Corporations

Passed

P HB 2023

Securities Act; exemptions. Clarifies that offers of a security for which registration statements under Virginia's Securities Act and the federal Securities Act of 1933 have been filed are exempt from the Securities Act only for periods that the registration statements are not effective.
Patron - Purkey

P HB 2024

Securities Act; employment of agents. Authorizes the State Corporation Commission to prescribe exceptions, by rule or regulation, to the current prohibition on the employment of an agent by more than one broker-dealer or issuer.
Patron - Purkey

P HB 2103

Professional corporations and professional limited liability companies. Authorizes the board of directors of a professional corporation to delegate managerial duties and tasks related to the corporation's operations to its agents, officers, and employees and, pursuant to an agreement, to other persons. An analogous amendment allows members or managers of a professional limited liability company to do likewise.
Patron - Ware, R.L.

P HB 2292

Limited liability companies; parties to actions, professional entities and recordation tax. Clarifies that a member of a limited liability company is not barred from being a party in an action against a limited liability company when the member has an interest in the action independent of being a member of the limited liability company. The measure also provides that (i) the terms of a limited liability company's articles of organization or operating agreement cannot alter the definition of "membership interest" as a member's share of the profits and the losses of the limited liability company and the right to receive distributions of the limited liability company's assets and (ii) the term "professional corporation" shall not be deemed to include a professional limited liability company when it is used in any section of the Virginia Professional Limited Liability Company Act or in Chapter 7 of Title 13.1, which pertains to professional corporations. Finally, the measure provides that the state recordation tax levied on every deed admitted to record and on every contract or memorandum thereof relating to real or personal property admitted to record shall not apply to any deed conveying real estate or lease of real estate to the surviving or new limited partnership or business trust upon a merger to which two or more business entities are parties. This bill is identical to SB 794.
Patron - McClellan

P HB 2603

State Corporation Commission; annual registration and filing fees. Clarifies that articles of domestication shall not be filed for a foreign stock or nonstock corporation, limited liability company, or business trust until all fees, including the annual registration fee, are paid. The measure also allows business entity documents to be filed without payment of the annual registration fee on or before, rather than prior to, the due date of the annual registration fee; moves the due date for the payment of an annual registration fee for a business trust or limited partnership from September 1 to October 1; and makes other technical amendments.
Patron - Plum

P HB 2786

Retail Franchising Act. Authorizes the State Corporation Commission to require, as a condition of franchise registration, that the franchise fees and other funds paid by a franchisee to the franchisor be escrowed or deferred until the franchisor's preopening obligations are fulfilled, if the liabilities of the franchisor or any controlling person exceed the franchisor's assets. The Commission is required to prescribe procedures regarding exemptions. The measure also clarifies that it is not unlawful for a person to grant an unregistered franchise if the franchise is exempted from registration by the Commission by rule or order.
Patron - Joannou

P SB 794

P SB 866

State Corporation Commission; property title records. Makes uniform the provisions in the various business entity statutes that relate to the recordation of certificates in circuit court deed books to maintain the continuity of title records. The measure also makes $6 the standard fee for the State Corporation Commission's issuance of certificates of fact in the various business entity acts and makes technical amendments intended to clarify and conform business entity statutes.
Patron - Watkins

P SB 1285

Virginia Stock Corporation Act. Authorizes circuit courts to appoint a custodian or receiver for a public corporation in proceedings where the directors are deadlocked or are acting fraudulently and causing irreparable injury to the corporation. The measure establishes requirements regarding approval of interested transactions involving the acquisition or conversion of shares or assets of the corporation by a person who is the beneficial owner of 20% or more of the voting power or otherwise an interested person. Other provisions (i) modify the requirements for taking corporate actions without meetings, with the consent of shareholders; (ii) authorize corporations to engage in "householding," where one copy of notices, reports, and statements are provided for all of shareholders who share a common address, with the consent of each shareholder at the address; (iii) address giving notice of appraisal rights that may be available when certain corporate actions are proposed; and (iv) establish limitations on the ability of shareholders to contest certain fundamental transactions after shareholders have approved the corporate action.
Patron - Stosch

P SB 1286

Virginia Nonstock Corporation Act. Updates the Virginia Nonstock Corporation Act to make several provisions consistent with changes to the Virginia Stock Corporation Act that were enacted in 2005, based upon recent amendments to the Model Business Corporation Act. Specific areas of substantive change include setting forth procedures for the approval of a business opportunity; defining "disinterested director"; permitting several corporate actions to be taken electronically; updating provisions regarding member voting and elections; staggering the terms of directors; indemnifying directors and officers; streamlining the process for combining corporations with other types of business entities; asserting claims against dissolved corporations; and confirming that provisions in corporate documents filed with the State Corporation Commission may be made dependent on statistical or market indices or other objectively ascertainable facts.
Patron - Stosch

Failed

F HB 2961

Stock and nonstock corporations. Clarifies several provisions authorizing notice and voting by electronic transmission under the Virginia Stock Corporation Act and Virginia Nonstock Corporation Act. Under current law, "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. The definition is amended to specifically address transmissions by electronic mail.
Patron - Bell

F SB 1258

Limited liability companies. Provides that an action of a limited liability company that is authorized by consent of less than all members, and which occurs without a meeting, prior notice or a vote, will not become effective until 10 days after written notice reasonably describing the action is given to all members who did not sign the consent.
Patron - Herring

F SB 1349

Securities Act; reporting short sales. Requires a registered broker-dealer that is selling or purchasing for a customer or its own account to notify the State Corporation Commission of the failure to settle, by delivery of securities of like kind and quality, a trade in a threshold security of an issuer domiciled in the Commonwealth or with its principal office located in the Commonwealth. The notice is required to be filed within 24 hours following the failure to settle. A broker-dealer who fails to file the notice during the period July 1, 2007, until July 1, 2008, is liable to the company for $1,000 for each business day the broker-dealer fails to provide the required notice and if the notice is not filed for six or more business days, is liable for the greater of (i) $1,000 for each business day or (ii) the sum of the sales price for each securities share in the subject trade that has not been delivered in settlement; however, if the failure occurs on or after July 1, 2008, liability increases from $1,000 to $10,000 per day. Threshold securities are equity securities that have an aggregate fail-to-deliver position for five consecutive settlement days at a registered clearing agency, total 10,000 shares or more, and are equal to at least 0.5% of the issuer's total shares outstanding. The measure applies to securities transactions occurring on or after July 1, 2007.
Patron - Potts

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