March 3, 2005

1. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather meets when in the process of considering amendments to the Business Corporation Act. Throughout 2004 and early 2005 the Committee has been considering the next round of amendments. Meetings were held on held on February 17, March 23 and July 29, 2004 and January 13, 2005. A final draft of the amendments has been forwarded for introduction in the state legislature. At the date of this writing, the proposed draft was under review by the Legislative Service Bureau.

2. Council Approval

The Committee requests that the Council approve (i) the submission of the proposed amendment for legislative action and (ii) the participation by the Committee in testifying with regard to the amendment, assisting the legislative effort or otherwise advocating adoption of the amendment. There has been submitted for the reference of Council members a copy of the reporter’s most recent draft of the changes with reporters’ commentary.

At its meeting on December 4, 2004, the Council approved the amendment except for proposed changes to Section 131. There have been certain additions since then, and a brief summary of the changes is attached.

Section 131 addresses the effective time of documents filed with the Administrator under the Act. Currently, the Act provides that the filing of a document is effective as of the date it is endorsed by the Administrator. The amendment would make filings effective following endorsement, on the date they are received. This would follow states such as Delaware and avoid problems, particularly at year end, that could be caused by delayed processing of filings.

At the December 4 meeting Ann Baker expressed the reservations of the Department of Labor & Economic Growth about the proposed amendments to Section 131. The Department declined to suggest an alternative approach but indicated that it would react once a bill was introduced. After further discussions the committee has determined to re-submit the same language for purposes of introducing the bill, with the intention of working with the Department to refine this approach or to settle on an alternative approach.

3. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

4. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

5. Meetings and Programs

One of the Committee Co-Chairs participated in the presentation of the business law legislative update at the Section annual meeting on September 23, 2004. No additional programs are currently scheduled, though the Committee is open to participation in presentations discussing changes to the Act once passed.

6. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

7. Legislative/Judicial/Administrative Developments

As mentioned above, introduction of a bill proposing amendments to the Business Corporation Act is imminent. The Committee seeks council approval to take a position in support of the bill and testify if necessary. Professors Mae Kuykendall and Elliot Spoon have assisted the Committee as reporters.

8. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Labor and Economic Growth regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

Summary of Changes to Draft Amendments
Submitted at December 4, 2004 Council Meeting

Section 143 (MCL §450.1143)

Subsection 1 would be amended to exempt corporations with a class of registered securities under the Securities Exchange Act of 1934 from the requirement to use first-class mail for mailings of notices and communications. This change would permit use of bulk mailing, thus lowering the sometimes considerable cost of shareholder mailings to public companies.

Section 261 (MCL §450.1441)

Subsection (i) would add limited liability companies to the types of affiliated entities covered by the safe harbor for guaranties.

Section 489 (MCL §450.1489)

Subsection 3 would be amended to provide that willfully unfair and oppressive conduct may include the termination of employment or limitations on employment benefits to the extent that the actions interfere with distributions or other shareholder interests disproportionately as to the affected shareholder. This language is intended to overcome the holding of the Court of Appeals in Franchino v. Franchino (Docket No. 244878, July 29, 2004 as corrected September 28, 2004). In that case the court held that termination of employment could not state a claim under Section 489 because it did not relate to a shareholder’s interest “as a shareholder.” The amendment would allow consideration of employment issues if they disproportionately interfere with shareholder interests.

December 4, 2004

1. Budget Request for 2004-2005.

In 2003-2004, the Committee budgeted for one-half of the amount anticipated to be needed for reporters for the current project considering amendments to the Business Corporation Act. For 2004-2005 we anticipate needing the balance and so again request $5,000.

2. Use of Budgeted Funds in 2003-2004.

Funds were used to pay the reporters engaged in the legislative amendment process.

3. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather meets when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. Consideration of the next round of amendments has begun, with meetings held on February 17, March 23 and July 29, 2004. Additional meetings will be scheduled. A description of the amendments under consideration was presented as part of the business law legislative update presented at the Section’s annual meeting on September 23, 2004. Additional topics have been raised for consideration since then, including (i) possible clarification of Section 261(i) to include guaranties, etc. of obligations of unincorporated affiliates and (ii) possible elimination with respect to public companies of the requirement in Section 336 that issuers send holders of uncertificated shares a written statement of information required on share certificates.

4. Council Approval

The Committee requests that the Council approve (i) the submission of the proposed amendment (with additional changes or additions that the Committee determines) for legislative action and (ii) the participation by the Committee in testifying with regard to the amendment, assisting the legislative effort or otherwise advocating adoption of the amendment. There is attached for the reference of Council members a copy of the reporter’s most recent draft of the changes with reporters’ commentary.

5. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

6. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

7. Meetings and Programs

One of the Committee Co-Chairs participated in the presentation of the business law legislative update at the Section annual meeting on September 23, 2004.

8. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

9. Legislative/Judicial/Administrative Developments

As mentioned above, the Committee is considering amendments to the Business Corporation Act. Professors Mae Kuykendall and Elliot Spoon are assisting the Committee as reporters.

10. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Labor and Economic Growth regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko
Butzel Long

To: Michigan Business Corporation Act Subcommittee
From: Mae Kuykendall and Elliot A. Spoon
Re: Proposed Amendments
Date: November 15, 2004

The reporters have drafted proposed legislation based on the deliberations of the Committee. Suggested Reporters’ Comments are included. Changes from the October 1, 2004 Memorandum are indicated by bold type.

Definition of “Department”

450.1106
Sec. 106

(2) “Department” means the department of consumer and industry affairs LABOR AND ECONOMIC GROWTH.

COMMENT: T his change reflects the change made to the name of the department.

Filing

450.1131
Sec. 131.
(3) UPON THE ENDORSEMENT OF THE DOCUMENT, the document is BECOMES effective at AS OF the time DATE it is endorsed OF RECEIPT unless a subsequent effective time DATE, not later than 90 days after the date of delivery, is set forth in the document.

COMMENT: In many business transactions, the effective date of the filing is critical to success of the transaction. In Michigan (unlike Delaware, for example) the statute provides for a review to assure the document substantially conforms to the requirements of the Act. In some instances, the Administrator is not able to complete the required review within narrow time frames which has created complications for businesses attempting to complete transactions since the effective date is given only after the review. Accordingly, this amendment adopts a solution identified in Section 1.23 of the Model Business Corporation Act and “…gives express statutory authority to the common practice of most secretaries of state of ignoring processing time and treating a document as effective as of the date it is submitted for filing even though it may not be reviewed and accepted for filing until several days later.” While there may ancillary issues to be addressed as a result of the amendment, such as the appropriateness of a good standing certificate while a filing is pending, the Reporters recommend that such issues be dealt with by the Administrator as part of administrative implementation.

Householding

450.1143 Mailing notice or communication; HOUSEHOLDING; electronic transmission

Sec. 143(2)
(2) A CORPORATION HAS GIVENWRITTEN NOTICE OR ANY OTHER REPORT OR STATEMENT UNDER THIS ACT, THE ARTICLES OF INCORPORATION OR THE BYLAWS TO ALL SHAREHOLDERS WHO SHARE A COMMON ADDRESS IF:

1. THE CORPORATION DELIVERS ONE COPY OF THE NOTICE, REPORT OR STATEMENT TO THE COMMON ADDRESS (INCLUDING EMAIL ADDRESS IF ELECTRONIC TRANSMISSION IS USED);
2. THE CORPORATION ADDRESSES THE NOTICE, REPORT OR STATEMENT TO THOSE SHAREHOLDERS EITHER AS A GROUP OR TO EACH OF THOSE SHAREHOLDERS INDIVIDUALLY OR TO THE SHAREHOLDERS IN A FORM TO WHICH EACH OF THOSE SHAREHOLDERS HAS NOT OBJECTED (DELETE “CONSENTED”); (DELETE “AND”)
3. AT LEAST 60 DAYS PRIOR TO THE FIRST DELIVERY OF A SINGLE COPY OF ANY NOTICE, REPORT OR STATEMENT TO THE COMMON ADDRESS, THE CORPORATION HAS GIVEN NOTICE TO THE AFFECTED SHAREHOLDERS OF ITS INTENTION TO SEND SINGLE COPIES OF NOTICES, REPORTS OR STATEMENTS TO SHAREHOLDERS WHO SHARE A COMMON ADDRESS; AND
4. EACH OF THOSE SHAREHOLDERS HAS NOT OB JECTED (DELETE “CONSENTS”) TO DELIVERY OF A SINGLE COPY OF (DELETE “THE SUCH”) NOTICES, REPORTS OR STATEMENTS TO THE SHAREHOLDERS’ COMMON ADDRESS. A SHAREHOLDER MAY OBJECT BY DELIVERING WRITTEN NOTICE TO THE CORPORATION. IF SUCH WRITTEN OBJECTION IS DELIVERED, THE CORPORATION SHALL BEGIN PROVIDING INDIVIDUAL NOTICES, REPORTS OR STATEMENTS TO THE OBJECTING SHAREHOLDER NO LATER THAN 30 DAYS AFTER RECEIPT OF THE WRITTEN OBJECTION. AN OBJECTION BY ONE SHAREHOLDER DOES NOT AFFECT THE CORPORATION’S RIGHT TO DELIVER A SINGLE COPY OF NOTICES, REPORTS OR OTHER STATEMENTS TO OTHER SHAREHOLDERS AT THAT ADDRESS WHO HAVE NOT OBJECTED.

