Florida Senate - 2019                        COMMITTEE AMENDMENT
       Bill No. CS for CS for SB 892
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: WD            .                                
                  04/19/2019           .                                

       The Committee on Appropriations (Simmons) recommended the
    1         Senate Amendment (with title amendment)
    3         Delete lines 3902 - 4174
    4  and insert:
    5  directors or shareholders of the corporation; or
    6         (j)(h) Otherwise governs the exercise of the corporate
    7  powers or the management of the business and affairs of the
    8  corporation or the relationship between the shareholders, the
    9  directors, and or the corporation, or among any of them, and is
   10  not contrary to public policy. For purposes of this paragraph,
   11  agreements contrary to public policy include, but are not
   12  limited to, agreements that reduce the duties of care and
   13  loyalty to the corporation as required by ss. 607.0830 and
   14  607.0832, exculpate directors from liability that may be imposed
   15  under s. 607.0831, adversely affect shareholders’ rights to
   16  bring derivative actions under s. 607.07401, or abrogate
   17  dissenters’ rights under ss. 607.1301-607.1320.
   18         (2) An agreement authorized by this section shall be:
   19         (a)1. Set forth or referenced in the articles of
   20  incorporation or bylaws and approved by all persons who are
   21  shareholders at the time the agreement; or
   22         2. Set forth in a written agreement that is signed by all
   23  persons who are shareholders at the time of the agreement and
   24  such written agreement is made known to the corporation; and.
   25         (b) Subject to termination or amendment only by all persons
   26  who are shareholders at the time of the termination or
   27  amendment, unless the agreement provides otherwise with respect
   28  to termination and with respect to amendments that do not change
   29  the designation, rights, preferences, or limitations of any of
   30  the shares of a class or series.
   31         (3) The existence of an agreement authorized by this
   32  section shall be noted conspicuously on the front or back of
   33  each certificate for outstanding shares or on the information
   34  statement required with respect to uncertified shares by s.
   35  607.0626(2). If at the time of the agreement the corporation has
   36  shares outstanding which are represented by certificates, the
   37  corporation shall recall such certificates and issue substitute
   38  certificates that comply with this subsection. The failure to
   39  note the existence of the agreement on the certificate or
   40  information statement shall not affect the validity of the
   41  agreement or any action taken pursuant to it. Any purchaser of
   42  shares who, at the time of purchase, did not have knowledge of
   43  the existence of the agreement shall be entitled to rescission
   44  of the purchase. A purchaser shall be deemed to have knowledge
   45  of the existence of the agreement if its existence is noted on
   46  the certificate or information statement for the shares in
   47  compliance with this subsection and, if the shares are not
   48  represented by a certificate, the information statement is
   49  delivered to the purchaser at or before prior to the time of the
   50  purchase of the shares. An action to enforce the right of
   51  rescission authorized by this subsection must be commenced
   52  within the earlier of 90 days after discovery of the existence
   53  of the agreement or 2 years after the time of purchase of the
   55         (4) An agreement authorized by this section shall cease to
   56  be effective when shares of the corporation are registered
   57  pursuant to s. 12 of the Securities Exchange Act of 1934 listed
   58  on a national securities exchange or regularly quoted in a
   59  market maintained by one or more members of a national or
   60  affiliated securities association. If the agreement ceases to be
   61  effective for any reason, the board of directors may, if the
   62  agreement is contained or referred to in the corporation’s
   63  articles of incorporation or bylaws, adopt an amendment to the
   64  articles of incorporation or bylaws, without shareholder action,
   65  to delete the agreement and any references to it.
   66         (5) An agreement authorized by this section that limits or
   67  restricts the discretion or powers of the board of directors
   68  shall relieve the directors of, and impose upon the person or
   69  persons in whom such discretion or powers are vested, liability
   70  for acts or omissions imposed by law on directors to the extent
   71  that the discretion or powers of the directors are limited by
   72  the agreement.
   73         (8) This section does not limit or invalidate agreements
   74  that are otherwise valid or authorized without regard to this
   75  section, including shareholder agreements between or among some
   76  or all of the shareholders or agreements between or among the
   77  corporation and one or more shareholders.
   78         Section 72. Section 607.07401, Florida Statutes, is
   79  repealed.
   80         Section 73. Section 607.0741, Florida Statutes, is created
   81  to read:
   82         607.0741 Standing.—
   83         (1) A shareholder may not commence a derivative proceeding
   84  unless the shareholder is a shareholder at the time the action
   85  is commenced and:
   86         (a) Was a shareholder when the conduct giving rise to the
   87  action occurred; or
   88         (b) Whose status as a shareholder devolved on the person
   89  through transfer or by operation of law from one who was a
   90  shareholder when the conduct giving rise to the action occurred.
   91         (2) In ss. 607.0741-607.0747, the term “shareholder” means
   92  a record shareholder, a beneficial shareholder, or an
   93  unrestricted voting trust beneficial owner.
