DeSantis signs bill streamlining correction of corporate missteps

by | Jun 26, 2024

Gov. Ron DeSantis signed legislation to establish a formal procedure for businesses in Florida to correct past procedural errors, such as improperly issued shares or incorrectly appointed directors.

Gov. Ron DeSantis signed a bill into law Tuesday that introduces a new procedure for businesses to correct past corporate missteps, such as improperly issued shares or incorrectly appointed directors.

Sponsored by Sen. Jonathan Martin, the legislation, Senate Bill 1198, provides companies with a statutory method to ratify actions that were intended to be valid but were flawed due to procedural errors. The measures introduces a formal procedure for the ratification of corporate actions that were not properly authorized at the time they were taken but would have been within the power of the corporation to authorize. The process is applicable to limited liability companies (LLCs), for-profit corporations, and not-for-profit corporations registered in Florida.

Ratified corporate actions are also subject to equitable review by courts, under the bill’s purview, ensuring that the ratification process cannot be abused to cover up or legitimize fundamentally improper corporate conduct. The legislative changes are underpinned by the Florida Business Corporation Act and are informed by the Model Business Corporation Act from the American Bar Association.

“The bill provides a statutory ratification process that is intended to supplement common law ratification,” a legislative analysis states. “The ratification procedure is intended to be available only where there is objective evidence that a corporate action was defectively implemented.”

The bill further simplifies the resignation process for registered agents who wish to resign from multiple entities at once, specifically targeting those associated with companies that have been dissolved or inactive for over ten years.

The enactment of this law comes in response to demands from the business community in Florida for clearer and more efficient corporate regulations. With over two million active LLCs and numerous other corporations, Florida has recorded heightened business growth in recent years.


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