Businesses: business corporations; benefit corporations; authorize formation and establish duties of officers and directors. Amends and adds (See bill).

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HOUSE BILL NO. 5939

A bill to amend 1972 PA 284, entitled
"Business corporation act,"
by amending sections 105, 106, 107, 109, 131, 143, 202, 209, 211,
261, 288, 404, 413, 441, 489, 505, 531, 535, 564a, 711, 745, 911,
1002, and 1060 (MCL 450.1105, 450.1106, 450.1107, 450.1109,
450.1131, 450.1143, 450.1202, 450.1209, 450.1211, 450.1261,
450.1288, 450.1404, 450.1413, 450.1441, 450.1489, 450.1505,
450.1531, 450.1535, 450.1564a, 450.1711, 450.1745, 450.1911,
450.2002, and 450.2060), sections 105, 106, 211, and 911 as amended
by 2012 PA 569, sections 107 and 711 as amended by 1989 PA 121,
April 30, 2026, Introduced by Reps. Wozniak and Johnsen and referred to Committee on
Economic Competitiveness.
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section 109 as amended by 2015 PA 158, sections 131, 143, 202, and
288 as amended by 2018 PA 85, section 209 as amended by 1997 PA
118, sections 261 and 489 as amended by 2006 PA 68, sections 404
and 413 as amended by 2001 PA 57, section 441 as amended by 2006 PA
66, section 505 as amended by 1993 PA 91, sections 564a and 1002 as
amended and section 745 as added by 2008 PA 402, and section 1060
as amended by 2023 PA 135, and by adding sections 152, 153, 154,
155, 156, 157, 158, 159, and 545b and chapter 9A.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 105. (1) "Administrator" means the chief officer of the 1
department or of any other another agency or department authorized 2
by law to administer this act, or his or her the designated 3
representative of the chief officer. 4
(2) "Articles of incorporation" includes any of the following: 5
(a) The original articles of incorporation or any other 6
instrument filed or issued under any statute to organize a domestic 7
or foreign corporation, as amended, supplemented, or restated by 8
certificates of amendment, merger, conversion, or consolidation or 9
other certificates or instruments filed or issued under any 10
statute. 11
(b) A special act or charter creating a domestic or foreign 12
corporation, as amended, supplemented, or restated. 13
(3) "Authorized shares" means shares of all classes that a 14
corporation is authorized to issue. 15
(4) "Benefit corporation" means a domestic corporation that 16
meets the requirements of a benefit corporation under chapter 9A 17
and has not terminated its status as a benefit corporation under 18
that chapter. 19
(5) (4) "Board" means board of directors or other governing 20
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board of a corporation. 1
(6) (5) "Bonds" includes secured and unsecured bonds, 2
debentures, and notes. 3
Sec. 106. (1) "Corporation" or "domestic corporation" means a 4
corporation formed under this act, or existing on January 1, 1973 5
and formed under any other statute of this state for a purpose for 6
which a corporation may be formed under this act. Corporation or 7
domestic corporation includes a benefit corporation. 8
(2) "Department" means the department of licensing and 9
regulatory affairs. 10
(3) "Director" means a member of the board of a corporation. 11
(4) "Distribution" means a direct or indirect transfer of 12
money or other property, except the corporation's shares, or the 13
incurrence of indebtedness by the corporation to or for the benefit 14
of its shareholders in respect to the corporation's shares. A 15
distribution may be in the form of a dividend, a purchase, 16
redemption or other acquisition of shares, an issuance of 17
indebtedness, or any other declaration or payment to or for the 18
benefit of the shareholders. 19
(5) "Electronic transmission" or "electronically transmitted" 20
means any form of communication that meets all of the following: 21
(a) It does not directly involve the physical transmission of 22
paper. 23
(b) It creates a record that may be retained and retrieved by 24
the recipient. 25
(c) It may be directly reproduced in paper form by the 26
recipient through an automated process. 27
Sec. 107. (1) "Foreign corporation" means a corporation for 28
profit formed under laws other than the laws of this state, which 29
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includes in its purposes a purpose for which a corporation may be 1
formed under this act. 2
(2) "Foreign nonprofit corporation" means a corporation 3
organized under laws other than the laws of this state, which 4
includes in its purposes a purpose for which a corporation may be 5
organized under the nonprofit corporation act, Act No. 162 of the 6
Public Acts of 1982, being sections 450.2101 to 450.3192 of the 7
Michigan Compiled Laws.1982 PA 162, MCL 450.2101 to 450.3192. 8
(3) "Independent director" means a director who meets all of 9
the following requirements: 10
(a) Is elected by the shareholders. 11
(b) Is designated as an independent director by the board or 12
the shareholders. 13
(c) Has at least not less than 5 years of business, legal, or 14
financial experience, or other equivalent experience. For a 15
corporation with securities registered under section 12 of the 16
securities exchange act of 1934, chapter 404, 48 Stat . 881, 15 17
U.S.C. 78L, USC 78l, "experience" shall mean means experience as a 18
senior executive, director, or attorney, or other equivalent 19
experience, for a corporation with registered securities. 20
(d) Is not and during the 3 years prior to before being 21
designated as an independent director has not been any of the 22
following: 23
(i) An officer or employee of the corporation or any affiliate 24
of the corporation. 25
(ii) Engaged in any business transaction for profit or series 26
of transactions for profit, including banking, legal, or consulting 27
services, involving more than $10,000.00 with the corporation or 28
any affiliate of the corporation. 29
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(iii) An affiliate, executive officer, general partner, or 1
member of the immediate family of any person that had the status or 2
engaged in a transaction described in subparagraph (i) or (ii). 3
(e) Does not propose to enter into a relationship or 4
transaction described in subdivision (d)(i) through to (iii). 5
(f) Does not have an aggregate of more than 3 years of service 6
as a director of the corporation, regardless of whether or not as 7
an independent director. 8
(4) "Internal affairs" means all of the following: 9
(a) Rights and duties under the laws of the jurisdiction in 10
which a corporation is incorporated that are possessed or owed by a 11
current or former director, officer, or shareholder in such a 12
capacity. 13
(b) Matters governed by, or claims arising under, the statute 14
under which a corporation is incorporated, including the procedural 15
rules for derivative actions or proceedings brought on behalf of 16
the corporation or shareholders, whether found in a statute, court 17
rule, or other source. 18
(c) Matters governed by a corporation's articles of 19
incorporation or bylaws. 20
(d) Matters or claims that are generally interpreted to be 21
governed by the internal affairs doctrine of this state that are 22
not included in subdivisions (a) to (c). 23
Sec. 109. (1) "Services in a learned profession" means 24
services provided to the public by a dentist, an osteopathic 25
physician, a physician, a surgeon, a doctor of divinity or other 26
clergy, or an attorney-at-law. The term does Services in a learned 27
profession do not include services provided to residents of a 28
nursing home, as that term is defined in section 20109 of the 29
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public health code, 1978 PA 368, MCL 333.20109, by a dentist, 1
osteopathic physician, physician, or surgeon who is an employee or 2
independent contractor of the nursing home. 3
(2) "Shareholder" means a person that holds units of 4
proprietary interest in a corporation and is considered to be 5
synonymous with "member" in a nonstock corporation. 6
(3) "Shares" means the units into which proprietary interests 7
in a corporation are divided and is considered to be synonymous 8
with "membership" in a nonstock corporation. 9
(4) "Voting group" means all shares of 1 or more classes or 10
series that, under the articles of incorporation or this act, are 11
entitled to vote and be counted together collectively on a matter 12
at a meeting of shareholders. All shares entitled by the articles 13
of incorporation or this act to vote generally on the matter are, 14
for that purpose, a single voting group. 15
Sec. 131. (1) A document that is required or permitted to be 16
filed under this act shall must be submitted by delivering the 17
document to the administrator together with the fees and 18
accompanying documents required by law. The administrator may 19
establish a procedure for accepting delivery of a document 20
submitted under this subsection by facsimile or other electronic 21
transmission. However, by December 31, 2006, the administrator 22
shall establish a procedure for accepting delivery of a document 23
submitted under this subsection by electronic mail email or over 24
the internet. Beginning January 1, 2007, the administrator shall 25
accept delivery of documents submitted by electronic mail email or 26
over the internet. 27
(2) If a document submitted under subsection (1), other than 28
an annual benefit report under section 961, substantially conforms 29
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to the requirements of this act, the administrator shall endorse 1
upon it the document with the word "filed", with his or her the 2
administrator's official title, and the date of receipt and of 3
filing on the document and shall file and index the document or a 4
photostatic, micrographic, photographic, optical disc media, or 5
other reproduced copy of the document in his or her the 6
administrator's office. If requested at the time of the delivery of 7
the document to his or her the administrator's office, the 8
administrator shall include the hour of filing in the endorsement 9
on the document. 10
(3) The administrator may return the original or a copy of a 11
document filed under subsection (2) to the person that submitted it 12
for filing. The administrator shall mark the filing date on the 13
copy or original before returning it or may provide proof of the 14
filing date to the person that submitted the document for filing in 15
another manner determined by the administrator. 16
(4) The records and files of the administrator relating to 17
domestic and foreign corporations shall must be open to reasonable 18
inspection by the public. The administrator may maintain records or 19
files in their the records' or files' original form or may maintain 20
records or files in the form of reproductions pursuant to in 21
accordance with the records reproduction act, 1992 PA 116, MCL 22
24.401 to 24.406, and may destroy the originals of the reproduced 23
documents. 24
(5) The administrator may make reproductions of any documents 25
filed under this act or any predecessor act pursuant to in 26
accordance with the records reproduction act, 1992 PA 116, MCL 27
24.401 to 24.406, and may destroy the originals of the reproduced 28
documents. A reproduced copy of a document certified by the 29
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administrator, including a copy sent by facsimile or other 1
electronic transmission, is considered an original document for all 2
purposes and is admissible in evidence in like manner as an 3
original document. 4
(6) Except as provided in section 806, a document filed under 5
subsection (2) is effective at the time it is endorsed unless a 6
subsequent effective time, not later than 90 days after the date of 7
delivery, is set forth stated in the document. 8
(7) The administrator shall charge 1 of the following 9
nonrefundable fees if expedited filing of a document by the 10
administrator is requested and the administrator shall retain the 11
revenue collected under this subsection and the department shall 12
use it to carry out its duties required by law: 13
(a) For any filing that a person requests the administrator to 14
complete within 1 hour on the same day as the day of the request, 15
$1,000.00. The department may establish a deadline by which a 16
person must submit a request for filing under this subdivision. 17
(b) For any filing that a person requests the administrator to 18
complete within 2 hours on the same day as the day of the request, 19
$500.00. The department may establish a deadline by which a person 20
must submit a request for filing under this subdivision. 21
(c) Except for a filing request under subdivision (a) or (b), 22
for the filing of any formation or qualification document that a 23
person requests the administrator to complete on the same day as 24
the day of the request, $100.00. The department may establish a 25
deadline by which a person must submit a request for filing under 26
this subdivision. 27
(d) Except for a filing request under subdivision (a) or (b), 28
for the filing of any other document concerning an existing 29
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domestic corporation or a qualified foreign corporation that a 1
person requests the administrator to complete on the same day as 2
the day of the request, $200.00. The department may establish a 3
deadline by which a person must submit a request for filing under 4
this subdivision. 5
(e) For the filing of any formation or qualification document 6
that a person requests the administrator to complete within not 7
later than 24 hours of the time after the administrator receives 8
the request, $50.00. 9
