Maryland 2023 Regular Session

Maryland Senate Bill SB58 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1	1
2	2
3	3		EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	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	5		sb0058
9	6
10	7		SENATE BILL 58
11	8		C1 3lr0902
12		-	(PRE–FILED) CF ~~HB 209~~
	9	+	(PRE–FILED) CF 3lr1160
13	10		By: Senators West and Waldstreicher
14	11		Requested: November 18, 2022
15	12		Introduced and read first time: January 11, 2023
16	13		Assigned to: Judicial Proceedings
17		-	Committee Report: Favorable
18		-	Senate action: Adopted
19		-	Read second time: February 15, 2023
20	14
21		-	~~CHAPTER ______~~
	15	+	A BILL ENTITLED
22	16
23	17		AN ACT concerning 1
24	18
25	19		Corporations and Associations – Revisions 2
26	20
27	21		FOR the purpose of altering certain provisions governing the issuance of stock, convertible 3
28	22		securities, and scrip; clarifying the authority of corporations to hold annual meetings 4
29	23		by remote communication; clarifying the application of certain provisions of law to 5
30	24		the conversion of a corporation; requiring a real estate investment trust that 6
31	25		voluntarily dissolves to file a notice of termination with the State Department of 7
32	26		Assessments and Taxation; authorizing the charter or bylaws of a nonstock 8
33	27		corporation to provide for the service of certain ex officio directors; providing for the 9
34	28		application of certain provisions of law regarding voting rights to statutory trusts; 10
35	29		and generally relating to corporations and associations. 11
36	30
37	31		BY repealing and reenacting, with amendments, 12
38	32		Article – Corporations and Associations 13
39	33		Section 2–203, 2–210, 2–214, 2–501(b), 2–503(c), 4–601, 4A–402(a)(5), 5–202(b), and 14
40	34		8–502 15
41	35		Annotated Code of Maryland 16
42	36		(2014 Replacement Volume and 2022 Supplement) 17
43	37
44	38		BY repealing and reenacting, without amendments, 18
45	39		Article – Corporations and Associations 19
46	40		Section 2–501(a), 2–503(a), and 4A–402(a)(8)(viii) and (9) 20
47	41		Annotated Code of Maryland 21
48		-	(2014 Replacement Volume and 2022 Supplement) 22 2 SENATE BILL 58
	42	+	(2014 Replacement Volume and 2022 Supplement) 22
	43	+
	44	+	BY adding to 23
	45	+	Article – Corporations and Associations 24
	46	+	Section 12–307 25
	47	+	Annotated Code of Maryland 26
	48	+	(2014 Replacement Volume and 2022 Supplement) 27 2 SENATE BILL 58
49	49
50	50
51	51
52		-	BY adding to 1
53		-	Article – Corporations and Associations 2
54		-	Section 12–307 3
55		-	Annotated Code of Maryland 4
56		-	(2014 Replacement Volume and 2022 Supplement) 5
	52	+	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
	53	+	That the Laws of Maryland read as follows: 2
57	54
58		-	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 6
59		-	That the Laws of Maryland read as follows: 7
	55	+	Article – Corporations and Associations 3
60	56
61		-	~~Article – Corporations and Associations 8~~
	57	+	2–203. 4
62	58
63		-	2–203. 9
	59	+	(a) Before the issuance of stock or convertible securities, the board of directors 5
	60	+	shall adopt a resolution that: 6
64	61
65		-	(a) Before the issuance of stock or convertible securities, the board of directors 10
66		-	shall adopt a resolution that: 11
	62	+	(1) Authorizes the issuance; 7
67	63
68		-	(1) Authorizes the issuance; 12
	64	+	(2) Sets the minimum consideration for the stock or convertible securities 8
	65	+	or a formula for its determination; and 9
69	66
70		-	(2) Sets the minimum consideration for the stock or convertible securities 13
71		-	or a formula for its determination; and 14
	67	+	(3) Fairly describes any consideration other than money. 10
72	68
73		-	(3) Fairly describes any consideration other than money. 15
	69	+	(b) In the absence of actual fraud in the transaction, the minimum consideration 11
	70	+	stated in the charter or determined by the board of directors in its resolution is conclusive 12
	71	+	for all purposes. 13
74	72
75		-	(b) In the absence of actual fraud in the transaction, the minimum consideration 16
76		-	stated in the charter or determined by the board of directors in its resolution is conclusive 17
77		-	for all purposes. 18
	73	+	(c) For purposes of this section, the consideration for stock issued as a stock 14
	74	+	dividend is the resulting capitalization of surplus. 15
78	75
79		-	(c) ~~For purposes of~~ this section, the ~~consideration for~~ stock ~~issued~~ as ~~a stock 19~~
