| 1 | 1 | | SENATE BILL NO. 667 A bill to amend 1972 PA 284, entitled "Business corporation act," by amending sections 105, 106, 131, 202, 211, 745, 746, and 762 (MCL 450.1105, 450.1106, 450.1131, 450.1202, 450.1211, 450.1745, 450.1746, and 450.1762), sections 105, 106, and 211 as amended by 2012 PA 569, sections 131, 202, 746, and 762 as amended by 2018 PA 85, and section 745 as added by 2008 PA 402, and by adding chapter 9A. the people of the state of michigan enact: Sec. 105. (1) "Administrator" means the chief officer of the department or of any other agency or department authorized by law to administer this act, or his or her the designated representative of the chief officer. (2) "Articles of incorporation" includes any of the following: (a) The original articles of incorporation or any other instrument filed or issued under any statute to organize a domestic or foreign corporation, as amended, supplemented, or restated by certificates of amendment, merger, conversion, or consolidation or other certificates or instruments filed or issued under any statute. (b) A special act or charter creating a domestic or foreign corporation, as amended, supplemented, or restated. (3) "Authorized shares" means shares of all classes that a corporation is authorized to issue. (4) "Benefit corporation" means a domestic corporation that meets the requirements for being a benefit corporation under chapter 9A and has not terminated its status as a benefit corporation under that chapter. (5) (4) "Board" means board of directors or other governing board of a corporation. (6) (5) "Bonds" includes secured and unsecured bonds, debentures, and notes. Sec. 106. (1) "Corporation" or "domestic corporation" means a corporation formed under this act, or existing on January 1, 1973 and formed under any other statute of this state for a purpose for which a corporation may be formed under this act. The term includes a benefit corporation. (2) "Department" means the department of licensing and regulatory affairs. (3) "Director" means a member of the board of a corporation. (4) "Distribution" means a direct or indirect transfer of money or other property, except the corporation's shares, or the incurrence of indebtedness by the corporation to or for the benefit of its shareholders in respect to the corporation's shares. A distribution may be in the form of a dividend, a purchase, redemption or other acquisition of shares, an issuance of indebtedness, or any other declaration or payment to or for the benefit of the shareholders. (5) "Electronic transmission" or "electronically transmitted" means any form of communication that meets all of the following: (a) It does not directly involve the physical transmission of paper. (b) It creates a record that may be retained and retrieved by the recipient. (c) It may be directly reproduced in paper form by the recipient through an automated process. Sec. 131. (1) A document that is required or permitted to be filed under this act shall must be submitted by delivering the document to the administrator together with the fees and accompanying documents required by law. The administrator may establish a procedure for accepting delivery of a document submitted under this subsection by facsimile or other electronic transmission. However, by December 31, 2006, the administrator shall establish a procedure for accepting delivery of a document submitted under this subsection by electronic mail or over the internet. Beginning January 1, 2007, the administrator shall accept delivery of documents submitted by electronic mail or over the internet. (2) If a document submitted under subsection (1), other than an annual benefit report prepared under section 961, substantially conforms to the requirements of this act, the administrator shall endorse upon it the word "filed" with his or her the administrator's official title and the date of receipt and of filing and shall file and index the document or a photostatic, micrographic, photographic, optical disc media, or other reproduced copy in his or her the administrator's office. If requested at the time of the delivery of the document to his or her the administrator's office, the administrator shall include the hour of filing in the endorsement on the document. (3) The administrator may return the original or a copy of a document filed under subsection (2) to the person that submitted it for filing. The administrator shall mark the filing date on the copy or original before returning it or may provide proof of the filing date to the person that submitted the document for filing in another manner determined by the administrator. (4) The records and files of the administrator relating to domestic and foreign corporations shall must be open to reasonable inspection by the public. The administrator may maintain records or files in their original form or may maintain records or files in the form of reproductions pursuant to in accordance with the records reproduction act, 1992 PA 116, MCL 24.401 to 24.406, and may destroy the originals of the reproduced documents. (5) The administrator may make reproductions of any documents filed under this act or any predecessor act pursuant to in accordance with the records reproduction act, 1992 PA 116, MCL 24.401 to 24.406, and may destroy the originals of the reproduced documents. A reproduced copy of a document certified by the administrator, including a copy sent by facsimile or other electronic transmission, is considered an original document for all purposes and is admissible in evidence in like manner as an original document. (6) Except as provided in section 806, a document filed under subsection (2) is effective at the time it is endorsed unless a subsequent effective time, not later than 90 days after the date of delivery, is set forth stated in the document. (7) The administrator shall charge 1 of the following nonrefundable fees if expedited filing of a document by the administrator is requested and the administrator shall retain the revenue collected under this subsection and the department shall use it to carry out its duties required by law: (a) For any filing that a person requests the administrator to complete within 1 hour on the same day as the day of the request, $1,000.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. (b) For any filing that a person requests the administrator to complete within 2 hours on the same day as the day of the request, $500.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. (c) Except for a filing request under subdivision (a) or (b), for the filing of any formation or qualification document that a person requests the administrator to complete on the same day as the day of the request, $100.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. (d) Except for a filing request under subdivision (a) or (b), for the filing of any other document concerning an existing domestic corporation or a qualified foreign corporation that a person requests the administrator to complete on the same day as the day of the request, $200.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. (e) For the filing of any formation or qualification document that a person requests the administrator to complete within 24 hours of the time after the administrator receives the request, $50.00. (f) For the filing of any other document concerning an existing domestic corporation or a qualified foreign corporation that a person requests the administrator to complete within 24 hours of the time after the administrator receives the request, $100.00. Sec. 202. The articles of incorporation shall must contain all of the following: (a) The name of the corporation. (b) The purposes for which the corporation is formed. All of the following apply for purposes of this subdivision: (i) Except as otherwise provided in subparagraph (ii) or (iii), it is a sufficient compliance with this subdivision to state substantially, alone or with specifically enumerated purposes, that the corporation may engage in any activity within the purposes for which corporations may be formed under the business corporation act, and all activities shall must by the statement be considered within the purposes of the corporation, subject to expressed limitations. (ii) Any corporation that proposes to conduct educational purposes shall state the purposes and shall comply with all requirements of sections 170 to 177 of 1931 PA 327, MCL 450.170 to 450.177. (iii) A professional corporation shall comply with section 283(2) and (3). (iv) The purposes of a benefit corporation must comply with section 953, but a benefit corporation is not required to state its general public benefit purpose in the articles of incorporation. (c) The aggregate number of shares that the corporation has authority to issue. (d) If the shares are, or are to be, divided into classes, or into classes and series, the designation of each class and series, the number of shares in each class and series, and a statement of the relative rights, preferences and limitations of the shares of each class and series, to the extent that the designations, numbers, relative rights, preferences, and limitations have been determined. (e) If the shares are to be designated and issued in 1 or more classes or series, a statement of any authority vested in the board to designate and issue shares in 1 or more classes or series, and to determine or change for any class or series its designation, number of shares, relative rights, preferences and limitations. (f) Except as otherwise provided in section 611(2)(c), the street address, and the mailing address if different from the street address, of the corporation's initial registered office and the name of the corporation's initial resident agent at that address. (g) The names and addresses of the incorporators. (h) The duration of the corporation if other than perpetual. Sec. 211. (1) Except as otherwise provided in chapter 2A for a professional corporation and in subsection (2) for a benefit corporation, the corporate name of a domestic corporation shall must contain the word "corporation", "company", "incorporated", or "limited", or shall must contain 1 of the following abbreviations: corp., co., inc., or ltd., with or without periods. (2) The corporate name of a benefit corporation may contain the words "benefit corporation" or "benefit company" or contain the initials "B.C.", with or without periods. A benefit corporation that includes the words "benefit corporation" or "benefit company" or contains the initials "B.C.", with or without periods, in its corporate name does not have to comply with subsection (1). Sec. 745. (1) A domestic corporation, except a benefit corporation, may convert into a business organization if all of the following requirements are satisfied: (a) The conversion is permitted by the law that will govern the internal affairs of the business organization after conversion and the surviving business organization complies with that law in converting. (b) Unless subdivision (d) applies, the board of the domestic corporation proposing to convert adopts a plan of conversion that includes all of the following: (i) The name of the domestic corporation, the name of the business organization into which the domestic corporation is converting, the type of business organization into which the domestic corporation is converting, identification of the statute that will govern the internal affairs of the surviving business organization, the street address of the surviving business organization, the street address of the domestic corporation if different from the street address of the surviving business organization, and the principal place of business of the surviving business organization. (ii) For the domestic corporation, the designation and number of outstanding shares of each class and series, specifying the classes and series entitled to vote, each class and series entitled to vote as a class, and, if the number of shares is subject to change before the effective date of the conversion, the manner in which the change may occur. (iii) The terms and conditions of the proposed conversion, including the manner and basis of converting the shares into ownership interests or obligations of the surviving business organization, into cash, into other consideration that may include ownership interests or obligations of an entity that is not a party to the conversion, or into a combination of cash and other consideration. (iv) The terms and conditions of the organizational documents that are to govern the surviving business organization. (v) Any other provisions with respect to the proposed conversion that the board considers necessary or desirable. (c) If the board adopts the plan of conversion under subdivision (b), the plan of conversion is submitted for approval in the same manner required for a merger under section 703a(2), including the procedures pertaining to dissenters dissenters' rights if any shareholder has the right to dissent under section 762. (d) If the domestic corporation has not commenced business, has not issued any shares, and has not elected a board, subdivisions (b) and (c) do not apply and the incorporators may approve of the conversion of the corporation into a business organization by unanimous consent. To effect the conversion, the majority of the incorporators must execute and file a certificate of conversion under subdivision (e). (e) After the plan of conversion is approved under subdivisions (b) and (c) or the conversion is approved under subdivision (d), the domestic corporation files any formation documents required to be filed under the laws governing the internal affairs of the surviving business organization, in the manner prescribed by those laws, and files a certificate of conversion with the administrator. The certificate of conversion shall must include all of the following: (i) Unless subdivision (d) applies, all of the information described in subdivision (b)(i) and (ii) and the manner and basis of converting the shares of the domestic corporation contained in the plan of conversion. (ii) Unless subdivision (d) applies, a