Business Corporation Act Revisions.
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SB 622 — Business Corporation Act Revisions.
Last action — Signed by Gov. 6/22/2018
No card. One bill, free forever — alerts when it moves.
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✓Introduced
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✓In Committee
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✓Passed Senate
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✓Passed House
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✓To Executive
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6Enacted
This bill has been enacted into law. Introduced April 04, 2017. Enacted.
Prognosis
Where this bill stands today.
Odds of enactment
HighHow often bills like it became law.
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Enacted
Current position in the legislative process.
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2 sponsors
1 primary, 1 co-sponsors signed on.
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Cleared a recorded vote
Passed 2 recorded votes so far.
Prognosis reads this bill's own signals — stage, sponsorship breadth, committee status, recorded votes and cross-state momentum. Odds come from a model trained on which bills have become law.
Bill Text
What changed in the latest version
1010 added · 1020 removedPlain-language change summary
The recent amendments to Bill SB 622 clarify language related to corporate opportunities, allowing corporations to have the right to participate in general business opportunities instead of being limited to specific ones. Additionally, the definitions surrounding "defective corporate actions" have been refined, ensuring they capture a broader range of corporate actions that could be considered void due to authorization issues. These changes are significant as they provide corporations with more flexible options for business opportunities and a clearer framework for addressing corporate actions that may not have been properly authorized, which can help reduce legal uncertainties.
GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2017 S 21 SENATE BILL 622 Judiciary Committee Substitute Adopted 6/14/17 Short Title:
Senators Barringer and Newton (Primary Sponsors).
Rules and Operations of the Senate April 5, 2017 A BILL TO BE ENTITLED AN ACT TO MAKE VARIOUS REVISIONS TO THE NORTH CAROLINA BUSINESS CORPORATION ACT.
… (4) A provision limiting or eliminating any duty of a director, an officer, or any other person, to offer the corporation the right to have or participate in oneany orbusiness moreopportunities, specificor classes or categories of business opportunities, prior to the pursuit or taking of the opportunity by the director, officer, or other person." SECTION 3.
*S622-v-1* General Assembly Of North Carolina Session 2017 (1) Corporate action.
– Any action taken by or on behalf of the corporation, including any action taken by the incorporator, the board of directors, a *S622-v-2* General Assembly Of North Carolina Session 2017 committee, a subcommittee, an officer or agent of the corporation, or the shareholders.
Page 2 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (b) Ratification under G.S.
55-1-67 is not the exclusive means of ratifying or validating any defective corporate action, and the absence or failure of ratification in accordance with this Part does not, of itself, affect the validity or Page 2 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 effectiveness of any corporate action properly ratified under common law or otherwise, nor does it create a presumption that the corporate action is or was a defective corporate action or void or voidable.
Senate Bill 622-First Edition Page 3 General Assembly Of North Carolina Session 2017 (a) The quorum and voting requirements applicable to a ratifying action by the board of directors under G.S.
55-1-62(c), and, if the approval is to be given at a meeting, the Senate Bill 622-Second Edition Page 3 General Assembly Of North Carolina Session 2017 corporation shall notify each holder of valid and putative shares, whether or not entitled to vote, as of the record date for notice of the meeting and as of the date of the occurrence of the defective corporate action, provided that notice shall not be required to be given to holders of valid or putative shares whose identities or addresses for notice cannot be determined from the records of the corporation.
Page 4 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (c) No notice under this section is required with respect to any action required to be submitted to shareholders for approval under G.S.
55-1-41 and, for any public corporation, may be given by means of a filing or furnishing of the notice with the Securities and Exchange Commission which becomes publicly accessible Page 4 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 on the Web site of the Securities and Exchange Commission approximately contemporaneously with the filing or furnishing.
(1) If a filing was previously made in respect of the defective corporate action and no changes to the filing are required to give effect to the ratification of Senate Bill 622-First Edition Page 5 General Assembly Of North Carolina Session 2017 the defective corporate action in accordance with G.S.
Senate Bill 622-Second Edition Page 5 General Assembly Of North Carolina Session 2017 (2) If a filing was previously made in respect of the defective corporate action and the filing requires any change to give effect to the ratification of the defective corporate action in accordance with G.S.
(d) Notwithstanding any other provision of this section or otherwise under applicable law, any action asserting that the ratification of any defective corporate action and any putative shares issued as a result of the defective corporate action should not be effective, or should be Page 6 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 effective only on certain conditions, shall be brought within 120 days of the validation effective time." SECTION 4.
55-10-04(c) for amendments of articles of incorporation apply to that provision." Page 6 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 SECTION 5.