80		-	~~dividend is the resulting capitalization~~ of ~~surplus.~~ 20
	76	+	(d) This section does not apply to the issuance of stock or convertible securities as 16
	77	+	part of: 17
81	78
82		-	(d) This section does not apply to the issuance of stock or convertible securities as 21
83		-	part of: 22
	79	+	(1) A reclassification of stock effected by amendment of the charter; or 18
84	80
85		-	(1) A reclassification of stock effected by amendment of the charter; or 23
	81	+	(2) A consolidation, merger, [or] share exchange, OR CONVERSION , 19
	82	+	including a consolidation, merger, [or] share exchange, OR CONVERSION to which a wholly 20
	83	+	owned subsidiary of the corporation is a party. 21
86	84
87		-	(2) A consolidation, merger, [or] share exchange, OR CONVERSION , 24
88		-	including a consolidation, merger, [or] share exchange, OR CONVERSION to which a wholly 25
89		-	owned subsidiary of the corporation is a party. 26
	85	+	(e) If its issuance is authorized in accordance with this subtitle, stock with par 22
	86	+	value and securities convertible into stock with par value may be issued as full paid and 23
	87	+	nonassessable even if the price or value of the consideration received is less than the par 24
	88	+	value of the stock issued or the stock into which the securities are convertible. 25
90	89
91		-	(e) If its issuance is authorized in accordance with this subtitle, stock with par 27
92		-	value and securities convertible into stock with par value may be issued as full paid and 28
93		-	nonassessable even if the price or value of the consideration received is less than the par 29
94		-	value of the stock issued or the stock into which the securities are convertible. 30
	90	+	(f) Notwithstanding any other provision of this section or § 2–204 or § 2–206 of 26
	91	+	this subtitle, a corporation may issue stock or other securities of the corporation pursuant 27
	92	+	to § 2–103(13) of this title without consideration of any kind. 28
	93	+
	94	+	2–210. 29
95	95		SENATE BILL 58 3
96	96
97	97
98		-	(f) ~~Notwithstanding any other provision~~ of this section ~~or § 2–204 or § 2–206 of~~ 1
99		-	~~this subtitle,~~ ~~a corporation may issue~~ stock ~~or other securities~~ of ~~the corporation pursuant~~ 2
100		-	~~to § 2–103(13) of this title without consideration of any kind~~. 3
	98	+	(a) Except as provided in subsections (b) and (c) of this section, each stockholder 1
	99	+	is entitled to stock certificates [which] THAT represent and certify the shares of stock [he] 2
	100	+	THE STOCKHOLDER holds in the corporation. 3
101	101
102		-	2–210. 4
	102	+	(b) A stock certificate may not be issued until the stock represented by it is fully 4
	103	+	paid. 5
103	104
104		-	~~(a) Except as provided in subsections (b) and~~ (c) of ~~this section,~~ ~~each stockholder 5~~
105		-	~~is entitled to stock certificates [which] THAT represent and certify~~ the shares of ~~stock [he] 6~~
106		-	~~THE STOCKHOLDE R holds in the corporation~~. 7
	105	+	(c) (1) Unless the charter or bylaws provide otherwise, the board of directors 6
	106	+	of a corporation may authorize the issue of some or all of the shares of any or all of its 7
	107	+	classes or series without certificates. 8
107	108
108		-	(b) ~~A stock certificate may~~ not ~~be issued until the stock represented by it is fully 8~~
109		-	~~paid~~. 9
	109	+	(2) The authorization under paragraph (1) of this subsection does not affect 9
	110	+	shares already represented by certificates until they are surrendered to the corporation. 10
110	111
111		-	(c) (1) Unless the charter or bylaws provide otherwise, the board of directors 10
112		-	of a corporation may authorize the issue of some or all of the shares of any or all of its 11
113		-	classes or series without certificates. 12
	112	+	(3) For shares issued without certificates, on request by a stockholder, the 11
	113	+	corporation shall send the stockholder, without charge, a statement in writing or by 12
	114	+	electronic transmission of the information required on certificates by § 2–211 of this 13
	115	+	subtitle. 14
114	116
115		-	(2) ~~The authorization under paragraph (1) of this subsection does~~ not ~~affect 13~~
116		-	~~shares already represented by certificates until they are surrendered to the corporation~~. 14
	117	+	(D) A CORPORATION MAY NOT ISSUE A STOCK CERTIFICATE IN BEARE R 15
	118	+	FORM. 16
117	119
118		-	(3) For shares issued without certificates, on request by a stockholder, the 15