statement that the board has adopted the plan of conversion by the board under subdivision (c), or if subdivision (d) applies to the conversion, a statement that the domestic corporation has not commenced business, has not issued any shares, and has not elected a board and that the plan of conversion was approved by the unanimous consent of the incorporators. (iii) A statement that the surviving business organization will furnish a copy of the plan of conversion, on request and without cost, to any shareholder of the domestic corporation. (iv) If approval of the shareholders of the domestic corporation was required, a statement that the plan was approved by the shareholders under subdivision (c). (v) A statement specifying each assumed name of the domestic corporation to be used by the surviving business organization and authorized under section 217(5). (2) Section 131 applies in determining when a certificate of conversion under this section becomes effective. (3) When a conversion under this section takes effect, all of the following apply: (a) The domestic corporation converts into the surviving business organization, and the articles of incorporation of the domestic corporation are canceled. Except as otherwise provided in this section, the surviving business organization is organized under and subject to the organizational laws of the jurisdiction of the surviving business organization as stated in the certificate of conversion. (b) The surviving business organization has all of the liabilities of the domestic corporation. The conversion of the domestic corporation into a business organization under this section shall is not be considered to affect any obligations or liabilities of the domestic corporation incurred before the conversion or the personal liability of any person incurred before the conversion, and the conversion shall is not be considered to affect the choice of law applicable to the domestic corporation with respect to matters arising before the conversion. (c) The title to all real estate and other property and rights owned by the domestic corporation remain vested in the surviving business organization without reversion or impairment. The rights, privileges, powers, and interests in property of the domestic corporation, as well as the debts, liabilities, and duties of the domestic corporation, shall are not be considered, as a consequence of the conversion, to have been transferred to the surviving business organization to which the domestic corporation has converted for any purpose of the laws of this state. (d) The surviving business organization may use the name and the assumed names of the domestic corporation if the filings required under section 217(5) or any other applicable statute are made and the laws regarding use and form of names are followed. (e) A proceeding pending against the domestic corporation may be continued as if the conversion had not occurred, or the surviving business organization may be substituted in the proceeding for the domestic corporation. (f) The surviving business organization is considered to be the same entity that existed before the conversion and is considered to be organized on the date that the domestic corporation was originally incorporated. (g) The shares of the domestic corporation that were to be converted into ownership interests or obligations of the surviving business organization or into cash or other property are converted. (h) Unless otherwise provided in a plan of conversion adopted in accordance with this section, the domestic corporation is not required to wind up its affairs or pay its liabilities and distribute its assets on account of the conversion, and the conversion does not constitute a dissolution of the domestic corporation. (4) If the surviving business organization of a conversion under this section is a foreign business organization, it is subject to the laws of this state pertaining to the transaction of business in this state if it transacts business in this state. The surviving business organization is liable, and is subject to service of process in a proceeding in this state, for the enforcement of an obligation of the domestic corporation, and in a proceeding for the enforcement of a right of a dissenting shareholder of the domestic corporation against the surviving business organization. (5) As used in this section and section 746, "business organization" and "entity" mean those terms as defined in section 736(1). Sec. 746. (1) A business organization may convert into a domestic corporation, except a benefit corporation, if all of the following requirements are satisfied: (a) The conversion is permitted by the law that governs the internal affairs of the business organization and the business organization complies with that law in converting. (b) If a plan of conversion is adopted by the business organization, the plan of conversion is submitted for approval in the manner required by the law governing the internal affairs of that business organization. (c) After the conversion is approved in accordance with the law that governs the internal affairs of the business organization, the business organization files a certificate of conversion with the administrator. The certificate of conversion shall must include all of the following: (i) The name of the business organization, the type of business organization that is converting, identification of the statute that governs the internal affairs of the business organization, the name of the surviving domestic corporation into which the business organization is converting, the street address of the surviving domestic corporation, and the principal place of business of the surviving domestic corporation. (ii) A statement that the business organization has, in connection with the conversion, complied with the law that governs the internal affairs of the business organization. (iii) A statement specifying each assumed name of the business organization to be used by the surviving domestic corporation and authorized under section 217(6). (iv) Articles of incorporation for the surviving domestic corporation that meet all of the requirements of this act applicable to articles of incorporation. (2) Section 131 applies in determining when a certificate of conversion under this section becomes effective. (3) When a conversion under this section takes effect, all of the following apply: (a) The business organization converts into the surviving domestic corporation. Except as otherwise provided in this section, the surviving domestic corporation is organized under and subject to this act. (b) The surviving domestic corporation has all of the liabilities of the business organization. The conversion of the business organization into a domestic corporation under this section shall is not be considered to affect any obligations or liabilities of the business organization incurred before the conversion or the personal liability of any person incurred before the conversion, and the conversion shall is not be considered to affect the choice of law applicable to the business organization with respect to matters arising before the conversion. (c) The title to all real estate and other property and rights owned by the business organization remain vested in the surviving domestic corporation without reversion or impairment. The rights, privileges, powers, and interests in property of the business organization, as well as the debts, liabilities, and duties of the business organization, shall are not be considered, as a consequence of the conversion, to have been transferred to the surviving domestic corporation to which the business organization has converted for any purpose of the laws of this state. (d) The surviving domestic corporation may use the name and the assumed names of the business organization if the filings required under section 217(6) or any other applicable statute are made and the laws regarding use and form of names are followed. (e) A proceeding pending against the business organization may be continued as if the conversion had not occurred, or the surviving domestic corporation may be substituted in the proceeding for the business organization. (f) The surviving domestic corporation is considered to be the same entity that existed before the conversion and is considered to be organized on the date that the business organization was originally organized. (g) The ownership interests of the business organization that were to be converted into shares or obligations of the surviving domestic corporation or into cash or other property are converted. (h) Unless otherwise provided under the law that governs the internal affairs of the business organization, the business organization is not required to wind up its affairs or pay its liabilities and distribute its assets on account of the conversion, and the conversion does not constitute a dissolution of the business organization. Sec. 762. (1) A shareholder is entitled to dissent from, and obtain payment of the fair value of his, her, or its the shareholder's shares in the event of, any of the following corporate actions: (a) Consummation of a plan of merger to which the corporation is a party if any of the following are met: (i) Shareholder approval is required for the merger under section 703a or 736(5) or the articles of incorporation and the shareholder is entitled to vote on the merger. (ii) Shareholder approval would be required if section 703a(3) did not apply and the shareholder is a shareholder on the date of the offer under section 703a(3). (iii) The corporation is a subsidiary that is merged with its parent under section 711. (b) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if either of the following are met: (i) The shareholder is entitled to vote on the plan. (ii) The shareholder would be entitled to vote on the plan if section 703a(3) did not apply and the shareholder is a shareholder on the date of the offer under section 703a(3). (c) Consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to in accordance with a court order. (d) Consummation of a plan of conversion to which the corporation is a party as the corporation that is being converted, if the shareholder is entitled to vote on the plan. However, any rights provided under this section are not available if that corporation is converted into a foreign corporation and the shareholder receives shares that have terms as favorable to the shareholder in all material respects, and represent at least the same percentage interest of the total voting rights of the outstanding shares of the corporation, as the shares held by the shareholder before the conversion. (e) An amendment of the articles of incorporation that creates a right to dissent under section 621. (f) A transaction that creates a right to dissent under section 754. (g) An amendment to the articles of incorporation of a benefit corporation giving rise to a right to dissent under section 953. (h) Consummation of a plan of merger or share exchange giving rise to a right to dissent under section 955. (i) (g) Any corporate action taken pursuant to in accordance with a shareholder vote to the extent that the articles of incorporation, bylaws, or a resolution of the board provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares. (2) Unless otherwise provided in the articles of incorporation, bylaws, or a resolution of the board, a shareholder may not dissent from any of the following: (a) Any corporate action set forth in subsection (1)(a) to (f) as to shares that are listed on a national securities exchange on the record date fixed to vote on the corporate action or on the date the resolution of the parent corporation's board is adopted in the case of a merger under section 711 that does not require a shareholder vote under section 713. For purposes of As used in this subdivision, "national securities exchange" includes the NASDAQ Global Select Market and the NASDAQ Global Market, but does not include the NASDAQ Capital Market, formerly known as the NASDAQ SmallCap Market. (b) A transaction described in subsection (1)(a) in which shareholders receive cash, shares that satisfy the requirements of subdivision (a) on the effective date of the merger, or any combination of cash and those shares. (c) A transaction described in subsection (1)(b) in which shareholders receive cash, shares that satisfy the requirements of subdivision (a) on the effective date of the share exchange, or any combination of cash and those shares. (d) A transaction described in subsection (1)(c) that is conducted pursuant to in accordance with a plan of dissolution that provides for distribution of substantially all of the corporation's net assets to shareholders in accordance with their respective interests within 1 year after the date of closing of the transaction, if the transaction is for cash, shares that satisfy the requirements of subdivision (a) on the date of closing, or any combination of cash and those shares. (e) A transaction described in subsection (1)(d) in which shareholders receive cash, shares that satisfy the requirements of subdivision (a) on the effective date of the conversion, or any combination of cash and those shares. (3) A shareholder that is entitled to dissent and obtain payment for shares under subsection (1)(a) to (f) may not challenge the corporate action that creates that entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation. (4) A shareholder that exercises a right to dissent and seek seeks payment for shares under subsection (1)(g) (1)(i) may not challenge the corporate action that creates that entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation. CHAPTER 9A BENEFIT CORPORATIONS Sec. 951. (1) As used in this chapter: (a) "Benefit enforcement proceeding" means a claim asserted or action brought directly by a benefit corporation, or derivatively on behalf of a benefit corporation, against a director or officer for either of the following: (i) A failure to pursue the general public benefit purpose of the benefit corporation or any specific public benefit purpose set forth in the articles of