(f) For the filing of any other document concerning an 10
existing domestic corporation or a qualified foreign corporation 11
that a person requests the administrator to complete within not 12
later than 24 hours of the time after the administrator receives 13
the request, $100.00. 14
Sec. 143. (1) If a notice or communication is required or 15
permitted under this act to be given by mail, it shall the notice 16
or communication must be mailed, except as otherwise provided in 17
this act, to the person to which it is directed at the address 18
designated by the person for that purpose or, if none is 19
designated, at the person's last known address. The notice or 20
communication is given when deposited, with postage prepaid, in a 21
post office or official depository under the exclusive care and 22
custody of the United States Postal Service. Unless the corporation 23
has securities registered under section 12 of title 1 of the 24
securities exchange act of 1934, 15 USC 78l, the mailing shall must 25
be sent by registered, certified, or other first-class mail except 26
unless otherwise required under this act. 27
(2) If a corporation is required or permitted to provide its 28
shareholders with a written notice or other written report, 29
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statement, or communication under this act, the articles of 1
incorporation, or the bylaws, the corporation may provide that 2
notice, report, statement, or communication to all shareholders 3
that share a common address by delivering 1 copy of it to the 4
common address if all of the following are met: 5
(a) The corporation addresses the notice, report, statement, 6
or communication to the shareholders that share the common address 7
as a group, individually, or in any other form to which any of 8
those shareholders have not objected. 9
(b) At least Not less than 60 days before the first delivery 10
of any delivery to a common address under this subsection, the 11
corporation gives notice to the shareholders that share that common 12
address that it intends to provide only 1 copy of notices, reports, 13
statements, or other communications to shareholders that share a 14
common address. 15
(c) The corporation has not received a written objection from 16
any shareholder that shares a common address to deliveries under 17
this subsection to that shareholder. If it receives a written 18
objection under this subdivision, the corporation within 30 days 19
shall begin providing the objecting shareholder with separate 20
copies of any notices, reports, statements, or communications to 21
the shareholders, but the corporation may deliver 1 copy of the 22
notices, reports, statements, or communications to all of the 23
shareholders at that common address that have not objected. 24
(3) If a notice is required or permitted under this act to be 25
given in writing, electronic transmission is written notice. 26
(4) If a notice or communication is permitted under this act 27
to be transmitted electronically, the notice or communication is 28
given when electronically transmitted to the either of the 29
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following: 1
(a) A person that is entitled to the notice or communication 2
in a manner authorized by the person. 3
(b) A shareholder that is entitled to the notice or 4
communication to the email address for the shareholder as it 5
appears on the records of the corporation, unless the shareholder 6
has previously notified the corporation in writing that it objects 7
to receiving notices and communications by email. 8
(5) A notice may not be electronically transmitted after the 9
corporation is unable to deliver by such electronic transmission 2 10
consecutive notices and the inability to electronically transmit 11
becomes known to the secretary, an assistant secretary of the 12
corporation, the transfer agent, or any other person responsible 13
for giving of notice, provided the inadvertent failure to discover 14
the inability does not invalidate any meeting or other action. 15
(6) (5) As used in subsection (2), "address" means a street 16
address, post office box, electronic mail email address for 17
electronic transmissions by electronic mail, email, or telephone 18
facsimile number for electronic transmissions by facsimile. 19
(7) (6) If the administrator is required under this act to 20
give notice to the corporation, the administrator may 21
electronically transmit the notice to the corporation's resident 22
agent in the manner authorized by the corporation. 23
Sec. 152. As used in sections 152 to 159: 24
(a) "Corporate action" means an action taken by or on behalf 25
of a corporation, including, but not limited to, any action taken 26
by the incorporator, the board, a committee of the board, an 27
officer or agent of the corporation, or the shareholders. 28
(b) "Date of the defective corporate action" means the date, 29
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or the approximate date if the exact date is unknown, that a 1
defective corporate action was purported to have been taken. 2
(c) "Defective corporate action" means either of the 3
following: 4
(i) A corporate action purportedly taken that is, and at the 5
time the corporate action was purportedly taken would have been, 6
within the power of the corporation, without regard to the failure 7
of authorization identified in section 154(1)(c), but is void or 8
voidable due to a failure of authorization. 9
(ii) An overissue. 10
(d) "Failure of authorization" means the failure to authorize, 11
approve, or otherwise effect a corporate action in compliance with 12
this act, the articles of incorporation or bylaws, a corporate 13
resolution, or any plan or agreement to which the corporation is a 14
party, if and to the extent the failure would render the corporate 15
action void or voidable. 16
(e) "Overissue" means the purported issuance of either of the 17
following: 18
(i) Shares of a class or series in excess of the number of 19
shares of a class or series the corporation has the power to issue 20
under section 301 at the time of issuance. 21
(ii) Shares of any class or series that the corporation is not 22
authorized to issue at the time of issuance by the articles of 23
incorporation. 24
(f) "Putative shares" means the shares of any class or series, 25
including shares issued on exercise of rights, options, warrants, 26
or other securities convertible into shares of the corporation, or 27
interests with respect to such shares, that were created or issued 28
as a result of a defective corporate action, that, but for a 29
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failure of authorization, would constitute valid shares, or that 1
cannot be determined by the board to be valid shares. 2
(g) "Valid shares" means the shares of any class or series 3
that have been duly authorized and validly issued in accordance 4
with this act, including as a result of ratification or validation 5
under sections 152 to 159. 6
(h) "Validation effective time" means the later of either of 7
the following: 8
(i) The time at which the ratification of a defective corporate 9
action is approved by the shareholders or, if approval of 10
shareholders is not required, the time at which the notice required 11
by section 156 is given in accordance with section 143. 12
(ii) The time at which a certificate of validation filed in 13
accordance with section 158 becomes effective. 14
Sec. 153. (1) A defective corporate action is not void or 15
voidable if ratified in accordance with section 154 or validated in 16
accordance with section 159. 17
(2) Ratification under section 154 or validation under section 18
159 is not the exclusive means of ratifying or validating a 19
defective corporate action, and the absence or failure of 20
ratification in accordance with sections 153 to 159 does not alone 21
affect the validity or effectiveness of a corporate action properly 22
ratified under common law or otherwise. The absence or failure of 23
ratification does not create a presumption that a corporate action 24
is or was a defective corporate action or is void or voidable. 25
(3) In the case of an overissue, putative shares are valid 26
shares effective as of the date originally issued or purportedly 27
issued on either of the following: 28
(a) The effectiveness under sections 153 to 159 and under 29
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chapter 6 of an amendment to the articles of incorporation 1
authorizing, designating, or creating the putative shares. 2
(b) The effectiveness of any other corporate action under 3
sections 153 to 159 ratifying the authorization, designation, or 4
creation of the putative shares. 5
Sec. 154. (1) To ratify a defective corporate action, other 6
than the ratification of a selection of the initial board of 7
directors under subsection (2), the board shall take action in 8
accordance with section 155, specifying in the action all of the 9
following: 10
(a) The defective corporate action to be ratified and, if the 11
defective corporate action involved the issuance of putative 12
shares, the number and type of putative shares purportedly issued. 13
(b) The date of the defective corporate action. 14
(c) The nature of the failure of authorization with respect to 15
the defective corporate action to be ratified. 16
(d) That the board approves the ratification of the defective 17
corporate action. 18
(2) In the event that a defective corporate action to be 19
ratified relates to the selection of the initial board of directors 20
of the corporation under section 223, a majority of the individuals 21
who, at the time of the ratification, are exercising the powers of 22
directors may take an action stating all of the following: 23
(a) The name of the individual or individuals who first took 24
action in the name of the corporation as the initial board of 25
directors of the corporation. 26
(b) The earlier of the date on which the individual or 27
individuals under subdivision (a) first took such action or were 28
purported to have been selected as the initial board of directors. 29
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(c) That the ratification of the selection of an individual or 1
individuals under subdivision (a) as the initial board of directors 2
is approved. 3
(3) If this act, the articles of incorporation, the bylaws, a 4
corporate resolution, or a plan or agreement to which the 5
corporation is a party and that is in effect at the time an action 6
under subsection (1) is taken requires shareholder approval or 7
would have required shareholder approval at the date of the 8
occurrence of the defective corporate action, the ratification of 9
the defective corporate action approved in the action taken under 10
subsection (1) must be submitted to the shareholders for approval 11
in accordance with section 155. Shareholder approval is not 12
required if, as of the time an action is taken under subsection 13
(1), there are no valid shares outstanding, regardless of whether 14
there exist any putative shares at that time. 15
(4) Unless otherwise provided in the action under subsection 16
(1), after the action has been taken by the board and, if required, 17
approved by the shareholders, the board may abandon the 18
ratification at any time before the validation effective time 19
without further action of the shareholders. 20
Sec. 155. (1) The quorum and voting requirements applicable to 21
a ratifying action by the board under section 154(1) are the quorum 22
and voting requirements applicable to the corporate action proposed 23
to be ratified at the time the ratifying action is taken. 24
(2) If the ratification of a defective corporate action 25
requires approval by the shareholders under section 154(3), and if 26
the approval is to be given at a meeting, the corporation shall 27
notify each holder of valid shares and putative shares, regardless 28
of whether the shareholder is entitled to vote, as of the record 29
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date for notice of the meeting and as of the date of the occurrence 1
of the defective corporate action. Notice under this subsection is 2
not required to be given to holders of valid shares or putative 3
shares whose identities or addresses for notice cannot be 4
determined from the records of the corporation. The notice must 5
state that the purpose, or 1 of the purposes, of the meeting is to 6
consider ratification of a defective corporate action and must be 7
accompanied by both of the following: 8
(a) A copy of the action taken by the board in accordance with 9
section 154(1) or the information required by section 154(1)(a) to 10
(d). 11
(b) A statement that a claim that the ratification of the 12
defective corporate action and any putative shares issued as a 13
result of the defective corporate action should not be effective, 14
or should be effective only on certain conditions, must be brought 15
not later than 120 days after the applicable validation effective 16
time. 17
(3) Except as provided in subsection (4) with respect to the 18
voting requirements to ratify the election of a director, the 19
quorum and voting requirements applicable to the approval by the 20
shareholders required under section 154(3) are the quorum and 21
voting requirements applicable to the corporate action proposed to 22
be ratified at the time of shareholder approval. 23
(4) The approval by shareholders to ratify the election of a 24
director requires that the votes cast within the voting group 25
favoring the ratification exceed the votes cast opposing the 26
ratification of the election at a meeting at which a quorum is 27
present. 28
(5) Putative shares on the record date for determining the 29