119		-	corporation shall send the stockholder, without charge, a statement in writing or by 16
120		-	electronic transmission of the information required on certificates by § 2–211 of this 17
121		-	subtitle. 18
	120	+	2–214. 17
122	121
123		-	(D) A CORPORATION MAY NOT ISSUE A STOCK CERTIFICATE IN BEARE R 19
124		-	FORM. 20
	122	+	(a) A corporation may, but is not obliged to: 18
125	123
126		-	~~2–214. 21~~
	124	+	(1) Issue fractional shares of stock; 19
127	125
128		-	(a) A ~~corporation may,~~ ~~but is not obliged~~ to~~: 22~~
	126	+	(2) Eliminate a fractional interest by rounding up to a full share of stock; 20
129	127
130		-	(1) Issue fractional shares of stock; 23
	128	+	(3) Arrange for the disposition of a fractional interest by the person entitled 21
	129	+	to it; 22
131	130
132		-	(2) Eliminate a fractional interest by rounding up to a full share of stock; 24
	131	+	(4) Pay cash for the fair value of a fractional share of stock determined as 23
	132	+	of the time when the person entitled to receive it is determined; or 24
133	133
134		-	(3) Arrange for the disposition of a fractional interest by the person entitled 25
135		-	to it; 26
	134	+	(5) Issue scrip or other evidence of ownership which: 25
136	135
137		-	(4) ~~Pay cash for the fair value~~ of ~~a fractional share of stock determined as 27~~
138		-	of the ~~time when the person entitled to receive it is determined~~; ~~or 28~~
	136	+	(i) Entitles its holder to exchange scrip or other evidence of 26
	137	+	ownership aggregating a full share for a certificate which represents the share; and 27
139	138
140		-	(5) Issue scrip or other evidence of ownership which: 29
	139	+	(ii) Unless otherwise provided, does not entitle its holder to exercise 28
	140	+	voting rights, receive dividends, or participate in the assets of the corporation in the event 29
	141	+	of liquidation. 30
141	142
142		-	(i) Entitles its holder to exchange scrip or other evidence of 30
143		-	ownership aggregating a full share for a certificate which represents the share; and 31
144		-	4 SENATE BILL 58
	143	+	(b) The board of directors may impose any reasonable condition on the issuance 31
	144	+	of the scrip or other evidence of ownership, including a condition that: 32 4 SENATE BILL 58
145	145
146	146
147		-	(ii) Unless otherwise provided, does not entitle its holder to exercise 1
148		-	voting rights, receive dividends, or participate in the assets of the corporation in the event 2
149		-	of liquidation. 3
150	147
151		-	(b) ~~The board of directors may impose any reasonable condition on the issuance 4~~
152		-	~~of the scrip or other evidence~~ of ~~ownership, including~~ a ~~condition that:~~ 5
	148	+	(1) It becomes void if not exchanged for a certificate representing a full 1
	149	+	share of stock before a specified date; 2
153	150
154		-	(1) ~~It becomes void if not exchanged~~ for ~~a certificate representing a full 6~~
155		-	~~share~~ of ~~stock before a specified date~~; 7
	151	+	(2) The corporation may sell the stock for which the scrip or other evidence 3
	152	+	of ownership is exchangeable and distribute the proceeds to the holders; or 4
156	153
157		-	(2) The corporation may sell the stock for which the scrip or other evidence 8
158		-	of ownership is exchangeable and distribute the proceeds to the holders; or 9
	154	+	(3) The proceeds of a sale under paragraph (2) of this subsection are 5
	155	+	forfeited to the corporation if not claimed within a specified period not less than three years 6
	156	+	from the date the scrip or other evidence of ownership was originally issued. 7
159	157
160		-	(3) The proceeds of a sale under paragraph (2) of this subsection are 10
161		-	forfeited to the corporation if not claimed within a specified period not less than three years 11
162		-	from the date the scrip or other evidence of ownership was originally issued. 12
	158	+	(C) A CORPORATION MAY NOT ISSUE A CERTIFICATE REPRESENTING SCRIP 8
	159	+	IN BEARER FORM . 9
163	160
164		-	(C) A CORPORATION MAY NOT ISSUE A CERTIFICATE REPRESENTING SCRIP 13
165		-	IN BEARER FORM . 14
	161	+	(D) FOR SCRIP ISSUED WITH OUT A CERTIFICATE, ON REQUEST BY A 10
	162	+	SCRIPHOLDER , THE CORPORATION SHAL L DELIVER TO THE SCR IPHOLDER, 11
	163	+	WITHOUT CHARGE , A STATEMENT IN WRITI NG OR BY ELECTRONIC TRANSMISSION OF 12
	164	+	THE INFORMATION REQU IRED TO BE ON A CERTIFICATE UNDER § 2–211 OF THIS 13
	165	+	SUBTITLE. 14
166	166
167		-	(D) FOR SCRIP ISSUED WITH OUT A CERTIFICATE, ON REQUEST BY A 15