incorporation of the benefit corporation. (ii) A violation of a duty or standard of conduct under this chapter. (b) "General public benefit" means a material positive impact on society and the environment, taken as a whole, as measured by a third-party standard, from the business and operations of a benefit corporation. (c) "Minimum status vote" means an authorization or approval of a corporate action by the shareholders of a benefit corporation that meets all of the following: (i) The shareholder approval or vote requirements of this act. (ii) Subject to subparagraph (iii), any shareholder approval or vote requirements included in any provisions of the articles of incorporation. (iii) The shareholders of every class or series are entitled to vote on the corporate action regardless of a limitation stated in the articles of incorporation or bylaws on the voting rights of any class or series. (iv) The corporate action is approved by vote of the shareholders of each class or series entitled to cast at least 2/3 of the votes that all shareholders of the class or series are entitled to cast on the action. (d) "Specific public benefit" includes, but is not limited to, any of the following: (i) Providing low-income or underserved individuals or communities with beneficial products or services. (ii) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business. (iii) Preserving the environment. (iv) Improving human health. (v) Promoting the arts, sciences, or advancement of knowledge. (vi) Increasing the flow of capital to entities that have a public benefit purpose. (vii) Conferring any other particular benefit on society or the environment. (e) "Subsidiary" means an entity in which a person owns beneficially or of record 50% or more of the outstanding equity interests. For purposes of determining a person's ownership percentage under this subdivision, any outstanding rights to acquire equity interests in an entity are considered outstanding equity interests in that entity. (f) "Third-party standard" means a standard for defining, reporting, and assessing overall corporate social and environmental performance that is all of the following: (i) Comprehensive, in that it assesses the effect of the business and its operations on the interests listed in section 957(1)(a)(ii) to (v). (ii) Developed by an organization that is independent of the benefit corporation and satisfies the following requirements: (A) Not more than 1/3 of the members of the governing body of the organization are representatives of either of the following: (I) An association of businesses operating in a specific industry if the performance of the member businesses is measured by the standard. (II) Businesses whose performance is measured by the standard. (B) The organization is not materially financed by an association or business described in sub-subparagraph (A). (iii) Credible, because the standard is developed by a person that meets both of the following: (A) The person has access to necessary expertise to assess overall corporate social and environmental performance. (B) The person uses a balanced multistakeholder approach that includes a public comment period of at least 30 days to develop the standard. (iv) Transparent, because all of the following are publicly available: (A) The criteria considered in the standard when measuring the overall social and environmental performance of a business, and the relative weightings of those criteria. (B) The following information about the development and revision of the standard: (I) The identity of the directors, officers, any material owners, and the governing body of the organization that developed and controls revisions to the standard. (II) The process by which revisions to the standard and changes to the membership of the governing body are made. (III) An accounting of the sources of financial support for the organization, with sufficient detail to disclose any relationships that could reasonably be considered to present a potential conflict of interest. (2) This chapter does not apply to any corporation that is not a benefit corporation or to a corporation that terminates its status as a benefit corporation under section 953(4). (3) If there is a conflict between a specific provision of this chapter and a general provision of this act, the provision of this chapter applies with respect to a benefit corporation. Sec. 953. (1) A domestic corporation that meets either of the following is a benefit corporation and subject to this chapter: (a) The corporation is formed under this act. (b) The articles of incorporation of the corporation state that it is a benefit corporation. However, an amendment to the articles of incorporation to include the statement described in this subdivision is not effective unless it is adopted by a minimum status vote. A shareholder that does not vote for or consent in writing to the amendment may dissent under section 762 and receive payment for the shares under section 762. (2) In addition to the purposes described in section 202(b), the purposes of a benefit corporation may also include 1 or more specific public benefits identified in the articles of incorporation, but the identification of a specific public benefit under this subsection does not limit the obligation of a benefit corporation to create general public benefit. (3) An amendment to the articles of incorporation of a benefit corporation to change the purposes of the corporation by adding, amending, or deleting 1 or more specific public benefits is not effective unless it is adopted by a minimum status vote. A shareholder that does not vote for or consent in writing to the amendment may dissent under section 762 and receive payment for the shares under section 762. (4) A benefit corporation may terminate its status as a benefit corporation by amending its articles of incorporation to remove the provisions described in this section. However, each of the following applies to an amendment to the articles of incorporation described in this subsection: (a) The amendment is not effective unless it is adopted by a minimum status vote. (b) A shareholder that does not vote for or consent in writing to the amendment may dissent under section 762 and receive payment for the shares under section 762. Sec. 955. (1) In addition to the requirements of chapter 7, if a domestic corporation that is not a benefit corporation is a constituent corporation in a merger or an exchanging corporation in a share exchange, and the surviving or acquiring corporation will be a benefit corporation under the plan of merger or share exchange, the plan must be approved by a minimum status vote of that constituent or exchanging corporation. (2) In addition to the requirements of chapter 7, a plan of merger or share exchange that would have the effect of terminating the status of a domestic corporation as a benefit corporation must be approved by a minimum status vote of that corporation. (3) A shareholder of a corporation that is not a benefit corporation may dissent under section 762 and receive payment for the shares under section 762 if the shareholder did not vote for or consent in writing to a plan of merger or share exchange under subsection (1) and the shareholder held the shares immediately before the effective time of the merger or share exchange. Sec. 957. (1) All of the following apply to the board, committees of the board, and individual directors of a benefit corporation, and to any officer of a benefit corporation who has discretion to act with respect to any matter if it reasonably appears to the officer that the matter may have a material effect on the creation of general public benefit or a specific public benefit by the benefit corporation, in discharging the duties of their respective positions and in considering the best interests of the benefit corporation: (a) They shall consider the effects of any action on all of the following: (i) The shareholders of the benefit corporation. (ii) The employees and workforce of the benefit corporation and its subsidiaries and suppliers. (iii) The interests of customers as beneficiaries of the general public benefit and any specific public benefit included in the purpose of the benefit corporation. (iv) Community and societal considerations, including those of each community where offices or facilities of the benefit corporation and its subsidiaries and suppliers are located. (v) The local and global environment. (vi) The short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests and the general public benefit and any specific public benefit included in the purpose of the benefit corporation may be best served by the continued independence of the benefit corporation. (vii) The ability of the benefit corporation to accomplish general public benefit and any specific public benefit included in the purposes of the benefit corporation. (b) In evaluating a person's proposed acquisition of control of the benefit corporation, they may consider, in addition to the effects of the proposed acquisition on the persons, interests, or factors described in subdivision (a)(i) to (vii), the resources, intent, and conduct of the person seeking to acquire control of the benefit corporation. (c) They may consider any other pertinent factors or the interests of any other group that they consider appropriate. (d) They are not required to give priority to the interests of a particular person or group described in subdivision (a), (b), or (c) over the interests of any other person or group unless the benefit corporation has stated its intention in its articles of incorporation to give priority to interests related to a specific public benefit purpose identified in its articles of incorporation. (2) The consideration of interests and factors by a director or officer of a benefit corporation under subsection (1) in the discharge of the director's or officer's duties does not constitute a violation of section 541a. (3) A director or officer who makes a business judgment in good faith fulfills the director's or officer's duties under this section if the director or officer meets all of the following: (a) Is not interested in the subject of the business judgment. (b) Is informed with respect to the subject of the business judgment to the extent the director or officer reasonably believes to be appropriate under the circumstances. (c) Rationally believes that the business judgment is in the best interests of the benefit corporation. (4) A director of a benefit corporation is not liable for monetary damages to the corporation, the shareholders, or any person that claims to be a beneficiary of a general or specific public benefit for a failure to fulfill a duty arising under this chapter or solely because the director performed duties in compliance with this section. (5) A director or officer of a benefit corporation does not have a duty to a person that is a beneficiary of the general or any specific public benefit purposes of the benefit corporation arising from the status of the person as a beneficiary. (6) Any corporate action taken by a benefit corporation to advance general public benefit or any specific public benefit included in the purpose of the corporation under section 953(2) is presumed to be in the best interests of the benefit corporation. Sec. 959. (1) The duties of any directors and officers of a benefit corporation arising under this chapter, or the general public benefit purpose or any specific public benefit purpose of a benefit corporation organized under this chapter, may be enforced only in a benefit enforcement proceeding under this section. A person shall not bring an action or assert a claim against a benefit corporation or its directors or officers with respect to the duties under this chapter of any directors or officers of the benefit corporation or the general public benefit purpose or any specific public benefit purpose of the benefit corporation organized under this chapter, except in a benefit enforcement proceeding under this section. (2) A benefit enforcement proceeding against a benefit corporation may be commenced or maintained only by 1 of the following: (a) Directly, by the benefit corporation. (b) Derivatively, by any of the following: (i) A shareholder of the benefit corporation that owns beneficially or of record, individually or collectively, as of the date the benefit enforcement proceeding is instituted, either of the following: (A) At least 2% of the corporation's outstanding shares. (B) If the shares of the benefit corporation are listed on a national securities exchange, 2% of the corporation's outstanding shares, or shares that have a market value of $2,000,000.00, whichever is less. (ii) A director of the benefit corporation. (iii) A person or group of persons that owns beneficially or of record 5% or more of the outstanding voting power in the election of directors of an entity of which the benefit corporation is a subsidiary or the right to receive 5% or more of the distributions to shareholders made by an entity of which the benefit corporation is a subsidiary. (iv) Any other person specified in the articles of incorporation or bylaws of the benefit corporation. (3) A benefit corporation is not liable for monetary damages under this chapter for any failure of the benefit corporation to pursue or create general public benefit or a specific public benefit. (4) An action against a director or officer for failure to perform any of the duties imposed under this section must be commenced within 3 years after the cause of action has accrued, or within 2 years after the time when the cause of action is discovered or should reasonably have been discovered by the complainant, whichever occurs first. Enacting section 1. This amendatory act takes effect 90 days after the date it is enacted into law. Enacting section 2. This amendatory act does not take effect unless Senate Bill No. 666 of the 102nd Legislature is enacted into law. |
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| 23 | 23 | | SENATE BILL NO. 667 |
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| 24 | 24 | | |