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shareholders entitled to vote on a matter submitted to shareholders 1
under section 154(3), and without giving effect to any ratification 2
of putative shares that becomes effective as a result of a vote, 3
are not entitled to vote and are not counted for quorum purposes in 4
any vote to approve the ratification of a defective corporate 5
action. 6
(6) If the approval under this section of putative shares 7
would result in an overissue, in addition to the approval required 8
by section 154, approval of an amendment to the articles of 9
incorporation under chapter 6 of this act to increase the number of 10
shares of an authorized class or series or to authorize the 11
creation of a class or series of shares so there would be no 12
overissue is required and must be filed in accordance with section 13
158. 14
Sec. 156. (1) Unless shareholder approval is required under 15
section 154(3), prompt notice of an action taken under section 154 16
must be given to each holder of valid shares and putative shares, 17
regardless of whether the shareholder is entitled to vote, as of 18
the date of the action by the board and as of the date of the 19
defective corporate action ratified. Notice is not required to be 20
given to holders of valid shares and putative shares whose 21
identities or addresses for notice cannot be determined from the 22
records of the corporation. 23
(2) The notice under subsection (1) must contain both of the 24
following: 25
(a) A copy of the action taken by the board in accordance with 26
section 154(1) or (2) or the information required by section 27
154(1)(a) to (d) or section 154(2)(a) to (c), as applicable. 28
(b) A statement that a claim that the ratification of the 29
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defective corporate action and any putative shares issued as a 1
result of such defective corporate action should not be effective, 2
or should be effective only on certain conditions, must be brought 3
not later than 120 days after the applicable validation effective 4
time. 5
(3) A notice is not required under this section with respect 6
to any action required to be submitted to shareholders for approval 7
under section 154(3) if notice is given in accordance with section 8
155(2). 9
(4) A notice required by this section may be given in any 10
manner permitted by section 143 and, for a corporation subject to 11
the reporting requirements of section 13 or section 15(d) of the 12
securities exchange act of 1934, 15 USC 78m and 78o, may be given 13
by means of filing or furnishing the notice with the Securities and 14
Exchange Commission. 15
Sec. 157. Beginning on the date of the validation effective 16
time, and without regard to the 120-day period during which a claim 17
may be brought under section 159, all of the following apply: 18
(a) Each defective corporate action ratified in accordance 19
with section 154 is not void or voidable as a result of the failure 20
of authorization identified in the action taken under section 21
154(1) or (2) and is considered a valid corporate action effective 22
as of the date of the defective corporate action. 23
(b) The issuance of each putative share or fraction of a 24
putative share purportedly issued under a defective corporate 25
action identified in the action taken under section 154 is not void 26
or voidable, and each such putative share or fraction of a putative 27
share is considered to be an identical share or fraction of a valid 28
share as of the time it was purportedly issued. 29
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(c) Any corporate action taken subsequent to the defective 1
corporate action ratified in accordance with section 154 in 2
reliance on that defective corporate action having been validly 3
effected, and any subsequent defective corporate action resulting 4
directly or indirectly from the original defective corporate 5
action, is valid as of the time taken. 6
Sec. 158. (1) If a defective corporate action ratified under 7
section 154 would have required a filing under any other section of 8
this act, then, regardless of whether a filing was previously made 9
in respect of that defective corporate action and instead of a 10
filing otherwise required by this act, the corporation shall file a 11
certificate of validation. A certificate of validation serves to 12
amend or substitute for any other filing with respect to the 13
defective corporate action as required under this act. 14
(2) The certificate of validation under subsection (1) must 15
include all of the following: 16
(a) The defective corporate action that is the subject of the 17
certificate of validation, including, in the case of any defective 18
corporate action involving the issuance of putative shares, the 19
number and type of putative shares issued and the date or dates on 20
which the putative shares were purported to have been issued. 21
(b) The date of the defective corporate action. 22
(c) The nature of the failure of authorization in respect of 23
the defective corporate action. 24
(d) A statement that the defective corporate action was 25
ratified in accordance with section 154, including the date on 26
which the board ratified the defective corporate action and the 27
date, if any, on which the shareholders approved the ratification 28
of the defective corporate action. 29
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(e) If a filing was previously made in respect of the 1
defective corporate action and no changes to that filing are 2
required to give effect to the ratification of the defective 3
corporate action in accordance with section 154, both of the 4
following: 5
(i) The name, title, and filing date of the filing previously 6
made and any certificate of correction to that filing. 7
(ii) A statement that a copy of the filing previously made, 8
together with any certificate of correction to that filing, is 9
attached as an exhibit to the certificate of validation. 10
(f) If a filing was previously made in respect of the 11
defective corporate action and that filing requires any change to 12
give effect to the ratification of the defective corporate action 13
in accordance with section 154, all of the following: 14
(i) The name, title, and filing date of the filing previously 15
made and any certificate of correction to that filing. 16
(ii) A statement that a filing containing all of the 17
information required to be included under the applicable section or 18
sections of this act to give effect to the defective corporate 19
action is attached as an exhibit to the certificate of validation. 20
(iii) The date and time that the filing is considered to have 21
become effective. 22
(g) If a filing was not previously made in respect of the 23
defective corporate action and the defective corporate action 24
ratified under section 154 would have required a filing under any 25
other section of this act, both of the following: 26
(i) A statement that a filing containing all of the information 27
required to be included under the applicable sections of this act 28
to give effect to the defective corporate action is attached as an 29
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WAM H04046'25_HB5939_INTR_1 9esb47
exhibit to the certificate of validation. 1
(ii) The date and time that the filing is considered to have 2
become effective. 3
(h) In the case of an overissue contemplated by section 4
155(6), the amendment or amendments to the corporation's articles 5
of incorporation approved in accordance with that subsection. 6
Sec. 159. (1) On application by a corporation, a successor 7
entity to the corporation, a director of the corporation, a 8
shareholder, a beneficial shareholder, an unrestricted voting trust 9
beneficial owner of the corporation, including any such 10
shareholder, beneficial shareholder, or unrestricted voting trust 11
beneficial owner as of the date of the defective corporate action 12
ratified under section 154, or any other person claiming to be 13
substantially and adversely affected by a ratification under 14
section 154, the circuit court may do any of the following: 15
(a) Determine the validity and effectiveness of a corporate 16
action or defective corporate action. 17
(b) Determine the validity and effectiveness of a ratification 18
under section 154. 19
(c) Determine the validity of any putative shares. 20
(d) Modify or waive any of the procedures specified in section 21
154 or 155 to ratify a defective corporate action. 22
(e) Make findings or orders, and take into account any factors 23
or considerations, regarding matters the court considers proper 24
under the circumstances. 25
(2) Service of process of the application under subsection (1) 26
on a corporation may be made in any manner provided by statute or 27
by rule of the applicable court for service on the corporation, and 28
another party does not need to be joined for the court to 29
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adjudicate the matter. In an action filed by a corporation, the 1
court may require notice of the action be provided to other persons 2
specified by the court and permit such persons to intervene in the 3
action. 4
(3) Notwithstanding any other provision of this section or 5
otherwise under applicable law, an action asserting that the 6
ratification of a defective corporate action and any putative 7
shares issued as a result of a defective corporate action should 8
not be effective, or should be effective only on certain 9
conditions, must be brought not later than 120 days after the 10
validation effective time. 11
(4) The validation effective time of a defective corporate 12
action that is ratified under section 154 is not affected by the 13
filing or pendency of a judicial proceeding under this section, 14
unless otherwise ordered by the court. 15
Sec. 202. The articles of incorporation shall must contain all 16
of the following: 17
(a) The name of the corporation. 18
(b) The purposes for which the corporation is formed. All of 19
the following apply for purposes of this subdivision: 20
(i) Except as otherwise provided in subparagraph (ii), or (iii), 21
or (iv), it is a sufficient compliance sufficiently compliant with 22
this subdivision to state substantially, alone or with specifically 23
enumerated purposes, that the corporation may engage in any 24
activity within the purposes for which corporations a corporation 25
may be formed under the business corporation this act, and all 26
activities shall must by the statement be considered within the 27
purposes of the corporation, subject to expressed limitations. 28
(ii) Any corporation that proposes to conduct educational 29
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purposes shall state the purposes and shall comply with all 1
requirements of sections 170 to 177 of 1931 PA 327, MCL 450.170 to 2
450.177. 3
(iii) A professional corporation shall comply with section 4
283(2) and (3). 5
(iv) The purpose of a benefit corporation must comply with 6
section 953. 7
(c) The aggregate number of shares that the corporation has 8
authority to issue. 9
(d) If the shares are, or are to be, divided into classes, or 10
into classes and series, the designation of each class and series, 11
the number of shares in each class and series, and a statement of 12
the relative rights, preferences, and limitations of the shares of 13
each class and series, to the extent that the designations, 14
numbers, relative rights, preferences, and limitations have been 15
determined. 16
(e) If the shares are to be designated and issued in 1 or more 17
classes or series, a statement of any authority vested in the board 18
to designate and issue shares in 1 or more classes or series, and 19
to determine or change for any class or series its designation, 20
number of shares, relative rights, preferences, and limitations. 21
(f) Except as otherwise provided in section 611(2)(c), the 22
street address, and the mailing address if different from the 23
street address, of the corporation's initial registered office and 24
the name of the corporation's initial resident agent at that 25
address. 26
(g) The names and addresses of the incorporators. 27
(h) The duration of the corporation if other than perpetual. 28
Sec. 209. (1) The articles of incorporation may contain any 29
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provision not inconsistent with this act or another statute of this 1
state, including any of the following: 2
(a) A provision for management of the business and conduct of 3
the affairs of the corporation, or creating, defining, limiting, or 4
regulating the powers of the corporation, its directors and 5
shareholders, or a class of shareholders. 6
(b) A provision that under this act is required or permitted 7
to be set forth in the bylaws. 8
(c) A provision eliminating or limiting a director's or 9
officer's liability to the corporation or its shareholders for 10
money damages for any action taken or any failure to take any 11
action as a director or officer, except liability for any of the 12
following: 13
(i) The amount of a financial benefit received by a director or 14
officer to which he or she the director or officer is not entitled. 15
(ii) Intentional A director's or officer's intentional 16
infliction of harm on the corporation or the shareholders. 17
(iii) A director's violation of section 551. 18
(iv) An A director's or officer's intentional criminal act. 19
(d) A provision renouncing any interest or expectancy of the 20
corporation in, or in being offered an opportunity to participate 21
in, 1 or more classes or categories of a business opportunity. 22
(2) If the articles of incorporation contain a provision 23
eliminating the liability of a director prior to the amendatory act 24