168		-	SCRIPHOLDER , THE CORPORATION SHAL L DELIVER TO THE SCR IPHOLDER, 16
169		-	WITHOUT CHARGE , A STATEMENT IN WRITING OR BY ELECTRONIC TRANSMISS ION OF 17
170		-	THE INFORMATION REQU IRED TO BE ON A CERTIFICATE UNDER § 2–211 OF THIS 18
171		-	SUBTITLE. 19
	167	+	2–501. 15
172	168
173		-	2–501. 20
	169	+	(a) Each corporation shall hold an annual meeting of its stockholders to elect 16
	170	+	directors and transact any other business within its powers. 17
174	171
175		-	(a) Each corporation shall hold an annual meeting of its stockholders to elect 21
176		-	directors and transact any other business within its powers. 22
	172	+	(b) (1) If the charter or bylaws of a corporation [registered under] THAT IS AN 18
	173	+	INVESTMENT COMPANY AS D EFINED IN the Investment Company Act of 1940 so 19
	174	+	provides, the corporation is not required to hold an annual meeting in any year in which 20
	175	+	the election of directors is not required to be acted upon under the Investment Company 21
	176	+	Act of 1940. 22
177	177
178		-	(b) (1) If the charter or bylaws of a corporation [registered under] THAT IS AN 23
179		-	INVESTMENT COMPANY A S DEFINED IN the Investment Company Act of 1940 so 24
180		-	provides, the corporation is not required to hold an annual meeting in any year in which 25
181		-	the election of directors is not required to be acted upon under the Investment Company 26
182		-	Act of 1940. 27
	178	+	(2) If a corporation is required under paragraph (1) of this subsection to 23
	179	+	hold a meeting of stockholders to elect directors, the meeting shall be designated as the 24
	180	+	annual meeting of stockholders for that year. 25
183	181
184		-	(2) If a corporation is required under paragraph (1) of this subsection to 28
185		-	hold a meeting of stockholders to elect directors, the meeting shall be designated as the 29
186		-	annual meeting of stockholders for that year. 30
	182	+	2–503. 26
187	183
188		-	2–503. 31
	184	+	(a) Unless the charter provides otherwise, meetings of stockholders shall be held 27
	185	+	as is: 28
189	186
190		-	(a) Unless the charter provides otherwise, meetings of stockholders shall be held 32
191		-	as is: 33
	187	+	(1) Provided in the charter or bylaws; or 29
	188	+
	189	+	(2) Set by the board of directors under the provisions of the charter or 30
	190	+	bylaws. 31
192	191		SENATE BILL 58 5
193	192
194	193
195		-	(1) Provided in the charter or bylaws; or 1
	194	+	(c) If authorized by the board of directors and subject to any guidelines and 1
	195	+	procedures that the board adopts, stockholders and proxy holders not physically present at 2
	196	+	the meeting of the stockholders, may, by remote communication: 3
196	197
197		-	(2) Set by the board of directors under the provisions of the charter or 2
198		-	bylaws. 3
	198	+	(1) Participate in the meeting of the stockholders; and 4
199	199
200		-	(c) ~~If authorized by~~ the ~~board~~ of ~~directors and subject to any guidelines and 4~~
201		-	~~procedures that~~ the ~~board adopts,~~ ~~stockholders and proxy holders not physically present~~ at 5
202		-	~~the meeting of the stockholders, may,~~ by remote communication: 6
	200	+	(2) Be considered present in person and may vote at the meeting of the 5
	201	+	stockholders, whether the meeting is held at a designated place or PARTIALLY OR solely 6
	202	+	by remote communication, if: 7
203	203
204		-	(1) Participate in the meeting of the stockholders; and 7
	204	+	(i) The corporation implements reasonable measures to verify that 8
	205	+	each person considered present and authorized to vote at the meeting by remote 9
	206	+	communication is a stockholder or proxy holder; 10
205	207
206		-	(2) Be considered present in person and may vote at the meeting of the 8
207		-	stockholders, whether the meeting is held at a designated place or PARTIALLY OR solely 9
208		-	by remote communication, if: 10
	208	+	(ii) The corporation implements reasonable measures to provide the 11
	209	+	stockholders and proxy holders a reasonable opportunity to participate in the meeting and 12
	210	+	to vote on matters submitted to the stockholders, including an opportunity to read or hear 13
	211	+	the proceedings of the meeting substantially concurrently with the proceedings; and 14
209	212
210		-	(i) The ~~corporation implements reasonable measures to verify that 11~~
211		-	~~each person considered present and authorized to vote~~ at the meeting by remote 12
212		-	~~communication is a stockholder or proxy holder; 13~~
