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Legislative updates

Senate Bill 33, effective October 16, 2020, revises the Business Corporation Act to (1) provide that unless the bylaws require otherwise, a board of directors may determine that a shareholders’ meeting may be held solely by means of remote communication, (2) to provide that the board of directors may change a corporation’s name without shareholder approval unless the articles of incorporation require approval, and (3) to provide that unless the articles of incorporation or law of a foreign subsidiary provide otherwise that a domestic parent corporation may merge a subsidiary into itself or another subsidiary, without approval of the shareholders of the parent corporation or board or shareholders of the subsidiary and that the articles of incorporation of the parent corporation may be amended only as provided by law.
Senate Bill 54, effective June 5, 2020, amends the corporation law regarding registered agents and the revocation of articles of incorporation and the indemnification of directors and officers of cooperatives.
Proclamation 37, dated March 26, 2020, orders the suspension of Subpart A of Part 7 of the Business Corporation Act to the extent it requires shareholder meetings to be noticed and held at a physical location in connection with meetings scheduled to be held or with record dates that fall within the declared Public Health Emergency.
Senate Bill 241, effective February 1, 2020, enacts the Small Business Protection Act. The Act states that the legislature’s intent is “to improve state rulemaking by creating procedures to analyze the availability of more flexible regulatory approaches for small businesses”. The Act, among other things, requires the Secretary of State to post information about proposed state rules that may affect small businesses on its website and to notify interested parties when the rule information is posted. The database is live and can be accessed here.

Case summaries

Sale of Membership Interest
Succession of Chisolm, No. 53,771, decided March 3, 2021. The Louisiana Court of Appeal held that the trial court erred in approving the sale of the membership interests in an LLC that was owned by the decedent and sold by the administrator of the succession utilizing the procedure available for the sale of stock. An ownership interest in an LLC is not stock and therefore the procedure for the sale of a moveable asset should have been used.
Charging Orders
Aok Property Investments, LLC v. Boudreaux, No. 20-C-237, decided December 9, 2020. The Louisiana Court of Appeal ruled that the charging order provision of Louisiana’s LLC law, which provides that a judgment creditor shall have only the rights of an assignee of the membership interest, applies to single member LLCs.
Inspection of Records
Bernard v. Louisiana Testing & Inspection, Inc., 19-575 (La. App. 3 Cir.), decided February 5, 2020. The Louisiana Court of Appeal held that the plaintiff was entitled to inspect a corporation’s financial records even though the trial court did not find his testimony credible where other testimony and evidence established that he was a shareholder and met the statutory requirements.

Other notices

June 19, 2020 — The Louisiana Secretary of State issued a warning alerting business owners to what it referred to as “fraudulent letters” being mailed to businesses regarding a 2020 Certificate of Status Request Form. The warning can be read on the Secretary of State’s website.