Relating to a request by the owner of an ownership interest in a domestic entity that the interest be uncertificated.
The bill's provisions are significant in modernizing the framework under which domestic entities operate regarding share issuance. By explicitly allowing the option for uncertificated shares, the law aims to facilitate quicker and more efficient transactions. The change is expected to reduce administrative burdens on businesses, as they will no longer be compelled to issue certificated shares to every owner if they're not requested. The effective date of the change is September 1, 2011, and it applies to any share issuance occurring after that date.
House Bill 2393 addresses the issuance of shares related to ownership interest in domestic entities by allowing owners to request that their shares be issued as uncertificated. The bill amends the Business Organizations Code to clarify that if a domestic entity is required by law to issue shares but an owner specifically requests that their interest be uncertificated, the entity is not in violation for not issuing a certificated share. This provision offers more flexibility for owners and business entities while streamlining share issuance processes.
While the bill provides a clearer path for business organizations wishing to streamline their operations, potential areas of contention may arise regarding the implications of uncertificated shares. Concerns could be raised about owner rights, share transferability, and the protection of ownership interests without the physical certificate. However, the text does not suggest significant opposition or public dissent, indicating there might be broader support or consensus on enhancing flexibility in share issuance within the business community.