SB-1279, As Passed Senate, June 8, 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SENATE BILL No. 1279

 

 

May 23, 2006, Introduced by Senator SANBORN and referred to the Committee on Economic Development, Small Business and Regulatory Reform.

 

 

 

     A bill to amend 1982 PA 162, entitled

 

"Nonprofit corporation act,"

 

by amending sections 106, 133, 141, 143, 151, 404, 405, 407, 413,

 

441, 446, 451, 521, 525, 1103, and 1144 (MCL 450.2106, 450.2133,

 

450.2141, 450.2143, 450.2151, 450.2404, 450.2405, 450.2407,

 

450.2413, 450.2441, 450.2446, 450.2451, 450.2521, 450.2525,

 

450.3103, and 450.3144), sections 1103 and 1144 as added by 1984 PA

 

209, and by adding section 406a.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 106. (1) "Corporation" or "domestic corporation" means a

 

nonprofit corporation.

 

     (2) "Director" means an individual who is a member of the

 

board of a corporation.  , and shall be construed to be  The term

 


is synonymous with "trustee" of a corporation or other similar

 

designation.

 

     (3) "Electronic transmission" or "electronically transmitted"

 

means any form of communication that meets all of the following:

 

     (a) It does not directly involve the physical transmission of

 

paper.

 

     (b) It creates a record that may be retained and retrieved by

 

the recipient.

 

     (c) It may be directly reproduced in paper form by the

 

recipient through an automated process.

 

     Sec. 133. If a document relating to a domestic or foreign

 

corporation filed with the administrator under this act is an

 

inaccurate record of the corporation action referred to in the

 

document or was defectively or erroneously executed, or the

 

document was electronically transmitted and the electronic

 

transmission was defective, the document may be corrected by filing

 

with the administrator a certificate of correction on behalf of the

 

corporation. A certificate entitled "certificate of correction of.

 

.. (correct title of document and name of corporation)" shall be

 

signed as provided in this act with respect to the document being

 

corrected and filed with the administrator. The certificate shall

 

set forth the name of the corporation, the date the document to be

 

corrected was filed by the administrator, the provision in the

 

document as corrected or eliminated, and if the execution was

 

defective, the proper execution. The corrected document is

 

effective in its corrected form as of its original filing date

 

except as to a person who relied upon the inaccurate portion of the

 


document and was, as a result of the inaccurate portion of the

 

document, adversely affected by the correction.

 

     Sec. 141. When, under this act or the articles of

 

incorporation or bylaws of a corporation or by the terms of an

 

agreement or instrument, a corporation or the board or any

 

committee  thereof  of the board may take action after notice to

 

any person or after lapse of a prescribed period of time, the

 

action may be taken without notice and without lapse of the period

 

of time, if at any time before or after the action is completed the

 

person entitled to notice or to participate in the action to be

 

taken or, in case of a shareholder or member, by the shareholder or

 

member's attorney-in-fact, submits a signed waiver  of such  or a

 

waiver by electronic transmission of the requirements.

 

     Sec. 143. (1) When a notice or communication is required or

 

permitted by this act to be given by mail, it shall be mailed,

 

except as otherwise provided in this act, to the person to whom it

 

is directed at the address designated by that person for that

 

purpose or, if none is designated, at that person's last known

 

address. The notice or communication is given when deposited, with

 

postage prepaid, in a post office or official depository under the

 

exclusive care and custody of the United States postal service. The

 

mailing shall be registered, certified, or other first class mail

 

except where otherwise provided in this act.

 

     (2) When a notice is required or permitted by this act to be

 

given in writing, electronic transmission is written notice.

 

     (3) When a notice or communication is permitted by this act to

 

be transmitted electronically, the notice or communication is given

 


when electronically transmitted to the person entitled to the

 

notice or communication in a manner authorized by the person.