   94         Section 74. Section 607.0742, Florida Statutes, is created
   95  to read:
   96         607.0742 Complaint; demand and excuse.—A complaint in a
   97  proceeding brought in the right of a corporation must be
   98  verified and allege with particularity:
   99         (1)The demand, if any, made to obtain the action desired
  100  by the shareholder from the board of directors; and
  101         (2) Either:
  102         (a)If such a demand was made, that the demand was refused,
  103  rejected, or ignored by the board of directors prior to the
  104  expiration of 90 days from the date the demand was made;
  105         (b)If such a demand was made, why irreparable injury to
  106  the corporation or misapplication or waste of corporate assets
  107  causing material injury to the corporation would result by
  108  waiting for the expiration of a 90-day period from the date the
  109  demand was made; or
  110         (c) The reason or reasons the shareholder did not make the
  111  effort to obtain the desired action from the board of directors
  112  or comparable authority.
  113         Section 75. Section 607.0743, Florida Statutes, is created
  114  to read:
  115         607.0743 Stay of proceedings.—If the corporation commences
  116  an inquiry into the allegations made in the demand or complaint,
  117  the court may stay any derivative proceeding for such period as
  118  the court deems appropriate.
  119         Section 76. Section 607.0744, Florida Statutes, is created
  120  to read:
  121         607.0744 Dismissal.—
  122         (1)A derivative proceeding may be dismissed, in whole or
  123  in part, by the court on motion by the corporation if a group
  124  specified in subsection (2) or subsection (3) has determined in
  125  good faith, after conducting a reasonable inquiry upon which its
  126  conclusions are based, that the maintenance of the derivative
  127  proceeding is not in the best interests of the corporation. In
  128  all such cases, the corporation has the burden of proof
  129  regarding the qualifications, good faith, and reasonable inquiry
  130  of the group making the determination.
  131         (2) Unless a panel is appointed pursuant to subsection (3),
  132  the determination required in subsection (1) shall be made by:
  133         (a) A majority of qualified directors present at a meeting
  134  of the board of directors if the qualified directors constitute
  135  a quorum; or
  136         (b) A majority vote of a committee consisting of two or
  137  more qualified directors appointed by majority vote of qualified
  138  directors present at a meeting of the board of directors,
  139  regardless of whether such qualified directors constitute a
  140  quorum.
  141         (3) Upon motion by the corporation, the court may appoint a
  142  panel consisting of one or more disinterested and independent
  143  individuals to make a determination required in subsection (1).
  144         (4) This section does not prevent the court from:
  145         (a) Enforcing a person’s rights under the corporation’s
  146  articles of incorporation, bylaws or this chapter, including the
  147  person’s rights to information under s. 607.1602; or
  148         (b)Exercising its equitable or other powers, including
  149  granting extraordinary relief in the form of a temporary
  150  restraining order or preliminary injunction.
  151         Section 77. Section 607.0745, Florida Statutes, is created
  152  to read:
  153         607.0745 Discontinuance or settlement; notice.—
  154         (1) A derivative action on behalf of a corporation may not
  155  be discontinued or settled without the court’s approval.
  156         (2) If the court determines that a proposed discontinuance
  157  or settlement will substantially affect the interest of the
  158  corporation’s shareholders or a class, series, or voting group
  159  of shareholders, the court shall direct that notice be given to
  160  the shareholders affected. The court may determine which party
  161  or parties to the derivative action shall bear the expense of
  162  giving the notice.
  163         Section 78. Section 607.0746, Florida Statutes, is created
  164  to read:
  165         607.0746 Proceeds and expenses.—On termination of the
  166  derivative proceeding the court may:
  167         (1) Order the corporation to pay from the amount recovered
  168  in the derivative proceeding by the corporation the plaintiff’s
  169  reasonable expenses, including reasonable attorney fees and
  170  costs, incurred in the derivative proceeding if it finds that,
  171  in the derivative proceeding, the plaintiff was successful in
  172  whole or in part; or
  173         (2) Order the plaintiff to pay any of the defendant’s
  174  reasonable expenses, including reasonable attorney fees and
  175  costs, incurred in defending the proceeding if it finds that the
  176  proceeding was commenced or maintained without reasonable cause
  177  or for an improper purpose.
  178         Section 79. Section 607.0747, Florida Statutes, is created
  179  to read:
  180         607.0747 Applicability to foreign corporations.—In any
  181  derivative proceeding in the right of a foreign corporation
  182  brought in the courts of this state, the matters covered by ss.
  183  607.0741-607.0747 shall be governed by the laws of the
  184  jurisdiction of incorporation of the foreign corporation except
  185  for ss. 607.0743, 607.0745, and 607.0746.
  186         Section 80. Section 607.0748, Florida Statutes, is created
  187  to read:
  188         607.0748 Shareholder action to appoint custodians or
  189  receivers.—
  190         (1) A circuit court may appoint one or more persons to be
  191  custodians or receivers of and for a corporation in a proceeding
  192  by a shareholder where it is established that:
  193         (a) The directors are deadlocked in the management of the
  194  corporate affairs, the shareholders are unable to break the
  195  deadlock, and irreparable injury to the corporation is
  196  threatened or being suffered; or
  197         (b)The directors or those in control of the corporation
  198  are acting fraudulently and irreparable injury to the
  199  corporation is threatened or being suffered.