that amended subsection (1) and added this subsection, before 25
October 24, 1997, that provision shall be considered to eliminate 26
eliminates the liability of a director as provided in subsection 27
(1)(c). 28
(3) A provision in the articles of incorporation may not 29
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WAM H04046'25_HB5939_INTR_1 9esb47
eliminate or limit the liability of a director or officer for any 1
act or omission that occurs before the date when the provision 2
becomes effective. A provision in the articles of incorporation may 3
apply to both directors and officers, to directors but not 4
officers, or to officers but not directors. Unless a provision in 5
the articles of incorporation refers to officers, the provision 6
does not eliminate or limit the liability of an officer, provided 7
that, to the extent that, before the amendatory act that added this 8
subsection, a corporation's articles of incorporation contained a 9
limitation of liability of directors under subsection (1)(c), the 10
corporation's bylaws may contain a limitation of liability of 11
officers. 12
(4) As used in this section, "officer" means any of the 13
following individuals: 14
(a) An individual who is or was the president, chief executive 15
officer, chief operating officer, chief financial officer, chief 16
legal officer, secretary, controller, treasurer, or chief 17
accounting officer of the corporation at any time during the course 18
of conduct alleged in the action or proceeding to be wrongful. 19
(b) An individual who is or was identified in the 20
corporation's public filings with the Securities and Exchange 21
Commission because the individual is or was 1 of the most highly 22
compensated executive officers of the corporation at any time 23
during the course of conduct alleged in the action or proceeding to 24
be wrongful. 25
(c) An individual or position that the board by resolution 26
designates as being, or being held by, an officer for purposes of 27
this section. The board may from time to time by resolution change 28
the persons or positions designated as officers, but this change 29
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does not impair the right of any individual to exculpation with 1
respect to any action or omission before the change. 2
Sec. 211. (1) Except as otherwise provided in chapter 2A for a 3
professional corporation and in subsection (2) for a benefit 4
corporation, the corporate name of a domestic corporation shall 5
must contain the word "corporation", "company", "incorporated", or 6
"limited" or shall must contain 1 of the following abbreviations: 7
corp., co., inc., or ltd., with or without periods. 8
(2) The corporate name of a benefit corporation must contain 9
the words "benefit corporation" or "benefit company" or must 10
contain the initials "B.C.", with or without periods. 11
Sec. 261. A corporation, subject to any limitation provided in 12
this act, in any other statute of this state, or in its articles of 13
incorporation, shall have has power in furtherance of its corporate 14
purposes to do all of the following: 15
(a) Have perpetual duration. 16
(b) Sue and be sued in all courts and participate in actions 17
and proceedings, judicial, administrative, arbitrative, or 18
otherwise, in the same manner as natural persons. 19
(c) Have a corporate seal, and alter the seal, and use it by 20
causing it or a facsimile to be affixed, impressed, or reproduced 21
in any other manner. 22
(d) Adopt, amend, or repeal bylaws, including emergency 23
bylaws, relating to the business of the corporation, the conduct of 24
its affairs, its rights and powers and the rights and powers of its 25
shareholders, directors, or officers. 26
(e) Elect or appoint officers, employees, and other agents of 27
the corporation, prescribe their the duties of the officers, 28
employees, and agents, fix their the compensation of the officers, 29
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WAM H04046'25_HB5939_INTR_1 9esb47
employees, and agents and the compensation of directors, and 1
indemnify corporate directors, officers, employees, and agents. 2
(f) Purchase, receive, take by grant, gift, devise, bequest or 3
otherwise, lease, or otherwise acquire, own, hold, improve, employ, 4
use and otherwise deal in and with, real or personal property, or 5
an interest in real or personal property, wherever situated. 6
(g) Sell, convey, lease, exchange, transfer, or otherwise 7
dispose of, or mortgage or pledge, or create a security interest in 8
any of its property or an interest in its property, wherever 9
situated. 10
(h) Purchase, take, receive, subscribe for, or otherwise 11
acquire, own, hold, vote, employ, sell, lend, lease, exchange, 12
transfer or otherwise dispose of, mortgage, pledge, use and 13
otherwise deal in and with, bonds and other obligations, shares or 14
other securities or interests issued by others, whether engaged in 15
similar or different business, governmental, or other activities, 16
including banking corporations or trust companies. A corporation 17
organized or transacting business in this state under this act 18
shall not guarantee or become surety upon on a bond or other 19
undertaking securing the deposit of public money. 20
(i) Make contracts, give guarantees and incur liabilities, 21
borrow money at rates of interest as the corporation may determine, 22
issue its notes, bonds, and other obligations, and secure any of 23
its obligations by mortgage or pledge of any of its property or an 24
interest in its property, wherever situated. This power shall 25
include includes the power to give guarantees that are necessary or 26
convenient to the conduct, promotion, or attainment of the business 27
of any of the following corporations, regardless of whether or not 28
subject to this act, and domestic or foreign limited liability 29
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companies or other business entities, and those guarantees shall 1
must be considered to be in furtherance of the corporate purposes 2
of the contracting corporation: 3
(i) All of the outstanding shares or interests of which are 4
owned, directly or indirectly, by the contracting corporation. 5
(ii) A corporation, or limited liability company, or other 6
business entity that owns, directly or indirectly, all of the 7
outstanding shares of the contracting corporation. 8
(iii) All of the outstanding shares or interests of which are 9
owned, directly or indirectly, by a corporation, regardless of 10
whether or not subject to this act, or a limited liability company 11
or other business entity that owns, directly or indirectly, all of 12
the outstanding shares of the contracting corporation. 13
(j) Lend money, invest and reinvest its funds, and take and 14
hold real and personal property as security for the payment of 15
funds so loaned or invested. 16
(k) Make donations for any of the following: The public 17
welfare; community fund or hospital; or a charitable, educational, 18
scientific, civic, or similar purpose. A corporation also has the 19
power to provide aid in time of war or other national emergency. 20
(l) Pay pensions, establish and carry out pension, profit 21
sharing, share bonus, share purchase, share option, savings, thrift 22
and other retirement, incentive and benefit plans, trusts, and 23
provisions for any of its directors, officers, and employees. 24
(m) Purchase, receive, take, otherwise acquire, own, hold, 25
sell, lend, exchange, transfer, otherwise dispose of, pledge, use 26
and otherwise deal in and with its own shares, bonds, and other 27
securities. 28
(n) Participate with others in any corporation, partnership, 29
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limited partnership, joint venture, or other association of any 1
kind, or in any transaction, undertaking, or agreement which the 2
participating corporation would have power to conduct by itself, 3
regardless of whether or not the participation involves sharing or 4
delegation of control with or to others. 5
(o) Cease its corporate activities and dissolve. 6
(p) Transact business, carry on its operations, and have 7
offices and exercise the powers granted by this act in any 8
jurisdiction in or outside the United States. 9
(q) Have and exercise all powers necessary or convenient to 10
effect any purpose for which the corporation is formed. 11
(r) Participate as a member of any mutual insurance company 12
for purposes of insuring property or activities relative to nuclear 13
facilities owned, operated, constructed, or being constructed by 14
the corporation. 15
Sec. 288. (1) A professional corporation shall not issue any 16
of its capital stock to anyone other than a person that is eligible 17
to be a shareholder of the professional corporation under section 18
283(2). The uniform securities act (2002), 2008 PA 551, MCL 19
451.2101 to 451.2703, does not apply to the issuance or transfer by 20
a professional corporation of its capital stock. 21
(2) Shares of a professional corporation shall must not be 22
sold or transferred to anyone other than a person that is eligible 23
to be a shareholder of the professional corporation under section 24
283(2); to the personal representative or estate of a deceased or 25
legally incompetent shareholder; or to a trust or split interest 26
trust in which the trustee and the current income beneficiary are 27
each eligible to be a shareholder of the professional corporation 28
under section 283(2). The personal representative or estate of the 29
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deceased or legally incompetent shareholder or, if a successor 1
trustee or current income beneficiary of a trust or split interest 2
trust is ineligible to be a shareholder of the professional 3
corporation, the trust may continue to own shares for a reasonable 4
period but is not authorized to participate in any decisions 5
concerning the providing of professional service by the 6
professional corporation. 7
(3) Except as permitted under subsection (2), a shareholder of 8
a professional corporation shall not enter into a voting trust 9
agreement or any other type of agreement that vests another person 10
with the authority to exercise the voting power of any or all of 11
his or her the shareholder's stock, unless that other person is 12
eligible to be a shareholder of the professional corporation under 13
section 283(2). 14
(4) The articles of incorporation, bylaws, or a contract may 15
provide specifically for additional restrictions on the transfer of 16
shares and may provide for the redemption or purchase of the shares 17
by the professional corporation or its shareholders at prices and 18
in a manner specifically set forth in the articles, bylaws, or 19
contract. 20
Sec. 404. (1) Except as otherwise provided in this act, 21
written notice of the time, place if any, and purposes of a meeting 22
of shareholders shall must be given in accordance with section 143 23
not less than 10 nor or more than 60 days before the date of the 24
meeting to each shareholder of record entitled to vote at the 25
meeting. Notice may be given personally, by mail, or by electronic 26
transmission. If a shareholder or proxy holder may be present and 27
vote at the meeting by remote communication, the means of remote 28
communication allowed shall must be included in the notice. 29
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(2) Unless the corporation has securities registered under 1
section 12 of title I of the securities exchange act of 1934, 2
chapter 404, 48 Stat . 892, 15 U.S.C. USC 78l, notice of the 3
purposes of a meeting shall must include notice of shareholder 4
proposals that are proper subjects for shareholder action and are 5
intended to be presented by shareholders who have notified the 6
corporation in writing of their the shareholders' intention to 7
present the proposals at the meeting. The bylaws may establish 8
reasonable procedures for the submission of proposals to the 9
corporation in advance of the meeting. 10
(3) If Unless the bylaws otherwise require, when a meeting is 11
adjourned to another time or place, including an adjournment taken 12
to address a technical failure to convene or continue a meeting 13
using remote communication, it is not necessary , unless the bylaws 14
otherwise provide, to give notice of the adjourned meeting if the 15
time, and place if any, to which the meeting is adjourned and the 16
means of remote communication, if any, by which shareholders and 17
proxy holders may be considered present and to vote at such 18
adjourned meetings, are announced at the meeting at which the 19
adjournment is taken, displayed during the time scheduled for the 20
meeting on the same electronic network, if any, used to enable 21
shareholders and proxy holders to participate in the meeting by 22
means of remote communication, or set forth in the notice of the 23
meeting given in accordance with subsection (1). A shareholder or 24
proxy holder may be present and vote at the adjourned meeting by a 25
means of remote communication if he or she the shareholder or proxy 26
holder was permitted to be present and vote by that means of remote 27
communication in the original meeting notice. At the adjourned 28
meeting, only business that might have been transacted at the 29
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original meeting may be transacted if a notice of the adjourned 1
meeting is not given. If after the adjournment the board fixes a 2
new record date for the adjourned meeting, a notice of the 3
adjourned meeting shall must be given to each shareholder of record 4
on the new record date entitled to notice under subsection (1). 5
(4) A shareholder's attendance at a meeting will result 6
results in both of the following: 7
