Connecticut has adopted legislation that updates the Business Corporation Act, which governs corporations formed under Connecticut law. Many of the changes were made to track revisions in the Model Business Corporation Act, the national model act that has been adopted in more than 30 states. Some of the changes will provide greater flexibility to public companies in their shareholder relations.
Public Act 09-55 was signed by Governor Rell on May 20, 2009, and it will become effective on October 1, 2009. Among other things, the Act provides the following:
Public companies will be permitted to make their annual financial statements available to shareholders on the Internet, pursuant to regulations adopted by the U.S. Securities and Exchange Commission, rather than having to mail financial statements each year.
Public companies will be permitted, but not required, to adopt bylaws that would allow the corporation's board of directors or shareholders to adopt a majority voting standard for the election of directors. This would not change the current default rule requiring a plurality vote for directors absent a contrary by law.
Corporations would be permitted to deliver a single copy of annual reports and other financial statements to a household, if multiple shareholders share a common address and consent to such delivery arrangements.
Public corporations would no longer be subject to lawsuits by shareholders to dissolve the corporation.
Corporations that elect directors by written consent would no longer be required to hold an annual meeting of shareholders. The Act also revises the rules for written consent by fewer than all of a corporation's shareholders.
Electronic transmission of written shareholder consent is permitted if the transmission is accompanied by information that allows the determination of the date the consent was signed and that permits authentication that the consent was given by the shareholder or authorized representative.
Other amendments clarify procedures for the exercise of appraisal rights and for judicial dissolution. Changes were also made to conform language among different provisions of the act.
Connecticut adopted the Model Business Corporation Act in 1994. Public Act 09-55 is part of the ongoing process of updating Connecticut's corporation statutes to keep them current with the Model Act. The legislation was supported by the Business Law Section of the Connecticut Bar Association, which monitors business entity legislation in Connecticut, in light of the advantages of having a modern form of corporation statute with rules similar to those in other states.