  200         (2) The court:
  201         (a) May issue injunctions, appoint one or more temporary
  202  custodians or temporary receivers with all the powers and duties
  203  the court directs, take other action to preserve the corporate
  204  assets wherever located, and carry on the business of the
  205  corporation until a full hearing is held;
  206         (b) Shall hold a full hearing, after notifying all parties
  207  to the proceeding and any interested persons designated by the
  208  court, before appointing a custodian or receiver; and
  209         (c) Has jurisdiction over the corporation and all of its
  210  property, wherever located.
  211         (3) The court may appoint a natural person, a domestic
  212  eligible entity, or a foreign eligible entity authorized to
  213  transact business in this state as a custodian or receiver and
  214  may require the custodian or receiver to post bond, with or
  215  without sureties, in an amount the court directs.
  216         (4) The court shall describe the powers and duties of the
  217  custodian or receiver in its appointing order, which may be
  218  amended. Among other powers:
  219         (a) A custodian may exercise all of the powers of the
  220  corporation, through or in place of its board of directors, to
  221  the extent necessary to manage the business and affairs of the
  222  corporation; and
  223         (b) A receiver may dispose of all or any part of the assets
  224  of the corporation, wherever located, at a public or private
  225  sale, if authorized by the court, and may sue and defend in the
  226  receiver’s own name as receiver in all courts of this state.
  227         (5) During a custodianship, the court may redesignate the
  228  custodian a receiver and, during a receivership, the court may
  229  redesignate the receiver a custodian, in each case if doing so
  230  is in the best interests of the corporation.
  231         (6) The court from time to time during the custodianship or
  232  receivership may order compensation paid and expense
  233  disbursements or reimbursements made to any custodian or
  234  receiver from the assets of the corporation or proceeds from the
  235  sale of its assets.
  236         Section 81. Section 607.0749, Florida Statutes, is created
  237  to read:
  238         607.0749 Provisional director.—
  239         (1) In a proceeding by a shareholder, a provisional
  240  director may be appointed in the discretion of the court if it
  241  appears that such action by the court will remedy a situation in
  242  which the directors are deadlocked in the management of the
  243  corporate affairs and the shareholders are unable to break the
  244  deadlock. A provisional director may be appointed
  245  notwithstanding the absence of a vacancy on the board of
  246  directors, and such director shall have all the rights and
  247  powers of a duly elected director, including the right to notice
  248  of and to vote at meetings of directors, until such time as the
  249  provisional director is removed by order of the court or, unless
  250  otherwise ordered by a court, removed by a vote of the
  251  shareholders sufficient either to elect a majority of the board
  252  of directors or, if greater than majority voting is required by
  253  the articles of incorporation or the bylaws, to elect the
  254  requisite number of directors needed to take action. A
  255  provisional director shall be an impartial person who is neither
  256  a shareholder nor a creditor of the corporation or of any
  257  subsidiary or affiliate of the corporation, and whose further
  258  qualifications, if any, may be determined by the court.
  259         (2) A provisional director shall report from time to time
  260  to the court concerning the matter complained of, or the status
  261  of the deadlock, if any, and of the status of the corporation’s
  262  business, as the court shall direct. No provisional director
  263  shall be liable for any action taken or decision made, except as
  264  directors may be liable under s. 607.0831. In addition, the
  265  provisional director shall submit to the court, if so directed,
  266  recommendations as to the appropriate disposition of the action.
  267  Whenever a provisional director is appointed, any officer or
  268  director of the corporation may, from time to time, petition the
  269  court for instructions clarifying the duties and
  270  responsibilities of such officer or director.
  271         (3) In any proceeding under this section, the court shall
  272  allow reasonable compensation to the provisional director for
  273  services rendered and reimbursement or direct payment of
  274  reasonable costs and expenses, which amounts shall be paid by
  275  the corporation.
  276         Section 82. Section 607.0750, Florida Statutes, is created
  277  to read:
  278         607.0750Direct action by shareholder.—
  279         (1)Subject to subsection (2), a shareholder may maintain a
  280  direct action against another shareholder, officer, director, or
  281  the company to enforce the shareholder’s rights and otherwise
  282  protect the shareholder’s interests, including rights and
  283  interests under the articles of incorporation, the bylaws or
  284  this chapter or arising independently of the shareholder
  285  relationship.
  286         (2) A shareholder maintaining a direct action under this
  287  section must plead and prove either:
  288         (a)An actual or threatened injury that is not solely the
  289  result of an injury suffered or threatened to be suffered by the
  290  corporation; or
  291         (b)An actual or threatened injury resulting from a
  292  violation of a separate statutory or contractual duty owed by
  293  the alleged wrongdoer to the shareholder, even if the injury is
  294  in whole or in part the same as the injury suffered or
  295  threatened to be suffered by the corporation.
  297  ================= T I T L E  A M E N D M E N T ================
  298  And the title is amended as follows:
  299         Delete line 218
  300  and insert:
  301         services; creating s. 607.0750, F.S.; authorizing a
  302         shareholder to maintain certain actions against
  303         certain entities; providing requirements for such
  304         actions; amending s. 607.0801, F.S.; making technical