(a) Waiver of objection to lack of notice or defective notice 8
of the meeting, unless the shareholder at the beginning of the 9
meeting objects to holding the meeting or transacting business at 10
the meeting. 11
(b) Waiver of objection to consideration of a particular 12
matter at the meeting that is not within the purpose or purposes 13
described in the meeting notice, unless the shareholder objects to 14
considering the matter when it is presented. 15
Sec. 413. (1) The officer or agent having charge of the stock 16
transfer books for shares of a corporation shall make and certify a 17
complete list of the shareholders entitled to vote at a 18
shareholders' meeting or any adjourned shareholders' meeting. The 19
list shall must be all of the following: 20
(a) Arranged alphabetically within each class and series, with 21
the address of and the number of shares held by each shareholder. A 22
corporation is not required to include email addresses or other 23
electronic contact information. 24
(b) Produced at the time and place of Open to examination by 25
any shareholder for any purpose germane to the meeting for a period 26
of 10 days ending on the day before the meeting at either of the 27
following locations: 28
(i) On a reasonably accessible electronic network, provided 29
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that the information required to gain access to the list is 1
provided with the notice of the meeting. A corporation must take 2
reasonable steps to ensure that information made available under 3
this subparagraph is available only to shareholders of the 4
corporation. 5
(ii) At the principal place of business of the corporation 6
during ordinary business hours. 7
(c) Subject to inspection by any shareholder during the entire 8
meeting. If the meeting is held solely by means of remote 9
communication, then the list shall be open to the examination of 10
any shareholder during the entire meeting by posting the list on a 11
reasonably accessible electronic network and the information 12
required to access the list shall be provided with the notice of 13
the meeting. 14
(c) (d) Prima facie evidence as to who are the shareholders 15
entitled to examine the list or to vote at the meeting. 16
(2) If the requirements of this section have not been complied 17
with, and a shareholder present in person or by proxy in good faith 18
challenges the existence of sufficient votes to carry any action at 19
the meeting, the meeting shall must be adjourned until the 20
requirements are complied with. Failure to comply with the 21
requirements of this section does not affect the validity of an 22
action taken at the meeting before a challenge described in this 23
subsection. 24
Sec. 441. (1) Each outstanding share is entitled to 1 vote on 25
each matter submitted to a vote of the shareholders, unless 26
otherwise provided in the articles of incorporation. A vote may be 27
cast either orally or in writing, unless otherwise provided in the 28
bylaws. 29
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(2) Other than the election of directors, if an action is to 1
be taken by vote of the shareholders, it shall must be authorized 2
by a majority of the votes cast by the holders of shares entitled 3
to vote on the action, unless a greater vote is required in the 4
articles of incorporation or another section of this act. Unless 5
otherwise provided in the articles of incorporation, abstaining 6
from a vote or submitting a ballot marked "abstain" with respect to 7
an action is not a vote cast on that action. Unless otherwise 8
provided in the articles, directors shall be elected by a plurality 9
of the votes cast at an election. 10
(3) If a corporation's articles of incorporation provide for 11
more or less than 1 vote for any share entitled to vote on any 12
matter, every reference in this act requiring or conditioning 13
adoption or approval of any matter by or on the approval or 14
affirmative vote of a majority or other proportion of outstanding 15
shares entitled to vote, or of the holders of a majority or other 16
proportion of the outstanding shares entitled to vote, means such 17
majority or other proportion of the votes entitled to be cast by 18
such shares. 19
Sec. 489. (1) A shareholder may bring an action in the circuit 20
court of the county in which the principal place of business or 21
registered office of the corporation is located to establish that 22
the acts of the directors or those in control of the corporation 23
are illegal , or fraudulent , or constitute willfully unfair and 24
oppressive to conduct toward the corporation or to the shareholder. 25
If the shareholder establishes grounds for relief, the circuit 26
court may make an order or grant relief as it considers 27
appropriate, including, without limitation, an order providing for 28
any of the following: 29
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(a) The dissolution and liquidation of the assets and business 1
of the corporation. 2
(b) The cancellation or alteration of a provision contained in 3
the articles of incorporation, an amendment of the articles of 4
incorporation, or the bylaws of the corporation. 5
(c) The cancellation, alteration, or injunction against a 6
resolution or other act of the corporation. 7
(d) The direction or prohibition of an act of the corporation 8
or of shareholders, directors, officers, or other persons party to 9
the action. 10
(e) The purchase at fair value of the shares of a shareholder, 11
either by the corporation or by the officers, directors, or other 12
shareholders responsible for the wrongful acts. 13
(f) An award of damages to the corporation or a shareholder. 14
An action seeking an award of damages must be commenced within not 15
later than 3 years after the cause of action under this section has 16
accrued, or within not later than 2 years after the shareholder 17
discovers or reasonably should have discovered the cause of action 18
under this section, whichever occurs first. 19
(2) No An action under this section shall may not be brought 20
by a shareholder whose shares are listed on a national securities 21
exchange or regularly traded in a market maintained by 1 or more 22
members of a national or affiliated securities association. 23
(3) As used in this section, "willfully unfair and oppressive 24
conduct" means a continuing course of conduct or a significant 25
action or series of actions that substantially interferes with the 26
interests of the shareholder as a shareholder. Willfully unfair and 27
oppressive conduct may include the termination of employment or 28
limitations on employment benefits to the extent that the actions 29
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interfere with distributions or other shareholder interests 1
disproportionately as to the affected shareholder. The term 2
Willfully unfair and oppressive conduct does not include conduct or 3
actions that are permitted by an agreement, the articles of 4
incorporation, the bylaws, or a consistently applied written 5
corporate policy or procedure. 6
Sec. 505. (1) The board shall must consist of 1 or more 7
members, each of whom must be a natural person. The bylaws must fix 8
the number of directors shall be fixed by, or in or establish the 9
manner provided in, the bylaws, for fixing the number of directors, 10
unless the articles of incorporation fix the number or establish 11
the manner for fixing the number of directors. 12
(2) The first board of directors shall hold office until the 13
first annual meeting of shareholders. At the first annual meeting 14
of shareholders and at each subsequent annual meeting, thereafter, 15
the shareholders shall elect directors to hold office until the 16
succeeding annual meeting, except in case of the classification of 17
directors as permitted by this act. A director shall hold office 18
for the term for which he or she the director is elected and until 19
his or her the director's successor is elected and qualified, or 20
until his or her the director's resignation or removal. A director 21
may resign by written notice to the corporation. The A resignation 22
of a director is effective upon its receipt when it is received by 23
the corporation or at a later time as set forth if a later time is 24
stated in the notice of resignation. 25
(3) The shareholders or board may designate 1 or more 26
directors as an independent director. Any director so designated 27
shall be as an independent director is entitled to reasonable 28
compensation in addition to compensation paid to directors 29
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generally, as determined by the board or shareholders, and 1
reimbursement for expenses reasonably related to service as an 2
independent director. An independent director may communicate with 3
shareholders at the corporation's expense, as part of a 4
communication or report sent by the corporation to shareholders. An 5
independent director shall not have any greater duties or 6
liabilities than any other director. 7
Sec. 531. (1) The officers of a corporation shall must consist 8
of a president, secretary, treasurer, and, if desired, a chairman 9
of the board, 1 or more vice-presidents, and such other officers as 10
may be prescribed by the bylaws or determined by the board. Unless 11
otherwise provided in the articles of incorporation or bylaws, the 12
officers shall must be elected or appointed by the board, except 13
that an officer may appoint 1 or more officers if authorized by the 14
bylaws or the board. 15
(2) Two or more offices may be held by the same person but an 16
officer shall not execute, acknowledge, or verify an instrument in 17
more than 1 capacity if the instrument is required by law or the 18
articles or bylaws to be executed, acknowledged, or verified by 2 19
or more officers. 20
(3) An officer elected or appointed as herein provided in this 21
section shall hold office for the term for which he the officer is 22
elected or appointed and until his the officer's successor is 23
elected or appointed and qualified, or until his the officer's 24
resignation or removal. 25
(4) An officer, as between himself the officer and other 26
officers and the corporation, has such the authority and shall 27
perform such the duties in the management of the corporation as may 28
be provided in the bylaws, or, as may be determined by resolution 29
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of to the extent consistent with the bylaws, the duties prescribed 1
by the board not inconsistent with the bylaws.or by direction of an 2
officer authorized by the board to prescribe the duties of other 3
officers. 4
Sec. 535. (1) An Except as otherwise provided in this 5
subsection, an officer elected or appointed by the board may be 6
removed by the board at any time with or without cause by the 7
board, the appointing officer unless the bylaws or the board 8
provided otherwise, or any other officer if authorized by the 9
bylaws or the board. An officer elected by the shareholders may be 10
removed, with or without cause, only by vote of the shareholders, 11
but his the officer's authority to act as an officer may be 12
suspended by the board for cause. As used in this subsection, 13
"appointing officer" means the officer, including a successor to 14
that officer, who appointed the officer being removed. 15
(2) The removal of an officer shall be is without prejudice to 16
his the officer's contract rights, if any. The election or 17
appointment of an officer does not of itself create contract 18
rights. 19
(3) An officer may resign by written notice to the 20
corporation. The resignation is effective upon on its receipt by 21
the corporation or at a subsequent time specified in the notice of 22
resignation, including effectiveness determined on a future event 23
or events. If effectiveness of a resignation is stated to be 24
delayed and the board or the appointing officer accepts the delay, 25
the board or the appointing officer may fill the pending vacancy 26
before the delayed effectiveness, but the new officer may not take 27
office until the vacancy occurs. 28
Sec. 545b. (1) If a director or officer pursues or takes 29
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advantage of a business opportunity directly, or indirectly through 1
or on behalf of another person, that action may not be enjoined, 2
set aside, or give rise to an award of damages or other sanctions, 3
in a proceeding by a shareholder or by or in the right of the 4
corporation, on the ground that the opportunity should have first 5
been offered to the corporation, if either of the following 6
applies: 7
(a) The corporation's articles of incorporation contain a 8
provision adopted in accordance with section 209(1)(d) that 9
renounces such opportunity. 10
(b) Before the director, officer, or other person becomes 11
legally obligated with respect to the opportunity, the director or 12
officer brings the opportunity to the attention of the corporation 13
and either of the following applies: 14
(i) The board, a committee, or the independent director or 15
directors disclaiming the corporation's interest in the opportunity 16
take action in compliance with the procedures described in section 17
545a(1)(b) and (2). 18
(ii) Shareholders take action disclaiming the corporation's 19
interest in the opportunity in compliance with the procedures 20
described in section 545a(1)(c) and (3), in either case as if the 21
decision being made concerned a transaction in which a director or 22
officer is determined to have an interest, except that rather than 23
making disclosure of the material facts of the transaction and the 24
director's or officer's interest, as required in section 545a, the 25
director or officer shall have made prior disclosure to those 26
