House File 844, effective January 1, 2022, significantly revises the Iowa Business Corporation Act, amending nearly every section and adding new sections as well. The revised Act is based on the ABA’s Model Business Corporation Act, as amended in 2016. The revised Act governs all new and existing domestic and foreign corporations on January 1, 2022.
Incorporation under the revised Act, as before, requires the filing of Articles of Incorporation with the Secretary of State. Foreign corporations must deliver a Foreign Registration Statement (formerly an Application for Certificate of Authority) in order to transact business in the state. As before, domestic and registered foreign corporations are required to appoint and maintain a registered agent and registered office.
The revised Act contains several new provisions which may be of interest to the management and legal advisers of Iowa corporations. They include the following:
- Corporations will be able to ratify a defective corporate action by following the procedures set forth in the Act
- The Articles of Incorporation or bylaws may specify a forum for litigation involving an internal corporate claim
- The Articles of Incorporation may contain a provision eliminating or restricting the liability of a director or other person for taking advantage of a corporate business opportunity without offering it to the corporation first
- Officers have a duty to inform superior officers, the board, or other appropriate person of a material violation of law or breach of duty they believe has occurred or is likely to occur
- The corporation, a shareholder, director, officer, or certain other persons may apply for judicial determination of corporate offices, including a review of the results or validity of an election or appointment of directors or officers, or of a shareholder vote
- Domestications to or from the state are provided for
- Benefit corporations are provided for. An existing corporation may become a benefit corporation by a two-thirds shareholder vote to amend its Articles of Incorporation to include required statements. Directors must act in a responsible and sustainable manner and in a manner that pursues the public benefit and must take into account certain stakeholder interests.
These are only some of the changes made by HF 844. Interested persons should review the bill or Chapter 490 of the Iowa Statutes, where the Business Corporation Act is codified.