Wisconsin Legislature: SB619,7,6

Currently, when a corporation approves a merger or share exchange, it must file
articles of merger or share exchange with the Department of Financial Institutions
(department). Among other things, the articles of merger or share exchange must
include the plan of merger or share exchange. This bill deletes this requirement and,
instead, requires the articles of merger to state that a plan of merger or share
exchange has been approved and adopted as required by law, that the plan is on file
at the principle place of business of the surviving corporation, and that the surviving
corporation will provide a copy of the plan, upon request and without cost, to any
shareholder or, upon payment of the cost of producing the copy, to any other
interested person. The bill also specifies other information that must be included in
the articles of merger or share exchange.

Currently, a business combination (including certain mergers) must be
approved by a specified supermajority of shareholders, unless the shareholders
receive a minimum price for their shares, computed under a specified formula. This
bill redefines a component of the formula, the valuation date, as the day before the
first public announcement of the proposed business combination.

With certain exceptions, the voting power of a person owning greater than 20
percent of a corporation's stock is currently limited to 10 percent of the full voting
power of those shares, unless the corporation's articles of incorporation provide
otherwise or unless regular voting power is restored by vote of the shareholders. This
bill permits the board of directors to specify that regular voting power will apply.

Under current law, if a shareholder dissents from certain mergers, share
exchanges, or other business combinations, the shareholder may obtain payment of
the fair value of his or her shares. Under current law, a dissenting shareholder is
entitled to receive fair value if either of the following apply: 1) the corporation that
issued the stock held by the dissenting shareholder (issuing corporation) is a party
to a merger for which shareholder approval is required under certain provisions in
current law or under the issuing corporation's articles of incorporation; or 2) the
corporation is a subsidiary corporation that is merging with a parent corporation.

Under the bill, a dissenting shareholder may also obtain fair value if the issuing
corporation is a parent corporation that is merging with a subsidiary, unless the
merger satisfies certain conditions specified in the bill relating to the effect of the
merger on the rights of shareholders.

Currently, the fair value is determined pursuant to several specified criteria.
With limited exceptions, this bill provides an exemption from these dissenter's rights
if the applicable shares are registered on a national securities exchange or quoted in
the National Association of Securities Dealers, Inc. This exemption is identical to
the exemption that applies generally to other dissenter's rights provisions.

Classes or series of stock

Under current law, a corporation's articles of incorporation may authorize the
board to determine the relative rights of a class or series of shares of stock. Generally,
the board may set the terms of a class or series without shareholder approval. The
board may revise the terms by resolution, as long as no shares have been issued. The
board may revise the terms of shares that have already been issued only by
amendment to the articles of incorporation.

Under this bill, at any time after filing articles of amendment creating a class
or series of shares, the board may: 1) decrease the number shares of a class or series,
but not below the number of outstanding shares of the class or series; 2) eliminate
a class or series, if no shares of the class or series are outstanding; or 3) increase the
number of shares of a class or series, but not beyond the number of shares authorized
by the articles of incorporation.

Shareholder notices and meetings

Current law requires a corporation to notify shareholders of certain events and
information. This bill exempts a corporation from all such notice requirements as
to an individual shareholder if a specified number of notices or dividend payments
sent to the shareholder are returned to the corporation as undeliverable. A
shareholder may reinstate the notice requirements by delivering to the corporation
the shareholder's current address.

Transfer of property to certain affiliates and other changes related to
business corporations

Current law also prescribes the conditions under which a board may transfer
the corporation's property. This bill permits a board to transfer the corporation's
assets to other entities that are wholly owned by the corporation, except in
connection with a plan that involves a transfer of all or substantially all of the
corporation's assets and that requires shareholder approval.

This bill also permits a corporation to specify in its articles of incorporation or
bylaws the rules for conducting shareholder meetings, and sets default rules for
corporations that do not adopt their own rules. The bill also makes changes to
current law regarding the formation and membership of a committee created by a
board, and the bill deletes certain restrictions on the power of such committees.
Further, the bill makes changes to current law relating to identifying a registered
agent.