	213	+	(iii) In the event any stockholder or proxy holder votes or takes other 15
	214	+	action at the meeting by remote communication, a record of the vote or other action is 16
	215	+	maintained by the corporation. 17
213	216
214		-	(ii) The corporation implements reasonable measures to provide the 14
215		-	stockholders and proxy holders a reasonable opportunity to participate in the meeting and 15
216		-	to vote on matters submitted to the stockholders, including an opportunity to read or hear 16
217		-	the proceedings of the meeting substantially concurrently with the proceedings; and 17
	217	+	4–601. 18
218	218
219		-	(~~iii~~) ~~In the event any stockholder or proxy holder votes or takes other 18~~
220		-	~~action at the meeting by remote communication~~, a ~~record of the vote or other action is 19~~
221		-	~~maintained by~~ the ~~corporation~~. 20
	219	+	(A) [A] SUBJECT TO SUBSECTION (B) OF THIS SECTION , A consolidation, 19
	220	+	merger, share exchange, [or] transfer of assets, OR CONVERSION of a close corporation 20
	221	+	shall be made in accordance with the provisions of Title 3 of this article. 21
222	222
223		-	4–601. 21
	223	+	(B) [However, approval] APPROVAL of a proposed consolidation or merger, a 22
	224	+	transfer of [its] assets, A CONVERSION , or an acquisition of [its] stock in a share exchange 23
	225	+	requires the affirmative vote of every stockholder of the CLOSE corporation. 24
224	226
225		-	(A) [A] SUBJECT TO SUBSECTION (B) OF THIS SECTION , A consolidation, 22
226		-	merger, share exchange, [or] transfer of assets, OR CONVERSION of a close corporation 23
227		-	shall be made in accordance with the provisions of Title 3 of this article. 24
	227	+	4A–402. 25
228	228
229		-	(B) [However, approval] APPROVAL of a proposed consolidation or merger, a 25
230		-	transfer of [its] assets, A CONVERSION , or an acquisition of [its] stock in a share exchange 26
231		-	requires the affirmative vote of every stockholder of the CLOSE corporation. 27
	229	+	(a) Except for the requirement set forth in § 4A–404 of this subtitle that certain 26
	230	+	consents be in writing, members may enter into an operating agreement not inconsistent 27
	231	+	with the articles of organization to regulate or establish any aspect of the affairs of the 28
	232	+	limited liability company, the conduct of its business, or the relations of its members, 29
	233	+	including provisions establishing: 30
232	234
233		-	4A–402. 28
234		-
235		-	(a) Except for the requirement set forth in § 4A–404 of this subtitle that certain 29
236		-	consents be in writing, members may enter into an operating agreement not inconsistent 30
237		-	with the articles of organization to regulate or establish any aspect of the affairs of the 31
238		-	limited liability company, the conduct of its business, or the relations of its members, 32
239		-	including provisions establishing: 33
	235	+	(5) (i) The right to have and a procedure for having a member’s 31
	236	+	membership interest evidenced by a certificate issued by the limited liability company, 32
	237	+	which may NOT be issued in bearer form [only if specifically allowed by the operating 33
	238	+	agreement]; 34
240	239		6 SENATE BILL 58
241	240
242	241
243		-	(5) (i) The right to have and a procedure for having a member’s 1
244		-	membership interest evidenced by a certificate issued by the limited liability company, 2
245		-	which may NOT be issued in bearer form [only if specifically allowed by the operating 3
246		-	agreement]; 4
	242	+	(ii) The procedure for assignment, pledge, or transfer of any 1
	243	+	membership interest represented by the certificate; and 2
247	244
248		-	(ii) The procedure for assignment, pledge, or transfer of any 5
249		-	membership interest represented by the certificate; and 6
	245	+	(iii) Any other provisions dealing with the certificate; 3
250	246
251		-	(~~iii~~) ~~Any other provisions dealing with the certificate; 7~~
	247	+	(8) Procedures relating to: 4
252	248
253		-	(8) Procedures relating to: 8
	249	+	(viii) Any other matter with respect to the exercise of voting rights by 5
	250	+	members; or 6
254	251
255		-	(viii) Any other matter with respect to the exercise of voting rights by 9
256		-	members; or 10
	252	+	(9) That a membership interest, an economic interest, or a noneconomic 7
	253	+	interest may or shall be transferred or assigned in whole or in part to one or more persons, 8
	254	+	including on the occurrence of any of the events described in § 4A–606 of this title, 9
