Bill Summary for H 320 (2021)

Summary date: 

Sep 1 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

Senate committee substitute to the 3rd edition makes the following changes.

Part II.

Amends the definition of vote in GS 55A-1-40 as it applies throughout GS Chapter 55A (North Carolina Nonprofit Corporation Act) by adding that the term includes authorization by written ballot and written consent through an electronic voting system.

Amends GS 55A-1-70 as follows. Reinstates the previous statute caption. Allows a corporation to conduct a transaction by electronic means, except as limited by its articles of incorporation or bylaws or by action of its board of directors (was, a corporation, its officers, directors, and members to conduct business by electronic means in accordance with GS Chapter 55A, unless prohibited or limited by the articles of incorporation or bylaws, or by action of its board of directors and subject to the requirements of the statute). Removes the provision specifying that GS Chapter 55A prevails when there is a conflict between the Chapter and Article 40 (Uniform Electronic Transactions Act) of GS Chapter 66. No longer specifies the inclusion of four specified statutes in the requirement that members who wish to communicate and conduct business with a corporation by electronic means designate the email address to be used for communication and business and provide any other information required by the corporation to facilitate communication and business conducted between the member and the corporation. Specifies that for purposes of applying Article 40 of GS Chapter 66 to transactions under GS Chapter 55A, a corporation that conducts an electronic transaction in accordance with this section is deemed to have agreed to conduct the transaction by electronic means (under current law, a corporation may agree to conduct a transaction by electronic means through provision in its articles of incorporation or bylaws or by action of its board of directors).

Amends GS 55A-3-03, which sets out emergency powers, by providing that an emergency exists if a natural or man-made disaster impedes the ability of the corporation's board of directors or members to comply with one or more provisions of the corporation's bylaws (was, exists if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event).

Amends GS 55A-7-04 by allowing a member's consent to action taken without a meeting to be in electronic form and delivered by electronic means, except as limited by the articles of incorporation or bylaws (no longer requires the member to have agreed as provided in GS 55A-1-70 and adds the limitations). Makes additional clarifying changes.

Amends proposed GS 55A-7-09 as follows. Adds that members of any class may participate in any meeting of members by remote communication to the extent the board of directors authorizes the participation for that class. Makes member participation by remote communication subject to any guidelines and procedures the board of directors adopts and as well as the following requirements. Deems members participating by means of remote communication as present and allowed to vote at the meeting if the corporation has implemented reasonable measures to: (1) verify that each person participating remotely as a member is a member and (2) provide the members a reasonable opportunity to participate in the meeting and to vote on matters submitted to the members to the same extent they could participate and vote if present in person substantially concurrently with the proceedings. Deletes the proposed (a) and instead provides that unless member meetings held solely by means of remote communication are prohibited by the articles of incorporation or the bylaws, the board of directors may, in its sole discretion, determine that any meeting of members shall not be held at any place and must instead be held solely by means of remote communication, but requires the corporation to implement the measures above. Amends the notice requirement so that it applies to notice of a meeting held solely by means of remote communication. Deletes the provision that allowed the board of directors to prescribe additional rules and procedures for meetings held by means of remote communication that are consistent with the provisions of GS Chapter 55A. Makes conforming changes to the statute's caption. 

Amends GS 55A-7-20, which requires that beginning two business days after notice is given of the meeting for which the list was prepared and continuing through the meeting, the list of members must be available for inspection by any member for the purpose of communication with other members concerning the meeting. Provides that if the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that the information is available only to shareholders of the corporation (was, only to members of the corporation). Adds that if the meeting is to be held solely by means of remote communication, then the list of members must also be open to inspection during the meeting on a reasonably accessible electronic network, and the information required to access the list must be provided with the meeting notice. Makes additional technical and clarifying changes.

Makes organizational changes.

Part IV.

Amends GS 55-6-01 by excluding from the requirement that articles of incorporation authorize one or more classes of shares that together have unlimited voting rights, the articles of incorporation of not-for-profit corporations formed for religious, charitable, nonprofit, social, or literary purposes before July 1, 1989. Specifies that this Section applies to not-for-profit corporations formed prior to July 1, 1989, existing as of the effective date of this act.

Part VI. 

Amends the applicability of the act to now deem remote shareholder, policyholder, and member meetings noticed before the effective date of this act as a result of the State of Emergency declared by Executive Order No. 116 on March 10, 2020, and complying with any subsequent executive orders authorizing remote shareholder, policy holder, or member meetings to be in compliance with this act.

Makes conforming changes to the act's long title.

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