Bill Summary for H 320 (2021-2022)

Summary date: 

Mar 16 2021

Bill Information:

View NCGA Bill Details2021
House Bill 320 (Public) Filed Tuesday, March 16, 2021
AN ACT TO MODIFY AUTHORIZATION TO CONDUCT MEETINGS BY MEANS OF REMOTE COMMUNICATION FOR CERTAIN ENTITIES, TO AUTHORIZE NONPROFIT CORPORATIONS TO CONDUCT ALL BUSINESS ELECTRONICALLY UNLESS PROHIBITED IN THEIR ARTICLES OF INCORPORATION OR BYLAWS, TO MAKE TECHNICAL CHANGES IN THE SURROUNDING LANGUAGE, AND TO EXEMPT CERTAIN NOT-FOR-PROFIT CORPORATIONS FORMED PRIOR TO JULY 1, 1989, FROM BEING REQUIRED TO HAVE AT LEAST ONE CLASS OF SHARES WITH UNLIMITED VOTING RIGHTS.
Intro. by D. Hall, Bradford, Paré, Howard.

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Bill summary

Part I.

Enacts GS 55-7-09(c) to authorize a corporation's board of directors, in its sole discretion, to determine that any shareholder meeting will be held solely by means of remote communication, unless prohibited by the articles of incorporation or bylaws, so long as existing measures for remote participation are implemented. Makes technical changes. 

Amends GS 55-7-05 to allow for an annual or special shareholders' meeting that is adjourned to a different date to be continued solely by remote communication if it is announced at the meeting before adjournment and the new date and time are noticed the same, unless the bylaws require otherwise. Adds a new provision to deem further notice in accordance with the time restraints of subsection (a) is not required when a governmental order restricts travel or group gatherings applicable to the place of the meeting or principal office in effect and in good faith are anticipated to be in effect at the date and time set forth in the initial notification. Requires the board of directors to determine to hold the meeting solely by remote communication at the same date and time set or a different date and time, and the corporation to promptly issue a national press release announcing the same and file the press release with the SEC contemporaneously. Makes technical and clarifying changes. 

Amends GS 55-7-20 to allow the shareholders' list to be available on a reasonably accessible electronic network, with access information provided with the meeting notice, in lieu of making the list available for inspection at the principal office or place identified in the meeting notice. Requires access to the electronic list to continue through the meeting if the meeting is to be held solely by means of remote communication. Makes clarifying and technical changes. Makes language gender neutral.

Amends GS 55-10-22 to provide for amendment or repeal of a bylaw that prohibits a meeting of shareholders solely by means of remote communication in the same way as bylaws are amended or repealed that fix a greater quorum or voting requirement for the board of directors. Makes technical changes. 

Makes further conforming changes to GS 55-7-01 (annual meetings) and GS 55-7-02 (special meetings).

Directs the Revisor of Statutes to print relevant Official Comments to the Revised Model Business Corporation Act and explanatory comments of the drafters.

Part II.

Replaces the provisions of GS 55A-1-70 with the following. Authorizes a nonprofit corporation, its officer, directors, and members to conduct business electronically in accordance with the Chapter and Article 40 of GS Chapter 66 without further consent or agreement unless prohibited by the articles of incorporation or bylaws. Provides that the Chapter's provisions supersede conflicting provisions of Article 40 of GS Chapter 66. Requires prior agreement of a member before conducting communication or business electronically with the member, including the member providing written agreement, designating a preferred email address, and providing any other facilitating information. Requires the nonprofit to inform the member on how to revoke the agreement.

Makes conforming changes to GS 55A-1-41 regarding electronic notice to members. Eliminates provisions allowing a member to terminate an agreement to electronic notice at any time on a prospective basis upon written notice. Makes technical and clarifying changes. Makes conforming changes to GS 55A-7-04 regarding action by written consent, and to GS 55A-8-21 regarding board action without meeting. 

Enacts GS 55A-7-09 to authorize a nonprofit corporation's board of directors to determine that any membership meeting will be held remotely if participants can hear other participants and be heard by other participants if recognized. Provides for electronic voting and verification of a quorum. Details additional notice requirements for electronic meetings, including sufficient instruction on how members can join the meeting, notice of electronic voting, and information on how to inspect or gain access to the members' list. Allows boards to prescribe additional rules and procedures for remote meetings consistent with the Chapter and Article 40 of GS Chapter 65. Specifies that all references to meetings in the Chapter include electronic meetings.

