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Legislation, Statutes, and Administrative Code

2018 Legislative Session
Session Law 2018-45 – An Act to Make Various Revisions to the North Carolina Business Corporation Act

Session Law 2018-45 amends the Business Corporation Act, as recommended by the Business Corporations Committee of the Business Law Section of the North Carolina Bar Association, to incorporate provisions based on revisions to the Model Corporation Act and to corporation law of other selected jurisdictions.

The key revisions affecting the filings at the NC Secretary of State’s Office comprise the ratification of defective corporate actions. The act sets forth procedures by which a corporation can ratify corporate actions taken without proper authorization, and provides that such actions are not void or voidable if they are ratified according to the prescribed procedures. An example of a defective corporate action is an over issuance of shares.

The new Section provides definitions for: Corporate Action; Defective Corporate Action; and Failure of Authorization among others and provides a process for ratification including notice requirements and a filing requirement. It also provides information on judicial proceedings regarding validity of corporate actions §55-1-67.



Articles of Validation – Form B-15 – $150.00 Filing Fee

The filing requirement (§55-1-66) is satisfied by filing Articles of Validation with the Business Registration Division at the NC Department of the Secretary of State.

The NC Secretary of State’s Office provides Form B-15 for use in filing the Articles of Validation. Specific certifications and attachments required when submitting the Articles of Validation. Attachments may include: previously filed documents; Articles of Correction; or any filing containing all of the information giving effect to the defective action.

Summary statements of other revisions to Session Law 2018-45 provided by the legislative staff are below and do not constitute an official statement of legislative intent.

Filing Fee for Articles of Validation – The act imposes a fee of $150 payable to the Secretary of State when filing of articles of validation.

Articles of Incorporation May Eliminate Duty to Bring Business Opportunity to the Corporation – The act authorizes the articles of incorporation to include a provision limiting or eliminating any duty of a director, officer or any other person to offer the corporation the right to have or participate in one or more specific classes or categories of business opportunities before the director, officer, or other person pursues that opportunity.

Certain Holders of Two or More Series of a Class of Shares Required to Vote Together as Single Voting Group on Proposed Plan of Merger – The act provides that holders of two or more series of a class of shares must vote together as a single voting group on a proposed plan of merger or conversion if the plan would entitle them to vote as separate voting groups and would affect those series in the same or a substantially similar way.

Modernize Treatment of Voting Trusts and Shareholder Agreements – The act removes the statutory 10- year limit on the duration of a voting trust and shareholder agreements, and clarifies when a purchaser of shares without notice of a shareholder agreement can nevertheless be bound by it.

Director Compensation Presumed Fair to Corporation – The act creates a presumption that director compensation is fair to the corporation unless it is proven to be unfair by a preponderance of the evidence.

Authority Granted to Create and Delegate Committee Powers to Subcommittees and to Appoint Alternate Committee Members – The act permits a board committee to establish a subcommittee to which it can delegate its powers and authority, and authorizes the appointment of alternate committee members for the purpose of taking the place of any absent or disqualified member at a committee or subcommittee meeting.

Limit on Retroactive Impairment of Rights to Indemnification and Advancement of Expenses – The act limits the circumstances under which rights to indemnification and advancement of expenses could be impaired retroactively.

Clarification that a Plan of Merger May Provide for Cancellation of Shares or Interests at Closing - The act amends various entity merger statutes to clarify that a plan of merger may provide for cancellation of shares or interests at the merger closing.

Certain Approvals of Plans of Merger or of Share Exchange without Shareholder Vote Permitted – The act permits the approval of a plan of merger or share exchange without a shareholder vote if the merger follows a tender offer made on the terms provided in the plan of merger or share exchange, and the offeror acquires enough shares to permit it to approve the merger or share exchange if the matter were submitted to a vote at a meeting of shareholders.