Senate Bill 622-First Edition Page 7 General Assembly Of North Carolina Session 2017 (2) Governs the authorization or making of distributions, whether or not in proportion to ownership of shares, subject to the limitations in G.S.
Senate Bill 622-Second Edition Page 7 General Assembly Of North Carolina Session 2017 (5) Establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between or among the corporation and any shareholder, director, officer, or employee of the corporation.
An action to enforce the right of rescission authorized by this subsection Page 8 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 shall be commenced within the earlier of 90 days after discovery of the existence of the agreement or two years after the time of purchase of the shares.
If the agreement ceases to be effective for any reason, the board of directors may, if the agreement is contained or referred to in the corporation's articles of incorporation or bylaws, adopt an amendment to the articles of Page 8 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 incorporation or bylaws, without shareholder action, to delete the agreement and any references to it.
The compensation of directors established pursuant to this section of directors of a public corporation or of a corporation that so provides in its articles of incorporation is presumed to be fair to the corporation unless proven not to be fair to the corporation by a preponderance of the evidence." SECTION 8.
The right of Senate Bill 622-First Edition Page 9 General Assembly Of North Carolina Session 2017 dissent or abstention is not available to a director who votes in favor of the action taken." SECTION 9.
(a) Unless this Chapter, the articles of incorporation, or the bylaws provide otherwise, a board of directors may create one or more committees and appoint one or more members of the Senate Bill 622-Second Edition Page 9 General Assembly Of North Carolina Session 2017 board of directors to serve on any suchthe committee.
Page 10 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (c) A director is not entitled to the benefit of subsection (b) of this section if hethe director has actual knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) of this section unwarranted.
(d) A director is not liable for (i) any action taken as a director, or any failure to take any action, if hethe director performed the duties of histhe director's office in compliance with this section.section or (ii) any failure to offer the corporation the right to have or participate in a Page 10 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 business opportunity prior to the pursuit or taking of the opportunity by the director or other person if the corporation's articles of incorporation include a provision authorized by G.S.
"(d) An officer is not liable for (i) any action taken as an officer, or any failure to take any action, if hethe officer performed the duties of histhe officer's office in compliance with this section.section or (ii) any failure to offer the corporation the right to have or participate in a business opportunity prior to the pursuit or taking of the opportunity by the officer or other person if the corporation's articles of incorporation include a provision authorized by Senate Bill 622-First Edition Page 11 General Assembly Of North Carolina Session 2017 G.S.
Senate Bill 622-Second Edition Page 11 General Assembly Of North Carolina Session 2017 (a) IfSubject to subsection (d) of this section, if the articles of incorporation limit indemnification or advance for expenses, indemnification and advance for expenses are valid only to the extent consistent with the articles.
Page 12 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (a) After adopting a plan of merger or share exchange, the board of directors of each corporation party to the merger, and the board of directors of the corporation whose shares will be acquired in the share exchange, shall submit the plan of merger (except as provided in subsection (g))subsections (g) and (j) of this section and in G.S.
Page 12 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 (b) The following requirements shall be met for a plan of merger or share exchange to be approved:
Senate Bill 622-First Edition Page 13 General Assembly Of North Carolina Session 2017 (4) The offer remains open for at least 10 days.
(6) Any or all of the following types of shares are collectively entitled to cast at least the minimum number of votes on the merger or share exchange that, Senate Bill 622-Second Edition Page 13 General Assembly Of North Carolina Session 2017 absent this subsection, would be required by Articles 9 and 11 of this Chapter and by the articles of incorporation of the corporation for the approval of the merger or share exchange by the shareholders and by any other voting group entitled to vote on the merger or share exchange at a meeting at which all shares entitled to vote on the approval were present and voted:
Page 14 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (5) Wholly owned subsidiary of a person.
Page 14 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 "(a) When a merger pursuant to G.S.
(b) If any shareholder of the domestic subsidiary corporation, other than the parent unincorporated entity, has or will have personal liability for any existing or future obligation of the surviving business entity solely as a result of holding an interest in the surviving business Senate Bill 622-First Edition Page 15 General Assembly Of North Carolina Session 2017 entity, then the plan of merger under subsection (a) of this section shall require the affirmative approval, by vote or written consent, of that shareholder.
Senate Bill 622-Second Edition Page 15 General Assembly Of North Carolina Session 2017 (d) The surviving business entity shall deliver articles of merger to the Secretary of State for filing.
Page 16 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (5) If a domestic corporation is the surviving business entity, its articles of incorporation shall be amended to the extent provided in the articles of merger.