(DELETE “ANY SHAREHOLDER WHO FAILS TO OBJECT BY EFFECTUATING THE RECEIPT BY THE CORPORATION OF WRITTEN NOTICE TO THE CORPORATION, WITHIN 60 DAYS OF DELIVERY OF WRITTEN NOTICE BY THE CORPORATION OF ITS INTENTION TO SEND SINGLE COPIES OF NOTICES, REPORTS OR STATEMENTS TO SHAREHOLDERS WHO SHARE A COMMON ADDRESS SHALL BE DEEMED TO HAVE CONSENTED TO RECEIVING SUCH SINGLE COPY AT THE COMMON ADDRESS. ANY SUCH CONSENT SHALL BE REVOCABLE BY ANY OF SUCH SHAREHOLDERS WHO DELIVER WRITTEN NOTICE OF REVOCATION TO THE CORPORATION. IF SUCH WRITTEN NOTICE OF REVOCATION IS DELIVERED, THE CORPORATION SHALL BEGIN PROVIDING INDIVIDUAL NOTICES, REPORTS OR OTHER STATEMENTS TO THE REVOKING SHAREHOLDER NO LATER THAN 30 DAYS AFTER RECEIPT OF THE WRITTEN NOTICE OF REVOCATION.”)

(2) (3)

(3) (4)

COMMENT: The proxy rules under the Securities Exchange Act of 1934 permit publicly held corporations to meet their obligation to deliver proxy statements and annual reports to shareholders who share a common address (including an email address if electronic transmission is used) by delivery of a single copy of such materials to the common address under conditions. The practice is known as “householding.” This section permits a corporation comparable flexibility to household the written notice of shareholder meetings as well as any other written notices, reports or statements required to be delivered to shareholders under the act, the corporation’s articles of incorporation or bylaws. Ability to household such notices, reports or statements would not, of course, eliminate the practical necessity of delivering to a common address sufficient copies of any accompanying document requiring individual shareholder signature or other action, such as a proxy card or consent. This provision is currently under consideration to be included in the Model Act. Section 233 of the Delaware General Corporation Law also adopts the concept of householding.

Voting by shareholders

450.1441

Sec. 441(2)

(2) If an action, other than the election of directors, is to be taken by vote of the shareholders, it shall be authorized by a majority of the votes cast by the holder of shares entitled to vote on the action, unless a greater vote is required by the articles or another section of this act. EXCEPT AS OTHERWISE PROVIDED BY THE ARTICLES, AN ABSTENTION OR THE SUBMISSION OF A BALLOT MARKED “ABSTAIN” WITH RESPECT TO ANY ACTION SHALL NOT CONSTITUTE A VOTE CAST ON THAT ACTION. Except as otherwise provided by the articles, Directors shall be elected by a plurality of the votes cast at an election.

Voting as a class or series

450.1442

Sec. 442(1)

1. The articles of incorporation may provide that a class of shares, or any series thereof, shall vote as a class to authorize any action, including amendment to the articles. Such voting as a class shall be in addition to any other vote required by this act. Where voting as a class or series is provided in the articles, it shall be by the proportionate vote provided in the articles or, if a proportionate vote is not so provided, then for any action other than the election of directors, by a majority of the votes cast by the holders of shares of such class or series entitled to vote thereon. EXCEPT AS OTHERWISE PROVIDED BY THE ARTICLES, AN ABSTENTION OR THE SUBMISSION OF A BALLOT MARKED “ABSTAIN” WITH RESPECT TO ANY ACTION SHALL NOT CONSTITUTE A VOTE CAST ON THAT ACTION.
   
   Sec. 442(2)
   
2. Where voting as a class or series is required by this to authorize an action, the action shall be authorized by a majority of the votes cast by the holders of shares of each such class or series entitled to vote thereon, unless a greater vote is required by the articles of incorporation or another section of this act. EXCEPT AS OTHERWISE PROVIDED BY THE ARTICLES, AN ABSTENTION OR THE SUBMISSION OF THE A BALLOT MARKED “ABSTAIN” WITH RESPECT TO ANY ACTION SHALL NOT CONSTITUTE A VOTE CAST ON THAT ACTION. The voting as a class shall be in addition to any other vote required by this act.

COMMENT: The changes in Sections 441 (2) and 442 (1) and (2) clarify that abstentions and non-votes do not affect the vote and are modeled after Section 7.25 (c) of the Model Act. The clarification is necessary in light of concerns expressed by companies that any ambiguity in this regard creates undesirable uncertainty as to voting requirements.

Delegation of Authority

450.1528 Committees; SUBCOMMITTEES: powers and authority; limitations.

Sec. 528(3)
(3) UNLESS OTHERWISE PROVIDED IN THE RESOLUTION, ARTICLES OR BYLAWS, A COMMITTEE MAY CREATE 1 OR MORE SUBCOMMITTEES, EACH SUBCOMMITTEE TO CONSIST OF 1 OR MORE MEMBERS OF THE COMMITTEE, AND DELEGATE TO A SUBCOMMITTEE ANY OR ALL OF THE POWERS AND AUTHORITY OF THE COMMITTEE.