acting on behalf of the corporation of all material facts 27
concerning the business opportunity known to the director or 28
officer. For purposes of this section and the test under section 29
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545a(2), a director who has no interest in the transaction is every 1
director except a director who pursues or takes advantage of the 2
business opportunity directly, or indirectly through or on behalf 3
of another person, or has a material relationship with a director 4
or officer who pursues or takes advantage of the business 5
opportunity directly, or indirectly through or on behalf of another 6
person. For purposes of this section and the test under section 7
545a(3), a shareholder who does not have an interest in the 8
transaction is every shareholder except a shareholder who pursues 9
or takes advantage of the business opportunity directly, or 10
indirectly through or on behalf of another person, or has a 11
material relationship with a director or officer who pursues or 12
takes advantage of the business opportunity directly, or indirectly 13
through or on behalf of another person. 14
(2) In a proceeding seeking equitable relief or other remedy 15
based on an alleged improper pursuit or taking advantage of a 16
business opportunity by a director or officer directly, or 17
indirectly through or on behalf of another person, the fact that 18
the director or officer did not employ the procedure described in 19
subsection (1)(b)(i) or (ii) before pursuing or taking advantage of 20
the opportunity does not create an implication that the opportunity 21
should have been first presented to the corporation or alter the 22
burden of proof otherwise applicable to establish that the director 23
or officer breached a duty to the corporation in the circumstances. 24
Sec. 564a. (1) Except as otherwise provided in subsection (5), 25
an indemnification under section 561 or 562, unless ordered by the 26
court or required under section 563, shall may be made by the 27
corporation only as authorized in the specific case upon on a 28
determination that indemnification of the director, officer, 29
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employee, or agent is proper in the circumstances because he or she 1
the director, officer, employee, or agent has met the applicable 2
standard of conduct set forth in under sections 561 and 562 and 3
upon on an evaluation of the reasonableness of expenses and amounts 4
paid in settlement. This determination and evaluation shall may be 5
made in any of the following ways: 6
(a) By a majority vote of a quorum of the board consisting of 7
directors who are not parties or threatened to be made parties to 8
the action, suit, or proceeding. 9
(b) If a quorum cannot be obtained under subdivision (a), by a 10
majority vote of a committee duly designated by the board and 11
consisting solely of 2 or more directors not at the time parties or 12
threatened to be made parties to the action, suit, or proceeding. 13
(c) In a written opinion by independent legal counsel selected 14
in 1 of the following ways: 15
(i) By the board or its committee in the manner prescribed in 16
subdivision (a) or (b). 17
(ii) If a quorum of the board cannot be obtained under 18
subdivision (a) and a committee cannot be designated under 19
subdivision (b), by the board. 20
(d) By all independent directors who are not parties or 21
threatened to be made parties to the action, suit, or proceeding. 22
(e) By the shareholders, but shares held by directors, 23
officers, employees, or agents who are parties or threatened to be 24
made parties to the action, suit, or proceeding may not be voted. 25
(f) By 1 or more officers of the corporation to whom the board 26
has delegated the authority to make the determinations required by 27
this subsection, if the person seeking indemnification is not an 28
officer or a director of the corporation. In the board's sole 29
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discretion, the board may impose limitations on the authority of 1
any officer to make the determinations required by this subsection, 2
such as materiality limitations. 3
(2) In the designation of a committee under subsection (1)(b), 4
or in the selection of independent legal counsel under subsection 5
(1)(c)(ii), or in the delegation of authority to 1 or more officers 6
under subsection (1)(f), all directors may participate. 7
(3) If a person is entitled to indemnification under section 8
561 or 562 for a portion of expenses, including reasonable 9
attorneys' fees, judgments, penalties, fines, and amounts paid in 10
settlement, but not for the total amount, the corporation may 11
indemnify the person for the portion of the expenses, judgments, 12
penalties, fines, or amounts paid in settlement for which the 13
person is entitled to be indemnified. 14
(4) An authorization of payment of indemnification under this 15
section shall may be made in any of the following ways: 16
(a) By the board in 1 of the following ways: 17
(i) If there are 2 or more directors who are not parties or 18
threatened to be made parties to the action, suit, or proceeding, 19
by a majority vote of all directors who are not parties or 20
threatened to be made parties, a majority of whom shall constitute 21
a quorum for this purpose. 22
(ii) By a majority of the members of a committee of 2 or more 23
directors who are not parties or threatened to be made parties to 24
the action, suit, or proceeding. 25
(iii) If the corporation has 1 or more independent directors who 26
are not parties or threatened to be made parties to the action, 27
suit, or proceeding, by a majority vote of all independent 28
directors who are not parties or are threatened to be made parties, 29
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a majority of whom shall constitute a quorum for this purpose. 1
(iv) If there are no independent directors and less than 2 2
directors who are not parties or threatened to be made parties to 3
the action, suit, or proceeding, by the vote necessary for action 4
by the board in accordance with section 523, in which authorization 5
all directors may participate. 6
(b) By the shareholders, but shares held by directors, 7
officers, employees, or agents who are parties or threatened to be 8
made parties to the action, suit, or proceeding may not be voted on 9
the authorization. 10
(c) By 1 or more officers of the corporation to whom the board 11
has delegated the authority to make a payment of indemnification, 12
if the person seeking indemnification is not an officer or a 13
director of the corporation. In the board's sole discretion, the 14
board may impose limitations on the authority of any officer to 15
make a payment of indemnification, such as materiality limitations. 16
(5) To the extent that the articles of incorporation include a 17
provision eliminating or limiting the liability of a director 18
pursuant to or officer in accordance with section 209(1)(c), a 19
corporation may indemnify a director or officer for the expenses 20
and liabilities described in this subsection without a 21
determination that the director or officer has met the standard of 22
conduct set forth in sections 561 and 562, but no indemnification 23
may be made except to the extent authorized in section 564c if the 24
director or officer received a financial benefit to which he or she 25
the director or officer was not entitled, intentionally inflicted 26
harm on the corporation or its shareholders, violated section 551, 27
or intentionally committed a criminal act. In connection with an 28
action or suit by or in the right of the corporation described in 29
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section 562, indemnification under this subsection may be for 1
expenses, including attorneys' fees, actually and reasonably 2
incurred. In connection with an action, suit, or proceeding other 3
than an action, suit, or proceeding by or in the right of the 4
corporation, as described in section 561, indemnification under 5
this subsection may be for expenses, including attorneys' fees, 6
actually and reasonably incurred, and for judgments, penalties, 7
fines, and amounts paid in settlement actually and reasonably 8
incurred. 9
Sec. 711. (1) A domestic corporation owning not less than 90% 10
of the outstanding shares of each class of another domestic 11
corporation or corporations may merge the other corporation or 12
corporations into itself, or may merge itself, or itself and any 13
such subsidiary corporation or corporations, into any such 14
subsidiary corporation, without approval of the shareholders of any 15
of the corporations, except as provided in section 713. The board 16
of the parent corporation shall approve a plan of merger setting 17
forth those matters required to be set forth in a plan of merger 18
under section 701. Approval by the board of any such subsidiary 19
corporation is not required. 20
(2) If the parent corporation owns less than 100% of the 21
outstanding shares of any constituent subsidiary corporation, the 22
parent corporation shall mail promptly after the filing of the 23
certificate of merger give to each minority shareholder of record 24
of each such subsidiary corporation, unless waived in writing, a 25
written copy or summary of the plan of merger and shall comply with 26
the provisions of this chapter respecting dissenters' rights. A 27
written copy or summary under this subsection may be given 28
personally, by mail, or by electronic transmission. 29
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(3) The grant of power to merge under this section does not 1
preclude the effectuation of a merger as elsewhere provided in this 2
act. 3
Sec. 745. (1) A domestic corporation may convert into a 4
business organization if all of the following requirements are 5
satisfied: 6
(a) The conversion is permitted by the law that will govern 7
the internal affairs of the business organization after conversion 8
and the surviving business organization complies with that law in 9
converting. 10
(b) Unless subdivision (d) applies, the board of the domestic 11
corporation proposing to convert adopts a plan of conversion that 12
includes all of the following: 13
(i) The name of the domestic corporation, the name of the 14
business organization into which the domestic corporation is 15
converting, the type of business organization into which the 16
domestic corporation is converting, identification of the statute 17
that will govern the internal affairs of the surviving business 18
organization, the street address of the surviving business 19
organization, the street address of the domestic corporation if 20
different from the street address of the surviving business 21
organization, and the principal place of business of the surviving 22
business organization. 23
(ii) For the domestic corporation, the designation and number 24
of outstanding shares of each class and series, specifying the 25
classes and series entitled to vote, each class and series entitled 26
to vote as a class, and, if the number of shares is subject to 27
change before the effective date of the conversion, the manner in 28
which the change may occur. 29
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(iii) The terms and conditions of the proposed conversion, 1
including the manner and basis of converting the shares into 2
ownership interests or obligations of the surviving business 3
organization, into cash, into other consideration that may include 4
ownership interests or obligations of an entity that is not a party 5
to the conversion, or into a combination of cash and other 6
consideration. 7
(iv) The terms and conditions of the organizational documents 8
that are to govern the surviving business organization. 9
(v) Any other provisions with respect to the proposed 10
conversion that the board considers necessary or desirable. 11
(c) If the board adopts the plan of conversion under 12
subdivision (b), the plan of conversion is submitted for approval 13
in the same manner required for a merger under section 703a(2), 14
including the procedures pertaining to dissenters' rights if any 15
shareholder has the right to dissent under section 762. 16
(d) If the domestic corporation has not commenced business, 17
has not issued any shares, and has not elected a board, 18
subdivisions (b) and (c) do not apply and the incorporators may 19
approve of the conversion of the corporation into a business 20
organization by unanimous consent. To effect the conversion, the 21
majority of the incorporators must execute and file a certificate 22
of conversion under subdivision (e). 23
(e) After the plan of conversion is approved under 24
subdivisions (b) and (c) or the conversion is approved under 25
subdivision (d), the domestic corporation files any formation 26
documents required to be filed under the laws governing the 27
internal affairs of the surviving business organization, in the 28
manner prescribed by those laws, and files a certificate of 29
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conversion with the administrator. The certificate of conversion 1
shall must include all of the following: 2
(i) Unless subdivision (d) applies, all of the information 3
described in subdivision (b)(i) and (ii) and the manner and basis of 4
converting the shares of the domestic corporation contained in the 5
plan of conversion. 6
(ii) Unless subdivision (d) applies, a statement that the board 7
has adopted the plan of conversion by the board under subdivision 8
(c), or if subdivision (d) applies to the conversion, a statement 9
that the domestic corporation has not commenced business, has not 10
issued any shares, and has not elected a board and that the plan of 11
