Last December, the American Bar Association (“ABA”) announced that it had published a complete revision to the Model Business Corporation Act (“MBCA”), a stand-alone business corporation statue that has been substantially adopted by a majority of states, including Georgia. The MBCA was first published by the ABA in 1950 and is often cited by various courts, lawyers and legal scholars as a reference point for the most recent developments in corporate law. The ABA continues to promote the MBCA to allow states the opportunity to modernize their corporate statutes and to encourage uniformity in corporate laws among the states, which the ABA hopes will lead to increased certainty and efficiency in corporate transactions.
Though the MBCA is periodically updated and amended, this was the first comprehensive revision of the act since 1984. Many of the revisions in the 2016 version of the MBCA have been previously adopted through the periodic amendments to the MBCA, but there are several notable new changes to the act, including the following:
- new provisions allowing the ratification of defective corporate actions, including actions in connection with the issuance of shares;
- amendments that permit corporations to include in their articles of incorporation a provision that limits or eliminates a director’s or an officer’s duty to present a business opportunity to the corporation;
- addition of a provision allowing a corporation’s articles of incorporation or bylaws to specify a forum for litigation of internal corporate claims;
- amendments clarifying the scope and operation of qualifications for nomination and election as directors;
- amendments that address the obligations of corporations to make financial statements available to shareholders, the maintenance of corporate records, and the inspection rights of shareholders and directors of corporations.
We will keep an eye on whether Georgia adopts any of the new revisions.