Certain Approvals of Plans of Merger or of Share Exchange without Shareholder Vote Permitted – The act permits the approval of a plan of merger or share exchange without a shareholder vote if the merger follows a tender offer made on the terms provided in the plan of merger or share exchange, and the offeror acquires enough shares to permit it to approve the merger or share exchange if the matter were submitted to a vote at a meeting of shareholders.

"Short Form" Merger of Corporate Subsidiary and Unincorporated Parent – The act permits the merger of an unincorporated entity with its corporate subsidiary without the approval of the subsidiary's board of directors or shareholders.

Appraisal Rights of Shareholders with Non-voting Shares – The act provides appraisal rights to shareholders with non-voting shares and requires that shareholders intending to demand appraisal rights must give the corporation notice of that intent before the proposed corporate action becomes effective.

2017 Legislative Session
Session Law 2017-90 - Veteran-Owned Small Business Designation on Annual Report

Senate Bill 578 allows for business corporations to voluntarily indicate on the business corporation annual report already filed with the Secretary of State’s Office or the Department of Revenue whether the company is a veteran-owned small business or a service-disabled veteran-owned small business.

Definitions for what a “service-disabled veteran,” service-disabled veteran-owned small business,” “veteran,” and “veteran-owned small business” were added to Section 55-1-40.

The effective date is for any document filed on or after January 2, 2018.



Session Law 2017-23 - Assumed Name Act Implementation Postponed

A new Article created the revised Assumed Name Act, Article 14A of Chapter 66 which was passed by Session Law 2016-100, with funding being a condition to the stated effective date. The General Assembly funded the program and passed a bill postponing the effective date of the new Act until December 1, 2017. The provisions of former Article 14 of Chapter 66 of the General Statutes shall continue to apply until that time.