 

     Sec. 151. (1) If the administrator  fails  refuses to promptly  

 

to  file a document, other than an annual report, submitted for

 

filing under this act, the administrator shall  ,  within 10 days

 

after receipt from the person submitting the document for filing of

 

a written request for the filing of the document  ,  give written

 

notice of the refusal to file the document to that person,

 

specifying the reasons for the  failure  refusal to file the

 

document.  From the disapproval the person may seek judicial review

 

pursuant to sections 103, 104, and 106 of Act No. 306 of the Public

 

Acts of 1969, as amended, being sections 24.303, 24.304, and 24.306

 

of the Michigan Compiled Laws.  If the document was not originally

 

submitted by electronic transmission, the administrator shall not

 

give the written notice by electronic transmission. The person may

 

seek judicial review of the refusal to file the document pursuant

 

to sections 103, 104, and 106 of the administrative procedures act

 

of 1969, 1969 PA 306, MCL 24.303, 24.304, and 24.306.

 

     (2) If the administrator refuses or revokes the authorization

 

of a foreign corporation to conduct affairs in this state pursuant

 

to this act, the foreign corporation may seek judicial review

 

pursuant to sections 103, 104, and 106 of  Act No. 306 of the

 

Public Acts of 1969, as amended  the administrative procedures act

 

of 1969, 1969 PA 306, MCL 24.303, 24.304, and 24.306.

 

     Sec. 404. (1) Except as otherwise provided in this act,  

 

written  notice of the time, place, if any, and purposes of a

 

meeting of shareholders or members shall be given in any of the

 


following manners:

 

     (a) By written notice, given personally, by mail, or by

 

electronic transmission, not less than 10 nor more than 60 days

 

before the date of the meeting  , either personally or by mail,  to

 

each shareholder or member of record entitled to vote at the

 

meeting.  , or may be included by being

 

     (b) By including the notice, prominently displayed, in a

 

newspaper or other periodical regularly published at least

 

semiannually by or in behalf of the corporation and addressed and

 

mailed,  at  postage  rates complying with the regulations of the

 

United States postal service addressed  prepaid, to a member or

 

shareholder entitled to vote at the meeting not less than 10 nor

 

more than 60 days before the meeting.

 

     (2)  When  If a meeting is adjourned to another time or place,

 

it is not necessary, unless the bylaws otherwise provide, to give

 

notice of the adjourned meeting if the time and place to which the

 

meeting is adjourned are announced at the meeting at which the

 

adjournment is taken.  and at  At the adjourned meeting, only  such  

 

business  is transacted as  that might have been transacted at the

 

original meeting may be transacted if a notice of the adjourned

 

meeting is not given.  However, if  If after the adjournment the

 

board fixes a new record date for the adjourned meeting, a notice

 

of the adjourned meeting shall be given to each shareholder or

 

member of record on the new record date entitled to notice under

 

subsection (1).

 

     (3) Attendance of a person at a meeting of shareholders or

 

members, in person or by proxy, constitutes a waiver of objection

 


to lack of notice or defective notice of the meeting,  except when  

 

unless the shareholder or member  attends a meeting for the express

 

purpose of objecting, at the beginning of  at the beginning of the

 

meeting objects to holding the meeting  , to the transaction of any  

 

or transacting business  because  at the meeting.  is not lawfully

 

called or convened.

 

     (4) If a shareholder or member is permitted to participate in

 

and vote at a meeting by remote communication under section 405,

 

the notice described in subsection (1) shall include a description

 

of the means of remote communication by which a shareholder or

 

member may participate.

 

     Sec. 405. (1) A corporation may provide in its articles of

 

incorporation or in its bylaws for a shareholder's or member's

 

participation in a meeting of shareholders or members by a

 

conference telephone or  similar communications equipment  other

 

means of remote communication by which all persons participating in

 

the meeting may hear each other if all participants are advised of

 

the  communications equipment  means of remote communication in use

 

and the names of the participants in the  conference  meeting are

 

divulged to all participants.

 

     (2) Participation in a meeting pursuant to this section

 

constitutes presence in person at the meeting.