(6) The interests in each merging business entity that are to be converted into interests, obligations, or securities of the surviving business entity, or into the right to receive cash or other property, are thereupon so converted, and the former holders of the interests are entitled only to the rights provided to Page 16 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 them in the plan of merger, resolution, or, in the case of former holders of shares in a domestic corporation, any rights they may have under Article 13 of this Chapter.
55-11-04 or Senate Bill 622-First Edition Page 17 General Assembly Of North Carolina Session 2017 G.S.
Senate Bill 622-Second Edition Page 17 General Assembly Of North Carolina Session 2017 (a) In addition to any rights granted under Article 9, Article 9 of this Chapter, a shareholder is entitled to appraisal rights and to obtain payment of the fair value of that shareholder's shares, in the event of any of the following corporate actions:
Page 18 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (d) A shareholder holding shares of a class or series that were issued and outstanding as of the effective date of this act but that did not as of that date entitle the shareholder to vote on a corporate action described in subdivision (a)(1), (2), or (3) of this section shall be entitled to appraisal rights, and to obtain payment of the fair value of the shareholder's shares of such class or series, to the same extent as if such shares did entitle the shareholder to vote on such corporate action." SECTION 26.
Show all 52 changed lines (12 more)
Page 18 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 "§ 55-13-20.
55-13-20(c)55-13-02(c) is given less than 25 days prior to the date the proposed action is effectuated.
Senate Bill 622-First Edition Page 19 General Assembly Of North Carolina Session 2017 (2) must The shareholder must not execute a consent in favor of the proposed action with respect to that class or series of shares.
(1) The shareholder must deliver to the corporation, before the shares are purchased pursuant to the offer made consistent with subdivision (2) of Senate Bill 622-Second Edition Page 19 General Assembly Of North Carolina Session 2017 subsection (j) of G.S.
Page 20 Senate Bill 622-First Edition General Assembly Of North Carolina Session 2017 (1) For each merging business entity, its name, type of business entity, and the state or country whose laws govern its organization and internal affairs;affairs.
Page 20 Senate Bill 622-Second Edition General Assembly Of North Carolina Session 2017 (4) The manner and basis for of converting the interests in each merging business entity into interests, obligations, or securities of the surviving business entityentity, or into cash or other property in whole or in part.part, or of cancelling the interests." SECTION 32.
SECTION 33.1.34.
G.S.
55-1-40(13a) reads as rewritten:
"(13a) An item is "mailed" when it is deposited "Mail," when used as a verb, means to deposit in the United States mail with postage thereon prepaid and correctly addressed.
When a corporation mails an item to a shareholder, "correctly addressed" means addressed to the shareholder's address as shown in the corporation's current record of shareholders." SECTION 34.
Senate Bill 622-Second622-First Edition Page 21
Show all 52 changed rows (12 more)
AI-generated reading aid from the bill's amendatory text — verify against the official bill.
The bill modifies various provisions of the North Carolina Business Corporation Act, including fee structures, articles of incorporation, and rules regarding defective corporate actions.
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G.S. 55-1-22(a)
(28) Articles of validation 150.00
Establishes a fee of $150 for articles of validation.
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G.S. 55-2-02(b)
theaffairsofthecorporation;(iii)defining,limiting,andregulatingthepowers→ the affairs of the corporation; (iii) defining, limiting, and regulating the powersCorrects formatting and spacing in the provisions regarding the articles of incorporation.
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G.S. 55-1-60
Definitions. (...)
Introduces definitions relevant to ratification of defective corporate actions.
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G.S. 55-1-61
Defective corporate actions. (...)
Clarifies that defective corporate actions can be ratified or validated and are not inherently void.
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G.S. 55-1-62
Ratification of defective corporate actions. (...)
Establishes procedures for the ratification of defective corporate actions by the board of directors.
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G.S. 55-1-63
Action on ratification. (...)
Sets forth requirements for the board of directors' ratifying actions and the subsequent shareholder approval if necessary.