	255	+	regardless of whether the persons to whom the interest is transferred or assigned are 10
	256	+	members. 11
257	257
258		-	(9) That a membership interest, an economic interest, or a noneconomic 11
259		-	interest may or shall be transferred or assigned in whole or in part to one or more persons, 12
260		-	including on the occurrence of any of the events described in § 4A–606 of this title, 13
261		-	regardless of whether the persons to whom the interest is transferred or assigned are 14
262		-	members. 15
	258	+	5–202. 12
263	259
264		-	5–202. 16
	260	+	(b) Notwithstanding any other provision of this article, the charter or bylaws of a 13
	261	+	nonstock corporation may: 14
265	262
266		-	(b) Notwithstanding any other provision of this article, the charter or bylaws of a 17
267		-	nonstock corporation may: 18
	263	+	(1) Divide the directors or members of the corporation into classes; 15
268	264
269		-	(1) Divide the directors or members of the corporation into classes; 19
	265	+	(2) Prescribe the tenure and conditions of service of its directors, but no 16
	266	+	class of directors may be elected to serve for a period shorter than the interval between 17
	267	+	annual meetings unless: 18
270	268
271		-	(2) Prescribe the tenure and conditions of service of its directors, but no 20
272		-	class of directors may be elected to serve for a period shorter than the interval between 21
273		-	annual meetings unless: 22
	269	+	(i) All or a class of directors must be members; and 19
274	270
275		-	(i) All or a class of directors must be members; and 23
	271	+	(ii) Qualifications for membership have the effect of shortening their 20
	272	+	tenure of service; 21
276	273
277		-	(ii) Qualifications for membership have the effect of shortening their 24
278		-	tenure of service; 25
	274	+	(3) PROVIDE THAT AN INDIV IDUAL MAY SERVE AS A DIRECTOR BY 22
	275	+	REASON OF SERVING IN A SPECIFIED OFFICE O R POSITION WITHIN OR OUTS IDE THE 23
	276	+	CORPORATION AND PRES CRIBE THAT THE INDIV IDUAL SHALL SERVE AS A DIRECTOR 24
	277	+	DURING THE INDIVIDUA L’S SERVICE IN THE SPE CIFIED OFFICE OR POS ITION; 25
279	278
280		-	(3) PROVIDE THAT AN INDIV IDUAL MAY SERVE AS A DIRECTOR BY 26
281		-	REASON OF SERVING IN A SPECIFIED OFFICE O R POSITION WITHIN OR OUTSIDE THE 27
282		-	CORPORATION AND PRES CRIBE THAT THE INDIV IDUAL SHALL SERVE AS A DIRECTOR 28
283		-	DURING THE INDIVIDUA L’S SERVICE IN THE SPE CIFIED OFFICE OR POSITION; 29
	279	+	(4) Prescribe the rights, privileges, and qualifications of its members; 26
284	280
285		-	(4) Prescribe the rights, privileges, and qualifications of its members; 30
	281	+	[(4)] (5) Prescribe the manner of giving notice of any meeting of its 27
	282	+	members; 28
286	283
287		-	[(4)] (5) Prescribe the manner of giving notice of any meeting of its 31
288		-	members; 32 SENATE BILL 58 7
	284	+	[(5)] (6) Provide for the number or proportion of voting members whose 29
	285	+	presence in person or by proxy constitutes a quorum at any meeting of its members; 30
	286	+	SENATE BILL 58 7
	287	+
	288	+
	289	+	[(6)] (7) Provide that any action may be taken or authorized by any 1
	290	+	number or proportion of the votes of all its members or all its directors entitled to vote; 2
	291	+
	292	+	[(7)] (8) Deny or limit the right of its members to vote by proxy; 3
	293	+
	294	+	[(8)] (9) Provide for the right of members to vote by mail or by electronic 4
	295	+	transmission on a stated proposal or for the election of directors or any officers who are 5
	296	+	elected by members; 6
	297	+
	298	+	[(9)] (10) Regulate the management of the business and affairs of the 7
	299	+	corporation; and 8
	300	+
	301	+	[(10)] (11) Regulate the exercise or allocation of voting power between or 9
	302	+	among the directors and members. 10
	303	+
	304	+	8–502. 11
	305	+
	306	+	(a) A real estate investment trust may terminate its existence by voluntary 12
	307	+	dissolution IN ACCORDANCE WITH S UBSECTION (B) OF THIS SECTION . [The 13
	308	+	Department shall be notified of the effective date of the dissolution.] 14
	309	+
	310	+	(b) [A real estate investment trust may curtail or cease its trust activities by 15
	311	+	partially or completely distributing its assets.] 16
	312	+
	313	+	(1) IN ORDER TO TERMINATE ITS EXISTENCE , A REAL ESTATE 17
	314	+	INVESTMENT TRUST MUS T FILE A NOTICE OF TERMINATION WITH THE DEPARTMENT 18
	315	+	THAT INCLUDES : 19
	316	+
	317	+	(I) THE NAME OF THE REAL ESTATE INVESTMENT TR UST; 20