Other changes

Under current law, when a limited partnership, business corporation, nonstock
corporation, or limited liability company merges with or converts to another entity
(or when a business corporation enters into a share exchange), title to all personal
property transfers, by operation of law, to the surviving entity. Title to real estate
generally must be transferred by deed, which must be recorded in the appropriate
office of the register of deeds. This bill deletes the requirement that a deed be
executed and recorded. Under the bill, if a limited partnership, business corporation,
nonstock corporation, or limited liability company merges with or converts to
another entity, the articles of merger or certificate of conversion filed with

department must indicate whether a business entity that does not survive the
merger or conversion has a fee simple ownership interest in real estate in this state.

Currently, the name of a limited partnership must contain the words "limited
partnership" without abbreviation. This bill allows the name to include abbreviated
versions of those words.

Under current law, a conveyance of real property pursuant to a merger or
business conversion is not subject to the real estate transfer fee. Under current law,
the reason for a real estate transfer fee exemption must be specified on the
conveyance at the time that the conveyance is recorded with the register of deeds of
the county in which the real property is located. Under the bill, in order to claim the
real estate transfer fee exemption for a conveyance of real property pursuant to a
merger or business conversion, a certified copy of the document providing evidence
of the merger or conversion must be submitted with the real estate transfer return.
The bill also requires that the surviving entity of a merger or conversion file a report
with the Department of Revenue (DOR) that specifies the effective date of the merger
or conversion, the name and address of each business entity that is a party to the
merger or conversion, the name of any person at the surviving entity that DOR may
contact with regard to submitting the report and the information contained in the
report, the parcel identification number and location of all real property interests
owned by the surviving entity, a certified copy of the document providing evidence
of the merger or conversion, and, in the case of a conversion, a sworn statement that
the ownership interests in the surviving entity are identical with the ownership
interests in the original entity immediately preceding the conversion.

For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:

SB619, s. 1 1Section 1. 77.22 (1) of the statutes is amended to read:

SB619,6,142 77.22 (1) There is imposed on the grantor of real estate a real estate transfer
3fee at the rate of 30 cents for each $100 of value or fraction thereof on every
4conveyance not exempted or excluded under this subchapter. In regard to land
5contracts the value is the total principal amount that the buyer agrees to pay the
6seller for the real estate. This fee shall be collected by the register at the time the
7instrument of conveyance is submitted for recording. Except as provided in s. 77.255,
8at the time of submission the grantee or his or her duly authorized agent or other

1person acquiring an ownership interest under the instrument, or the clerk of court
2in the case of a foreclosure under s. 846.16 (1), shall execute a return, signed by both
3grantor and grantee, on the form prescribed under sub. (2). The register shall enter
4the fee paid on the face of the deed or other instrument of conveyance before
5recording, and, except as provided in s. 77.255, submission of a completed real estate
6transfer return and collection by the register of the fee shall be prerequisites to
7acceptance of the conveyance for recording. The register shall have no duty to
8determine either the correct value of the real estate transferred or the validity of any
9exemption or exclusion claimed. If the transfer is not subject to a fee as provided in
10this subchapter, the reason for exemption shall be stated on the face of the
11conveyance to be recorded by reference to the proper subsection under s. 77.25. No
12exemption shall be granted under s. 77.25 (6) or (6m), unless a certified copy of the
13document providing evidence of the merger or conversion, as filed with the state in
14which the surviving entity is organized, is submitted with the return.

SB619, s. 2 15Section 2. 77.264 of the statutes is created to read:

SB619,6,21 1677.264 Merger and conversion reports. (1) If an acquired business entity
17in a merger or the converted business entity in a conversion had a fee simple
18ownership interest in any Wisconsin real estate immediately prior to the merger or
19conversion, the surviving business entity shall submit a report to the department of
20revenue no later than 60 days after the effective date of the merger or conversion that
21provides the following information:

SB619,6,2222 (a) The effective date of the merger or conversion.

SB619,6,2423 (b) The name and address of each business entity that is a party to the merger
24or conversion.

SB619,7,3

1(c) The name and telephone number of any person at the surviving business
2entity that the department of revenue may contact with regard to submitting the
3report and the information contained in the report.

SB619,7,64 (d) The parcel identification number of each fee simple ownership interest in
5Wisconsin real estate owned by the surviving business entity and municipality in
6which such interest is located.

SB619,7,97 (e) In the case of a conversion, a sworn statement that, after the conversion, the
8ownership interests in the surviving entity are identical with the ownership
9interests in the original entity immediately preceding the conversion.