conversion was approved by the unanimous consent of the 12
incorporators. 13
(iii) A statement that the surviving business organization will 14
furnish a copy of the plan of conversion, on request and without 15
cost, to any shareholder of the domestic corporation. 16
(iv) If approval of the shareholders of the domestic 17
corporation was required, a statement that the plan was approved by 18
the shareholders under subdivision (c). 19
(v) A statement specifying each assumed name of the domestic 20
corporation to be used by the surviving business organization and 21
authorized under section 217(5). 22
(2) Section 131 applies in determining when a certificate of 23
conversion under this section becomes effective. 24
(3) When a conversion under this section takes effect, all of 25
the following apply: 26
(a) The domestic corporation converts into the surviving 27
business organization, and the articles of incorporation of the 28
domestic corporation are canceled. Except as otherwise provided in 29
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this section, the surviving business organization is organized 1
under and subject to the organizational laws of the jurisdiction of 2
the surviving business organization as stated in the certificate of 3
conversion. 4
(b) The surviving business organization has all of the 5
liabilities of the domestic corporation. The conversion of the 6
domestic corporation into a business organization under this 7
section shall does not be considered to affect any obligations or 8
liabilities of the domestic corporation incurred before the 9
conversion or the personal liability of any person incurred before 10
the conversion, and the conversion shall does not be considered to 11
affect the choice of law applicable to the domestic corporation 12
with respect to matters arising before the conversion. 13
(c) The title to all real estate and other property and rights 14
owned by the domestic corporation remain vested in the surviving 15
business organization without reversion or impairment. The rights, 16
privileges, powers, and interests in property of the domestic 17
corporation, as well as the debts, liabilities, and duties of the 18
domestic corporation, shall are not be considered, as a consequence 19
of the conversion, to have been transferred to the surviving 20
business organization to which the domestic corporation has 21
converted for any purpose of the laws of this state. 22
(d) The surviving business organization may use the name and 23
the assumed names of the domestic corporation if the filings 24
required under section 217(5) or any other applicable statute are 25
made and the laws regarding use and form of names are followed. 26
(e) A proceeding pending against the domestic corporation may 27
be continued as if the conversion had not occurred, or the 28
surviving business organization may be substituted in the 29
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proceeding for the domestic corporation. 1
(f) The surviving business organization is considered to be 2
the same entity that existed before the conversion and is 3
considered to be organized on the date that the domestic 4
corporation was originally incorporated. 5
(g) The shares of the domestic corporation that were to be 6
converted into ownership interests or obligations of the surviving 7
business organization or into cash or other property are converted. 8
(h) Unless otherwise provided in a plan of conversion adopted 9
in accordance with this section, the domestic corporation is not 10
required to wind up its affairs or pay its liabilities and 11
distribute its assets on account of the conversion, and the 12
conversion does not constitute a dissolution of the domestic 13
corporation. 14
(4) If the surviving business organization of a conversion 15
under this section is a foreign business organization, it is 16
subject to the laws of this state pertaining to the transaction of 17
business in this state if it transacts business in this state. The 18
surviving business organization is liable, and is subject to 19
service of process in a proceeding in this state, for the 20
enforcement of an obligation of the domestic corporation, and in a 21
proceeding for the enforcement of a right of a dissenting 22
shareholder of the domestic corporation against the surviving 23
business organization. 24
(5) If the conversion of a domestic corporation that is not a 25
benefit corporation into a business organization would result in 26
the shares of any voting group becoming, or being converted into or 27
exchanged for the right to receive, shares or interests in a 28
business organization that is subject to law that governs the 29
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internal affairs of the business organization that is analogous to 1
those in chapter 9A, the conversion must comply with section 2
955(3). 3
(6) (5) As used in this section and section 746, "business 4
organization" and "entity" mean those terms as defined in section 5
736(1). 6
Sec. 911. (1) A domestic corporation and each foreign 7
corporation subject to chapter 10 shall file a report with the 8
administrator no not later than May 15 of each year. The report 9
shall must be on a form approved by the administrator, signed by an 10
authorized officer or agent of the corporation, and contain all of 11
the following information: 12
(a) The name of the corporation. 13
(b) The name of its the corporation's resident agent and 14
address of its the corporation's registered office in this state. 15
(c) The names and addresses of its the corporation's 16
president, secretary, treasurer, and directors. 17
(d) General The general nature and kind of business in which 18
the corporation is engaged. 19
(e) For each foreign corporation authorized to transact 20
business in this state, the total number of authorized shares and 21
the most recent percentage used in computation of the tax required 22
by the Michigan business tax act, 2007 PA 36, MCL 208.1101 to 23
208.1601.208.1519. 24
(f) For each professional corporation, the names and addresses 25
of its shareholders and a certification that both of the following 26
are met: 27
(i) Each shareholder is a licensed person in 1 or more of the 28
professional services provided by the professional corporation. 29
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(ii) The corporation meets the other requirements of chapter 1
2A. 2
(2) A corporation that is a benefit corporation shall include 3
the annual benefit report that is required under section 961 with 4
the report under subsection (1). 5
(3) (2) A corporation that is formed or authorized to do 6
business on or after January 1 and before May 16 of a calendar year 7
is not required to file the report described in subsection (1) for 8
that calendar year. 9
(4) (3) If there are no changes in the information provided in 10
the last filed report required under subsection (1), the 11
corporation may file a report that certifies to the administrator 12
that no changes in the required information have occurred since the 13
last filed report. A report filed under this subsection shall must 14
be on a form approved by the administrator and filed no not later 15
than the date required under this section. 911.A corporation that 16
is a benefit corporation that files a report under this subsection 17
shall include the annual benefit report that is required under 18
section 961 with that report. 19
CHAPTER 9A 20
BENEFIT CORPORATIONS 21
Sec. 951. (1) As used in this chapter: 22
(a) "Benefit enforcement proceeding" means a claim asserted or 23
action brought directly by a benefit corporation, or derivatively 24
on behalf of a benefit corporation, against a director for either 25
of the following: 26
(i) A failure to pursue a public benefit. 27
(ii) A violation of a duty or standard of conduct under this 28
chapter. 29
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(b) "Minimum status vote" means an authorization or approval 1
of a corporate action that meets all of the following: 2
(i) The shareholder approval or vote requirements of this act. 3
(ii) Any shareholder approval or vote requirement that is 4
included in a provision of the articles of incorporation. 5
(iii) The approval by not less than 2/3 of the votes entitled to 6
be cast on the corporate action, and, if a voting group is entitled 7
to a vote as a separate group on the corporate action, the 8
corporate action is approved by not less than 2/3 of the votes 9
entitled to be cast by the voting group. 10
(c) "Public benefit" includes either of the following purposes 11
for which the corporation is formed, as identified in the articles 12
of incorporation under section 953: 13
(i) Creating a positive effect, or reducing a negative effect, 14
for at least 1 community or category of persons, other than 15
shareholders solely in the shareholders' capacity as shareholders, 16
or on the environment. As used in this subparagraph, "effect" 17
includes an effect that is artistic, charitable, economic, 18
educational, cultural, literary, medical, religious, social, 19
ecological, or scientific in nature. 20
(ii) Acting in a responsible and sustainable manner. 21
(d) "Responsible and sustainable manner" means the corporation 22
does both of the following: 23
(i) Pursues through the business of the corporation the 24
creation of a positive effect, or a reduction of a negative effect, 25
on society and the environment, that when taken as a whole, is 26
material in light of the corporation's size and the nature of the 27
corporation's business. 28
(ii) Considers, in addition to the interests of the 29
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shareholders, the separate interests of stakeholders known to be 1
affected by the conduct of the business of the corporation. 2
(2) If there is a conflict between a specific provision of 3
this chapter and a general provision of this act, the provision of 4
this chapter applies with respect to a benefit corporation. 5
Sec. 953. (1) A domestic corporation that meets both of the 6
following is a benefit corporation and subject to this chapter: 7
(a) The corporation is formed under this act. 8
(b) The articles of incorporation of the corporation state 9
that it is a benefit corporation. However, an amendment to the 10
articles of incorporation to include the statement described in 11
this subdivision is not effective unless it is adopted by a minimum 12
status vote. 13
(2) In addition to the purposes described in section 202(b), 14
the purposes of a benefit corporation must include 1 or more public 15
benefits, which must be identified in 1 or more provisions in the 16
articles of incorporation. 17
(3) An amendment to the articles of incorporation of a benefit 18
corporation to change the purposes of the corporation by adding, 19
amending, or deleting 1 or more public benefits is not effective 20
unless it is adopted by a minimum status vote. 21
(4) A benefit corporation may terminate its status as a 22
benefit corporation by amending its articles of incorporation to 23
remove its public benefits. However, an amendment to the articles 24
of incorporation described in this subsection is not effective 25
unless it is adopted by a minimum status vote. 26
Sec. 955. (1) In addition to the requirements of chapter 7, if 27
a domestic corporation that is not a benefit corporation is a 28
constituent corporation in a merger or an exchanging corporation in 29
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a share exchange, and the surviving or acquiring corporation will 1
be a benefit corporation under the plan of merger or share 2
exchange, the plan must be approved by a minimum status vote of 3
that constituent or exchanging corporation. 4
(2) In addition to the requirements of chapter 7, if a benefit 5
corporation is a constituent corporation in a merger or an 6
exchanging corporation in a share exchange, and the surviving or 7
acquiring corporation will not be a benefit corporation under the 8
plan of merger or share exchange, the plan must be approved by a 9
minimum status vote of that constituent or exchanging corporation. 10
(3) In addition to the requirements of chapter 7, if the 11
conversion of a domestic corporation that is not a benefit 12
corporation into a business organization would result in the shares 13
of any voting group becoming, or being converted into or exchanged 14
for the right to receive, shares or interests in a business 15
organization that is subject to law that governs the internal 16
affairs of the business organization that is analogous to those in 17
this chapter, the conversion must be approved by a minimum status 18
vote of the domestic corporation. However, if the conversion would 19
affect the shares of 1 or more, but not all, of the voting groups, 20
a minimum status vote is required only with respect to the shares 21
in the voting groups affected by the conversion. 22
(4) In addition to the requirements of chapter 7, if the 23
conversion of a benefit corporation into a business organization 24
would result in the shares of a voting group of the benefit 25
corporation becoming, or being converted into or exchanged for the 26
right to receive, shares or interests in a business organization 27
that is not subject to law that governs the internal affairs of the 28
business organization that is analogous to those in this chapter, 29
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the conversion must be approved by a minimum status vote of the 1
benefit corporation. However, if the conversion would affect the 2
shares of 1 or more, but not all, of the voting groups, a minimum 3
status vote is required only with respect to the shares in the 4
voting group affected by the conversion. 5
