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Council Meeting Minutes
March 1, 2001

    This meeting of the Council of the Business Law Section of the State Bar of Michigan was held at the offices of the State Bar of Michigan, 306 Townsend Street, Lansing, Michigan, on March 1, 2001 at 4:00 p.m., pursuant to notice duly given.

    Present: Daniel H. Minkus, Tracy T. Larsen, Vicki Martin-Anderson, David Foltyn, Patrick Daugherty, Arthur Dudley II, David D. Joswick, Eric I. Lark, Michael S. Khoury, Judith Greenstone Miller, Patrick E. Mears, Jeffrey S. Ammon, James H. Breay, Justin G. Klimko, Mark R. Lezotte, Jane Forbes, Hugh H. Makens, and Laura Jones.

    1. Remarks—John Berry, Executive Director of the State Bar of Michigan. Discussed improving dialogue with the courts; multi-disciplinary and multi-jurisdictional practices—vital that we react to activities and developments going on around us; communication and need for unified bar; making the SBM helpful and useful to its members.

    2. Remarks—Ron Jones, Chief Deputy Commissioner for Securities at the Office of Insurance and Financial Services (OIFS) and Acting Chief Deputy Commissioner for Financial Institutions. In addition to his responsibilities in the Division of Securities, he will be responsible for the management of the Bank and Trust, Credit Union and Policy Divisions of OIFS. Discussed reorganization for functional regulation as there is a lot of overlap and cross-over among the divisions. Creating a new division called Risk Assessment.

    3. Call to Order and Determination of Quorum. Section Chair, Daniel H. Minkus, called the meeting to order at 4:15 p.m., and determined with the other officers present that a quorum existed.

    4. Approval of Minutes of Meeting of December 2, 2000. Mr. Minkus called for a motion to approve the Minutes of the Council Meeting held on December 2, 2000. Judith Greenstone Miller raised an issue regarding paragraph 4(g) of the Minutes (discussion relating to the State Bar of Michigan Bylaw Article IX—Public Statements). Ms. Miller will revisit this matter in her committee report. Pursuant to motion duly made and seconded, the Minutes were approved as presented.

    5. Chair's Report.

      a. February 10, 2001 Meeting of the State Bar of Michigan Representative Assembly. An item at the meeting was the consideration of the Report and Recommendation Regarding Multidisciplinary Practices by the MDP Committee. On behalf of the Business Law Section, Mr. Minkus supported the Committee's work and conclusions, noting that further study of issues relating to the maintenance of the attorney-client privilege is needed. At the Representative Assembly meeting, a motion to table the recommendation was made. The Business Law Section will continue to support the recommendation when it comes up again.

      b. Access to Justice Campaign. Mr. Minkus called for a motion to allow the Section to make a $5,000 contribution to ATJ Campaign for this fiscal year. Pursuant to a motion duly made and seconded, the motion was approved.

      c. Business Law Journal.The Section has informally approached ICLE to consider taking over publication of the Business Law Journal. ICLE would tentatively publish the Journal three times a year for $36,000 and would require a $5,000 start-up fee. The Section would maintain the Publications Directorship to monitor the publication process. Mr. Khoury discussed reserving the right to republish the content in any way we choose, i.e. on our webpage, etc.

      d. Mileage Reimbursement Policy. There is a perception that the Section discourages out-state participation in quarterly Council meetings and otherwise. Mr. Minkus suggested reimbursing Council members, committee chairs, directors, and past Council chairs for mileage for attending the quarterly Council meetings. A discussion ensued. Mr. Minkus asked for a motion to adopt a policy to reimburse Council members, committee chairs, directors, and past Council chairs for mileage at the IRS rate for attending quarterly Council meetings. Pursuant to a motion duly made and seconded, the motion was approved.

      e. The Section has been asked to send a delegate to a 2-day conference on May 24 & 25, 2001 to develop relationships between judges and practitioners. Mr. Minkus nominated Diane L. Akers of the Commercial Litigation Committee. A motion was duly made to send Diane L. Akers as the Section delegate to the May 24 & 25, 2001 conference and to pay her expenses (mileage, lodging and meals) incurred in representing the Section at the conference. Pursuant to the motion duly made and seconded, the motion was approved.

