SB-0123, As Passed Senate, February 19, 2008

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 123

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1982 PA 162, entitled

 

"Nonprofit corporation act,"

 

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

 

421, 441, 446, 451, 521, 525, 901, 1103, and 1144 (MCL 450.2106,

 

450.2133, 450.2141, 450.2143, 450.2151, 450.2404, 450.2405,

 

450.2407, 450.2413, 450.2421, 450.2441, 450.2446, 450.2451,

 

450.2521, 450.2525, 450.2901, 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

 


Senate Bill No. 123 as amended April 18, 2007

                    as amended February 14, 2008

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 [ANY PROVISIONS OF] 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 <<or>> members not physically present

 


Senate Bill No. 123 as amended April 18, 2007

                    as amended February 14, 2008

at a meeting of shareholders <<or members>> 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 [OR] 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.

 

     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

 

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. 421. (1) Except as otherwise provided in the articles of

 

incorporation or in a bylaw adopted by the shareholders or members,

 

a shareholder or member entitled to vote at a meeting of

 


shareholders or members or to express consent or dissent without a

 

meeting may authorize other persons to act for the shareholder or

 

member by proxy.

 

     (2) A proxy shall be signed by the shareholder or member or an

 

authorized agent or representative. A proxy is not valid after the

 

expiration of 3 years from its date unless otherwise provided in

 

the proxy.

 

     (3) A proxy is revocable at the pleasure of the shareholder or

 

member executing it, except as otherwise provided in this section

 

and sections 422 and 423.

 

     (4) The authority of the holder of a proxy to act is not

 

revoked by the incompetence or death of the shareholder or member

 

who executed the proxy unless, before the authority is exercised,

 

written notice of an adjudication of the incompetence or death is

 

received by the corporate officer responsible for maintaining the

 

list of shareholders or members.

 

     (5) Without limiting the manner in which a shareholder or

 

member may authorize another person or persons to act for him or

 

her as proxy under subsection (1), each of the following methods

 

constitute a valid means by which a shareholder or member may grant

 

authority to another person to act as proxy:

 

     (a) Delivering a writing to the person authorizing that person

 

to act for the shareholder or member as proxy, executed by the

 

shareholder or member, or by an authorized officer, director,

 

employee, or agent of the shareholder or member, by signing the

 

writing or causing his or her signature to be affixed to the

 

writing by any reasonable means, including, but not limited to,

 


facsimile signature.

 

     (b) Transmitting or authorizing the transmission of a

 

telegram, cablegram, or other means of electronic transmission to

 

the person who will hold the proxy or to a proxy solicitation firm,

 

proxy support service organization, or similar agent fully

 

authorized by the person who will hold the proxy to receive that

 

transmission. Any telegram, cablegram, or other means of electronic

 

transmission must either set forth or be submitted with information

 

from which it can be determined that the telegram, cablegram, or

 

other electronic transmission was authorized by the shareholder or

 

member. If a telegram, cablegram, or other electronic transmission

 

is determined to be valid, the inspectors or, if there are no

 

inspectors, the persons making the determination shall specify the

 

information upon which they relied.

 

     (6) A copy, facsimile telecommunication, or other reliable

 

reproduction of the writing or transmission created under

 

subsection (5) may be substituted or used in lieu of the original

 

writing or transmission for any purpose for which the original

 

writing or transmission could be used, if the copy, facsimile

 

telecommunication, or other reproduction is a complete reproduction

 

of the entire original writing or transmission.

 

     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

 

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. 901. (1) Each domestic corporation at least once in each

 

year shall cause a report of the corporation for the preceding

 

fiscal year to be made and distributed to each shareholder or

 

member thereof or presented at the annual meeting of shareholders

 

or members, or, if the corporation is organized upon a directorship

 

basis, at the annual meeting of the board. The report shall include

 

the corporation's year-end statement of assets and liabilities,

 

including trust funds, and the principal change in assets and

 

liabilities during the year preceding the date of the report and,

 

if prepared by the corporation, its source and application of funds

 

and any other such information as may be required by this act.

 

     (2) A corporation may distribute the financial report required

 

under subsection (1) electronically, either by electronic

 

transmission of the report or by making the report available for

 

electronic transmission. If the report is distributed

 

electronically under this subsection, the corporation shall provide

 

the report in written form to a shareholder or member on request.

 

     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.