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| 25 | 25 | | |
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| 26 | 26 | | |
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| 27 | 27 | | A bill to amend 1972 PA 284, entitled |
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| 28 | 28 | | |
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| 29 | 29 | | "Business corporation act," |
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| 30 | 30 | | |
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| 31 | 31 | | by amending sections 105, 106, 131, 202, 211, 745, 746, and 762 (MCL 450.1105, 450.1106, 450.1131, 450.1202, 450.1211, 450.1745, 450.1746, and 450.1762), sections 105, 106, and 211 as amended by 2012 PA 569, sections 131, 202, 746, and 762 as amended by 2018 PA 85, and section 745 as added by 2008 PA 402, and by adding chapter 9A. |
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| 32 | 32 | | |
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| 33 | 33 | | the people of the state of michigan enact: |
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| 34 | 34 | | |
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| 35 | 35 | | Sec. 105. (1) "Administrator" means the chief officer of the department or of any other agency or department authorized by law to administer this act, or his or her the designated representative of the chief officer. |
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| 36 | 36 | | |
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| 37 | 37 | | (2) "Articles of incorporation" includes any of the following: |
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| 38 | 38 | | |
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| 39 | 39 | | (a) The original articles of incorporation or any other instrument filed or issued under any statute to organize a domestic or foreign corporation, as amended, supplemented, or restated by certificates of amendment, merger, conversion, or consolidation or other certificates or instruments filed or issued under any statute. |
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| 40 | 40 | | |
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| 41 | 41 | | (b) A special act or charter creating a domestic or foreign corporation, as amended, supplemented, or restated. |
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| 42 | 42 | | |
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| 43 | 43 | | (3) "Authorized shares" means shares of all classes that a corporation is authorized to issue. |
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| 44 | 44 | | |
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| 45 | 45 | | (4) "Benefit corporation" means a domestic corporation that meets the requirements for being a benefit corporation under chapter 9A and has not terminated its status as a benefit corporation under that chapter. |
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| 46 | 46 | | |
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| 47 | 47 | | (5) (4) "Board" means board of directors or other governing board of a corporation. |
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| 48 | 48 | | |
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| 49 | 49 | | (6) (5) "Bonds" includes secured and unsecured bonds, debentures, and notes. |
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| 50 | 50 | | |
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| 51 | 51 | | Sec. 106. (1) "Corporation" or "domestic corporation" means a corporation formed under this act, or existing on January 1, 1973 and formed under any other statute of this state for a purpose for which a corporation may be formed under this act. The term includes a benefit corporation. |
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| 52 | 52 | | |
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| 53 | 53 | | (2) "Department" means the department of licensing and regulatory affairs. |
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| 54 | 54 | | |
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| 55 | 55 | | (3) "Director" means a member of the board of a corporation. |
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| 56 | 56 | | |
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| 57 | 57 | | (4) "Distribution" means a direct or indirect transfer of money or other property, except the corporation's shares, or the incurrence of indebtedness by the corporation to or for the benefit of its shareholders in respect to the corporation's shares. A distribution may be in the form of a dividend, a purchase, redemption or other acquisition of shares, an issuance of indebtedness, or any other declaration or payment to or for the benefit of the shareholders. |
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| 58 | 58 | | |
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| 59 | 59 | | (5) "Electronic transmission" or "electronically transmitted" means any form of communication that meets all of the following: |
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| 60 | 60 | | |
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| 61 | 61 | | (a) It does not directly involve the physical transmission of paper. |
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| 62 | 62 | | |
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| 63 | 63 | | (b) It creates a record that may be retained and retrieved by the recipient. |
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| 64 | 64 | | |
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| 65 | 65 | | (c) It may be directly reproduced in paper form by the recipient through an automated process. |
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| 66 | 66 | | |
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| 67 | 67 | | Sec. 131. (1) A document that is required or permitted to be filed under this act shall must be submitted by delivering the document to the administrator together with the fees and accompanying documents required by law. The administrator may establish a procedure for accepting delivery of a document submitted under this subsection by facsimile or other electronic transmission. However, by December 31, 2006, the administrator shall establish a procedure for accepting delivery of a document submitted under this subsection by electronic mail or over the internet. Beginning January 1, 2007, the administrator shall accept delivery of documents submitted by electronic mail or over the internet. |
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| 68 | 68 | | |
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| 69 | 69 | | (2) If a document submitted under subsection (1), other than an annual benefit report prepared under section 961, substantially conforms to the requirements of this act, the administrator shall endorse upon it the word "filed" with his or her the administrator's official title and the date of receipt and of filing and shall file and index the document or a photostatic, micrographic, photographic, optical disc media, or other reproduced copy in his or her the administrator's office. If requested at the time of the delivery of the document to his or her the administrator's office, the administrator shall include the hour of filing in the endorsement on the document. |
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| 70 | 70 | | |
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| 71 | 71 | | (3) The administrator may return the original or a copy of a document filed under subsection (2) to the person that submitted it for filing. The administrator shall mark the filing date on the copy or original before returning it or may provide proof of the filing date to the person that submitted the document for filing in another manner determined by the administrator. |
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| 72 | 72 | | |
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| 73 | 73 | | (4) The records and files of the administrator relating to domestic and foreign corporations shall must be open to reasonable inspection by the public. The administrator may maintain records or files in their original form or may maintain records or files in the form of reproductions pursuant to in accordance with the records reproduction act, 1992 PA 116, MCL 24.401 to 24.406, and may destroy the originals of the reproduced documents. |
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| 74 | 74 | | |
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| 75 | 75 | | (5) The administrator may make reproductions of any documents filed under this act or any predecessor act pursuant to in accordance with the records reproduction act, 1992 PA 116, MCL 24.401 to 24.406, and may destroy the originals of the reproduced documents. A reproduced copy of a document certified by the administrator, including a copy sent by facsimile or other electronic transmission, is considered an original document for all purposes and is admissible in evidence in like manner as an original document. |
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| 76 | 76 | | |
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| 77 | 77 | | (6) Except as provided in section 806, a document filed under subsection (2) is effective at the time it is endorsed unless a subsequent effective time, not later than 90 days after the date of delivery, is set forth stated in the document. |
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| 78 | 78 | | |
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| 79 | 79 | | (7) The administrator shall charge 1 of the following nonrefundable fees if expedited filing of a document by the administrator is requested and the administrator shall retain the revenue collected under this subsection and the department shall use it to carry out its duties required by law: |
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| 80 | 80 | | |
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| 81 | 81 | | (a) For any filing that a person requests the administrator to complete within 1 hour on the same day as the day of the request, $1,000.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. |
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| 82 | 82 | | |
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| 83 | 83 | | (b) For any filing that a person requests the administrator to complete within 2 hours on the same day as the day of the request, $500.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. |
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| 84 | 84 | | |
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| 85 | 85 | | (c) Except for a filing request under subdivision (a) or (b), for the filing of any formation or qualification document that a person requests the administrator to complete on the same day as the day of the request, $100.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. |
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| 86 | 86 | | |
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| 87 | 87 | | (d) Except for a filing request under subdivision (a) or (b), for the filing of any other document concerning an existing domestic corporation or a qualified foreign corporation that a person requests the administrator to complete on the same day as the day of the request, $200.00. The department may establish a deadline by which a person must submit a request for filing under this subdivision. |
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| 88 | 88 | | |
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| 89 | 89 | | (e) For the filing of any formation or qualification document that a person requests the administrator to complete within 24 hours of the time after the administrator receives the request, $50.00. |
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| 90 | 90 | | |
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| 91 | 91 | | (f) For the filing of any other document concerning an existing domestic corporation or a qualified foreign corporation that a person requests the administrator to complete within 24 hours of the time after the administrator receives the request, $100.00. |
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| 92 | 92 | | |
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| 93 | 93 | | Sec. 202. The articles of incorporation shall must contain all of the following: |
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| 94 | 94 | | |
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| 95 | 95 | | (a) The name of the corporation. |
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| 96 | 96 | | |
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| 97 | 97 | | (b) The purposes for which the corporation is formed. All of the following apply for purposes of this subdivision: |
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| 98 | 98 | | |
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| 99 | 99 | | (i) Except as otherwise provided in subparagraph (ii) or (iii), it is a sufficient compliance with this subdivision to state substantially, alone or with specifically enumerated purposes, that the corporation may engage in any activity within the purposes for which corporations may be formed under the business corporation act, and all activities shall must by the statement be considered within the purposes of the corporation, subject to expressed limitations. |
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| 100 | 100 | | |
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| 101 | 101 | | (ii) Any corporation that proposes to conduct educational purposes shall state the purposes and shall comply with all requirements of sections 170 to 177 of 1931 PA 327, MCL 450.170 to 450.177. |
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| 102 | 102 | | |
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| 103 | 103 | | (iii) A professional corporation shall comply with section 283(2) and (3). |
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| 104 | 104 | | |