 

     (3) Unless otherwise restricted by the articles of

 

incorporation or bylaws, the board of directors may hold a meeting

 

of shareholders or members conducted solely by means of remote

 

communication.

 

     (4) Subject to any guidelines and procedures adopted by the

 


board of directors, shareholders and members not physically present

 

at a meeting of shareholders may participate in the meeting by

 

means of remote communication and are considered present in person

 

and may vote at the meeting if all of the following are met:

 

     (a) The corporation implements reasonable measures to verify

 

that each person considered present and permitted to vote at the

 

meeting by means of remote communication is a shareholder or

 

member.

 

     (b) The corporation implements reasonable measures to provide

 

each shareholder and member a reasonable opportunity to participate

 

in the meeting and to vote on matters submitted to the shareholders

 

or members, including an opportunity to read or hear the

 

proceedings of the meeting substantially concurrently with the

 

proceedings.

 

     (c) If any shareholder or member votes or takes other action

 

at the meeting by means of remote communication, a record of the

 

vote or other action is maintained by the corporation.

 

     (d) A shareholder or member may be present and vote at an

 

adjourned meeting of the shareholders or members by a means of

 

remote communication if he or she was permitted to be present and

 

vote by that means of remote communication in the original meeting

 

notice given under section 404.

 

     Sec. 406a. In addition to any other form of notice to a

 

shareholder or member permitted by the articles of incorporation,

 

the bylaws, or this chapter, any notice given to a shareholder or

 

member by a form of electronic transmission to which the

 

shareholder or member has consented is effective.

 


Senate Bill No. 1279 as amended June 7, 2006

 

     Sec. 407. (1) The articles of incorporation may provide that

 

any action required or permitted by this act to be taken at an

 

annual or special meeting of shareholders or members may be taken

 

without a meeting, without prior notice, and without a vote, if <<a

 

consent consents>> in writing, setting forth the action  so  taken,

<<is are>> signed

 

and dated by the holders of outstanding stock or members having not

 

less than the minimum number of votes that would be necessary to

 

authorize or take the action at a meeting at which all shares or

 

members entitled to vote  thereon  on the action were present and

 

voted. Prompt notice of the taking of the corporate action without

 

a meeting by less than unanimous written consent shall be given to

 

shareholders or members who have not consented in writing.

 

     (2) If  the  an action consented to under this section would

 

have required filing of a certificate under any other section of

 

this act  ,  if  such  the action had been voted upon by

 

shareholders or members at a meeting  thereof  of the shareholders

 

or members, the certificate filed under  such  that other section

 

shall state, in lieu of any statement required by that section

 

concerning a vote of shareholders or members, that both written

 

consent and written notice have been given as provided in this

 

section.

 

     (3) Any action required or permitted by this act to be taken

 

at an annual or special meeting of shareholders or members may be

 

taken without a meeting, without prior notice, and without a vote,

 

if all the shareholders or members entitled to vote  thereon  on

 

the action consent  thereto  to the action in writing.

 

     (4) An electronic transmission consenting to an action

 


transmitted by a shareholder or member, or by a person authorized

 

to act for the shareholder or member, is written, signed, and dated

 

for the purposes of this section if the electronic transmission is

 

delivered with information from which the corporation can determine

 

that the electronic transmission was transmitted by the shareholder

 

or member, or by a person authorized to act for the shareholder or

 

member, and the date on which the electronic transmission was

 

transmitted. The date on which an electronic transmission is

 

transmitted is the date on which the consent was signed for

 

purposes of this section. A consent given by electronic

 

transmission is not delivered until reproduced in paper form and

 

the paper form delivered to the corporation by delivery to its

 

registered office in this state, its principal office in this

 

state, or an officer or agent of the corporation having custody of

 

the book in which proceedings of meetings of shareholders or

 

members are recorded. Delivery to a corporation's registered office

 

shall be made by hand or by certified or registered mail, return

 

receipt requested. Delivery to a corporation's principal office in

 

this state or to an officer or agent of the corporation having

 

custody of the book in which proceedings of meetings of

 

shareholders or members are recorded shall be made by hand, by

 

certified or registered mail, return receipt requested, or in any

 

other manner provided in the articles of incorporation or bylaws or

 

by resolution of the board of the corporation.