SB619,7,1310 (f) A certified copy of the document providing evidence of the merger or
11conversion, as filed with the state in which the surviving entity is organized and a
12copy of any other merger or conversion plan, regardless of whether the plan is
13required to be filed with the state in which the surviving entity is organized.

SB619,7,19 14(2) (a) If a surviving entity required to submit a report under sub. (1), fails to
15file the report within the time provided under sub. (1), the surviving entity is subject
16to a penalty in an amount equal to $200 for each day that the report is late, but not
17to exceed $7,500, except that no penalty shall be imposed under this paragraph if the
18surviving entity can shown good cause for submitting a late report and if submitting
19a late report is not the result of the surviving entity's neglect.

SB619,7,2420 (b) If a surviving entity required to submit a report under sub. (1), fails to
21specify in the report each municipality in which a fee simple ownership interest in
22Wisconsin real estate owned by the surviving entity is located, the surviving entity
23is subject to a penalty in an amount equal to $1,500 for each municipality not
24specified in the report and in which such ownership interest in located.

SB619,8,3

1(3) The reports submitted under this section are privileged information, except
2that the department of revenue may disclose the reports and information from the
3reports for the sole purpose of administering and enforcing this subchapter.

SB619, s. 3 4Section 3. 179.02 (1) of the statutes is amended to read:

SB619,8,65 179.02 (1) Shall contain, with or without abbreviation, the words "limited
6partnership".

SB619, s. 4 7Section 4. 179.76 (4) (c) of the statutes is amended to read:

SB619,8,168 179.76 (4) (c) The business entity continues to be vested with title to all
9property owned by the business entity that was converted without reversion or
10impairment, provided that, if the converting business entity has an interest in real
11estate in Wisconsin on the date of the conversion, the converting business entity shall
12transfer that interest to the business entity surviving the conversion and shall
13execute any real estate transfer return required under s. 77.22. The business entity
14surviving the conversion shall promptly record the instrument of conveyance under
15s. 59.43 in the office of the register of deeds for each county in which the real estate
16is located.

SB619, s. 5 17Section 5. 179.76 (5) (bm) of the statutes is created to read:

SB619,8,1918 179.76 (5) (bm) A statement indicating whether the business entity that is to
19be converted has a fee simple ownership interest in any Wisconsin real estate.

SB619, s. 6 20Section 6. 179.77 (5) (bm) of the statutes is created to read:

SB619,8,2321 179.77 (5) (bm) A statement indicating whether a business entity merged with
22or into the surviving entity in the merger has a fee simple ownership interest in any
23Wisconsin real estate.

SB619, s. 7 24Section 7. 179.77 (6) (c) of the statutes is amended to read:

SB619,9,8

1179.77 (6) (c) The title to all property owned by each business entity that is a
2party to the merger is vested in the surviving business entity without reversion or
3impairment, provided that, if a merging business entity has an interest in real estate
4in Wisconsin on the date of the merger, the merging business entity shall transfer
5that interest to the business entity surviving the merger and shall execute any real
6estate transfer return required under s. 77.22. The business entity surviving the
7merger shall promptly record the instrument of conveyance under s. 59.43 in the
8office of the register of deeds for each county in which the real estate is located.

SB619, s. 8 9Section 8. 180.0502 (3) of the statutes is amended to read:

SB619,9,1710 180.0502 (3) If the name of a registered agent changes or if the street address
11of his or her a registered agent's business office, he or she changes, the registered
12agent may change the name of the registered agent or street address of the registered
13office of any corporation for which he or, she, or it is the registered agent by notifying.
14To make a change under this subsection, the registered agent shall notify the
15corporation in writing of the change and by signing, either manually or in facsimile,
16and delivering deliver to the department for filing a signed statement that complies
17with sub. (2) and recites that the corporation has been notified of the change.