Amends GS 55A-7-01 and GS 55A-7-02 to explicitly authorize remote annual, regular, and special meetings as provided in new GS 55A-7-09. Makes conforming changes. 

Amends GS 55A-7-03 to authorize court-ordered meetings to be held remotely as provided in new GS 55A-7-09. Makes technical and clarifying changes.

Makes the following changes to GS 55A-7-05 regarding meeting notices. Requires notices for remote meetings to include the information required in new GS 55A-7-09. Requires continued meetings held remotely to announce a description of the means of remote communication. Makes technical and clarifying changes.

Amends GS 55A-7-06 to limit the exception to the general rule that attendance waives the right to object to consideration of a particular matter that was not within the purposes described in the meeting notice. Provides that waiver does not apply when the member objects to the matter's consideration before it is voted on in an in-person meeting. 

Amends GS 55A-7-08 to provide for action by written ballot and electronic voting. Adds to the existing parameters for written ballots to require ballots to contain or request information sufficient to identify the member of the member's proxy unless secret balloting is required. Allows submission of written ballots by any reasonable means specified by the corporation, including email (previously authorized electronic submission). Establishes parameters for electronic ballots or electronic notice that sets forth each proposed action and provides an opportunity and instruction on how to vote for or against each proposed action using the electronic ballot or an electronic voting system, limited to members who have agreed to electronic communication and business under GS 55A-1-70 as amended. Lists four requirements of electronic voting, including control mechanisms and recordkeeping. Limits the use of solely electronic voting to when all members entitled to vote on a proposed action have agreed pursuant to GS 55A-1-70, as amended. Requires that all deadlines for returns of written ballots and electronic ballots and for casting of electronic votes on any proposed action be identical. Prohibits revocation of any electronic ballot or electronic vote submitted unless otherwise provided in the articles of incorporation or bylaws. Makes conforming changes. 

Amends GS 55A-7-24 to allow for appointment of a proxy electronically with the member's signature or sent from the member's designated email address pursuant to GS 55A-1-70 as amended. Makes clarifying and technical changes. 

Amends GS 55A-7-20 to alternatively allow a members' list to be available on a reasonably accessible electronic network so long as access information is provided with the meeting notice. Allows for the nonprofit to take reasonable steps to ensure restrict access to members only. Makes conforming and technical changes. 

Amends GS 55A-8-20 to specify that electronic nonprofit board meetings require that all participating directors hear and can be heard by each other during the meeting. 

Part III.

Amends GS 47C-3-108 to require a unit owner to agree to email notification in order for a condominium association meeting notice to be delivered to them via email. Makes technical changes by removing outdated language. Adds that meetings of the association and executive board that are held remotely do not have to be conducted in accordance with the most recent edition of Robert's Rules of Order Newly Revised.

Amends GS 47F-3-108 to require a lot owner to agree to email notification in order for a planned community association meeting notice to be delivered to them via email. Makes technical changes by removing outdated language. Adds that meetings of the association and executive board that are held remotely do not have to be conducted in accordance with the most recent edition of Robert's Rules of Order Newly Revised.

Part IV.

Amends GS 58-8-10 by adding to the information that must be included in a meeting notice given to members of a mutual insurance company, to require including the method of remote communication. Specifies that language that is to be included in the notice when the meeting has a remote connection or is held solely remotely. Makes participation via remote communication subject to guidelines and procedures adopted by the board of directors. Specifies that members participating in meetings remotely are to be deemed (1) present and (2) voting in person at the meeting if the mutual insurance company has implemented reasonable measures to: (1) verify membership status of people participating remotely; (2) give each member participating remotely a reasonable opportunity to participate in the meeting and to vote on matters submitted to the members substantially concurrently with the proceedings. Allows the board of directors to determine that any meeting of members must be held solely by means of remote communication, but only if the mutual company implements the measures specified above.

Part V.

Allows remote shareholder meetings noticed before this act’s effective date that comply with Executive Order No. 185, to proceed remotely as originally noticed notwithstanding any notice and meeting requirements of GS Chapter 55 (North Carolina Business Corporation Act).

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