      f. Stephen H. Schulman Memorial. The Section previously authorized a $10,000 contribution to the Stephen H. Schulman Memorial by way of an appropriate vehicle to be determined by the Section officers. The contribution has not yet been given. The Section is waiting for a recommendation from Wayne State University as to the appropriate vehicle for this contribution.

      g. Consideration of Proposed Revised Bylaws. A Committee consisting of Daniel Minkus, Tracy Larsen, Timothy Damschroder and G. Ann Baker has reviewed and submitted proposed revisions to the Bylaws of the Section. The substantive changes include: Art. II, Sec. 4 (Limitations on members to speak on behalf of the Section); Art. III, Sec. 1 (number of Council members); Art. VI, Sect. 3 (Executive Committee); Art. VI, Sec. 8 (telephonic participation in Council meetings); and Art. VII (Directorships). A discussion of the proposed revisions ensued. Mr. Minkus will prepare a final version of the Revised Bylaws for publication prior to the Annual Meeting of the Section in September, 2001. A motion was made to adopt the Proposed Revised Bylaws. Pursuant to the motion duly made and seconded, the motion was approved.

      h. Consideration of Additional Committees of the Section. Liquor Control Committee. A group of approximately 25 attorneys is interested in committee status. Mr. Minkus requested a letter from the group. To date, Mr. Minkus has received no such letter. E-Commerce Committee. General comments: originally brought through Patrick Mears; would be part of the UCC Committee; worthwhile and believe it deserves committee status. Mr. Khoury suggested that there would be nice overlap with the Computer Law Section. Mr. Makens reported that at the ABA level, the establishment of the E-Commerce Committee has enhanced membership and E-Commerce programs consistently draw high attendance. Motion was made that E-Commerce be established as part of the UCC Committee. Pursuant to the motion duly made and seconded, the motion was approved.

      i. Consideration of Comments to ICLE Questionnaire. A brief discussion of the proposed ICLE survey occurred. Mr. Khoury requested that any comments/revisions be submitted to the either him or the Section Administrator by March 27, 2001. A revised survey will be re-circulated.

    6. Committee/Directorship Reports.

      a. Agricultural Committee—A written report of this Committee is attached to these Minutes.

      b. Commercial Litigation—A written report of this Committee is attached to these Minutes. Vicki Martin-Anderson (In-House Counsel) reported that the Commercial Litigation and In-House Counsel Committees' program on "Attorney-Client Privilege and the Corporate Client" is scheduled for March 20, 2001.

      c. Corporate Laws—A written report of this Committee is attached to these Minutes. Justin Klimko reported that amendments to the Michigan Business Corporation Act that were developed by the Committee were introduced by Senator Bill Bullard as Senate Bill 206. Senator Bullard also introduced Senate Bill 216 (proposed amendments to the Michigan Professional Service Corporations Act).

      d. Debtor/Creditor Rights—A written report of this Committee is attached to these Minutes (Minutes of the Committee's January 17, 2001 Meeting). Ms. Miller reported that Ms. Calton testified in Washington, D.C. before the Committee on Rules of Practice and Procedure on January 26, 2001. Ms. Miller reported that she and Ms. Calton proceeded in good faith and followed what they believed to be the procedure regarding public comments that was established at the December 2, 2000 Council meeting. Ms. Calton submitted an invoice for her expenses ($1,046.09) for which she was denied reimbursement. Ms. Miller requested that the Section reimburse Ms. Calton for her out-of-pocket expenses. At the request of Mr. Minkus, Ms. Miller requested and obtained the Commercial Law League's agreement to share in a portion of Ms. Calton's reimbursement in the amount of $300.00. A discussion occurred. A motion was made that the Section reimburse Ms. Calton for her out-of-pocket expenses in the amount of $746.09 (Commercial Law League will reimburse Ms. Calton in the amount of $300.00). Pursuant to the motion duly made and seconded, the motion was approved (Foltyn abstaining). Mr. Minkus reiterated the Section's policy that no committee chair is authorized to speak on behalf of the Section or the Council without the advance approval of the Council.

