United States: Changes To The Business Corp. Act Are In Effect - Do Your Company's Bylaws Need Updating?

Published in the Portsmouth Herald

On January 1, 2014, changes to the law governing New Hampshire business corporations (the New Hampshire Business Corporation Act, NH RSA 293-A) went into effect. The updated statute reflects the current best practices relating to the governance of New Hampshire corporations and includes provisions for electronic notification and communication with shareholders and directors. As these changes go into effect, New Hampshire corporations should consider updating their bylaws to take advantage of the updated laws.  Below is a summary of key changes to the corporate laws and situations where a corporation may want to consider amending its bylaws.

1. Annual Meeting of Shareholders: The New Hampshire corporate law provides that the annual meeting of shareholders may be conducted by written consent of the shareholders. Although many corporations assumed that the prior version of the New Hampshire Business Corporation Act authorized this action, the revised act codifies this common practice, and makes it clear that directors may be elected by written consent in lieu of an annual meeting.

2. Written Consents of Shareholders now need to be dated: The requirements of written consents of shareholders have changed and now require that each shareholder who signs a written consent include a date with his/her signature. The revised corporate law does not require that a director's signature be dated. Shareholders must be aware of this requirement in order to ensure that the consents that they sign are valid.

3. Participation in a Shareholder Meeting by Remote Communication: The revised corporate law provides that shareholders may participate in a shareholder meeting by means of remote communication if such participation is authorized by the board of directors and the corporation has adopted reasonable measures to verify (a) that each person participating remotely is a shareholder, and (b) such shareholders are provided with a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to communicate, and to read or hear the proceedings of the meeting, substantially concurrently with such proceedings. Boards of Directors may want to evaluate their procedures for holding shareholder meetings and include in their bylaws that the corporation will take appropriate steps to meet the requirements set forth in the revised statute.

4. Proxies: The revised corporate law allows proxies to be appointed by electronic transmission. This change makes it easier for shareholders to appoint proxies. In order to take advantage of this change, a corporation may want to amend its bylaws to expressly provide that proxies may be appointed by electronic transmission.

5. Notice: The revised corporate law allows for the delivery of notices and other communications by electronic transmission if the recipient consents to receiving such notices and communications by electronic transmission. With regard to communication with shareholders corporations must have each of its shareholders who will receive electronic notification execute a written consent authorizing delivery of notices and other communications by electronic transmission.  For communication with directors, the corporation must either obtain a written consent or authorize delivery of notices and other communication electronically in the corporation's articles of incorporation or bylaws.

6. The Conduct of Meetings: The revised New Hampshire corporate law provides that at each meeting of shareholders, a chair shall preside at the meeting and the chair shall have the authority to determine the order of the of business at the meeting and establish the rules of conduct for the meeting. This is a new provision and corporations may need to amend their bylaws to make it clear who will serve as chair at the shareholder meetings.

In addition to the changes listed above, there are a number of technical changes that improve the ability of a corporation to operate in New Hampshire. New Hampshire corporations must be aware of the changes that went into effect on January 1, 2014, in order to take advantage of these changes and to ensure that the actions taken by the corporation's shareholders and board of directors are valid.

Patrick Closson serves as vice chair of the Corporate Department at McLane, Graf, Raulerson & Middleton and as managing director of the firm's Portsmouth office.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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