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| 105 | 105 | | (iv) The purposes of a benefit corporation must comply with section 953, but a benefit corporation is not required to state its general public benefit purpose in the articles of incorporation. |
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| 106 | 106 | | |
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| 107 | 107 | | (c) The aggregate number of shares that the corporation has authority to issue. |
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| 108 | 108 | | |
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| 109 | 109 | | (d) If the shares are, or are to be, divided into classes, or into classes and series, the designation of each class and series, the number of shares in each class and series, and a statement of the relative rights, preferences and limitations of the shares of each class and series, to the extent that the designations, numbers, relative rights, preferences, and limitations have been determined. |
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| 110 | 110 | | |
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| 111 | 111 | | (e) If the shares are to be designated and issued in 1 or more classes or series, a statement of any authority vested in the board to designate and issue shares in 1 or more classes or series, and to determine or change for any class or series its designation, number of shares, relative rights, preferences and limitations. |
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| 112 | 112 | | |
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| 113 | 113 | | (f) Except as otherwise provided in section 611(2)(c), the street address, and the mailing address if different from the street address, of the corporation's initial registered office and the name of the corporation's initial resident agent at that address. |
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| 114 | 114 | | |
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| 115 | 115 | | (g) The names and addresses of the incorporators. |
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| 116 | 116 | | |
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| 117 | 117 | | (h) The duration of the corporation if other than perpetual. |
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| 118 | 118 | | |
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| 119 | 119 | | Sec. 211. (1) Except as otherwise provided in chapter 2A for a professional corporation and in subsection (2) for a benefit corporation, the corporate name of a domestic corporation shall must contain the word "corporation", "company", "incorporated", or "limited", or shall must contain 1 of the following abbreviations: corp., co., inc., or ltd., with or without periods. |
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| 120 | 120 | | |
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| 121 | 121 | | (2) The corporate name of a benefit corporation may contain the words "benefit corporation" or "benefit company" or contain the initials "B.C.", with or without periods. A benefit corporation that includes the words "benefit corporation" or "benefit company" or contains the initials "B.C.", with or without periods, in its corporate name does not have to comply with subsection (1). |
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| 122 | 122 | | |
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| 123 | 123 | | Sec. 745. (1) A domestic corporation, except a benefit corporation, may convert into a business organization if all of the following requirements are satisfied: |
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| 124 | 124 | | |
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| 125 | 125 | | (a) The conversion is permitted by the law that will govern the internal affairs of the business organization after conversion and the surviving business organization complies with that law in converting. |
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| 126 | 126 | | |
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| 127 | 127 | | (b) Unless subdivision (d) applies, the board of the domestic corporation proposing to convert adopts a plan of conversion that includes all of the following: |
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| 128 | 128 | | |
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| 129 | 129 | | (i) The name of the domestic corporation, the name of the business organization into which the domestic corporation is converting, the type of business organization into which the domestic corporation is converting, identification of the statute that will govern the internal affairs of the surviving business organization, the street address of the surviving business organization, the street address of the domestic corporation if different from the street address of the surviving business organization, and the principal place of business of the surviving business organization. |
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| 130 | 130 | | |
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| 131 | 131 | | (ii) For the domestic corporation, the designation and number of outstanding shares of each class and series, specifying the classes and series entitled to vote, each class and series entitled to vote as a class, and, if the number of shares is subject to change before the effective date of the conversion, the manner in which the change may occur. |
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| 132 | 132 | | |
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| 133 | 133 | | (iii) The terms and conditions of the proposed conversion, including the manner and basis of converting the shares into ownership interests or obligations of the surviving business organization, into cash, into other consideration that may include ownership interests or obligations of an entity that is not a party to the conversion, or into a combination of cash and other consideration. |
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| 134 | 134 | | |
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| 135 | 135 | | (iv) The terms and conditions of the organizational documents that are to govern the surviving business organization. |
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| 136 | 136 | | |
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| 137 | 137 | | (v) Any other provisions with respect to the proposed conversion that the board considers necessary or desirable. |
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| 138 | 138 | | |
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| 139 | 139 | | (c) If the board adopts the plan of conversion under subdivision (b), the plan of conversion is submitted for approval in the same manner required for a merger under section 703a(2), including the procedures pertaining to dissenters dissenters' rights if any shareholder has the right to dissent under section 762. |
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| 140 | 140 | | |
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| 141 | 141 | | (d) If the domestic corporation has not commenced business, has not issued any shares, and has not elected a board, subdivisions (b) and (c) do not apply and the incorporators may approve of the conversion of the corporation into a business organization by unanimous consent. To effect the conversion, the majority of the incorporators must execute and file a certificate of conversion under subdivision (e). |
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| 142 | 142 | | |
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| 143 | 143 | | (e) After the plan of conversion is approved under subdivisions (b) and (c) or the conversion is approved under subdivision (d), the domestic corporation files any formation documents required to be filed under the laws governing the internal affairs of the surviving business organization, in the manner prescribed by those laws, and files a certificate of conversion with the administrator. The certificate of conversion shall must include all of the following: |
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| 144 | 144 | | |
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| 145 | 145 | | (i) Unless subdivision (d) applies, all of the information described in subdivision (b)(i) and (ii) and the manner and basis of converting the shares of the domestic corporation contained in the plan of conversion. |
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| 146 | 146 | | |
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| 147 | 147 | | (ii) Unless subdivision (d) applies, a statement that the board has adopted the plan of conversion by the board under subdivision (c), or if subdivision (d) applies to the conversion, a statement that the domestic corporation has not commenced business, has not issued any shares, and has not elected a board and that the plan of conversion was approved by the unanimous consent of the incorporators. |
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| 148 | 148 | | |
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| 149 | 149 | | (iii) A statement that the surviving business organization will furnish a copy of the plan of conversion, on request and without cost, to any shareholder of the domestic corporation. |
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| 150 | 150 | | |
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| 151 | 151 | | (iv) If approval of the shareholders of the domestic corporation was required, a statement that the plan was approved by the shareholders under subdivision (c). |
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| 152 | 152 | | |
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| 153 | 153 | | (v) A statement specifying each assumed name of the domestic corporation to be used by the surviving business organization and authorized under section 217(5). |
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| 154 | 154 | | |
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| 155 | 155 | | (2) Section 131 applies in determining when a certificate of conversion under this section becomes effective. |
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| 156 | 156 | | |
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| 157 | 157 | | (3) When a conversion under this section takes effect, all of the following apply: |
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| 158 | 158 | | |
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| 159 | 159 | | (a) The domestic corporation converts into the surviving business organization, and the articles of incorporation of the domestic corporation are canceled. Except as otherwise provided in this section, the surviving business organization is organized under and subject to the organizational laws of the jurisdiction of the surviving business organization as stated in the certificate of conversion. |
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| 160 | 160 | | |
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| 161 | 161 | | (b) The surviving business organization has all of the liabilities of the domestic corporation. The conversion of the domestic corporation into a business organization under this section shall is not be considered to affect any obligations or liabilities of the domestic corporation incurred before the conversion or the personal liability of any person incurred before the conversion, and the conversion shall is not be considered to affect the choice of law applicable to the domestic corporation with respect to matters arising before the conversion. |
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| 162 | 162 | | |
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| 163 | 163 | | (c) The title to all real estate and other property and rights owned by the domestic corporation remain vested in the surviving business organization without reversion or impairment. The rights, privileges, powers, and interests in property of the domestic corporation, as well as the debts, liabilities, and duties of the domestic corporation, shall are not be considered, as a consequence of the conversion, to have been transferred to the surviving business organization to which the domestic corporation has converted for any purpose of the laws of this state. |
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| 164 | 164 | | |
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| 165 | 165 | | (d) The surviving business organization may use the name and the assumed names of the domestic corporation if the filings required under section 217(5) or any other applicable statute are made and the laws regarding use and form of names are followed. |
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| 166 | 166 | | |
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| 167 | 167 | | (e) A proceeding pending against the domestic corporation may be continued as if the conversion had not occurred, or the surviving business organization may be substituted in the proceeding for the domestic corporation. |
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| 168 | 168 | | |
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| 169 | 169 | | (f) The surviving business organization is considered to be the same entity that existed before the conversion and is considered to be organized on the date that the domestic corporation was originally incorporated. |
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| 170 | 170 | | |
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| 171 | 171 | | (g) The shares of the domestic corporation that were to be converted into ownership interests or obligations of the surviving business organization or into cash or other property are converted. |
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| 172 | 172 | | |
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| 173 | 173 | | (h) Unless otherwise provided in a plan of conversion adopted in accordance with this section, the domestic corporation is not required to wind up its affairs or pay its liabilities and distribute its assets on account of the conversion, and the conversion does not constitute a dissolution of the domestic corporation. |
