SB-0123, As Passed House, February 14, 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.