(5) In addition to the requirements of chapter 7, if the 6
conversion of a benefit corporation into a business organization 7
would result in the shares of a voting group of the benefit 8
corporation becoming, or being converted into or exchanged for the 9
right to receive, shares or interests in a business organization 10
that is subject to law that governs the internal affairs of the 11
business organization that is analogous to those in this chapter, 12
the conversion does not require a minimum status vote. 13
(6) Notwithstanding anything to the contrary in this section, 14
if a corporate action would result in all shares of 1 or more 15
voting groups being converted into the right to receive cash or 16
cash equivalents, approval of the transaction by a minimum status 17
vote of such voting group or groups is not required under this 18
section. 19
(7) As used in this section, "business organization" means 20
that term as defined in section 736. 21
Sec. 957. (1) The board of a benefit corporation shall 22
consider all of the following: 23
(a) The interests of the shareholders. 24
(b) The separate interest of stakeholders known to be affected 25
by the conduct of the business of the corporation. 26
(c) Each public benefit. 27
(2) A consideration made by a director of a benefit 28
corporation under subsection (1) in the discharge of the director's 29
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WAM H04046'25_HB5939_INTR_1 9esb47
duties does not constitute a violation of section 541a. 1
(3) A director who makes a business judgment in good faith 2
fulfills the director's duties under this section if the director 3
is not interested in the subject of the business judgment and is 4
informed with respect to the subject of the business judgment to 5
the extent that the director reasonably believes appropriate under 6
the circumstances. 7
(4) A director of a benefit corporation is not liable for 8
monetary damages to the corporation, the shareholders, or any 9
person that claims to be a beneficiary of a public benefit for a 10
failure to fulfill a duty arising under this chapter or solely 11
because the director performed duties in compliance with this 12
section. 13
(5) A director of a benefit corporation does not have a duty 14
to a person that is a beneficiary of a public benefit arising from 15
the status of the person as a beneficiary. 16
Sec. 959. (1) The duties of any director of a benefit 17
corporation arising under this chapter or any public benefit may be 18
enforced only in a benefit enforcement proceeding under this 19
section. A person shall not bring an action or assert a claim 20
against a benefit corporation or its directors with respect to the 21
duties under this chapter of any directors of the benefit 22
corporation or any public benefit except in a benefit enforcement 23
proceeding under this section. 24
(2) A benefit enforcement proceeding may be commenced or 25
maintained only by 1 of the following: 26
(a) Directly, by the benefit corporation. 27
(b) Derivatively, by any of the following: 28
(i) A shareholder of the benefit corporation that owns 29
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beneficially or of record, individually or collectively, as of the 1
date the benefit enforcement proceeding is instituted, either of 2
the following: 3
(A) Not less than 5% of the corporation's outstanding shares. 4
(B) If the shares of the benefit corporation are listed on a 5
national securities exchange, 5% of the corporation's outstanding 6
shares, or shares that have a market value of $5,000,000.00, 7
whichever is less. 8
(ii) Any other person specified in the articles of 9
incorporation or bylaws of the benefit corporation. 10
(3) A benefit corporation and its directors are not liable for 11
monetary damages under this chapter for any failure of the benefit 12
corporation to pursue or create a public benefit. 13
(4) An action against a director for failure to perform a duty 14
imposed under this chapter must be commenced not later than 3 years 15
after the cause of action has accrued, or not later than 2 years 16
after the time when the cause of action is discovered or should 17
reasonably have been discovered by the complainant, whichever 18
occurs first. 19
Sec. 961. (1) A benefit corporation shall prepare an annual 20
benefit report that includes all of the following: 21
(a) A summary addressing the efforts of the benefit 22
corporation during the preceding year to pursue its public 23
benefits. 24
(b) The objectives that the board has established for the 25
corporation to pursue its public benefits. 26
(c) The standards that the board has adopted to measure the 27
corporation's progress in pursuing its public benefits. 28
(d) If the articles of incorporation or bylaws require that 29
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the corporation use an independent third-party standard in 1
reporting on the corporation's progress in pursuing its public 2
benefits, or if the board has chosen to use a third-party standard, 3
a summary of the third-party standard. 4
(e) An assessment of the corporation's success in meeting the 5
objectives and standards under subdivisions (b) and (c), and 6
subdivision (d), as applicable, and the basis of the assessment. 7
(2) Subject to subsection (3), a benefit corporation shall, 8
not later than 4 months after the end of the fiscal year of the 9
benefit corporation, deliver to each shareholder, or make available 10
and provide written notice of the availability to each shareholder, 11
a copy of the annual benefit report described in subsection (1). 12
(3) The benefit corporation may distribute the annual benefit 13
report described in subsection (1) by electronic transmission or by 14
making the annual benefit report available for electronic 15
transmission. If the annual benefit report is distributed 16
electronically under this subsection, the corporation must provide 17
the annual benefit report in written form, if requested by a 18
shareholder. 19
(4) A shareholder that has not received or been given access 20
to an annual benefit report in the time described in subsection (2) 21
may make a written request that the corporation deliver or make the 22
annual benefit report available to the shareholder. 23
(5) If a benefit corporation subject to a request under 24
subsection (4) does not deliver or make the annual benefit report 25
available to the shareholders within 5 business days after 26
receiving the request under subsection (4), the requesting 27
shareholder may petition the circuit court of the county in which 28
the corporation's principal place of business or registered office 29
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is located for an order requiring the delivery of, or access to, 1
the annual benefit report. 2
(6) Except as otherwise provided in subsection (7), a benefit 3
corporation shall post its 3 most recent annual benefit reports on 4
the public portion of its website. 5
(7) If a benefit corporation does not have a website, the 6
benefit corporation shall provide a copy of its most recent annual 7
benefit report, without charge, to a person that submits a written 8
request to the benefit corporation for a copy of its most recent 9
annual benefit report. 10
(8) A benefit corporation shall include a copy of its annual 11
benefit report with the report it is required to file with the 12
administrator under section 911. A benefit corporation shall pay a 13
fee of $25.00 when the annual benefit report is delivered to the 14
administrator. The administrator's filing of a benefit report does 15
not relate to the validity or invalidity of the information 16
contained in the annual benefit report. 17
Sec. 1002. (1) A foreign corporation that receives a 18
certificate of authority under this act, until a certificate of 19
revocation or of withdrawal is issued under this act, has the same 20
rights and privileges as a domestic corporation organized for the 21
purposes set forth described in the application pursuant to for 22
which the certificate of authority is issued. Except as otherwise 23
provided in this act, the corporation is subject to the same 24
duties, restrictions, penalties, and liabilities of a similar 25
domestic corporation. 26
(2) This act does not authorize this state to regulate the 27
organization or internal affairs of a foreign corporation 28
authorized to transact business in this state.The law of the 29
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jurisdiction of formation of a foreign corporation governs the 1
internal affairs of the foreign corporation. 2
(3) A foreign corporation is not precluded from receiving a 3
certificate of authority because of a difference between the law of 4
the foreign corporation's jurisdiction of formation and the law of 5
this state. 6
Sec. 1060. (1) When delivering a document described in this 7
subsection to the administrator for filing, a person shall pay the 8
administrator whichever of the following fees apply to that 9
document: 10
(a) Articles of a domestic corporation, $10.00. 11
(b) Application of a foreign corporation for a certificate of 12
authority to transact business in this state, $10.00. 13
(c) Amendment to the articles of a domestic corporation, 14
$10.00. 15
(d) Amended application for a certificate of authority to 16
transact business in this state, $10.00. 17
(e) Certificate of merger, conversion, or share exchange under 18
chapter 7, $50.00. 19
(f) Certificate attesting to the occurrence of a merger or 20
conversion of a foreign corporation under section 1021, $10.00. 21
(g) Certificate of dissolution, $10.00. 22
(h) Application for withdrawal and issuance of a certificate 23
of withdrawal of a foreign corporation, $10.00. 24
(i) Application for reservation of corporate name, $10.00. 25
(j) Certificate of assumed name or a certificate of 26
termination of assumed name, $10.00. 27
(k) Statement of change of registered office or resident 28
agent, $5.00. 29
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(l) Restated articles of domestic corporations, $10.00. 1
(m) Certificate of abandonment, $10.00. 2
(n) Certificate of correction, $10.00. 3
(o) Certificate of revocation of dissolution proceedings, 4
$10.00. 5
(p) Certificate of renewal of corporate existence, $10.00. 6
(q) For examining a special report required by law, $2.00. 7
(r) Certificate of registration of corporate name of a foreign 8
corporation, $50.00. 9
(s) Certificate of renewal of registration of corporate name 10
of a foreign corporation, $50.00. 11
(t) Certificate of termination of registration of corporate 12
name of a foreign corporation, $10.00. 13
(u) Report required under section 911, $15.00 if paid after 14
September 30, 2027. Before October 1, 2027, the fee is $25.00. 15
(v) Certificate of validation under section 158, $50.00. 16
(2) The fees described in subsection (1) are in addition to 17
any franchise fees prescribed in this act. The administrator shall 18
not refund all or any part of a fee described in this section. 19
(3) Except as provided in subsection (9), the administrator 20
shall deposit all fees received and collected under this section in 21
the state treasury to the credit of the administrator, who may only 22
use the money credited in accordance with legislative appropriation 23
and only in carrying out those duties of the department required by 24
law. 25
(4) The fees described in this section apply to documents 26
filed by a domestic or foreign regulated investment company as that 27
term is defined in section 1064. 28
(5) If any money received by the administrator from fees paid 29
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under subsection (1)(u) is not appropriated to the department in 1
that fiscal year, the money remaining from those fees reverts to 2
the general fund of this state. 3
(6) A minimum charge of $1.00 for each certificate and 50 4
cents per folio must be paid to the administrator for certifying a 5
part of a file or record pertaining to a corporation if a fee for 6
that service is not described in subsection (1). The administrator 7
may furnish copies of documents, reports, and papers required or 8
permitted by law to be filed with the administrator, and shall 9
charge for those copies the fee established in a schedule of fees 10
adopted by the administrator with the approval of the state 11
administrative board. The administrator shall retain the revenue 12
collected under this subsection, and the department shall use it to 13
defray the costs for its copying and certifying services. 14
(7) If a domestic or foreign corporation pays fees or 15
penalties by check and the check is dishonored, or by credit card 16
and a chargeback is successful, the fee is unpaid and the 17
administrator shall rescind the filing of all related documents. 18
(8) The administrator may accept a credit card in lieu instead 19
of cash or check as payment of a fee under this act. The 20
administrator shall determine which credit cards the administrator 21
accepts for payment. 22
(9) The administrator may charge a nonrefundable fee of not 23
more than $50.00 for any document submitted or certificate sent by 24
facsimile or electronic transmission. The administrator shall 25
retain the revenue collected under this subsection and the 26
department shall use it to carry out its duties required by law. 27
(10) The administrator shall waive any fee otherwise required 28
under this section if a majority of the shares of the domestic or 29
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foreign corporation responsible for paying the fee are, and the 1
corporation provides proof satisfactory to the administrator that 2
those shares are, held by 1 or more honorably discharged veterans 3
of the Armed Forces of the United States. 4