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| 174 | 174 | | |
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| 175 | 175 | | (4) If the surviving business organization of a conversion under this section is a foreign business organization, it is subject to the laws of this state pertaining to the transaction of business in this state if it transacts business in this state. The surviving business organization is liable, and is subject to service of process in a proceeding in this state, for the enforcement of an obligation of the domestic corporation, and in a proceeding for the enforcement of a right of a dissenting shareholder of the domestic corporation against the surviving business organization. |
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| 176 | 176 | | |
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| 177 | 177 | | (5) As used in this section and section 746, "business organization" and "entity" mean those terms as defined in section 736(1). |
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| 178 | 178 | | |
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| 179 | 179 | | Sec. 746. (1) A business organization may convert into a domestic corporation, except a benefit corporation, if all of the following requirements are satisfied: |
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| 180 | 180 | | |
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| 181 | 181 | | (a) The conversion is permitted by the law that governs the internal affairs of the business organization and the business organization complies with that law in converting. |
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| 182 | 182 | | |
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| 183 | 183 | | (b) If a plan of conversion is adopted by the business organization, the plan of conversion is submitted for approval in the manner required by the law governing the internal affairs of that business organization. |
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| 184 | 184 | | |
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| 185 | 185 | | (c) After the conversion is approved in accordance with the law that governs the internal affairs of the business organization, the business organization files a certificate of conversion with the administrator. The certificate of conversion shall must include all of the following: |
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| 186 | 186 | | |
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| 187 | 187 | | (i) The name of the business organization, the type of business organization that is converting, identification of the statute that governs the internal affairs of the business organization, the name of the surviving domestic corporation into which the business organization is converting, the street address of the surviving domestic corporation, and the principal place of business of the surviving domestic corporation. |
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| 188 | 188 | | |
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| 189 | 189 | | (ii) A statement that the business organization has, in connection with the conversion, complied with the law that governs the internal affairs of the business organization. |
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| 190 | 190 | | |
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| 191 | 191 | | (iii) A statement specifying each assumed name of the business organization to be used by the surviving domestic corporation and authorized under section 217(6). |
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| 192 | 192 | | |
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| 193 | 193 | | (iv) Articles of incorporation for the surviving domestic corporation that meet all of the requirements of this act applicable to articles of incorporation. |
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| 194 | 194 | | |
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| 195 | 195 | | (2) Section 131 applies in determining when a certificate of conversion under this section becomes effective. |
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| 196 | 196 | | |
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| 197 | 197 | | (3) When a conversion under this section takes effect, all of the following apply: |
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| 198 | 198 | | |
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| 199 | 199 | | (a) The business organization converts into the surviving domestic corporation. Except as otherwise provided in this section, the surviving domestic corporation is organized under and subject to this act. |
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| 200 | 200 | | |
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| 201 | 201 | | (b) The surviving domestic corporation has all of the liabilities of the business organization. The conversion of the business organization into a domestic corporation under this section shall is not be considered to affect any obligations or liabilities of the business organization incurred before the conversion or the personal liability of any person incurred before the conversion, and the conversion shall is not be considered to affect the choice of law applicable to the business organization with respect to matters arising before the conversion. |
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| 202 | 202 | | |
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| 203 | 203 | | (c) The title to all real estate and other property and rights owned by the business organization remain vested in the surviving domestic corporation without reversion or impairment. The rights, privileges, powers, and interests in property of the business organization, as well as the debts, liabilities, and duties of the business organization, shall are not be considered, as a consequence of the conversion, to have been transferred to the surviving domestic corporation to which the business organization has converted for any purpose of the laws of this state. |
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| 204 | 204 | | |
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| 205 | 205 | | (d) The surviving domestic corporation may use the name and the assumed names of the business organization if the filings required under section 217(6) or any other applicable statute are made and the laws regarding use and form of names are followed. |
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| 206 | 206 | | |
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| 207 | 207 | | (e) A proceeding pending against the business organization may be continued as if the conversion had not occurred, or the surviving domestic corporation may be substituted in the proceeding for the business organization. |
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| 208 | 208 | | |
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| 209 | 209 | | (f) The surviving domestic corporation is considered to be the same entity that existed before the conversion and is considered to be organized on the date that the business organization was originally organized. |
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| 210 | 210 | | |
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| 211 | 211 | | (g) The ownership interests of the business organization that were to be converted into shares or obligations of the surviving domestic corporation or into cash or other property are converted. |
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| 212 | 212 | | |
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| 213 | 213 | | (h) Unless otherwise provided under the law that governs the internal affairs of the business organization, the business organization is not required to wind up its affairs or pay its liabilities and distribute its assets on account of the conversion, and the conversion does not constitute a dissolution of the business organization. |
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| 214 | 214 | | |
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| 215 | 215 | | Sec. 762. (1) A shareholder is entitled to dissent from, and obtain payment of the fair value of his, her, or its the shareholder's shares in the event of, any of the following corporate actions: |
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| 216 | 216 | | |
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| 217 | 217 | | (a) Consummation of a plan of merger to which the corporation is a party if any of the following are met: |
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| 218 | 218 | | |
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| 219 | 219 | | (i) Shareholder approval is required for the merger under section 703a or 736(5) or the articles of incorporation and the shareholder is entitled to vote on the merger. |
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| 220 | 220 | | |
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| 221 | 221 | | (ii) Shareholder approval would be required if section 703a(3) did not apply and the shareholder is a shareholder on the date of the offer under section 703a(3). |
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| 222 | 222 | | |
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| 223 | 223 | | (iii) The corporation is a subsidiary that is merged with its parent under section 711. |
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| 224 | 224 | | |
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| 225 | 225 | | (b) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if either of the following are met: |
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| 226 | 226 | | |
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| 227 | 227 | | (i) The shareholder is entitled to vote on the plan. |
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| 228 | 228 | | |
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| 229 | 229 | | (ii) The shareholder would be entitled to vote on the plan if section 703a(3) did not apply and the shareholder is a shareholder on the date of the offer under section 703a(3). |
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| 230 | 230 | | |
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| 231 | 231 | | (c) Consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to in accordance with a court order. |
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| 232 | 232 | | |
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| 233 | 233 | | (d) Consummation of a plan of conversion to which the corporation is a party as the corporation that is being converted, if the shareholder is entitled to vote on the plan. However, any rights provided under this section are not available if that corporation is converted into a foreign corporation and the shareholder receives shares that have terms as favorable to the shareholder in all material respects, and represent at least the same percentage interest of the total voting rights of the outstanding shares of the corporation, as the shares held by the shareholder before the conversion. |
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| 234 | 234 | | |
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| 235 | 235 | | (e) An amendment of the articles of incorporation that creates a right to dissent under section 621. |
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| 236 | 236 | | |
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| 237 | 237 | | (f) A transaction that creates a right to dissent under section 754. |
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| 238 | 238 | | |
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| 239 | 239 | | (g) An amendment to the articles of incorporation of a benefit corporation giving rise to a right to dissent under section 953. |
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| 240 | 240 | | |
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| 241 | 241 | | (h) Consummation of a plan of merger or share exchange giving rise to a right to dissent under section 955. |
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| 242 | 242 | | |
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| 243 | 243 | | (i) (g) Any corporate action taken pursuant to in accordance with a shareholder vote to the extent that the articles of incorporation, bylaws, or a resolution of the board provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares. |
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| 244 | 244 | | |
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| 245 | 245 | | (2) Unless otherwise provided in the articles of incorporation, bylaws, or a resolution of the board, a shareholder may not dissent from any of the following: |
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| 246 | 246 | | |
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| 247 | 247 | | (a) Any corporate action set forth in subsection (1)(a) to (f) as to shares that are listed on a national securities exchange on the record date fixed to vote on the corporate action or on the date the resolution of the parent corporation's board is adopted in the case of a merger under section 711 that does not require a shareholder vote under section 713. For purposes of As used in this subdivision, "national securities exchange" includes the NASDAQ Global Select Market and the NASDAQ Global Market, but does not include the NASDAQ Capital Market, formerly known as the NASDAQ SmallCap Market. |
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| 248 | 248 | | |
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| 249 | 249 | | (b) A transaction described in subsection (1)(a) in which shareholders receive cash, shares that satisfy the requirements of subdivision (a) on the effective date of the merger, or any combination of cash and those shares. |
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| 250 | 250 | | |