COMMENT: This addition is modeled after Section 141 of the General Corporation Law of Delaware and reflects the flexibility necessary for effective operation of committees.

Approval of Charter Amendments

450.1611
Sec. 611
(3) Other amendments of the articles of incorporation, except as otherwise provided in this act, shall be PROPOSED BY THE BOARD OF DIRECTORS AND approved by the shareholders as provided in this section. THE BOARD OF DIRECTORS MAY CONDITION ITS SUBMISSION OF THE AMENDMENT TO THE SHAREHOLDERS ON ANY BASIS.

COMMENT: This amendment will clarify that amendments to the articles of incorporation must be initiated by the board of directors. The Model Act has always required this procedure and the vast majority of states have adopted it. In view of the historical emphasis on shareholders’ rights in Michigan, there may be a policy preference for limiting the amendment to publicly-held corporations. However, the Reporters are aware of only one state (Pennsylvania) that has made such a distinction.

Technical Amendment to Section 735 (1)(a)

450.1735

Sec. 735 (1)(a)

(iii) The applicable provisions of section 1021 or 1035 if the foreign corporation is authorized to transact business in this state.

Sec. 735 (1) (d)

( d )EACH FOREIGN CORPORATION AUTHORIZED TO TRANSACT BUSINESS IN THIS STATE SHALL COMPLY WITH THE APPLICABLE PROVISIONS OF SECTION 1021 OR 1035.

COMMENT: This amendment corrects the drafting error in the 1997 amendments by making the subsection applicable to all foreign corporations, not only those involved in parent-subsidiary mergers.

Repeal of Control Share Act

Chapter 7B

Chapter 7B of the business corporation act, 1972 PA 284, MCL 450.1790-1799, is repealed.

COMMENT: The Michigan Control Share Act has proved to be a “trap for the unwary” because of its broad applicability. It is also no longer an important tool to protect corporations and shareholders from takeovers as there are more effective tools now available, such as Chapter 7A and shareholder rights plans. Many experienced lawyers recommend that corporations opt out of its coverage on the ground that, despite its intended purpose as a takeover defense, the Act is more helpful to bidders than defenders. Indeed, in a recent takeover, the Act was used effectively as an offensive weapon. The amendment to the Act in 2003 dealt only with the formation of a group and did not address other ambiguities or the effectiveness of the Act. Accordingly, given its lack of helpfulness as a takeover defense, and its potential for deployment in unintendedfashions, its repeal is appropriate.

Dissolution
450.1823

Sec. 823
(a) The directors of the corporation, or its shareholders if a provision in the articles in incorporation authorized by subsection (1) of section 463 488 is in effect,…

COMMENT: The change is necessary to reflect the fact that section 463 has been repealed and replaced in part by section 488.

September 23, 2004

1. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather meets when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. Consideration of the next round of amendments has begun, with meetings held on February 17, March 23 and July 29, 2004. Additional meetings will be scheduled. A description of the amendments under consideration is included in the business law legislative update presented at the Section’s annual meeting on September 23, 2004. Since the last meeting of the council, the list of amendments under consideration has expanded to include an amendment clarifying that abstentions and broker non-votes are not considered votes “cast” for purposes of Section 441(2) and consideration of an amendment to Section 489 to alter the impact of the Court of Appeals’ holding in Franchino v. Franchino.

2. Council Approval

There are no matters requiring Council approval at this time.

3. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

4. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

5. Meetings and Programs

One of the Committee Co-Chairs participated in the presentation of the business law legislative update at the Section annual meeting on September 23, 2004.

6. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

7. Legislative/Judicial/Administrative Developments

As mentioned above, the Committee has begun the process of considering another round of amendments to the Business Corporation Act. Professors Mae Kuykendall and Elliot Spoon are assisting the Committee as reporters.

8. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Labor and Economic Growth regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

1. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather tends to meet when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. Consideration of the next round of amendments has begun, with meetings held on February 17 and March 23, 2004. Additional meetings will be scheduled. Among the items under consideration is an amendment that would require board approval of charter amendments. Michigan is in the minority in not requiring such approval. The committee has discussed whether such a change, if proposed, should apply only to publicly held companies or to all corporations. Committee member Aleksandra Miziolek circulated a survey of other state statutes noting which states required board approval of charter amendments (36 states were identified) and whether any of them distinguished publicly held from privately held companies (none were identified). Other possible amendment topics discussed include amendments to effective date provisions to prevent year-end filing problems; possible repeal of the Control Share Act; authorization for board committees to delegate tasks to subcommittees; consideration of entity conversion provisions; and technical issues.

2. Council Approval

There are no matters requiring Council approval at this time.

3. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

4. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

5. Meetings and Programs

Nothing to describe at this time.

6. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

7. Legislative/Judicial/Administrative Developments

As mentioned above, the Committee has begun the process of considering another round of amendments to the Business Corporation Act. Professors Mae Kuykendall and Elliot Spoon have agreed to assist the Committee as reporters.

8. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Labor and Economic Growth regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

1. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather tends to meet when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. A meeting was held on February 17, 2004 to consider what additional amendments may be advisable for the BCA. Additional meetings will be held for this purpose but have not yet been scheduled.

2. Council Approval

There are no matters requiring Council approval at this time.

3. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

4. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

5. Meetings and Programs

Nothing to describe at this time.

6. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

7. Legislative/Judicial/Administrative Developments

As mentioned above, the Committee has begun the process of considering another round of amendments to the Business Corporation Act. The Committee has met once and placed several items at issue for further consideration. Among these are proposals to address year-end filing backlogs, to revise the amendment process for Articles of Incorporation and to consider possible repeal of the Control Share Act. Professors Mae Kuykendall and Elliot Spoon have agreed to assist the Committee as reporters.

8. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Labor and Economic Growth regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

1. Budget Request for 2003-2004

$5,000

2. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather tends to meet when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. The Committee will soon begin considering the advisability of additional amendments.

3. Council Approval

There are no matters requiring Council approval at this time.

4. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

5. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

6. Meetings and Programs

Nothing to describe at this time.

7. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

8. Legislative/Judicial/Administrative Developments

The Committee continues to evaluate the advisability of amending the Business Corporation Act and Michigan Limited Liability Act so as to permit direct conversions by one type of entity into another. These efforts are being spearheaded by James C. Cambridge, who has overseen LLC Act matters on behalf of the Section.

PA 181 of 2003 became law on October 7, 2003. The act amended the Michigan Control Share Act, Chapter 7B of the Business Corporation Act, to provide that the formation of a group does not constitute a control share acquisition and to restore the voting rights of any shares previously held not to have voting rights because of the formation of a group. PA 181 reversed the effect of the U.S. District Court's ruling in the matter of Simon Property Group, Inc., et al. v. Taubman Centers Inc., et al., 2003 U.S. Dist. LEXIS 7435 (E.D. Mich. May 1, 2003 as amended May 8, 2003), which had found that the formation of a group had occurred and ruled that all shares held by all group members were disabled from voting under the Control Share Act.

9. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

1. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather tends to meet when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. The Committee will soon begin considering the advisability of additional amendments.

2. Council Approval

There are no matters requiring Council approval at this time.

3. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

4. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

5. Meetings and Programs

Nothing to describe at this time.

6. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

7. Legislative/Judicial/Administrative Developments

The Committee continues to evaluate the advisability of amending the Business Corporation Act and Michigan Limited Liability Act so as to permit direct conversions by one type of entity into another. These efforts are being spearheaded by James C. Cambridge, who has overseen LLC Act matters on behalf of the Section.

The Committee continues to monitor developments that may affect Michigan corporate laws. Of particular significance in this regard is the continuing matter between Simon Properties and Taubman Centers, Inc. relating to Simon's tender offer for Taubman's shares. This case has produced judicial opinions regarding application of Chapter 7B of the Michigan Business Corporation Act and standing for derivative actions. Certain rulings are currently on appeal to the Sixth Circuit Court of Appeals. There have also been various legislative initiatives that have proposed amendments to Chapter 7B as well as other portions of the BCA that could have an effect on this matter. None of these have been adopted as of the date of this writing.

8. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

1. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather tends to meet when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. The Committee will likely try to convene a meeting in 2003.

2. Council Approval

There are no matters requiring Council approval at this time.

3. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

4. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

5. Meetings and Programs

Nothing to describe at this time.

6. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

7. Legislative/Judicial/Administrative Developments

The Committee is cooperating in attempts to amend the Business Corporation Act and Michigan Limited Liability Act so as to permit direct conversions by one type of entity into another. These efforts are being spearheaded by James C. Cambridge, who has overseen LLC Act matters on behalf of the Section.

The Committee continues to monitor developments that may affect Michigan corporate laws. Of particular significance in this regard is the ongoing matter between Simon Properties and Taubman Centers, Inc. relating to Simon's tender offer for Taubman's shares. This case has produced judicial opinions regarding application of Chapter 7B of the Michigan Business Corporation Act and standing for derivative actions. A proposed amendment to the Business Corporation Act that would have required Board approval for amendments to the Articles of Incorporation and would have allowed continuing directors to exempt acquisitions from Section 7B after they occurred was withdrawn from consideration and sent back to committee after complaints that the bill was intended to influence the Simon/Taubman matter.

8. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

1. Next Scheduled Meeting of the Committee

The Committee does not hold regular meetings but rather tends to meet when in the process of considering amendments to the Business Corporation Act. The most recent BCA amendment became law in the fall of 2001. The Committee will likely try to convene a meeting in the summer of 2003.