	318	+
	319	+	(II) 1. A STATEMENT THAT THE T ERMINATION OF THE RE AL 21
	320	+	ESTATE INVESTMENT TR UST BY VOLUNTARY DIS SOLUTION WAS APPROV ED IN THE 22
	321	+	MANNER AND BY THE VO TE REQUIRED BY LAW A ND BY THE DECLARATIO N OF TRUST 23
	322	+	OF THE REAL ESTATE I NVESTMENT TRUST ; AND 24
	323	+
	324	+	2. A STATEMENT DETAILING THE MANNER OF 25
	325	+	APPROVAL; 26
	326	+
	327	+	(III) ALL OTHER PROVISIONS THE BOARD OF THE REA L ESTATE 27
	328	+	INVESTMENT TRUST CONSIDERS NECESSARY TO DISSOLVE AND TERM INATE THE 28
	329	+	REAL ESTATE INVESTME NT TRUST; AND 29
	330	+
	331	+	(IV) A STATEMENT THAT THE R EAL ESTATE INVESTMEN T TRUST 30
	332	+	IS DISSOLVED AND TER MINATED. 31 8 SENATE BILL 58
289	333
290	334
291	335
292		-	[(5)] (6) Provide for the number or proportion of voting members whose 1
293		-	presence in person or by proxy constitutes a quorum at any meeting of its members; 2
	336	+	(2) THE NOTICE OF TERMINA TION SHALL BE EXECUT ED BY: 1
294	337
295		-	~~[(6)]~~ (7) ~~Provide that any action may be taken~~ or ~~authorized by any 3~~
296		-	~~number or proportion of the votes of all its members or all its directors entitled to vote~~; 4
	338	+	(I) THE CHAIRMAN OR VICE CHAIRMAN OF THE BOAR D OF 2
	339	+	TRUSTEES; 3
297	340
298		-	~~[(7)]~~ (8) ~~Deny or limit~~ the ~~right of its members to vote by proxy~~; 5
	341	+	(II) THE CHIEF EXECUTIVE O FFICER; 4
299	342
300		-	[(8)] (9) Provide for the right of members to vote by mail or by electronic 6
301		-	transmission on a stated proposal or for the election of directors or any officers who are 7
302		-	elected by members; 8
	343	+	(III) THE CHIEF OPERATING O FFICER; 5
303	344
304		-	[(9)] (10) Regulate the management of the business and affairs of the 9
305		-	corporation; and 10
	345	+	(IV) THE CHIEF FINANCIAL O FFICER; 6
306	346
307		-	[(10)] (11) Regulate the exercise or allocation of voting power between or 11
308		-	among the directors and members. 12
	347	+	(V) THE PRESIDENT OR A VICE PRESIDENT ; OR 7
309	348
310		-	8–502. 13
	349	+	(VI) IF AUTHORIZED BY THE BYLAWS OR A RESOLUTI ON OF THE 8
	350	+	BOARD OF TRUSTEES , ANY OTHER OFFICER OR AGENT OF THE REAL ES TATE 9
	351	+	INVESTMENT TRUST . 10
311	352
312		-	(a) ~~A real estate investment trust may terminate its existence by voluntary 14~~
313		-	~~dissolution IN ACCORDANCE WITH S UBSECTION (B) OF THIS SECTION . [~~The 15
314		-	~~Department shall be notified~~ of ~~the effective date of the dissolution.] 16~~
	353	+	(C) (1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS SUBSECTION , 11
	354	+	THE REAL ESTATE INVE STMENT TRUST IS DISS OLVED AND TERMINATED ON THE 12
	355	+	LATER OF: 13
315	356
316		-	(b) ~~[A real estate investment trust may curtail or cease its trust activities by 17~~
317		-	~~partially~~ or ~~completely distributing its assets.] 18~~
	357	+	(I) THE TIME THAT THE DEPARTMENT ACCEPTS THE NOTICE 14
	358	+	OF TERMINATION FOR RECORD ; OR 15
318	359
319		-	(1) IN ORDER TO TERMINATE ITS EXISTENCE , A REAL ESTATE 19
320		-	INVESTMENT TRUST MUS T FILE A NOTICE OF TERMINATION WITH THE DEPARTMENT 20
321		-	THAT INCLUDES : 21
	360	+	(II) THE TIME ESTABLISHED BY THE NOTICE OF TER MINATION, 16
	361	+	NOT TO EXCEED 30 DAYS AFTER THE NOTIC E IS ACCEPTED FOR RE CORD. 17
322	362
323		-	(I) THE NAME OF THE REAL ESTATE INVESTMENT TR UST; 22
	363	+	(2) THE REAL ESTATE INVES TMENT TRUST CONTINUE S TO EXIST FOR 18
	364	+	THE PURPOSE O F: 19
324	365
325		-	(II) 1. A STATEMENT THAT THE TERMINAT ION OF THE REAL 23
326		-	ESTATE INVESTMENT TR UST BY VOLUNTARY DIS SOLUTION WAS APPROVE D IN THE 24
327		-	MANNER AND BY THE VO TE REQUIRED BY LAW A ND BY THE DECLARATIO N OF TRUST 25
328		-	OF THE REAL ESTATE I NVESTMENT TRUST ; AND 26
	366	+	(I) PAYING, SATISFYING, AND DISCHARGING ANY EXISTING 20
	367	+	DEBTS OR OBLIGATIONS ; 21
329	368
330		-	2. A STATEMENT DETAILING THE MANNER OF 27
331		-	APPROVAL; 28
	369	+	(II) COLLECTING AND DISTRI BUTING ASSETS; AND 22
332	370
333		-	(III) ALL OTHER PROVISIONS THE BOARD OF THE REA L ESTATE 29
334		-	INVESTMENT TRUST CON SIDERS NECESSARY TO DISSOLVE AND TERMINA TE THE 30
335		-	REAL ESTATE INVESTME NT TRUST; AND 31 8 SENATE BILL 58
	371	+	(III) TAKING ALL OTHER ACTIONS REQUIRED TO LIQUIDAT E AND 23
	372	+	WIND UP ITS BUSINESS AND AFFAIRS. 24
336	373
337		-
338		-
339		-	(IV) A STATEMENT THAT THE R EAL ESTATE INVESTMEN T TRUST 1
340		-	IS DISSOLVED AND TERMINATED . 2
341		-
342		-	(2) THE NOTICE OF TERMINA TION SHALL BE EXECUT ED BY: 3
343		-