      e. Financial Institutions—James H. Breay reported that the Committee is drafting the articles for the next issue of the Business Law Journal which will deal primarily with the extensive changes in the banking code.

      f. In-House Counsel—A written report of this Committee is attached to these Minutes. See report of Vicki Martin-Anderson (Commercial Litigation report) above.

      g. Nonprofit Corporations—A written report of this Committee is attached to these Minutes. Jane Forbes reported that the Committee approached Mae Kuykendall about assisting with incorporating the last several amendments to the Michigan Business Corporation Act into the Michigan Nonprofit Corporation Act (revisions of the Nonprofit Act were completed in 1995 and marked up by the Legislative Service Bureau, but were never enacted). Ms. Kuykendall submitted a proposal of an hourly fee of $150 and a cap on hours of 150 hours. A discussion occurred including inquiry regarding whether or not the Section will receive a complete project at the end of 150 hours. A motion was made delegating to the officers the authority to approve the expenditure. Pursuant to the motion duly made and seconded, the motion was approved.

      h. Regulation of Securities—Arthur Dudley reported that this Committee is responsible for the next issue of the Business Law Journal (after Financial Institutions).

      i. Uniform Commercial Code—Patrick Mears reported that this Committee needs members. It was encouraged that the Section leadership recruit members from their own firms and solicit members at the Mid-Year meeting.

      j. Unincorporated Enterprises—A written report of this Committee is attached to these Minutes.

      k. Legislative Review—A written report is attached to these Minutes. Ann Baker reported that the State Bar of Michigan has advised that the Public Policy Committee of the Board of Commissioners will consider SB 1425 (amendments to the Business Corporation Act) on March 9, 2001. The Section has been asked for a position on the bill. A brief discussion occurred. A motion was made to endorse the amendments. Pursuant to motion duly made and seconded, the motion was approved.

      l. Program—A written report is attached to these Minutes. The Mid-Year program has been finalized and brochures have been sent out. Initial returns look good. The Program Directorship will begin work shortly on the Annual Meeting Program in September.

      m. Publications—No report.

      n. Section Development—No report.

      o. Technology—Michael Khoury reported that the section webpage has been redesigned. The section listserv will be up within the next week. The section listserv will require an administrator because the list cannot be universally updated.

    7. Treasurer's Report. Ms. Baker reported that the Section continues to be financially sound and has a balance of $253,893.94. A report is attached. Officers have discussed and recommend the allocation of $2,500 to purchase recognitions for Council members, committee chairs, directors, and past Council chairs.

    A motion was made to approve the Section budget (copy attached). Pursuant to motion duly made and seconded, the motion was approved.

    8. Other Business and Announcements. Justin Klimko reported on behalf of the Ad Hoc Committee formed to review and update the 1997 Strategic Plan of the Section. The Committee will distribute an Updated Strategic Plan for consideration by the Council at the May meeting.

    9. Announcement of May Meeting. The May Council meeting will be held on Saturday, May 19, 2001, at 7:00 a.m., at the Grand Traverse Resort.

    10. Meeting Adjournment. There being no further business to come before this meeting of the Council of the Business Law Section of the State Bar of Michigan, upon a motion duly made and seconded, and unanimously approved, the meeting was adjourned.

    Respectfully submitted,
    Laura Jones
    Secretary of the Meeting


    TREASURER'S REPORT
    March 1, 2001

    The financial condition of the Business Law Section continues to be sound. As of December 31, 2000, the Section's YTD Total Income was $70,899.00, net income was $62,629.41 and the cash balances aggregated $257,431.68.

    The State Bar of Michigan has experienced problems with the software program used to produce financial statements and was unable to print statements. The problem was recently corrected. Attached to this Report is a copy of the monthly financial statements for October, November, and December 2000 and the final statement for fiscal year October 1, 1999-September 20, 2000.