 

     Sec. 413. (1) The officer or agent having charge of the

 

shareholder or membership records of a corporation shall make and

 

certify a complete list of the shareholders or members entitled to

 


Senate Bill No. 1279 as amended June 7, 2006

 

vote at a shareholders' or members' meeting or any <<adjournment

 

thereof  adjourned shareholders' or members'>> meeting. The list shall

 meet all of the following:

 

     (a) Be arranged alphabetically within each class with the

 

address of each member or shareholder and the number of shares held

 

by each shareholder.

 

     (b) Be produced at the time and place of the meeting.

 

     (c) Be  subject  open to  inspection  examination by any

 

shareholder or member during the  whole time of the  entire

 

meeting. If the meeting is held solely by means of remote

 

communication, then the list shall be open to the examination of

 

any shareholder or member during the entire meeting by posting the

 

list on a reasonably accessible electronic network, and the

 

information required to access the list shall be provided with the

 

notice of the meeting.

 

     (d) Be prima facie evidence as to who are the shareholders or

 

members entitled to examine the list or to vote at the meeting.

 

     (2) If the requirements of this section have not been complied

 

with, <<on demand of and>> a shareholder or member <<present>> in person

or by proxy<<,

 

who>> in good faith challenges the existence of sufficient votes to

 

carry any action at the meeting, the meeting shall be adjourned

 

until the requirements are complied with. Failure to comply with

 

the requirements of this section does not affect the validity of an

 

action taken at the meeting before the making of  such  a <<demand

challenge>>

 

under this subsection.

 

     Sec. 441. (1) Each outstanding share or member is entitled to

 

1 vote on each matter submitted to a vote, unless otherwise

 

provided pursuant to section 303 or 304. A vote may be cast either

 


orally or in writing, unless otherwise provided in the bylaws. In

 

addition, the bylaws may provide for voting by electronic

 

transmission.

 

     (2) When an action, other than the election of directors, is

 

to be taken by vote of the shareholders or members, it shall be

 

authorized by a majority of the votes cast by the holders of shares

 

or members entitled to vote  thereon  on that action, unless a

 

greater plurality is required by the articles of incorporation or

 

another section of this act. Except as otherwise provided by the

 

articles, directors shall be elected by a plurality of the votes

 

cast at an election.

 

     Sec. 446. The vote of shares or a membership held by 2 or more

 

persons as joint tenants or as tenants in common may be cast or

 

voted at a meeting of shareholders or members by any of  such  

 

those persons, unless another joint tenant or tenant in common

 

seeks to vote in person or by proxy. In the latter event, the

 

written agreement, if any, which governs the manner in which the

 

shares or membership shall be voted, controls if presented at the

 

meeting, either physically or by means of electronic transmission.

 

If  no such  the agreement is not presented at the meeting, the

 

majority in interest of the joint  tenant  tenants or tenants in

 

common present shall control the manner of voting. In the case of a

 

stock corporation, if there is no  such  majority in interest of

 

the joint tenants or tenants in common present, the shares, for the

 

purpose of voting, shall be divided among  such  those joint

 

tenants or tenants in common in accordance with their interest in

 

the shares.

 


     Sec. 451. The articles of incorporation may provide that a

 

shareholder or member entitled to vote at an election for directors

 

may vote, in person,  or  by proxy, or by electronic transmission,

 

for as many persons as there are directors to be elected and for

 

whose election the shareholder or member has a right to vote, or to

 

cumulate votes by giving 1 candidate as many votes as the number of

 

such  those directors multiplied by the number of shares held by

 

the shareholder or member, or by distributing the votes of the

 

shareholder or member on the same principle among any number of the

 

candidates.

