SF1431

SF1431 (Legislative Session 94 (2025-2026))

Minnesota Business Corporation Act provisions modifications

Related bill: HF747

AI Generated Summary

The legislative bill S.F. No. 1431 proposes changes to the Minnesota Business Corporation Act by modifying existing sections and adding new provisions related to corporate governance, beneficial ownership definitions, and mechanisms for addressing and rectifying corporate errors known as "defective corporate acts." Key aspects include:

Definition of Beneficial Ownership: The bill expands the definition of a beneficial owner. This includes anyone who, directly or indirectly, can control or influence the voting of shares, or dispose of securities, except under certain circumstances such as shares tendered under a tender or exchange offer.
Defective Corporate Acts: Introduces definitions and remedies for "defective corporate acts" (e.g., unauthorized corporate actions due to lack of proper approval) by providing a framework under which these acts can be ratified and made valid retrospectively.
Emergency Provisions: Specifies procedures and powers for corporate action during emergencies, such as natural disasters or other conditions that prevent the normal operation of the corporation.
Standard and Liability of Conduct: Addresses standards for corporate officer conduct and the potential for limiting personal liability in specific scenarios concerning their decision-making.
Transparency and Record-Keeping: Enhancements to shareholders’ rights to inspect certain corporate records, ensuring transparency and proper documentation.
Shareholder Rights: Updates mechanisms by which shareholders can dissent from certain corporate actions and potentially seek compensation under specific conditions.

This bill aims to refine and clarify corporate governance standards, address problematic corporate actions retrospectively, ensure better transparency, and provide clear definitions and remedies for issues related to beneficial ownership and emergency operation of companies registered in Minnesota.

Bill text versions

Introduction PDF file

Actions

Date	Chamber	Where	Type	Name	Committee Name
February 16, 2025	Senate	Floor	Action	Introduction and first reading
February 16, 2025	Senate	Floor	Action	Referred to	Judiciary and Public Safety
	Senate	Note	Action	HF substituted in committee

Citations

[
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This section defines 'Beneficial owner' and specifies conditions under which a person is deemed or not deemed a beneficial owner regarding voting rights of shares or securities.",
      "modified": [
        "Clarified definitions and conditions under which a person is considered a beneficial owner of shares or securities."
      ]
    },
    "citation": "302A.011, subdivision 41"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Provides the general business purposes and powers of a corporation.",
      "modified": []
    },
    "citation": "302A.101"
  },
  {
    "analysis": {
      "added": [
        "A new subdivision regarding emergency powers is added."
      ],
      "removed": [],
      "summary": "Relates to the general powers of a corporation",
      "modified": []
    },
    "citation": "302A.161"
  },
  {
    "analysis": {
      "added": [
        "New subdivision regarding emergency bylaws."
      ],
      "removed": [],
      "summary": "Section 302A.181 is amended by adding new provisions.",
      "modified": []
    },
    "citation": "302A.181"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Relates to voting rights of shareholders.",
      "modified": [
        "Subdivision 2 is amended regarding cumulative voting for directors.",
        "Amendments affecting voting rights and director elections affect dissenters' rights under section 302A.215 subdivision 1."
      ]
    },
    "citation": "302A.215"
  },
  {
    "analysis": {
      "added": [
        "A new subdivision regarding authorization of agreements."
      ],
      "summary": "Relates to the requirement for a majority affirmative vote by directors for board action."
    },
    "citation": "302A.237"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Relates to written actions by the board taken without a meeting.",
      "modified": []
    },
    "citation": "302A.239"
  },
  {
    "analysis": {
      "added": [],
      "notes": [
        "Approval from the board is required for issuance of securities and rights to purchase them as per subdivision 1.",
        "Provisions related to classes, series, and par value of shares are found in subdivision 2 clauses a, b, and c."
      ],
      "removed": [],
      "summary": "Provides provisions for the issuance of securities and rights to purchase them.",
      "modified": [
        "Subdivision 1 and 2 clauses a, b, and c are affected in various articles."
      ]
    },
    "citation": "302A.401"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Describes the board or shareholders' authority regarding the issuance of shares, share dividends, divisions, or combinations.",
      "modified": [
        "Subdivision 1 is modified to include details on issuance for consideration and determining nonmonetary consideration.",
        "Subdivision 2 discusses the conditions for issuing shares for a consideration less than the par value."
      ]
    },
    "citation": "302A.405"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Relates to the issuance of rights to purchase securities.",
      "modified": []
    },
    "citation": "302A.409"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Discusses shareholder preemptive rights.",
      "modified": []
    },
    "citation": "302A.413"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "States the required vote for shareholder actions.",
      "modified": [
        "Subdivision 1: Requirement for an affirmative vote of the majority of voting power of shareholders."
      ],
      "additional_context": [
        "This section is mentioned in the context of broader amendments to other statutory provisions."
      ]
    },
    "citation": "302A.437"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Deals with the reissuance of shares acquired by the corporation.",
      "modified": [
        "Subdivision 1 is referenced regarding the reissuance of shares acquired by the corporation."
      ]
    },
    "citation": "302A.553"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Section 302A.445 subdivision 3 relates to voting rights and is referenced regarding shareholder voting.",
      "modified": [
        "Subdivision 3: Each share has one vote unless article provisions state otherwise."
      ]
    },
    "citation": "302A.445"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This part pertains to shareholder control agreements.",
      "modified": [
        "This section is referenced in multiple additions and amendments to determine shareholder rights and control."
      ]
    },
    "citation": "302A.457"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Concerns voting requirements for directors.",
      "modified": [
        "Subdivision 2 is amended regarding voting for shareholders' action.",
        "Referenced regarding voting requirements for the ratification of directors' election."
      ]
    },
    "citation": "302A.215"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Subdivision 1 pertains to the reissuance of shares acquired by the corporation.",
      "modified": []
    },
    "citation": "302A.553"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Relates to written action of shareholders and voting processes.",
      "modified": [
        "Section 302A.441 mentions written actions of shareholders must be signed by all shareholders."
      ]
    },
    "citation": "302A.441"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Section 302A.471 is amended regarding dissenters' rights.",
      "modified": [
        "Subdivision 1 clause a: Specified amendments of the articles create dissenters' rights",
        "Subdivision 3: Describes exceptions and limitations on dissenters' rights."
      ]
    },
    "citation": "302A.471"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Deals with remote communication for shareholder participation.",
      "modified": []
    },
    "citation": "302A.436"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Section 302A.673 is referenced regarding failures of compliance with the ratification of corporate acts.",
      "modified": []
    },
    "citation": "302A.673"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Section 302A.626 is referenced in connection with plans of merger.",
      "modified": []
    },
    "citation": "302A.626"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Surrounds the sale, lease, transfer or disposition of property or assets requiring shareholder approval.",
      "modified": [
        "This section is referenced regarding the requirement for shareholder approval in the sale or disposition of property and assets under subdivision 2."
      ]
    },
    "citation": "302A.661"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Section concerning the disposition of property during dissolution.",
      "modified": [
        "Subdivision 2 is referenced in connection with sale or transfer of assets not requiring shareholder approval."
      ]
    },
    "citation": "302A.725"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "General statute governing instruction to legal actions.",
      "modified": [
        "Referenced in Sec.20 regarding proceedings to determine validity of defective corporate acts."
      ]
    },
    "citation": "302A.013"
  }
]