    The officers discussed and recommend the Council adopt a resolution to allocate $2,500 for this fiscal year to purchase recognitions for individuals providing service to the Sections, such as committee Chairs.

    The officers recommend the Council adopt a resolution authorizing Council members to be reimbursed for mileage to attend Council meetings. The State Bar policy is to reimburse at the standard IRS rate. The IRS changed the standard business mileage rate to 34.5 cents per mile effective January 1, 2001.

    Respectfully submitted
    G. Ann Baker


    COMMERCIAL LITIGATION COMMITTEE

    By: Diane L. Akers
    February 19, 2001

    The Commercial Litigation Committee and the In-House Counsel Committee are jointly sponsoring a program on "Attorney-Client Privilege and the Corporate Client," scheduled for March 20, 2001. The format will be a "round table" type discussion during which the panel will develop the issues by commenting on hypothetical situations that are both prepared in advance and expanded upon during the discussion. The panelists include judges, in-house counsel, outside litigation counsel and a law school professor. Invitations were sent out during the week of February 5, 2001. On February 15, 2001, members of both committees and the panelists participated in a prep session during which ideas and possible hypotheticals were reviewed.


    UNINCORPORATED ENTERPRISES COMMITTEE REPORT

    Daniel H. Minkus, Chair
    Dated: March 1, 2001

    I. Educational Outreach
    The Committee recently presented the 2001 Choice of Entity Seminar which was co-sponsored by the Business Law Section and ICLE. This annual seminar is now in its ninth year and has become a "regular" event on ICLE's calendar.

    II. Legislative Activity
    The Unincorporated Enterprises Committee is active as a participant in the current plans to revise the Michigan Limited Liability Company Act ("MLLCA"). It is anticipated that legislation will be proposed , and adopted, during 2001.

    III. Business Law Journal
    The Unincorporated Enterprises Committee was responsible for developing articles for a 2000 Business Law Journal. As an attempt to bring practical materials to the members of our Section, and to further expand upon our Section's relationship with the Institute for Continuing Legal Education, the Unincorporated Enterprises Committee's theme issue included several limited liability company operating agreements (with commentary), each tailored to a particular business endeavor.

    IV. Membership
    The Committee continues to solicit members. At the 1999 Mid-Year Meeting and again at the 2000 Mid-Year Meeting, the Committee received inquiries from individuals, and the Committee is considering further initiatives to increase membership. The Committee intends to continue to present seminars in conjunction with ICLE and the Business Law Section and to involve interested members of the Bar in Committee activities. Membership, and the opportunity to play a significant role in the Committee's activities, is and will continue to be open to all members of the Business Law Section of the State Bar of Michigan.


    Nonprofit Corporations Committee Report

    February 19, 2000

    In 1994, the Nonprofit Corporations Committee prepared draft legislation amending the Nonprofit Corporation Act to include many of the changes in the Business Corporation Act enacted since 1984 and to add provisions designed to meet special needs of nonprofit corporations, especially with respect to membership voting. Before that legislation can be introduced, the proposed bills should be revised to incorporate amendments of the Business Corporation Act adopted since 1995 and to correct nonconforming language inserted by the Legislative Service Bureau. The 1994 Reporter's Draft of the legislation is more than 300 pages long, making this a time consuming undertaking.

    Attached to this report is a proposal from Professor Mae Kuykendall to undertake the necessary revisions that will be presented at the March 1 Council meeting. The expense involved is substantial and the amount of work done this year could probably be reduced. It may be more efficient, however, to do the job over a relatively short period of time. Any Council members wishing to discuss this proposal in advance of the March 1 meeting, should feel free to call Jane Forbes at (313) 568-6792.

    Jane Forbes and Mark Lezotte, Chairs

    February 9, 2000
    Jane Forbes, Esq.
    Dykema Gossett PPLC
    400 Renaissance Center
    Detroit, MI 48243

    Dear Jane:

    I am responding to your request to present a business proposal in connection with my possibly assisting with revisions to the Michigan Nonprofit Corporation Act.