2. Council Approval

There are no matters requiring Council approval at this time.

3. Membership

The Committee remains open to participation by any interested parties. The lack of regular meetings tends to limit interaction with Committee members.

4. Accomplishments Toward Committee Objectives

The Committee continues to monitor developments in corporate laws throughout the country and to consider changes to the Business Corporation Act. This is an ongoing and continuous process.

5. Meetings and Programs

Nothing to describe at this time.

6. Publications

The Committee sponsored an issue of the Michigan Business Law Journal in 2002.

7. Legislative/Judicial/Administrative Developments

The Committee is cooperating in attempts to amend the Business Corporation Act and Michigan Limited Liability Act so as to permit direct conversions by one type of entity into another. These efforts are being spearheaded by James C. Cambridge, who has overseen LLC Act matters on behalf of the Section.

Senate Bills 593 (amending the general sales tax act) 594 (amending the use tax act) and 595 (amending the income tax act), became Public Acts 579, 580 and 581, effective October 14, 2002. As a result, it is no longer necessary to obtain a tax clearance certificate as a prerequisite to filing a certificate of dissolution for a Michigan corporation or an application for withdrawal for a foreign corporation with a certificate of authority. Tax clearance certificates must now be requested within sixty days after submitting a certificate of dissolution or application for withdrawal.

Public Act 433 of 2002, which repealed two RJA sections dealing with corporate matters, became law on June 10, 2002.

The Committee participated in the drafting of the amendments to the Business Corporation Act and the Professional Services Corporation Act that became law as P.A. 57 and 58 of 2001.

The Committee also prepared and filed an amicus brief that was extensively cited by the special panel of the Michigan Court of Appeals in its reconsideration of the holding in Estes v. Idea Engineering.

8. Miscellaneous

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

Public Act 433 of 2002, which repealed two RJA sections, became law on June 10, 2002.

Senate Bills 593 (amending the general sales tax act) 594 (amending the use tax act) and 595 (amending the income tax act), all introduced by Senator Bullard and each dealing with the dissolution issue, became Public Acts 579, 580 and 581, effective October 14, 2002. As a result, it is no longer necessary to obtain a tax clearance certificate as a prerequisite to filing a certificate of dissolution for a Michigan corporation or an application for withdrawal for a foreign corporation with a certificate of authority. Tax clearance certificates must now be requested within sixty days after submitting a certificate of dissolution or application for withdrawal.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

The issue of the Michigan Business Law Journal for which the Committee was responsible was published as the Spring 2002 issue.

The Committee intends to continue to pursue proposed Revised Judicature Act amendments as well as amendments to remove the requirement for obtaining tax clearances upon dissolution. Public Act 433 of 2002, which repealed two RJA sections, became law on June 10, 2002. Senate Bills 593 (amending the general sales tax act) 594 (amending the use tax act) and 595 (amending the income tax act), all introduced by Senator Bullard and each dealing with the dissolution issue, passed the Senate May 1, 2002 and were referred to the House Committee on Finance in July.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

The issue of the Michigan Business Law Journal for which the Committee was responsible has been published as the Spring 2002 issue.

As mentioned in the Committee's previous report, the Committee filed an amicus curiae brief with the Court of Appeals in connection with the reconsideration by a special Appeals Court panel of the holding in Estes v. Idea Engineering. The Court of Appeals rendered its decision in Estes in early March. The opinion adopted the position urged by the Committee and cited liberally to the amicus brief.

The Committee intends to continue to pursue proposed Revised Judicature Act amendments as well as amendments to remove the requirement for obtaining tax clearances upon dissolution. Senate Bill 422, which would repeal two RJA sections, was introduced by Senator Bullard in April and passed by the Senate on November 8. It has been reported out of Committee in the House with recommendation for passage and waits further action. Senate Bills 593 (amending the general sales tax act) 594 (amending the use tax act) and 595 (amending the income tax act), all introduced by Senator Bullard and each dealing with the dissolution issue, passed the Senate May 1, 2002 and await House action.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

The Committee is working with ICLE on the next issue of the Michigan Business Law Journal, which should be published in the spring.

As mentioned in the Committee's previous report, the Committee filed an amicus curiae brief with the Court of Appeals in connection with the reconsideration by a special Appeals Court panel of the holding in Estes v. Idea Engineering. There has been no resolution of that appeal as of the date of this report.

The Committee intends to continue to pursue proposed Revised Judicature Act amendments as well as amendments to remove the requirement for obtaining tax clearances upon dissolution. Senate Bill 422, which would repeal two RJA sections, was introduced by Senator Bullard in April and passed by the Senate on November 8. It awaits House action.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

As previously noted, amendments to the Michigan Business Corporation Act, Senate Bill 206, and the Michigan Professional Service Corporations Act, Senate Bill 216, became law on July 23, 2001 as P.A. 57 and 58, respectively. An article describing the amendments will be included in the next issue of the Michigan Business Law Journal, which may be published by the time of the Council meeting for which this report is prepared. The Committee is also working with ICLE on the next issue of the Journal, which should be published in the spring.

