The Florida Business Corporation Act (“FBCA”) has been revised (“Revised Act”). The changes went into effect on January 1, 2020. When adopted in 1989, the FBCA was created using the American Bar Association’s Model Business Corporation Act (“Model Act”) as a guide. The Model Act was modernized in 2016. Conversely, the FBCA underwent some changes in 1996 and 2003, which were consistent with changes made to the Model Act; however, the FBCA has not undergone a full modernization in line with the Model Act’s 2016 overhaul – until now.
The Revised Act is the product of the work of the Chapter 607 Drafting Subcommittee of the Corporations, Securities and Financial Services Committee of the Florida’ Bar’s Business Law Section. When tasked with making recommendations for revisions to the FBCA, the Subcommittee’s mission was to create a more comprehensive statute that is harmonious with the 2016 Model Business Corporation Act as well as the Florida Limited Liability Company Act. The Subcommittee’s recommendations were unanimously passed by the Florida House of Representatives on April 25, 2019 and unanimously passed by the Florida Senate on April 30, 2019. Governor DeSantis signed the changes into law on June 7, 2019.
Enacting these changes has become increasingly important in Florida, particularly due to the large number of entities organized in the state. At the end of 2018, Florida had almost 780,000 corporations and almost 1.3 million limited liability companies. During the course of 2018, more than 100,000 corporations were organized, and more than 300,000 limited liability companies were organized. The Subcommittee modernized the Revised Act to include a wealth of commentary and explanations, as well as simplified and clarified language. These changes accommodate non-lawyers who use Florida’s entity statutes as well as lawyers who are non-experts in matters of corporate law.
If you have an existing Florida corporation, no changes in the Revised Act will be retroactively effective against you or require immediate action to change your corporate documents as they exist. However, it is prudent to review the Revised Act to ensure you are complying with the new changes in your corporate procedures. For example, Section 607.0832 no longer permits an “unfair” director conflict of interest to exist even if it is approved by qualified directors or disinterested shareholders. Further, a review of the Revised Act and your corporate documents is important so that you might consider actions now permitted by the Revised Act that may positively impact your business. For example, Section 607.0124 now provides that a corporate document may be corrected at any time. This is significant change from the FBCA prior to its revision, as the same only permitted corrections within 30 days of the date of filing the corporate document. The Revised Act now allows for corrections to be made even years after a filing. This relates to a correction, such as an inaccuracy or a defective signature, as opposed to a material amendment. Additionally, Section 607.0141 has been modernized to consider the extensive use of electronic transmissions. This section provides that notice or other communications to a director may be delivered by electronic transmission if consented to by the recipient director; however, such consent is not required if the articles or bylaws require or authorize electronic transmission of notice or communications to a director.
There are numerous additional revised provisions to the FBCA aside from the examples provided above. If you have an existing corporation or are thinking about forming a corporation, Hunter Business Law can advise you regarding the relevant statutory changes and help you to update your corporate processes or documents or assist you in forming a new corporation. To arrange a consultation, visit our contact page HERE. To view the Revised Act and commentary, visit the link HERE.
This Blog was written by Hunter Business Law Attorney Stephanie Boussias.
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