 

     Sec. 521. (1) Regular or special meetings of a board may be

 

held either  within or without  in or outside of this state.

 

     (2) A regular meeting may be held with or without notice as

 

prescribed in the bylaws. A special meeting shall be held upon

 

notice as prescribed in the bylaws. Attendance of a director at a

 

meeting constitutes a waiver of notice of the meeting, except where

 

a director attends a meeting for the express purpose of objecting

 

to the transaction of any business because the meeting is not

 

lawfully called or convened. Neither the business to be transacted

 

at, nor the purpose of, a regular or special meeting need be

 

specified in the notice or waiver of notice of the meeting unless

 

required by the bylaws.

 

     (3) Unless otherwise restricted by the articles of

 

incorporation or bylaws, a member of the board or of a committee

 

designated by the board may participate in a meeting by means of

 

conference telephone or  similar communications equipment  other

 

means of remote communication by  means of  which all persons

 


Senate Bill No. 1279 as amended June 7, 2006

 

participating in the meeting can  hear  communicate with each

 

other. Participation in a meeting pursuant to this subsection

 

constitutes presence in person at the meeting.

 

     Sec. 525. Unless  otherwise provided  prohibited by the

 

articles of incorporation or bylaws, action <<required or permitted

 

to                         >> be taken  pursuant to  under

authorization

 

voted at a meeting of the board or a committee  thereof  of the

 

board may be taken without a meeting if, before or after the

 

action, all members of the board then in office or of the committee

 

consent  thereto  to the action in writing or by electronic

 

transmission. The written consents shall be filed with the minutes

 

of the proceedings of the board or committee. The consent has the

 

same effect as a vote of the board or committee for all purposes.

 

     Sec. 1103. (1) "Consumer" means a natural person who acquires,

 

or commits to acquire in the future from the cooperative primarily

 

for consumption, use, or occupancy by the person or the person's

 

family, any of the goods, services, or facilities furnished by the

 

cooperative.

 

     (2) "Consumer cooperative" means a cooperative the majority of

 

the votes of which are held by consumers, or, in the case of a

 

cooperative which provides residential dwelling units, the majority

 

of the votes of which are held by consumers and the majority of

 

members of which do not have the right of possession or occupancy

 

of dwelling units they do not occupy.

 

     (3) "Cooperative" means a corporation organized on a

 

cooperative basis or similar basis  which  that is provided in law

 

as a criterion for being a cooperative.

 


     (4) "Cooperative basis" means:

 

     (a) That, subject to section 1133, each member has 1 vote,

 

except as provided in this chapter.  or, subject to section 1133.

 

     (b) That the dividends, if any, paid on member capital do not

 

exceed 8% per year.

 

     (c) That the net savings are distributed as provided in

 

section 1135.

 

     (d) That business is engaged in for the mutual benefit of its

 

members.

 

     (5) "Electronic transmission" or "electronically transmitted"

 

means any form of communication that meets all of the following:

 

     (a) It does not directly involve the physical transmission of

 

paper.

 

     (b) It creates a record that may be retained and retrieved by

 

the recipient.

 

     (c) It may be directly reproduced in paper form by the

 

recipient through an automated process.

 

     (6)  (5)  "Foreign cooperative" means a corporation organized

 

under laws other than the laws of this state operating on a

 

cooperative basis or a similar basis  which  that is provided in

 

such  those other laws as a criterion for being a cooperative.

 

     Sec. 1144. (1) Notwithstanding section 421, there shall be no

 

proxies unless the articles of incorporation or bylaws  so provide,

 

in which case no  authorize use of proxies. If the articles of

 

incorporation or bylaws authorize use of proxies, an individual may

 

not vote more than 5 proxies  may be voted by any 1 person  at any

 

meeting.

 


     (2) The articles or bylaws may provide a method by which

 

members may vote on matters submitted to a vote of members by mail

 

ballot,  or  referendum, or electronic transmission.