At the invitation of the Michigan Court of Appeals and following authorization by the Council at its September 12 meeting, the Committee filed an amicus curiae brief with the Court of Appeals in connection with the reconsideration by a special Appeals Court panel of the holding in Estes v. Idea Engineering. The special panel is charged with reconciling Estes and Baks v. Moroun. The Committee's brief addressed whether Section 489 of the Michigan Business Corporation Act provides a separate cause of action and what the appropriate limitation of actions period should be under Section 489 for matters not governed by the recently-adopted limitations period provided in P.A. 57.

The Committee intends to continue to pursue proposed Revised Judicature Act amendments as well as amendments to remove the requirement for obtaining tax clearances upon dissolution. Senate Bill 422, which would repeal two RJA sections, was introduced by Senator Bullard in April and passed by the Senate on November 8. It awaits House action.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

Amendments to the Michigan Business Corporation Act, Senate Bill 206, and the Michigan Professional Service Corporations Act, Senate Bill 216, became law on July 23, 2001 as P.A. 57 and 58, respectively. Senator Bill Bullard, Jr. sponsored both acts. Copies of each bill are available at the Michigan Legislature website, www.michiganlegislature.org. The text of the acts will also be reprinted, with a short introduction, in the next issue of the Michigan Business Law Journal. A more detailed description of the amendments will appear in the subsequent issue of the Journal, for which the Committee will be responsible.

The Committee intends to continue to pursue proposed Revised Judicature Act amendments as well as amendments to remove the requirement for obtaining tax clearances upon dissolution. Senate Bill 422, which would repeal certain RJA sections, was introduced by Senator Bullard in April and referred to the Senate Financial Services Committee.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

The proposed amendments to the Michigan Business Corporation Act, Senate Bill 206, and proposed amendments to the Michigan Professional Service Corporations Act, Senate Bill 216, passed the Michigan Senate and have been referred to the Michigan House Commerce Committee. A copy of Senate Bills 206 and 216 and a brief summary of the amendments under Bill 206 are available from the Committee Chairs.

In light of the Court of Appeals strongly-worded opinion in Estes v. Idea Engineering & Fabricating, Inc., __ Mich App __ (2001), the Committee is considering making a recommendation that Senate Bill 206 be revised to delete proposed amendments to Section 489 of the Business Corporation Act. The proposed amendments were intended to address problems raised by the Court of Appeals' decision in Baks v. Moroun, 227 Mich App 472 (1998). The language of the Estes opinion, which was highly critical of Baks, has raised the possibility that the Court of Appeals will overturn the Baks holding.

The proposed Revised Judicature Act amendments, Senate bill 422, have been referred to the Senate Financial Services Committee. These amendments are intended to eliminate obsolete provisions of the RJA which affect corporations.

Amendments to remove the requirement for obtaining tax clearances upon dissolution have been sent to the Legislative Service Bureau by Senator Bill Bullard but no bills have been introduced yet.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

The amendments to the Michigan Business Corporation Act developed by the Committee were introduced by Senator Bill Bullard, Jr. as Senate Bill 206 on February 13, 2001. Senator Bullard also introduced on that date Senate Bill 216, proposed amendments to the Michigan Professional Service Corporations Act. This amendment is intended to reverse OAG 1989-90 No. 6592 and make clear that the cross-reference in the PSCA to the Business Corporation Act is intended to incorporate all amendments to the BCA. The Attorney General's Opinion held that the cross-reference only incorporates the BCA as in existence as of the date of most recent PSCA amendment, and does not incorporate subsequent changes to the BCA.

A copy of Senate Bills 206 and 216 and a brief summary of the amendments under Bill 206 are available from the Committee Chairs.

Council Co-Chair Cy Moscow has also requested of Senator Bullard bills to amend the tax statutes to eliminate the requirement for a tax clearance as a condition to filing of a certificate of dissolution and to eliminate obsolete provisions of the Revised Judicature Act which affect corporations. One such obsolete provision, for example, provides that a corporation is automatically dissolved upon becoming insolvent. Bill requests on these matters have been forwarded to the Legislative Service Bureau.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

The Committee continues to work on amendments to the Michigan Business Corporation Act. Several drafts of the amendments have been reviewed by the Committee throughout the course of calendar 2000. In late August, a draft was sent to its legislative sponsor and subsequently submitted to the Legislative Services Bureau. We are in the process of reviewing the blueback prepared by the LSB for additional changes with the goal of preparing a bill for introduction in the new session of the Legislature which convenes in January. Thereafter we will be engaged in assisting the sponsor in any technical issues relating to the bill and trying to encourage support within the business community for the bill.

