMENT TRUST . 12
382357
383- (B) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE GOVERNING
384-INSTRUMENT OF A STAT UTORY TRUST FORMED B EFORE OCTOBER 1, 2023, THAT IS
385-A CLOSED–END INVESTMENT COMPA NY AS DEFINED IN THE INVESTMENT COMPANY
386-ACT OF 1940 MAY PROVIDE THAT TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPL IES
387-TO THE STATUTORY TRU ST.
358+ (C) (1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS SUBSECTION , 13
359+THE REAL ESTATE INVE STMENT TRUST IS DISS OLVED AND TERMINATED ON THE 14
360+LATER OF: 15
388361
389- SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
390-October 1, 2023.
362+ (I) THE TIME THAT THE DEPARTMENT ACCEPTS TH E NOTICE 16
363+OF TERMINATION FOR R ECORD; OR 17
391364
392-Approved by the Governor, May 8, 2023.
365+ (II) THE TIME ESTABLISHED BY THE NOTICE OF TER MINATION, 18
366+NOT TO EXCEED 30 DAYS AFTER THE NOTICE IS ACCEPTED F OR RECORD. 19
367+
368+ (2) THE REAL ESTATE INVES TMENT TRUST CONTINUE S TO EXIST FOR 20
369+THE PURPOSE OF : 21
370+
371+ (I) PAYING, SATISFYING, AND DISCHARGING ANY EXISTING 22
372+DEBTS OR OBLIGATIONS ; 23
373+
374+ (II) COLLECTING AND DISTRI BUTING ASSETS; AND 24
375+
376+ (III) TAKING ALL OTHER ACTIONS RE QUIRED TO LIQUIDATE AND 25
377+WIND UP ITS BUSINESS AND AFFAIRS. 26
378+
379+ [(c)] (D) (1) The Attorney General may institute proceedings to dissolve a 27
380+real estate investment trust [which] THAT has abused, misused, or failed to use its powers. 28 HOUSE BILL 209 9
381+
382+
383+
384+ (2) The proceedings shall be brought in the manner and on the grounds 1
385+provided in Title 3, Subtitle 5 of this article with respect to dissolution of a corporation for 2
386+misuse of its franchise. 3
387+
388+ [(2)] (3) The venue of an action under this subsection is in a county where 4
389+an officer or resident agent of the real estate investment trust is located. 5
390+
391+12–307. 6
392+
393+ (A) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE PROVISIONS OF 7
394+TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPL Y TO A STATUTORY TRU ST FORMED ON 8
395+OR AFTER OCTOBER 1, 2023, THAT IS A CLOSED –END INVESTMENT COMPA NY AS 9
396+DEFINED IN THE INVESTMENT COMPANY ACT OF 1940. 10
397+
398+ (B) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE GOVERNING 11
399+INSTRUMENT OF A STAT UTORY TRUST FORMED B EFORE OCTOBER 1, 2023, THAT IS 12
400+A CLOSED–END INVESTMENT COMPA NY AS DEFINED IN THE INVESTMENT COMPANY 13
401+ACT OF 1940 MAY PROVIDE THAT TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPL IES 14
402+TO THE STATUTORY TRU ST. 15
403+
404+ SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 16
405+October 1, 2023. 17
406+
407+
408+
409+
410+Approved:
411+________________________________________________________________________________
412+ Governor.
413+________________________________________________________________________________
414+ Speaker of the House of Delegates.
415+________________________________________________________________________________
416+ President of the Senate.