Action History
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Signed by Gov. 6/22/2018
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Ch. SL 2018-45
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Special Message Sent To Senate
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Special Message Received For Concurrence in H Com Sub
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Placed on Today's Calendar
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Concurred In H Com Sub
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Ordered Enrolled
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Ratified
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Pres. To Gov. 6/14/2018
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Passed 2nd Reading
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Passed 3rd Reading
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Withdrawn From Com
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Re-ref Com On Rules, Calendar, and Operations of the House
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Reptd Fav Com Substitute
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Cal Pursuant Rule 36(b)
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Placed On Cal For 06/13/2018
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Withdrawn From Com
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Re-ref Com On Judiciary II
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Passed 2nd Reading
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Passed 3rd Reading
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Special Message Sent To House
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Special Message Received From Senate
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Passed 1st Reading
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Ref To Com On Rules, Calendar, and Operations of the House
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Reptd Fav
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Placed On Cal For 06/26/2017
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Reptd Fav
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Re-ref Com On Rules and Operations of the Senate
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Withdrawn From Com
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Re-ref to Finance. If fav, re-ref to Rules and Operations of the Senate
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Reptd Fav Com Substitute
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Com Substitute Adopted
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Re-ref Com On Rules and Operations of the Senate
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Withdrawn From Com
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Re-ref to Judiciary. If fav, re-ref to Rules and Operations of the Senate
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Passed 1st Reading
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Ref To Com On Rules and Operations of the Senate
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Filed
Sponsors
- Barringer · Primary
- Newton · Cosponsor
Sponsorship breakdown
Export CSV (upgrade) →1 sponsors · 1 co-sponsors · 177 not signed on
Sponsors (1)
- Barringer
Co-sponsors (1)
- Newton
Not signed on (177)
177 members have not signed on to this bill.
Show all 177 →"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.
Votes
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 28 | 0 | 0 | 5 |
| Republican | 9 | 0 | 0 | 1 |
| Democratic | 7 | 0 | 0 | 0 |
| Total | 44 | 0 | 0 | 6 |
| % of votes cast | 88% | 0% | 0% | 12% |
How each member voted (50)
| Member | Party | Vote |
|---|---|---|
| McKissick | — | Yea |
| Rabin | — | Yea |
| Randleman | — | Yea |
| Tarte | — | Yea |
| Wells | — | Yea |
| Ballard | — | Yea |
| Barrett | — | Yea |
| Curtis | — | Not Voting |
| Fitch | — | Yea |
| Foushee | — | Not Voting |
| D.Davis | — | Yea |
| J.Jackson | — | Yea |
| Smith | — | Yea |
| VanDuyn | — | Yea |
| Brown | — | Yea |
| B.Jackson | — | Yea |
| Newton | — | Yea |
| Tucker | — | Yea |
| Barringer | — | Yea |
| Bishop | — | Yea |
| Dunn | — | Yea |
| Edwards | — | Yea |
| Gunn | — | Yea |
| Harrington | — | Yea |
| Horner | — | Yea |
| Krawiec | — | Yea |
| Meredith | — | Yea |
| Tillman | — | Yea |
| Wade | — | Yea |
| Woodard | — | Yea |
| J.Davis | — | Not Voting |
| Barefoot | — | Not Voting |
| Pate | — | Not Voting |
| Amanda P. Cook | Democratic | Yea |
| Dan Blue | Democratic | Yea |
| Gladys A. Robinson | Democratic | Yea |