    My understanding of the scope of the project is that the last several amendments to the Michigan Business Corporation Act need to be incorporated into the nonprofit act. In addition, there are certain practices peculiar to nonprofit acts that need to be adequately provided for in the act, such as balloting at "polling places."

    This is to confirm that you gave me a copy of the revisions of the nonprofit act that were completed in 1995 and marked up by the Legislative Service Bureau, but which were never enacted. Part of my task will be establishing as a starting point the proposed changes of the Committee in 1995, without the style changes of the Legislative Service Bureau. You and I agreed that these style changes have been mooted by the subsequent enactment of the provisions in the Business Act on which the proposed changes were modeled. Thus, we must now conform the proposals to the form of the Business Act that has been enacted. In addition, we must add the applicable further revisions that were since proposed and enacted. And, as necessary, we must add provisions that reflect the special logic of the nonprofit act.

    You indicated that you would be able to send me an electronic version of the proposal, perhaps in the form of its original promulgation by the Committee.

    In terms of the business arrangements, I have assumed that I would be able to describe myself as the Reporter for this undertaking to revise the Code. Thus, one aspect of the business arrangement is to confirm that my role is that of the Reporter.

    Second, you asked that I make a proposal for the amount of the honorarium. As you know, I have taken as a base line for my estimate of the amount of work involved in revising the nonprofit act my work with Cyril Moscow and the late Professor Stephen Schulman on the Michigan Business Corporation Act. I estimate I have expended considerably more than a month devoting substantial parts of days to my work on the revision of the Business Corporation Act. The nonprofit act has special issues that may complicate it, but there are some portions that I may be able to do with some efficiency. Given the relative uncertainty about the overall amount of time needed and my own competing scholarly obligations, I suggest that we agree to an hourly rate, with a cap on the total hours to be charged to the endeavor. I propose an hourly fee of $150 and a cap on hours of 150 hours.

    As you know, I am currently a visiting professor at Florida State University. I plan to devote substantial time to completing a manuscript by early in the summer, but would be willing to begin working right away to back out the changes that were placed in the earlier draft but did not survive the legislative process relating to the Business Act, and to drop in conforming changes for all the changes that have occurred in recent years in the Business Act. I would provide you with an interim work product that shows these changes, and would await your views on the need for, and the nature of, further work before charging any additional hours.

    Thank you for asking me to help with your work on the nonprofit act. I look forward to working with you and with the Committee.

    Very truly yours,
    Mae Kuykendall
    Visiting Professor of Law, Florida State University Law School and Professor of Law, Michigan State University-Detroit College of Law


    AGRICULTURAL LAW COMMITTEE REPORT
    March 1, 2001

    The Agricultural Law Committee contends to seek arrangements for speaker and contributions to the upcoming issue of the Business Law Journal.

    Regards,
    Will Tishkoff


    IN-HOUSE COUNSEL COMMITTEE

    March 1, 2001

    The Commercial Litigation Committee and the In-House Counsel Committee are jointly sponsoring a program on "Attorney-Client Privilege and the Corporate Client," scheduled for March 20, 2001. The format will be a "round table" type discussion during which the panel will develop the issues by commenting on hypothetical situations that are both prepared in advance and expanded upon during the discussion. The panelists include judges, in-house counsel, outside litigation counsel and a law school professor. Invitations were sent out during the week of February 5, 2001. On February 15, 2001, members of both committees and the panelists participated in a prep session during which ideas and possible hypotheticals were reviewed.


    CORPORATE LAWS COMMITTEE REPORT

    Co-Chairs: Cyril Moscow and Justin 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
    Butzel Long
    150 West Jefferson, Suite 900
    Detroit, Michigan 48226
    Telephone: (313) 225-7037
    Fax: (313) 225-7080
    e-mail: klimkojg@butzel.com


    February 23, 2001

    REPORT ON LEGISLATION

    The following bills of interest from the last session passed:

    Public Act 334 of 2000 (SB 1239) amends the Occupational Code to require a simple majority of equity owners of a CPA firm be licensed CPAs. Immediate effect.