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| 251 | 251 | | (c) A transaction described in subsection (1)(b) in which shareholders receive cash, shares that satisfy the requirements of subdivision (a) on the effective date of the share exchange, or any combination of cash and those shares. |
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| 252 | 252 | | |
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| 253 | 253 | | (d) A transaction described in subsection (1)(c) that is conducted pursuant to in accordance with a plan of dissolution that provides for distribution of substantially all of the corporation's net assets to shareholders in accordance with their respective interests within 1 year after the date of closing of the transaction, if the transaction is for cash, shares that satisfy the requirements of subdivision (a) on the date of closing, or any combination of cash and those shares. |
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| 254 | 254 | | |
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| 255 | 255 | | (e) A transaction described in subsection (1)(d) in which shareholders receive cash, shares that satisfy the requirements of subdivision (a) on the effective date of the conversion, or any combination of cash and those shares. |
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| 256 | 256 | | |
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| 257 | 257 | | (3) A shareholder that is entitled to dissent and obtain payment for shares under subsection (1)(a) to (f) may not challenge the corporate action that creates that entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation. |
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| 258 | 258 | | |
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| 259 | 259 | | (4) A shareholder that exercises a right to dissent and seek seeks payment for shares under subsection (1)(g) (1)(i) may not challenge the corporate action that creates that entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation. |
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| 260 | 260 | | |
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| 261 | 261 | | CHAPTER 9A |
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| 262 | 262 | | |
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| 263 | 263 | | BENEFIT CORPORATIONS |
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| 264 | 264 | | |
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| 265 | 265 | | Sec. 951. (1) As used in this chapter: |
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| 266 | 266 | | |
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| 267 | 267 | | (a) "Benefit enforcement proceeding" means a claim asserted or action brought directly by a benefit corporation, or derivatively on behalf of a benefit corporation, against a director or officer for either of the following: |
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| 268 | 268 | | |
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| 269 | 269 | | (i) A failure to pursue the general public benefit purpose of the benefit corporation or any specific public benefit purpose set forth in the articles of incorporation of the benefit corporation. |
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| 270 | 270 | | |
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| 271 | 271 | | (ii) A violation of a duty or standard of conduct under this chapter. |
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| 272 | 272 | | |
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| 273 | 273 | | (b) "General public benefit" means a material positive impact on society and the environment, taken as a whole, as measured by a third-party standard, from the business and operations of a benefit corporation. |
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| 274 | 274 | | |
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| 275 | 275 | | (c) "Minimum status vote" means an authorization or approval of a corporate action by the shareholders of a benefit corporation that meets all of the following: |
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| 276 | 276 | | |
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| 277 | 277 | | (i) The shareholder approval or vote requirements of this act. |
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| 278 | 278 | | |
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| 279 | 279 | | (ii) Subject to subparagraph (iii), any shareholder approval or vote requirements included in any provisions of the articles of incorporation. |
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| 280 | 280 | | |
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| 281 | 281 | | (iii) The shareholders of every class or series are entitled to vote on the corporate action regardless of a limitation stated in the articles of incorporation or bylaws on the voting rights of any class or series. |
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| 282 | 282 | | |
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| 283 | 283 | | (iv) The corporate action is approved by vote of the shareholders of each class or series entitled to cast at least 2/3 of the votes that all shareholders of the class or series are entitled to cast on the action. |
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| 284 | 284 | | |
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| 285 | 285 | | (d) "Specific public benefit" includes, but is not limited to, any of the following: |
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| 286 | 286 | | |
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| 287 | 287 | | (i) Providing low-income or underserved individuals or communities with beneficial products or services. |
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| 288 | 288 | | |
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| 289 | 289 | | (ii) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business. |
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| 290 | 290 | | |
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| 291 | 291 | | (iii) Preserving the environment. |
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| 292 | 292 | | |
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| 293 | 293 | | (iv) Improving human health. |
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| 294 | 294 | | |
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| 295 | 295 | | (v) Promoting the arts, sciences, or advancement of knowledge. |
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| 296 | 296 | | |
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| 297 | 297 | | (vi) Increasing the flow of capital to entities that have a public benefit purpose. |
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| 298 | 298 | | |
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| 299 | 299 | | (vii) Conferring any other particular benefit on society or the environment. |
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| 300 | 300 | | |
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| 301 | 301 | | (e) "Subsidiary" means an entity in which a person owns beneficially or of record 50% or more of the outstanding equity interests. For purposes of determining a person's ownership percentage under this subdivision, any outstanding rights to acquire equity interests in an entity are considered outstanding equity interests in that entity. |
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| 302 | 302 | | |
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| 303 | 303 | | (f) "Third-party standard" means a standard for defining, reporting, and assessing overall corporate social and environmental performance that is all of the following: |
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| 304 | 304 | | |
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| 305 | 305 | | (i) Comprehensive, in that it assesses the effect of the business and its operations on the interests listed in section 957(1)(a)(ii) to (v). |
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| 306 | 306 | | |
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| 307 | 307 | | (ii) Developed by an organization that is independent of the benefit corporation and satisfies the following requirements: |
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| 308 | 308 | | |
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| 309 | 309 | | (A) Not more than 1/3 of the members of the governing body of the organization are representatives of either of the following: |
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| 310 | 310 | | |
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| 311 | 311 | | (I) An association of businesses operating in a specific industry if the performance of the member businesses is measured by the standard. |
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| 312 | 312 | | |
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| 313 | 313 | | (II) Businesses whose performance is measured by the standard. |
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| 314 | 314 | | |
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| 315 | 315 | | (B) The organization is not materially financed by an association or business described in sub-subparagraph (A). |
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| 316 | 316 | | |
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| 317 | 317 | | (iii) Credible, because the standard is developed by a person that meets both of the following: |
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| 318 | 318 | | |
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| 319 | 319 | | (A) The person has access to necessary expertise to assess overall corporate social and environmental performance. |
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| 320 | 320 | | |
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| 321 | 321 | | (B) The person uses a balanced multistakeholder approach that includes a public comment period of at least 30 days to develop the standard. |
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| 322 | 322 | | |
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| 323 | 323 | | (iv) Transparent, because all of the following are publicly available: |
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| 324 | 324 | | |
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| 325 | 325 | | (A) The criteria considered in the standard when measuring the overall social and environmental performance of a business, and the relative weightings of those criteria. |
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| 326 | 326 | | |
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| 327 | 327 | | (B) The following information about the development and revision of the standard: |
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| 328 | 328 | | |
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| 329 | 329 | | (I) The identity of the directors, officers, any material owners, and the governing body of the organization that developed and controls revisions to the standard. |
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| 330 | 330 | | |
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| 331 | 331 | | (II) The process by which revisions to the standard and changes to the membership of the governing body are made. |
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| 332 | 332 | | |
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| 333 | 333 | | (III) An accounting of the sources of financial support for the organization, with sufficient detail to disclose any relationships that could reasonably be considered to present a potential conflict of interest. |
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| 334 | 334 | | |
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| 335 | 335 | | (2) This chapter does not apply to any corporation that is not a benefit corporation or to a corporation that terminates its status as a benefit corporation under section 953(4). |
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| 336 | 336 | | |
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| 337 | 337 | | (3) If there is a conflict between a specific provision of this chapter and a general provision of this act, the provision of this chapter applies with respect to a benefit corporation. |
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| 338 | 338 | | |
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| 339 | 339 | | Sec. 953. (1) A domestic corporation that meets either of the following is a benefit corporation and subject to this chapter: |
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| 340 | 340 | | |
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| 341 | 341 | | (a) The corporation is formed under this act. |
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| 342 | 342 | | |
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| 343 | 343 | | (b) The articles of incorporation of the corporation state that it is a benefit corporation. However, an amendment to the articles of incorporation to include the statement described in this subdivision is not effective unless it is adopted by a minimum status vote. A shareholder that does not vote for or consent in writing to the amendment may dissent under section 762 and receive payment for the shares under section 762. |
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| 344 | 344 | | |
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| 345 | 345 | | (2) In addition to the purposes described in section 202(b), the purposes of a benefit corporation may also include 1 or more specific public benefits identified in the articles of incorporation, but the identification of a specific public benefit under this subsection does not limit the obligation of a benefit corporation to create general public benefit. |
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| 346 | 346 | | |
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| 347 | 347 | | (3) An amendment to the articles of incorporation of a benefit corporation to change the purposes of the corporation by adding, amending, or deleting 1 or more specific public benefits is not effective unless it is adopted by a minimum status vote. A shareholder that does not vote for or consent in writing to the amendment may dissent under section 762 and receive payment for the shares under section 762. |
