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Attorneys at Law 6400 S. Fiddlers Green Circle Phone (303) 796-2626 |
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NEW PROVISION FOR COLORADO CORPORATIONSby Herrick K. Lidstone, Jr. On April 22, 2005, Governor Owens signed Senate Bill 76 which provides flexibility when seeking shareholder consents to corporate actions. Under the previous law, shareholders of a Colorado corporation could only act by unanimous written consent or at a shareholders' meeting (usually requiring a majority vote or, in some cases, a two-thirds vote). Senate Bill 76 provides that shareholders of a Colorado corporation can act by less than unanimous written consent - but only if the right to do so is expressly provided for in the corporation's articles of incorporation. We do not believe that any articles of incorporation for a Colorado corporation contain this right, and that all Colorado corporations should consider amending their articles of incorporation to include this right. There are some issues to be considered in deciding whether to include this new right, and minority shareholders may see this as a method of infringing on their rights. Delaware and Nevada have similar statutes, and this does provide greater flexibility to Colorado corporations. Even if these provisions are adopted, public corporations will still have to comply with the information statement provisions of SEC Regulation 14C or the proxy rules. Thus the incremental benefit to public corporations will not be as significant as it may be for privately-held corporations. We recommend that any person who owns a Colorado corporation and is considering whether to adopt the new flexibility contact us to discuss the advantages and disadvantages. Herrick K. Lidstone, Jr. is a senior member of the law firm. Mr. Lidstone practices in the areas of business transactions, including corporate law, federal and state securities compliance, mergers and acquisitions, contract law, tax law, real estate and zoning law, and natural resources law. For more information contact Herrick K. Lidstone, Jr. at 303.796.2626 or hklidstone@bfw-law.com. |