Other projects which the Committee will pursue are legislative amendments to eliminate the need for a tax clearance in connection with dissolution proceedings and amending existing statutes, primarily the Revised Judicature Act, to remove obsolete provisions relating to Michigan corporations.

The Committee will continue to accept ideas for technical and other amendments to the Business Corporation Act, which is amended periodically. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Department of Consumer and Industry Services regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

I. Educational Outreach

The Corporate Laws Committee from time to time sponsors or co-sponsors programs and seminars with program presenters such as ICLE. The Committee has not conducted its own separately produced seminars. The committee will be responsible for an issue of the Michigan Business Law Journal in 2001.

II. Legislative Activity

The reporters initial draft of the proposed amendments to the Michigan Business Corporation Act was reviewed at a meeting of the committee held in late October. As a result of comments made to that draft, another draft was produced in mid-January and discussed at a meeting of the Business Corporation Act Revision Subcommittee on February 3. Further drafts was turned and discussed at a meeting held on April 27 and a meeting scheduled for September 19, which will have been held prior to distribution of this report to the Council.

Numerous comments have been made. The committee will continue to pursue its goal of soon having a draft ready to send to seek sponsors in the Michigan legislature.

Membership Diversity

Membership in the Committee is open to any interested person.

IV. Other

The Committee will continue its efforts to solicit ideas for technical and other amendments to the Act. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Corporation and Securities Bureau regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko and Cyril Moscow

I. Educational Outreach

The Corporate Laws Committee from time to time sponsors or co-sponsors programs and seminars with program presenters such as ICLE. The Committee has not conducted its own separately produced seminars. The committee will be responsible for an issue of the Michigan Business Law Journal in 2001.

II. Legislative Activity

The reporters initial draft of the proposed amendments to the Michigan Business Corporation Act was reviewed at a meeting of the committee held in late October. As a result of comments made to that draft, another draft was produced in mid-January and discussed at a meeting of the Business Corporation Act Revision Subcommittee on February 3. A further draft was turned and discussed at a meeting held on April 27.

Numerous comments have been made, and some issues are still being debated, including the proper treatment of shareholder oppression actions under Section 489 in response to the Court of Appeals' holding in Baks v. Moroun. One of the key debates in this regard has been whether the statute should attempt to define the meaning of "oppressive" conduct. Additional revisions will be made and the committee will continue to pursue its goal of soon having a draft ready to send to seek sponsors in the Michigan legislature.

III. Membership Diversity

Membership in the Committee is open to any interested person.

IV. Other

The Committee will continue its efforts to solicit ideas for technical and other amendments to the Act. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Corporation and Securities Bureau regarding efforts to further streamline corporate filings and information dissemination.

Justin G. Klimko

I. Educational Outreach

The Corporate Laws Committee from time to time sponsors or co-sponsors programs and seminars with program presenters such as ICLE. The Committee has not conducted its own separately produced seminars. The Committee will be responsible for an issue of the Michigan Business Law Journal in 2001.

II. Legislative Activity

The reporters initial draft of the proposed amendments to the Michigan Business Corporation Act was reviewed at a meeting of the Committee held in late October. As a result of comments made to that draft, another draft was produced in mid-January and discussed at a meeting of the Business Corporation Act Revision Subcommittee on February 3. Numerous comments were made, and some issues are still being debated, including the proper treatment of shareholder oppression actions under Section 489 in response to the Court of Appeals' holding in Baks v. Moroun. Additional revisions will be made and the Committee will continue to pursue its goal of soon having a draft ready to send to seek sponsors in the Michigan legislature.

III. Membership Diversity

Membership in the Committee is open to any interested person.

IV. Other

The Committee will continue its efforts to solicit ideas for technical and other amendments to the Act. Suggestions in this regard may be addressed to either of the Committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Corporation and Securities Bureau regarding efforts to further streamline corporate filings and information dissemination.

I. Educational Outreach

The Corporate Laws Committee from time to time sponsors or co-sponsors programs and seminars with program presenters such as ICLE. The Committee has not conducted its own separately-produced seminars. The Committee will be responsible for an issue of the Michigan Business Law Journal in 2001.

II. Legislative Activity

The reporter's initial draft of the proposed amendments to the Michigan Business Corporation Act was reviewed at a meeting of the Committee held in late October. As a result of comments made to that draft, another draft will be produced for further review with a goal of having a bill ready to introduce in the first quarter of 2000.

III. Membership Diversity

Membership in the Committee is open to any interested person.

IV. Other

The Committee will continue its efforts to solicit ideas for technical and other amendments to the Act. Suggestions in this regard may be addressed to either of the committee co-chairs, Cyril Moscow or Justin G. Klimko. The Committee also will consult with the Corporation and Securities Bureau regarding efforts to further streamline corporate filings and information dissemination.