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| 348 | 348 | | |
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| 349 | 349 | | (4) A benefit corporation may terminate its status as a benefit corporation by amending its articles of incorporation to remove the provisions described in this section. However, each of the following applies to an amendment to the articles of incorporation described in this subsection: |
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| 350 | 350 | | |
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| 351 | 351 | | (a) The amendment is not effective unless it is adopted by a minimum status vote. |
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| 352 | 352 | | |
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| 353 | 353 | | (b) A shareholder that does not vote for or consent in writing to the amendment may dissent under section 762 and receive payment for the shares under section 762. |
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| 354 | 354 | | |
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| 355 | 355 | | Sec. 955. (1) In addition to the requirements of chapter 7, if a domestic corporation that is not a benefit corporation is a constituent corporation in a merger or an exchanging corporation in a share exchange, and the surviving or acquiring corporation will be a benefit corporation under the plan of merger or share exchange, the plan must be approved by a minimum status vote of that constituent or exchanging corporation. |
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| 356 | 356 | | |
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| 357 | 357 | | (2) In addition to the requirements of chapter 7, a plan of merger or share exchange that would have the effect of terminating the status of a domestic corporation as a benefit corporation must be approved by a minimum status vote of that corporation. |
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| 358 | 358 | | |
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| 359 | 359 | | (3) A shareholder of a corporation that is not a benefit corporation may dissent under section 762 and receive payment for the shares under section 762 if the shareholder did not vote for or consent in writing to a plan of merger or share exchange under subsection (1) and the shareholder held the shares immediately before the effective time of the merger or share exchange. |
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| 360 | 360 | | |
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| 361 | 361 | | Sec. 957. (1) All of the following apply to the board, committees of the board, and individual directors of a benefit corporation, and to any officer of a benefit corporation who has discretion to act with respect to any matter if it reasonably appears to the officer that the matter may have a material effect on the creation of general public benefit or a specific public benefit by the benefit corporation, in discharging the duties of their respective positions and in considering the best interests of the benefit corporation: |
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| 362 | 362 | | |
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| 363 | 363 | | (a) They shall consider the effects of any action on all of the following: |
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| 364 | 364 | | |
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| 365 | 365 | | (i) The shareholders of the benefit corporation. |
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| 366 | 366 | | |
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| 367 | 367 | | (ii) The employees and workforce of the benefit corporation and its subsidiaries and suppliers. |
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| 368 | 368 | | |
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| 369 | 369 | | (iii) The interests of customers as beneficiaries of the general public benefit and any specific public benefit included in the purpose of the benefit corporation. |
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| 370 | 370 | | |
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| 371 | 371 | | (iv) Community and societal considerations, including those of each community where offices or facilities of the benefit corporation and its subsidiaries and suppliers are located. |
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| 372 | 372 | | |
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| 373 | 373 | | (v) The local and global environment. |
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| 374 | 374 | | |
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| 375 | 375 | | (vi) The short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests and the general public benefit and any specific public benefit included in the purpose of the benefit corporation may be best served by the continued independence of the benefit corporation. |
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| 376 | 376 | | |
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| 377 | 377 | | (vii) The ability of the benefit corporation to accomplish general public benefit and any specific public benefit included in the purposes of the benefit corporation. |
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| 378 | 378 | | |
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| 379 | 379 | | (b) In evaluating a person's proposed acquisition of control of the benefit corporation, they may consider, in addition to the effects of the proposed acquisition on the persons, interests, or factors described in subdivision (a)(i) to (vii), the resources, intent, and conduct of the person seeking to acquire control of the benefit corporation. |
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| 380 | 380 | | |
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| 381 | 381 | | (c) They may consider any other pertinent factors or the interests of any other group that they consider appropriate. |
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| 382 | 382 | | |
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| 383 | 383 | | (d) They are not required to give priority to the interests of a particular person or group described in subdivision (a), (b), or (c) over the interests of any other person or group unless the benefit corporation has stated its intention in its articles of incorporation to give priority to interests related to a specific public benefit purpose identified in its articles of incorporation. |
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| 384 | 384 | | |
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| 385 | 385 | | (2) The consideration of interests and factors by a director or officer of a benefit corporation under subsection (1) in the discharge of the director's or officer's duties does not constitute a violation of section 541a. |
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| 386 | 386 | | |
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| 387 | 387 | | (3) A director or officer who makes a business judgment in good faith fulfills the director's or officer's duties under this section if the director or officer meets all of the following: |
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| 388 | 388 | | |
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| 389 | 389 | | (a) Is not interested in the subject of the business judgment. |
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| 390 | 390 | | |
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| 391 | 391 | | (b) Is informed with respect to the subject of the business judgment to the extent the director or officer reasonably believes to be appropriate under the circumstances. |
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| 392 | 392 | | |
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| 393 | 393 | | (c) Rationally believes that the business judgment is in the best interests of the benefit corporation. |
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| 394 | 394 | | |
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| 395 | 395 | | (4) A director of a benefit corporation is not liable for monetary damages to the corporation, the shareholders, or any person that claims to be a beneficiary of a general or specific public benefit for a failure to fulfill a duty arising under this chapter or solely because the director performed duties in compliance with this section. |
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| 396 | 396 | | |
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| 397 | 397 | | (5) A director or officer of a benefit corporation does not have a duty to a person that is a beneficiary of the general or any specific public benefit purposes of the benefit corporation arising from the status of the person as a beneficiary. |
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| 398 | 398 | | |
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| 399 | 399 | | (6) Any corporate action taken by a benefit corporation to advance general public benefit or any specific public benefit included in the purpose of the corporation under section 953(2) is presumed to be in the best interests of the benefit corporation. |
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| 400 | 400 | | |
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| 401 | 401 | | Sec. 959. (1) The duties of any directors and officers of a benefit corporation arising under this chapter, or the general public benefit purpose or any specific public benefit purpose of a benefit corporation organized under this chapter, may be enforced only in a benefit enforcement proceeding under this section. A person shall not bring an action or assert a claim against a benefit corporation or its directors or officers with respect to the duties under this chapter of any directors or officers of the benefit corporation or the general public benefit purpose or any specific public benefit purpose of the benefit corporation organized under this chapter, except in a benefit enforcement proceeding under this section. |
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| 402 | 402 | | |
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| 403 | 403 | | (2) A benefit enforcement proceeding against a benefit corporation may be commenced or maintained only by 1 of the following: |
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| 404 | 404 | | |
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| 405 | 405 | | (a) Directly, by the benefit corporation. |
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| 406 | 406 | | |
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| 407 | 407 | | (b) Derivatively, by any of the following: |
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| 408 | 408 | | |
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| 409 | 409 | | (i) A shareholder of the benefit corporation that owns beneficially or of record, individually or collectively, as of the date the benefit enforcement proceeding is instituted, either of the following: |
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| 410 | 410 | | |
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| 411 | 411 | | (A) At least 2% of the corporation's outstanding shares. |
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| 412 | 412 | | |
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| 413 | 413 | | (B) If the shares of the benefit corporation are listed on a national securities exchange, 2% of the corporation's outstanding shares, or shares that have a market value of $2,000,000.00, whichever is less. |
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| 414 | 414 | | |
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| 415 | 415 | | (ii) A director of the benefit corporation. |
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| 416 | 416 | | |
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| 417 | 417 | | (iii) A person or group of persons that owns beneficially or of record 5% or more of the outstanding voting power in the election of directors of an entity of which the benefit corporation is a subsidiary or the right to receive 5% or more of the distributions to shareholders made by an entity of which the benefit corporation is a subsidiary. |
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| 418 | 418 | | |
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| 419 | 419 | | (iv) Any other person specified in the articles of incorporation or bylaws of the benefit corporation. |
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| 420 | 420 | | |
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| 421 | 421 | | (3) A benefit corporation is not liable for monetary damages under this chapter for any failure of the benefit corporation to pursue or create general public benefit or a specific public benefit. |
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| 422 | 422 | | |
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| 423 | 423 | | (4) An action against a director or officer for failure to perform any of the duties imposed under this section must be commenced within 3 years after the cause of action has accrued, or within 2 years after the time when the cause of action is discovered or should reasonably have been discovered by the complainant, whichever occurs first. |
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| 424 | 424 | | |
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| 425 | 425 | | Enacting section 1. This amendatory act takes effect 90 days after the date it is enacted into law. |
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| 426 | 426 | | |
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| 427 | 427 | | Enacting section 2. This amendatory act does not take effect unless Senate Bill No. 666 of the 102nd Legislature is enacted into law. |
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