Three Things to Consider When Adopting or Updating the Articles or Bylaws of a Nebraska Corporation
On January 1, 2017, the Nebraska Model Business Corporation Act (“Act”) went into effect. Its adoption provides numerous changes for the formation and operation of Nebraska corporations. This article will highlight three of the changes from the Act that any corporation should consider adopting and incorporating into their governing documents.
I. Meetings By Teleconference
Section 21-261 of the new Act provides shareholders may now participate in meetings by remote communication, so long as the board of directors authorizes such participation. A shareholder that does participate via remote communication will be deemed present and may vote, just as if they attend in person. Remote participation remains subject to the board’s guidelines and procedures. Note that the Act does not permit entirely virtual meetings; rather the Act allows only “hybrid shareholder meetings,” where a physical location is designated for the meeting.
Consider adding to your governing documents the option to allow participation via remote communication. Remote participation can be advantageous to both the corporation and shareholders by making meetings more accessible and convenient.
II. Electronic Notice
Section 21-215 of the new Act allows for electronic communications and notices. Prior to any electronic communications or notices being effective, the corporation must have the recipient’s written consent to receive notices by electronic means. If the proper consent is obtained, an electronic communication is considered received regardless of whether recipient is aware of its receipt.
Recipients may revoke consent at any time and cease to receive electronic notice or communications. If the corporation is unable to deliver two consecutive electronic communications or if the secretary becomes aware of the recipient’s inability to receive electronic communications, the recipient’s consent will be considered revoked.
Allowing electronic notice could potentially reduce time and cost associated with delivery of notices. This provision grants the corporation an alternative method to deliver notice that is more efficient and convenient than the traditional process.
III. Action Without Meeting
The old Act allowed action without a meeting only if there was unanimous written consent by shareholders. Section 21-256 of the new Act allows the Articles of Incorporation to provide that action may be taken without a meeting if the action is approved by all shareholders entitled to vote on the action, which may or may not require unanimity. The written consent required to approve the action no longer needs to be unanimous, it just needs to meet the same vote requirement as would be required for an in-person meeting. Note that if an action is taken by less than unanimous consent, the corporation must give nonconsenting shareholders written notice not more than 10 days after a sufficient number of written consents have been delivered or tabulated.
This provision can be advantageous because it expedites the process for taking action by allowing for written consent, but not requiring unanimous consent.
Each of the provisions described above could be incorporated into a Nebraska corporation’s governing documents to allow for greater flexibility when dealing with shareholders. If you have any interest in adopting any of these into your current practices or have questions about their applicability, the Corporate attorneys at Baird Holm are available to assist.
Natalie M. Williams, Summer Associate