SB619, s. 9 18Section 9. 180.0602 (3) of the statutes is renumbered 180.0602 (3) (a) and
19amended to read:

SB619,9,2520 180.0602 (3) (a) After the articles of amendment are filed under sub. (2) and
21before the corporation issues any shares of the class or series that is the subject of
22the articles of amendment, the board of directors may alter or revoke any the
23distinguishing designation of the class or series and the preferences, limitations, or
24relative rights described in the articles of amendment, by adopting another
25resolution appropriate for that purpose. The corporation shall file and filing with the

1department revised articles of amendment that comply with sub. (2). A Except as
2provided in par. (b), a distinguishing designation, preference, limitation, or relative
3right may not be altered or revoked after the issuance of any shares of the class or
4series that are subject to the distinguishing designation, preference, limitation, or
5relative right, except by amendment of the articles of incorporation under s.
6180.1003.

SB619, s. 10 7Section 10. 180.0602 (3) (b) of the statutes is created to read:

SB619,10,158 180.0602 (3) (b) 1. Except as otherwise provided in this subdivision, after the
9articles of amendment are filed under sub. (2), the board of directors may decrease
10the number of shares of the class or series that is the subject of the articles of
11amendment by adopting another resolution appropriate for that purpose. The
12shares specified in the resolution shall resume the status applicable to them
13immediately before their inclusion in the class or series. The board of directors may
14not decrease the number of shares under this subdivision below the number of such
15shares that are outstanding.

SB619,11,216 2. After the articles of amendment are filed under sub. (2), if no shares of the
17class or series that is the subject of the articles of amendment are outstanding, the
18board of directors may eliminate from the articles of incorporation all matters set
19forth in the articles of amendment with respect to that class or series by adopting
20another resolution for that purpose. The board of directors shall prepare a certificate
21setting forth the content of any resolution under this subdivision, stating that none
22of the authorized shares of the class or series are outstanding, and stating that no
23such shares will be issued under the articles of amendment and shall deliver the
24signed certificate to the department for filing. A resolution under this subdivision
25takes effect upon filing of the certificate by the department and has the effect of

1eliminating from the articles of incorporation all matters set forth in the articles of
2amendment with respect to the applicable class or series.

SB619,11,93 3. Except as otherwise provided in this subdivision, after the articles of
4amendment are filed under sub. (2), the board of directors may increase the number
5of shares of the class or series that is the subject of the articles of amendment by
6adopting another resolution appropriate for that purpose. The board of directors
7may not increase the number of shares under this subdivision to be greater than the
8total number of authorized shares of the class or series as specified in the articles of
9incorporation.

SB619, s. 11 10Section 11. 180.0706 (title) of the statutes is amended to read:

SB619,11,11 11180.0706 (title) Waiver of and exemption from notice.

SB619, s. 12 12Section 12. 180.0706 (3) of the statutes is created to read:

SB619,11,1513 180.0706 (3) (a) Except as provided in par. (b), any notice required to be given
14by a corporation to a shareholder under this chapter is not required to be given if any
15of the following applies:

SB619,11,1916 1. Notice of 2 consecutive annual meetings, and all notices of meetings during
17the period between these annual meetings, have been sent to the shareholder at the
18shareholder's address as shown on the records of the corporation and have been
19returned as undeliverable.

SB619,11,2320 2. All, but not less than 2, payments of dividends on securities during a
21one-year period, or 2 consecutive payments of dividends on securities during a period
22of more than one year, have been sent to the shareholder at the shareholder's address
23as shown on the records of the corporation and have been returned as undeliverable.

SB619,12,224 (b) If a shareholder to whom par. (a) applies delivers to the corporation a
25written notice containing the shareholder's current address, then, beginning 30 days

1after receipt of the notice by the corporation, the requirement that notice be given
2to the shareholder is reinstated, until such time as par. (a) may again apply.

SB619, s. 13 3Section 13. 180.0708 of the statutes is created to read:

SB619,12,5 4180.0708 Conduct of meeting. Unless the articles of incorporation or bylaws
5provide otherwise, every meeting of the shareholders shall be conducted as follows:

SB619,12,7 6(1) A chairperson shall preside over the meeting. The chairperson shall be
7appointed by the board of directors.

SB619,12,10 8(2) The chairperson shall determine the order of business and the time of
9adjournment and may establish rules for the conduct of the meeting which the
10chairperson believes are fair to the interests of all shareholders.

SB619,12,15 11(3) The chairperson shall determine and announce at the meeting the time at
12which the polls will close for each matter voted upon at the meeting. The polls close
13at the announced time, except that, if no such announcement is made, the polls close
14upon final adjournment of the meeting. After the polls close, no ballots, proxies, or
15votes or revocations or changes to ballots, proxies, or votes may be accepted.

