Bylaws May Provide for a Greater-Than-Plurality Vote for Election of Directors of a Listed Corporation
Currently, Section 607.0728 of the Florida Business Corporation Act (FBCA) provides for a plurality vote for directors unless otherwise provided in a company’s articles of incorporation. Under recent FBCA amendments, effective October 1, 2009, a corporation with shares listed on a national securities exchange may adopt a bylaw provision, by board or shareholder action, that fixes a greater voting requirement for the election of directors. A bylaw provision or amendment adopted by shareholders that specifies the votes necessary for the election of directors may not be further amended or repealed by the board of directors.
An Opportunity for Listed Companies to Address Recent NYSE Discretionary Voting Changes
This change is particularly important in light of the recent amendments to the New York Stock Exchange (NYSE) Rules and to the Listed Company Manual to eliminate broker discretionary voting in uncontested director elections. The amended rule applies to companies listed on any stock exchange, including Nasdaq, where the company’s shares are held by brokers that are NYSE members.
The FBCA revision permits a Florida corporation whose shares are listed on a national securities exchange to change, through a bylaw amendment, the vote required to elect directors from the "default" plurality vote to a voting requirement, such as a "majority of the votes cast," tailored to require a greater vote while addressing any uncertainty created by the NYSE discretionary voting amendment. As in the past, a corporation will have to ensure there is a quorum for the election of directors.
Requirement to Provide Annual Financial Statements Modified for E-Proxy Filers
Section 607.1620 of the FBCA requires Florida corporations to furnish annual financial statements to shareholders, generally within 120 days after the end of the company’s fiscal year. Annual financial statements are furnished by mail (defined to include facsimile transmissions, but silent as to electronic delivery). Shareholders are the holders of record unless the company establishes optional procedures to treat beneficial owners as shareholders.
A Florida corporation with an outstanding class of securities registered under Section 12 of the Securities Exchange Act of 1934 (Exchange Act), as amended, is required to comply with SEC proxy solicitation regulations. Under the regulations, such a corporation furnishes an annual report to shareholders by posting the annual report and related proxy materials on its website and notifies shareholders of the availability of those documents on the website.
Under a recent legislative amendment to the FBCA, for fiscal years beginning after December 31, 2008, companies incorporated in Florida with securities registered under Section 12 of the Exchange Act no longer have to mail annual financial statements to shareholders, but can satisfy the requirement to provide annual financial statements by furnishing their annual report to shareholders in accordance with the SEC "e-proxy" regulations.
Resignation of Directors May Be Conditioned on the Happening of a Subsequent Event
Section 607.0807 of the FBCA relating to the resignation of directors has been amended to permit a resignation that specifies a later effective date or that is conditioned upon the subsequent happening of an event, and such a resignation may provide that the resignation is irrevocable. A conforming change was made to Section 607.0809 that relates to filling vacancies on the board.