Legislative updates

House Bill 1611, effective October 1, 2019, amends the LLC law by authorizing the registration of protected series of a series LLC.
Senate Bill 142, effective February 13, 2019, amends the Business Corporation Act of 1987 to authorize a for-profit corporation to convert to a nonprofit corporation under the Arkansas Nonprofit Corporation Act or the Arkansas Nonprofit Corporation Act of 1993. Those two Nonprofit Corporation Acts were amended to provide that a for-profit corporation may convert to a nonprofit corporation by filing an amendment to its articles of incorporation with the Secretary of State stating the fact that it converted under the appropriate nonprofit corporation act and describing the treatment of its stock. The bill’s Emergency Clause states that this legislative action was immediately necessary because Arkansas for-profit corporations could face severe adverse tax consequences for reorganizing as a nonprofit under pre-exisiting law.

Case summaries

Attorney’s Authority to Bind Corporate Client
Terra Land Services, Inc. v. McIntrye, No. CV-18-317, decided February 20, 2019. The Arkansas Court of Appeals ruled that a settlement negotiated and agreed to by a corporation’s attorney was unenforceable because the shareholders had indicated they needed more information before agreeing to settle. Therefore, the attorney lacked the actual authority to agree to the settlement.
Fiduciary Duties
Morrison v. MC Express LLC, Case No. 3:17-CV-00144, decided 1/9/18. The US District Court, Eastern District of Arkansas held that a director and majority shareholder of a corporation did not owe fiduciary duties to the plaintiff – who had a contractual right to a percentage of stock that had not yet vested. Fiduciary duties are only owed to present shareholders, not speculative or future shareholders.

Other notices

There are no new notices at this time.