SF 2378 — A bill for an act relating to the boards of directors of public corporations, and including effective date provisions. (Formerly SSB 3183.) Various effective dates; see section 9 of bill.

Senate File 2378 - IntroducedEnrolled SENATESenate FILEFile 2378 BYAN COMMITTEEACT ONRELATING JUDICIARY (SUCCESSOR TO SSBTHE 3183)BOARDS (COMPANIONOF TODIRECTORS LSBOF 6163HVPUBLIC BYCORPORATIONS, COMMITTEEAND ONINCLUDING JUDICIARY)EFFECTIVE ADATE BILLPROVISIONS. FOR An Act relating to the boards of directors of public corporations, and including effective date provisions.

TLSBSection 6163SV1. (2) 87 da/rn S.F.

2378 Section 1.

Directors are elected at the first annual shareholders’ meeting and at each annual meeting thereafter unless their terms are staggered under section 490.806 or 490.806A490.806A. .

Sec.Senate File 2378, p.

2 Sec.

LSBb. 6163SV (2) 87 -1- da/rn 1/5 S.F.

2378 b.

Subsection 1 does not apply to a public corporation that is subject to section 490.806A, subsection 1, but may applySenate toFile a2378, publicp. corporation that is subject to section 490.806B.

3 apply to a public corporation that is subject to section 490.806B.

Notwithstanding section 490.806A, the board of directors LSBof 6163SVany (2)public 87corporation -2-which, da/rnas 2/5of S.F.January 1, 2019, is subject to section 490.806A, subsection 1, shall adopt an amendment to its articles of incorporation that includes all of the following:

2378 of any public corporation which, as of January 1, 2019, is subject to section 490.806A, subsection 1, shall adopt an amendment to its articles of incorporation that includes all of the following:

For a public corporation subject to section 490.806A, subsection 1, or section 490.806B, a vacancy on the board of directors, including but not limited to a vacancy resulting from an increase in the number of directors, shall beSenate filledFile solely2378, byp. the affirmative vote of a majority of the remaining directors, even though less than a quorum of the board.

4 be filled solely by the affirmative vote of a majority of the remaining directors, even though less than a quorum of the board.

LSBNEW 6163SVSUBSECTION (2). 87 -3- da/rn 3/5 S.F.

2378 NEW SUBSECTION.

EXPLANATION______________________________ The______________________________ inclusionJACK ofWHITVER thisLINDA explanationUPMEYER doesPresident notof constitutethe agreementSenate withSpeaker of the explanation’sHouse substanceI byhereby thecertify membersthat ofthis bill originated in the generalSenate assembly.and is known as Senate File 2378, Eighty-seventh General Assembly.

GENERAL.______________________________ W.

ThisCHARLES billSMITHSON amendsSecretary provisions in Code chapter 490 (“Iowa Business Corporation Act”), that became effective on March 23, 2011, and created a special requirement governing the terms of office for a public corporation’s board of directors (board), unless the boardSenate electedApproved to_______________, opt2018 out______________________________ ofKIM theREYNOLDS requirementGovernor by a date certain.

See 2011 Iowa Acts, chapter 2, and Code section 490.806A, which in part superseded Code sections 490.805 and 490.806.

STAGGERED TERMS FOR DIRECTORS.

The 2011 Act required the public corporation to divide its directors into three equal groups (referred to as “classes”).

The directors are then required to serve staggered three-year terms.

The board was required to amend its articles of incorporation (articles) in order to comply with the special requirement.

The bill provides that beginning January 1, 2019, the shareholders of the public corporation will elect all directors whose three-year terms are expiring for one-year terms, unless the LSB 6163SV (2) 87 -4- da/rn 4/5 S.F.

2378 corporation has adopted the ordinary staggered term method under Code section 490.806.

REPEAL.

On January 1, 2022, the bill eliminates a majority of the provisions that allowed for the special requirement and effectively restores the provisions in Code chapter 490 as they existed prior to the 2011 Act.

The one provision that will survive defines a public corporation.

The provision prior to the 2011 Act referenced the national association of securities dealers (NASD) which is no longer in existence.

The bill provides that the articles of incorporation survives the repeals of the relevant Code sections.

EFFECTIVE DATE.

The provisions of the bill take effect July 1, 2018, except for the provision allowing directors to serve one-year terms, which takes effect January 1, 2019.

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