| Jay J. Chaudhuri | Democratic | Yea |
| Joyce Waddell | Democratic | Yea |
| Paul A. Lowe, Jr. | Democratic | Yea |
| Tracy Clark | Democratic | Yea |
| Bill Rabon | Republican | Yea |
| Carl Ford | Republican | Not Voting |
| Danny Earl Britt, Jr. | Republican | Yea |
| Michael V. Lee | Republican | Yea |
| Norman W. Sanderson | Republican | Yea |
| Phil Berger | Republican | Yea |
| Ralph Hise | Republican | Yea |
| Tom McInnis | Republican | Yea |
| W. Ted Alexander | Republican | Yea |
| Warren Daniel | Republican | Yea |
| Party | Yea | Nay | Present | Not Voting |
|---|---|---|---|---|
| Unaffiliated | 70 | 0 | 0 | 6 |
| Republican | 27 | 0 | 0 | 1 |
| Democratic | 14 | 0 | 0 | 1 |
| U | 1 | 0 | 0 | 0 |
| Total | 112 | 0 | 0 | 8 |
| % of votes cast | 93% | 0% | 0% | 7% |
How each member voted (120)
| Member | Party | Vote |
|---|---|---|
| McElraft | — | Yea |
| Michaux | — | Yea |
| Muller | — | Yea |
| Presnell | — | Yea |
| Szoka | — | Yea |
| Wray | — | Yea |
| Yarborough | — | Yea |
| Zachary | — | Yea |
| Autry | — | Yea |
| Boswell | — | Yea |
| Burr | — | Yea |
| Dobson | — | Yea |
| Dulin | — | Yea |
| Faircloth | — | Yea |
| Farmer-Butterfield | — | Yea |
| Fisher | — | Yea |
| Floyd | — | Yea |
| Fraley | — | Yea |
| Garrison | — | Yea |
| Gill | — | Yea |
| Jordan | — | Yea |
| G.Adcock | — | Yea |
| L.Bell | — | Yea |
| DuaneHall | — | Yea |
| C.Graham | — | Yea |
| G.Graham | — | Yea |
| Jackson | — | Yea |
| G.Martin | — | Yea |
| R.Moore | — | Yea |
| B.Richardson | — | Yea |
| W.Richardson | — | Yea |
| B.Turner | — | Yea |
| J.Bell | — | Yea |
| BertJones | — | Yea |
| Brawley | — | Yea |
| BrendenJones | — | Yea |
| DestinHall | — | Yea |
| K.Hall | — | Yea |
| Beasley | — | Yea |
| Black | — | Yea |
| Boles | — | Yea |
| Bradford | — | Yea |
| Bumgardner | — | Yea |
| Conrad | — | Yea |
| Dollar | — | Yea |
| Earle | — | Yea |
| Elmore | — | Yea |
| Goodman | — | Yea |
| Hanes | — | Yea |
| Hardister | — | Yea |
| Henson | — | Yea |
| Holley | — | Yea |
| Horn | — | Yea |
| Hunter | — | Yea |
| Hurley | — | Yea |
| Insko | — | Yea |
| Lucas | — | Yea |
| Terry | — | Yea |
| Johnson | — | Yea |
| Malone | — | Yea |
| T.Moore(Speaker) | — | Yea |
| R.Turner | — | Yea |
| S.Martin | — | Not Voting |
| Stone | — | Not Voting |
| Cleveland | — | Not Voting |
| Collins | — | Not Voting |
| Grange | — | Not Voting |
| Lewis | — | Yea |
| McGrady | — | Yea |
| McNeill | — | Yea |
| Murphy | — | Yea |
| Rogers | — | Yea |
| Saine | — | Yea |
| Speciale | — | Yea |
| Steinburg | — | Yea |
| Williams | — | Not Voting |
| Amos L. Quick, III | Democratic | Yea |
| Becky Carney | Democratic | Not Voting |
| Cecil Brockman | Democratic | Yea |
| Cynthia Ball | Democratic | Yea |
| Dante Pittman | Democratic | Yea |
| Deb Butler | Democratic | Yea |
| Eric Ager | Democratic | Yea |
| Garland E. Pierce | Democratic | Yea |
| Graig Meyer | Democratic | Yea |
| Joe John | Democratic | Yea |
| Marcia Morey | Democratic | Yea |
| Mary Belk | Democratic | Yea |
| Pricey Harrison | Democratic | Yea |
| Robert T. Reives, II | Democratic | Yea |
| Shelly Willingham | Democratic | Yea |
| Carl Ford | Republican | Yea |
| Dean Arp | Republican | Yea |
| Dennis Riddell | Republican | Yea |
| Donna McDowell White | Republican | Yea |
| Donny Lambeth | Republican | Yea |
| Frank Iler | Republican | Yea |
| Harry Warren | Republican | Yea |
| Hugh Blackwell | Republican | Yea |
| Jay Adams | Republican | Yea |
| Jimmy Dixon | Republican | Yea |
| John A. Torbett | Republican | Yea |
| John M. Blust | Republican | Not Voting |
| John Sauls | Republican | Yea |
| Julia C. Howard | Republican | Yea |
| Kelly E. Hastings | Republican | Yea |
| Kevin Corbin | Republican | Yea |
| Larry C. Strickland | Republican | Yea |
| Larry W. Potts | Republican | Yea |
| Mark Brody | Republican | Yea |
| Mike Clampitt | Republican | Yea |
| Mitchell S. Setzer | Republican | Yea |
| Phil Shepard | Republican | Yea |
| Sam Watford | Republican | Yea |
| Sarah Stevens | Republican | Yea |
| Stephen M. Ross | Republican | Yea |
| Ted Davis, Jr. | Republican | Yea |
| W. Ted Alexander | Republican | Yea |
| William D. Brisson | Republican | Yea |
| Carla D. Cunningham | U | Yea |
Subjects
Frequently asked questions
- Who sponsors SB 622?
- SB 622 is sponsored by Barringer and Newton.
- What is the current status of SB 622?
- This bill has been enacted into law. Introduced April 04, 2017. Enacted.
- Where can I track SB 622?
- Track SB 622 free on One Click Politics — get push/email alerts when it moves.
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