Important Change to Maine's Business Corporation Act

November 07, 2007

Effective September 20, 2007, "An Act to Update the Maine Business Corporation Act," became law in Maine. A key provision of this new law permits greater flexibility in the conduct of shareholder votes which may be attractive to certain closely held corporations organized under Maine law. 
 
In general, certain corporate actions require approval by the shareholders, and the corporation must provide the opportunity for the shareholders to vote on such actions. Under prior law, shareholders could vote either at a duly called meeting, in which case majority action normally was sufficient, or could take action without a meeting, but only with the unanimous written consent of all shareholders entitled to vote. In practice, either course had its difficulties: a formal meeting was often time consuming or impractical and it was often cumbersome or impossible to obtain the consent of each and every shareholder. 
 
Some other states, such as Delaware, allow shareholder action to be taken by the written consent of a majority of shareholders. The new amendment to the Maine Business Corporation Act follows this approach, and now allows shareholders to take action by majority consent if the Articles of Incorporation authorize such action. Some corporations will find this option attractive in order to streamline corporate process in instances where shareholder approval is required. 
 
To take advantage of this change, an existing corporation must amend its Articles of Incorporation. The amendment would have to be adopted by the board of directors, approved by the shareholders at a meeting or by unanimous consent, and filed with the Secretary of State. Those forming a new corporation should be mindful of the possible benefits of including a majority consent provision in the Articles of Incorporation from the outset.

If you are considering the possibility of forming a corporation, or are interested in the potential advantages of this new voting provision for an existing corporation, please contact one of our corporate attorneys, David M. Austin, Daniel G. McKay, Allison C. Lucy or Jeffrey W. Spaulding at 207-947-0111 for further information and guidance.
 
  
  This alert is provided as general information, and is not a substitute for legal or other professional advice.