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SB 602 signed by the governor; changes have become law

We are pleased to report that the Business Entities Bill (CS/SB 602), which we affectionately call the “son of a glitch bill,” was signed by Governor DeSantis this past Friday (May 7, 2021). Since the statutory changes in the bill became law upon the bill becoming effective, those changes have now become law. A copy of the enrolled bill as adopted by the legislature and signed by the Governor is attached.

For reference, the “son of a glitch” bill makes the following principal changes:

  • Changes to §607.1302(1) modifying in certain respects the types of circumstances under which a shareholder has a right to seek appraisal rights, including deleting certain triggers and adding certain others;
  • Changes to §607.1302(2) dealing with the “market out” exception to §607.1302(1), including expanding the list of appraisal rights triggers which fall within the “market out” exception and adding language to provide that a corporation subject to “a comparable trading process” will be considered as being “traded in an organized market” (and defining the limited circumstances when a Florida corporation will qualify as having such a “comparable trading process”);
  • Changes to various sections of Article 13 (i.e., the appraisal rights provisions) in an effort to prevent perceived abuses by persons seeking to engage in appraisal rights arbitrage, as such abuses are illustrated by disputes that have recently arisen in appraisal rights litigation in the Florida courts;
  • A clean up change to §605.0410 of FRLLCA to fix a glitch in paragraph (b) of subsection 3 (to change an “or” to an “and” in a situation where the word “or” was clearly incorrect and unintended); and
  • A change to §607.1405 (dealing with voluntary dissolution of a Florida corporation) to change the period in which an entity name is not available after the effective date of a dissolution to be 120 days instead of one year (making this provision parallel with §605.0717 of FRLLCA).

Additionally, based upon a request from the Real Property, Probate and Trust Law Section of The Florida Bar, two changes were made to Chapter 617 (Florida’s not-for-profit statute). The first change modifies §617.0825(9) (dealing with quorum requirements) to make it clear that this provision does not apply to an association (as defined in §720.301) or any corporation regulated under Chapter 718 or 719. The second change alters §617.1703 generally in an effort to make the section broad enough to cover all situations where the provisions of Chapter 617 should be considered superseded by provisions appearing in Chapters 718, 719, 720, 721, and 723 of the Florida Statutes that address the same matter.

Thanks to Phil Schwartz and Gary Teblum, Co-Chairs of the Chapter 607 subcommittee for their tireless efforts.

Regards,

Willard Blair

Chair, Corporations, Securities and Financial Services Committee

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