Alexander Abramson Business Lawyers - January 2020

Your Business Matters AlexanderAbramson.com • (407) 649-7777 January 2020

New Year, New Laws

Massive Changes to Florida’s Business Corporation Act

The new year is here, and it’s brought plenty of change to business owners here in Florida. With surprisingly little fanfare, significant changes to the Florida Business Corporation Act (FBCA) took effect on Jan. 1, 2020. On the whole, these new statutes provided much-needed updates to existing laws but also introduced new terms, conditions, and regulations all business owners and advisors should be aware of. Now, the FBCA hasn’t had a major revision since 1989, a full two years before the launch of “America Online.” A lot has changed in the ways we do business since the “you’ve got mail” days, from video calls to digital signatures, so the revised act had a lot of ground to cover — more than I can summarize in this humble newsletter. For that reason, we’re holding free seminars on Jan. 15 and 16 where we’ll outline the revisions in depth. Here, though, I have put together an overview of some of the critical changes to give you a taste of the overall scope of the modifications. As part of the effort to modernize the FBCA, several new definitions have been added, and others have been updated significantly from their 20th- century counterparts. For example, the revisions now use the term “authorized entity” to designate what entities are allowed to serve as registered agents of New Definitions

corporations. The concept of “qualified directors” is another new addition, referring to who is a truly independent director for the purposes of a derivative action or conflict of interest. “Insolvent,” while an old term, has been modified to include a balance sheet test. Not all the updates coming in 2020 are wholly new — the changes made to entity naming requirements actually contain a throwback to the 1990s. Specifically, the ability to reserve a name for a corporation before formation has been brought back. Names can be reserved for up to 120 days, making it easier for entrepreneurs to lock in the brand they want without having to rush to file. The restrictions on names being “distinguishable on the record” have also been relaxed with separate abbreviations of the same root word now being seen as legally distinct. For example, “FL Candy Company” and “FLA Candy Company” could now both exist as distinguishable names. One of the most significant changes to the FBCA has to do with shareholder agreements. In fact, an entirely new subsection has been added to the act to address the modern realities of doing business, including sections on remote conferencing and reimbursement for the solicitation of proxies. The upshot is that virtually all corporations will need Shareholders Agreements Naming Requirements

to review and update their shareholder agreements to account for these new provisions. Essentially, this is a major “software update” for corporations in Florida, which will require them to review and update their bylaws, shareholder agreements, and other legal arrangements so they comply with the new system. Both business owners and advisors need to have a comprehensive understanding of these changes. To that end, I’ll be doing two free seminars on Jan. 15 and 16 to explain the updates in detail. Use the URL below to register and prepare yourself and your business for a successful future.

Sign up here: http://bit.ly/corp-seminar

Looking forward to seeing you,

–Ed Alexander

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