by Gardner Davis
The Florida Legislature passed a major revision to the Florida Business Corporation Act, Chapter 607, with the changes to be effective Oct. 1. The legislation represents the first comprehensive revision to the FBCA since it was enacted in 1990.
The Corporate Law Revision Committee, charged with reviewing and recommending revisions to the FBCA, examined the differences between the Florida statute and the Model Business Corporation Act, Delaware corporate law and New York corporate law. Florida has historically patterned its corporate statute on the Model Act.
The 2003 legislation makes a number of substantive changes to the corporate statute, including important revisions to dissenters’ rights, the provisions for handling creditor claims against dissolved corporations, shareholder preemptive rights, the director’s access to information, the requirements for pursuing a derivative lawsuit, changes to the anti-takeover provisions and various provisions regarding filings with the State Department.
The legislature adopted all but a few of the Revision Committee’s recommendations. The two most important suggestions rejected by the legislature, dealing with judicial dissolution for “oppression” and no “minority discount” for the purpose of dissenters’ rights, may have been viewed as favoring minority shareholders versus management. The legislature’s decision to reject these revisions suggests that Florida will follow Delaware’s approach of strictly construing minority shareholder rights and leaving it up to investors to negotiate for specific protections through the terms of the shareholders’ agreement or articles of incorporation.
The legislature wanted to ensure that Florida remains the most attractive venue, from management’s perspective, for incorporation. After the new legislation, there is no meaningful advantage for a corporation to incorporate in Delaware rather than Florida.
Gardner Davis is a corporate lawyer with Foley & Lardner.