2016 Session Laws
Session laws 2016;

Session Law 2016-100 - Assumed Name Act Summary of Changes:
  • An Assumed Name Certificate (d/b/a) has to be filed at the Register of Deeds Office in only one county in which the business is doing business.
  • If the entity ceases to use the assumed name in business, the entity is to file a withdrawal of assumed business name.
  • A searchable database is to be maintained by the Secretary of State.
  • The Register of Deeds Offices will need to upload the filing with image and index standards to the database maintained by the Secretary of State’s Office.
  • Forms are to be developed by the Land Records Management Advisory Committee and may be provided by the Register of Deeds Office and the Secretary of State’s Office.
  • All Certificates of Assumed Name filed under the old law will expire July 1, 2022. At least one person listed as an owner of the business in a certificate of assumed name under the old law must file an assumed business name certificate before the certificate of assumed name expires if the entity wants to continue doing business under the assumed name.
  • The searchable database will consist of any new assumed name filings on or after December 1, 2017.
2013-2014 Session Laws
Session laws 2013-2014
Summary of Legislative Changes - 2010
The General Assembly passed three bills during the 2010 Legislative Session which affected the Business Entity Filings at the NC Secretary of State’s Office, they are:
  • Session Law 2010-31: Annual Report Due Date Changes;
  • Session Law 2010-118: Changes to Chapter 36D “The Community Trust Act”.
  • Session Law 2010-187: Chapter 57D “Limited Liability Company Act” amended by adding a new subsection authorizing the creation of L3C entities (low profit limited liability companies.)
Legislative Fee Changes - 2007
Effective September 1, 2007, Annual Report Fee Changes Business Corporation
Summary of Legislative Changes - 2001
  • Session Law 2001-390 (House Bill 1073)Effective August 26, 2001,this law removes the five-year limitation on reinstatement from administrative dissolution for several types of business entities, including business corporations and limited liability companies. This Bill permits the Secretary of State to reinstate an administratively dissolved entity at any time if the entity files an Application for Reinstatement from Administrative Dissolution and meets other statutory requirements.The name of an administratively dissolved entity that has not applied for reinstatement becomes available for use by another entity at the expiration of five years from the effective date of the administrative dissolution. If the name of an administratively dissolved entity is used by another entity following that time, the administratively dissolved entity must change its name before it may be reinstated. You may review the full text of House Bill 1073 by clicking here.
  • Session Law 2001-358 (House Bill 385)Effective January 1, 2002, this law amends the General Statutes to create a new Chapter 55D and consolidate in one place various provisions that either duplicate or closely track each other in Chapters 55, 55A, 57D and 59 relating to corporations, nonprofit corporations, limited liability companies, limited partnerships and registered limited liability partnerships.The provisions that are covered by the Bill fall into three different categories: (1) requirements for filing documents with the Secretary of State, (2) formal requirements for entity name availability, and (3) requirements for maintaining a registered office and registered agent in each of the affected chapters.(Note that the effective date of House Bill 385 was amended and delayed to January 1, 2002 by Senate Bill 842.) You may review the full text of House Bill 385 by clicking here.
  • Session Law 2001-387 (Senate Bill 842) Effective January 1, 2002, this law makes changes to the North Carolina Business Corporation Act, Nonprofit Corporation Act, Limited Liability Company Act and the laws governing various forms of partnerships. These changes include conforming changes for corporations to operate under the Uniform Electronic Transaction Act, amendments to the law to allow majority shareholder action without meeting for closely held corporations, amendments involving the formation and organization of limited liability companies, creation of a limited liability limited partnership, amendments allowing corporations to convert to non-corporate business entities, amendments permitting North Carolina business entities to convert to foreign entities, standardization of business entity definitions, standardization of provisions relating to service of process on the Secretary of State, and changes to the tax law to conform tax treatment for various business entities. You may review the full text of Senate Bill 842 by clicking here.
Summary of Legislative Changes - 1999
During the 1999 General Assembly three bills were passed that impact filings in the Business Registration Division and are of interest to our customers. Below is a brief synopsis of each bill and the effective date. You may click on the appropriate link to review the full text of the bill.
  • Senate Bill 660: Revised Limited Liability Company Act Senate Bill 660 makes a number of changes to Chapter 57D of the North Carolina Limited Liability Company Act. An LLC may now be perpetual in duration and organized for a nonprofit purpose. There are various changes to the articles of organization, articles of amendment and to restated articles. Effective Date: June 18, 1999 You may review the full text of Senate Bill 660 by clicking here.
  • Senate Bill 835: Revised Law Governing Mergers This bill creates mechanisms for business and nonprofit corporations, limited liability companies, general partnerships, limited partnerships and limited liability partnerships to merge with one another. Effective Date: December 15, 1999 You may review the full text of Senate Bill 835 by clicking here.
  • Senate Bill 297: Limited Partnership/Professional Liability Changes This bill clarifies the liability of members in general partnerships, limited partnerships and limited liability partnerships. Changes to Chapter 59 as it relates to limited liability partnerships are more significant. The registration fee has been increased from $100 to $125. In addition, LLPs will no longer file an annual renewal, but will be required to file an annual report each year. The due date for the annual report is the fifteenth day of the fourth month after the end of the fiscal year. There is a $200 fee for the annual report. Effective Date: January 1, 2000 You may review the full text of Senate Bill 297 by clicking here.
Summary of Legislative Changes - 1997
The 1997 session of the North Carolina General Assembly brought many changes in the statutes that govern incorporating in North Carolina. The following is a brief synopsis of those changes.
  • House Bill 157: Changes the length of time a corporation has to reinstate after administrative dissolution from two years to five years; Clarifies the correction procedures for articles; Clarifies the restatement of LLC Articles of Organization and Cancellation of Articles of Dissolution; States the criteria for the availability of an LLC name; Authorizes facsimile signature for Limited Partnership documents; Modifies the definition of foreign professional corporations; Eliminates the twenty day time limit on the effective dates of correction and cancellations of Certificate of Limited Partnerships; Allows single member LLC to be formed; and Permits a parent corporation to merge into a subsidiary under certain conditions.
  • House Bill 727: Increases certain corporate filing fees; Transfers the requirement for filing of annual reports in most instances to the Department of Revenue; Changes the due date for filing annual reports to the deadline for filing corporate franchise and income tax returns.
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