344		-	(I) THE CHAIRMAN OR VICE CHAIRMAN OF THE BOAR D OF 4
345		-	TRUSTEES; 5
346		-
347		-	(II) THE CHIEF EXECUTIVE O FFICER; 6
348		-
349		-	(III) THE CHIEF OPERATING O FFICER; 7
350		-
351		-	(IV) THE CHIEF FINANCIAL O FFICER; 8
352		-
353		-	(V) THE PRESIDENT OR A VICE PRESIDENT ; OR 9
354		-
355		-	(VI) IF AUTHORIZED BY THE BYLAWS OR A RESOLUTI ON OF THE 10
356		-	BOARD OF TRUSTEES , ANY OTHER OFFICER OR AGENT OF THE REAL ES TATE 11
357		-	INVESTMENT TRUST . 12
358		-
359		-	(C) (1) EXCEPT AS PROVIDED IN PARAGRAPH (2) OF THIS SUBSECTION , 13
360		-	THE REAL ESTATE INVESTMENT TR UST IS DISSOLVED AND TERMINATED ON THE 14
361		-	LATER OF: 15
362		-
363		-	(I) THE TIME THAT THE DEPARTMENT ACCEPTS TH E NOTICE 16
364		-	OF TERMINATION FOR RECORD ; OR 17
365		-
366		-	(II) THE TIME ESTABLISHED BY THE NOTICE OF TER MINATION, 18
367		-	NOT TO EXCEED 30 DAYS AFTER THE NOTIC E IS ACCEPTED FOR RECORD . 19
368		-
369		-	(2) THE REAL ESTATE INVES TMENT TRUST CONTINUE S TO EXIST FOR 20
370		-	THE PURPOSE OF : 21
371		-
372		-	(I) PAYING, SATISFYING, AND DISCHARGING ANY EXISTING 22
373		-	DEBTS OR OBLIGATIONS ; 23
374		-
375		-	(II) COLLECTING AND DISTRI BUTING ASSETS; AND 24
376		-
377		-	(III) TAKING ALL OTHER ACTIONS REQUIRED TO LIQUIDAT E AND 25
378		-	WIND UP ITS BUSINESS AND AFFAIRS. 26
	374	+	[(c)] (D) (1) The Attorney General may institute proceedings to dissolve a 25
	375	+	real estate investment trust [which] THAT has abused, misused, or failed to use its powers. 26
379	376		SENATE BILL 58 9
380	377
381	378
382		-	[(c)] (D) (1) The Attorney General may institute proceedings to dissolve a 1
383		-	real estate investment trust [which] THAT has abused, misused, or failed to use its powers. 2
	379	+	(2) The proceedings shall be brought in the manner and on the grounds 1
	380	+	provided in Title 3, Subtitle 5 of this article with respect to dissolution of a corporation for 2
	381	+	misuse of its franchise. 3
384	382
385		-	(2) The proceedings shall be brought in the manner and on the grounds 3
386		-	provided in Title 3, Subtitle 5 of this article with respect to dissolution of a corporation for 4
387		-	misuse of its franchise. 5
	383	+	[(2)] (3) The venue of an action under this subsection is in a county where 4
	384	+	an officer or resident agent of the real estate investment trust is located. 5
388	385
389		-	[(2)] (3) The venue of an action under this subsection is in a county where 6
390		-	an officer or resident agent of the real estate investment trust is located. 7
	386	+	12–307. 6
391	387
392		-	12–307. 8
	388	+	(A) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE PROVISIONS OF 7
	389	+	TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPL Y TO A STATUTORY TRU ST FORMED ON 8
	390	+	OR AFTER OCTOBER 1, 2023, THAT IS A CLOSED –END INVESTMENT COMPA NY AS 9
	391	+	DEFINED IN THE INVESTMENT COMPANY ACT OF 1940. 10
393	392
394		-	(A) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE PROVISIONS OF 9
395		-	TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPL Y TO A STATUTORY TRU ST FORMED ON 10
396		-	OR AFTER OCTOBER 1, 2023, THAT IS A CLOSED –END INVESTMENT COMPA NY AS 11
397		-	DEFINED IN THE INVESTMENT COMPANY ACT OF 1940. 12
	393	+	(B) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE GOVERNING 11
	394	+	INSTRUMENT OF A STAT UTORY TRUST FORMED BEFORE OCTOBER 1, 2023, THAT IS 12
	395	+	A CLOSED–END INVESTMENT COMPA NY AS DEFINED IN THE INVESTMENT COMPANY 13
	396	+	ACT OF 1940 MAY PROVIDE THAT TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPL IES 14
	397	+	TO THE STATUTORY TRU ST. 15
398	398
399		-	(B) NOTWITHSTANDING § 3–709 OF THIS ARTICLE , THE GOVERNING 13
400		-	INSTRUMENT OF A STAT UTORY TRUST FORMED BEFORE OCTOBER 1, 2023, THAT IS 14
401		-	A CLOSED–END INVESTMENT COMPA NY AS DEFINED IN THE INVESTMENT COMPANY 15
402		-	ACT OF 1940 MAY PROVIDE THAT TITLE 3, SUBTITLE 7 OF THIS ARTICLE APPL IES 16
403		-	TO THE STATUTORY TRU ST. 17
404		-
405		-	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 18
406		-	October 1, 2023. 19
407		-
408		-
409		-
410		-	Approved:
411		-	________________________________________________________________________________
412		-	Governor.
413		-	________________________________________________________________________________
414		-	President of the Senate.
415		-	________________________________________________________________________________
416		-	Speaker of the House of Delegates.
	399	+	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 16
	400	+	October 1, 2023. 17