SB619, s. 14 16Section 14. 180.0824 (3) of the statutes is amended to read:

SB619,12,2117 180.0824 (3) Except as provided in ss. 180.0825 (2) and (3), 180.0831 (4) and
18180.0855 (1) and (2), if a quorum is present when a vote is taken, the affirmative vote
19of a majority of directors present is the act of the board of directors or a committee
20of the board of directors created under s. 180.0825, unless the articles of
21incorporation or bylaws require the vote of a greater number of directors.

SB619, s. 15 22Section 15. 180.0825 (1) of the statutes is amended to read:

SB619,13,323 180.0825 (1) Unless the articles of incorporation or bylaws provide otherwise,
24a board of directors may create one or more committees, appoint members of the
25board of directors to serve on the committees and designate other members of the

1board of directors to serve as alternates. Each committee shall have 2 or more
2members at least one member. Unless otherwise provided by the board of directors,
3members of the committee shall serve at the pleasure of the board of directors.

SB619, s. 16 4Section 16. 180.0825 (2) (intro.) and (b) of the statutes are consolidated,
5renumbered 180.0825 (2) and amended to read:

SB619,13,96 180.0825 (2) Except as provided in sub. (3), the creation of a committee,
7appointment of members to it, and designation of alternate members, if any, shall be
8approved by the greater of the following: (b) The number of directors required by the
9articles of incorporation or bylaws to take action under s. 180.0824 (3).

SB619, s. 17 10Section 17. 180.0825 (2) (a) of the statutes is repealed.

SB619, s. 18 11Section 18. 180.0825 (5) (a) to (h) of the statutes are repealed.

SB619, s. 19 12Section 19. 180.0825 (5) (am) and (bm) of the statutes are created to read:

SB619,13,1513 180.0825 (5) (am) Approve or recommend to shareholders for approval any
14action or matter expressly required by this chapter to be submitted to shareholders
15for approval.

SB619,13,1616 (bm) Adopt, amend, or repeal any bylaw of the corporation.

SB619, s. 20 17Section 20. 180.1103 (1) of the statutes is amended to read:

SB619,13,2218 180.1103 (1) Submit to shareholders. After adopting and approving a plan of
19merger or share exchange, the board of directors of each corporation that is party to
20the merger, and the board of directors of the corporation whose shares will be
21acquired in the share exchange, shall submit the plan of merger, except as provided
22in sub. (5) and s. 180.11045 (2), or share exchange for approval by its shareholders.

SB619, s. 21 23Section 21. 180.11045 of the statutes is created to read:

SB619,13,25 24180.11045 Merger of indirect wholly owned subsidiary or parent. (1)
25Definitions. In this section:

SB619,14,4

1(a) "Holding company" means a corporation that issues shares under sub. (2)
2(b) and that, during the period beginning with its incorporation and ending with the
3consummation of a merger under this section, was at all times a wholly owned
4subsidiary of the parent corporation that is party to the merger.

SB619,14,55 (b) "Indirect wholly owned subsidiary" means any of the following:

SB619,14,86 1. A corporation, all of the outstanding shares of each class of which are, prior
7to the consummation of a merger under this section, owned by a parent corporation
8indirectly through one or more business entities.

SB619,14,129 2. A limited liability company organized under ch. 183, all of the outstanding
10interests of each class of which are, prior to the consummation of a merger under this
11section, owned by a parent corporation indirectly through one or more business
12entities.

SB619,14,1613 (c) "Organizational documents" means, when used in reference to a
14corporation, the corporation's articles of incorporation and bylaws and, when used
15in reference to a limited liability company, the limited liability company's operating
16agreement.

SB619,14,2017 (d) "Parent corporation" means a corporation owning, prior to the
18consummation of a merger under this section, all of the outstanding shares of each
19class of another corporation or all of the outstanding interests of each class of another
20business entity.

SB619,14,2221 (e) "Surviving entity" means the limited liability company or corporation, other
22than the holding company, surviving a merger under sub. (2).

SB619,14,2323 (f) "Wholly owned subsidiary" means any of the following:

SB619,14,2524 1. A corporation, all of the outstanding shares of each class of which are owned
25by a corporation indirectly through one or more business entities or directly.