    Public Act 333 of 2000 (SB 1238) and Public Act 335 of 2000 (SB 1240) amends the Limited Liability Company Act and the Professional Service Corporation Act, respectively to eliminate language which would conflict with the changes made to the Occupational Code by Public Act 334 of 2000. Immediate effect.

    Public Act 336 of 2000 (SB 1241) amends the definition of services in a learned profession in the Michigan Limited Liability Company Act, deleting "certified or other public accountant". Immediate effect.

    Public Act 358 of 2000( SB 5412) amends reference to Uniform Commercial Code in section 471 of the Business Corporation Act.

    Public Act 359 of 2000 (SB 5413) amends reference to the Uniform Commercial Code in section 471 of the Nonprofit Corporation Act.

    Public Act 463 of 2000 (SB 863) amends the Estates and Protected Individuals Act. Section 5106(7) provides an exception to the banking code for a "for-profit or nonprofit, nonbanking corporation organized under the laws of this state to serve in a fiduciary capacity" if appointed by the court. Eff. date June 1, 2001

    Public Act 494 of 2000 (HB 5763) amends the Michigan Uniform Securities Act to make changes that will conform to National Securities Markets Improvements Act of 1996 (NSMIA) which effectively preempted portions of the state's securities law. Immediate effect.

    The following bills of interest have been introduced this session:

    Senate Bill 206 (Bullard and Steil) referred to Committee on Financial Services amends the Business Corporation Act. Draft was prepared by subcommittee of Business Law Section.

    Senate Bill 216 (Bullard) referred to Committee on Financial Services amends section 13 of Professional Service Corporation Act to provide current version of BCA applies to professional service corporations.

    To follow the progress of legislation, visit the legislature's web site at: www.michiganlegislature.org

    Cy Moscow has been working with Senator Bullard's office to get bills introduced to amend Section 5 of the Use Tax Act, MCL 205.95, and Section 451 of the Income Tax Act, MCL 206.451, to eliminate the requirement for a corporation to obtain a tax clearance before filing a certificate of dissolution or certificate of withdrawal. In addition, Cy is working on getting a bill introduced which would repeal provision in the Revised Judicature Act that are inconsistent with the Business Corporation Act.

    Karen Williams, at the State Bar of Michigan, has advised Dan Minkus that the Public Policy Committee of the Board of Commissioners will consider SB 1425 at its March 9, 2001, meeting and has asked for a recommended position on the bill. SB 1425 is amendments to the Business Corporation Act drafted by the Business Law Section subcommittee and introduced last session by Senator Bullard. Senate Bill 206 is substantially identical. The proposed amendments will permit greater use of electronic transactions for the internal operation of a corporation. In addition changes to section 342a specifically addresses shareholder rights plans and changes to section 489 specifically provide for a shareholder cause of action. The latter is in reaction to Baks v Moroun, 227 Mich. App. 472 (1998).

    The Council has not taken a position on the bill. I spoke with Cy Moscow on February 15, 2001, and he urges the Council to support for the bill. Justin Klimko can provide the Council with more information regarding the amendments.

    Respectfully submitted
    G. Ann Baker
    February 16, 2001


    PROGRAM DIRECTORSHIP REPORT

    The Program Directorship, working with Shel Stark and other members of ICLE, has put together an exciting program for the Business Law Section Mid-Year Meeting and Seminar taking place on May 18 and May 19, 2001 in Traverse City. The Program includes a keynote address on "E-Commerce in the Modern Economy" by Larry S. Freed, Vice-President, E‑Business Services, Compuware. The Program also includes an update on LLCs, panel discussions on revised Article 9 and minority business enterprises, and discussions on various other business-related topics.

    The Program Directorship will shortly commence planning the Program to take place at the Annual Meeting in September.

 
     

 

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