Senate
Study
Bill
3157
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
JUDICIARY
BILL
BY
CHAIRPERSON
HOGG)
A
BILL
FOR
An
Act
relating
to
the
Iowa
business
corporation
Act
by
1
removing
limitations
imposed
on
shareholders
making
2
long-term
arrangements
affecting
the
affairs
of
the
3
corporation,
and
by
providing
for
the
delivery
of
financial
4
information
to
shareholders.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
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DIVISION
I
1
VOTING
TRUSTS
AND
2
SHAREHOLDER
AGREEMENTS
3
Section
1.
Section
490.730,
Code
2014,
is
amended
to
read
4
as
follows:
5
490.730
Voting
trusts.
6
1.
One
or
more
shareholders
may
create
a
voting
trust,
7
conferring
on
a
trustee
the
right
to
vote
or
otherwise
act
for
8
them,
by
signing
an
agreement
setting
out
the
provisions
of
the
9
trust,
which
may
include
anything
consistent
with
its
purpose,
10
and
transferring
their
shares
to
the
trustee.
When
a
voting
11
trust
agreement
is
signed,
the
trustee
shall
must
prepare
a
12
list
of
the
names
and
addresses
of
all
voting
trust
beneficial
13
owners
of
beneficial
interests
in
the
trust
,
together
with
the
14
number
and
class
of
shares
each
transferred
to
the
trust,
and
15
deliver
copies
of
the
list
and
agreement
to
the
corporation’s
16
principal
office.
17
2.
A
voting
trust
becomes
effective
on
the
date
the
first
18
shares
subject
to
the
trust
are
registered
in
the
trustee’s
19
name.
A
voting
trust
is
valid
for
not
more
than
ten
years
after
20
its
effective
date
unless
extended
under
subsection
3
.
21
3.
All
or
some
of
the
parties
to
a
voting
trust
may
extend
22
it
for
additional
terms
of
not
more
than
ten
years
each
23
by
signing
an
extension
agreement
and
obtaining
the
voting
24
trustee’s
written
consent
to
the
extension.
An
extension
is
25
valid
for
ten
years
from
the
date
the
first
shareholder
signs
26
the
extension
agreement.
The
voting
trustee
must
deliver
27
copies
of
the
extension
agreement
and
list
of
beneficial
owners
28
to
the
corporation’s
principal
office.
An
extension
agreement
29
binds
only
those
parties
signing
it.
Limits,
if
any,
on
the
30
duration
of
a
voting
trust
shall
be
as
set
forth
in
the
voting
31
trust.
A
voting
trust
that
became
effective
between
December
32
31,
1989,
and
June
30,
2014,
both
dates
inclusive,
remains
33
governed
by
the
provisions
of
this
section
then
in
effect,
34
unless
the
voting
trust
is
amended
to
provide
otherwise
by
35
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unanimous
agreement
of
the
parties
to
the
voting
trust.
1
Sec.
2.
Section
490.732,
subsection
2,
paragraph
c,
Code
2
2014,
is
amended
by
striking
the
paragraph.
3
Sec.
3.
Section
490.732,
Code
2014,
is
amended
by
adding
the
4
following
new
subsection:
5
NEW
SUBSECTION
.
8.
Limits,
if
any,
on
the
duration
of
an
6
agreement
authorized
by
this
section
shall
be
as
set
forth
in
7
the
agreement.
An
agreement
that
became
effective
between
8
January
1,
2003,
and
June
30,
2014,
both
dates
inclusive,
9
unless
the
agreement
provided
otherwise,
remains
governed
by
10
the
provisions
of
this
section
then
in
effect.
11
DIVISION
II
12
FINANCIAL
STATEMENTS
FOR
SHAREHOLDERS
13
Sec.
4.
Section
490.1620,
subsection
3,
Code
2014,
is
14
amended
to
read
as
follows:
15
3.
a.
Within
one
hundred
twenty
days
after
the
close
16
of
each
fiscal
year,
the
corporation
shall
send
the
annual
17
financial
statements
to
each
shareholder.
Thereafter,
on
18
written
request
from
a
shareholder
to
whom
the
statements
were
19
not
sent,
the
corporation
shall
send
the
shareholder
the
latest
20
financial
statements.
21
b.
A
public
corporation
may
fulfill
its
responsibilities
22
under
this
section
paragraph
“a”
by
delivering
the
specified
23
financial
statements,
or
otherwise
making
them
available,
in
24
any
manner
permitted
by
the
applicable
rules
and
regulations
of
25
the
United
States
securities
and
exchange
commission.
26
Sec.
5.
Section
490.1620,
Code
2014,
is
amended
by
adding
27
the
following
new
subsection:
28
NEW
SUBSECTION
.
3A.
A
corporation
that
is
not
a
public
29
corporation
may
fulfill
its
responsibilities
under
this
section
30
by
filing
annual
financial
reports
in
compliance
with
state
or
31
federal
law,
provided
that
such
reports
meet
all
the
following
32
requirements:
33
a.
Contain
a
balance
sheet
as
of
the
end
of
the
fiscal
year
34
and
an
income
statement
for
that
year.
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b.
Are
required
by
state
or
federal
law
to
be
filed
with
a
1
state
or
federal
agency
within
one
hundred
twenty
days
after
2
the
close
of
each
fiscal
year.
3
c.
Are
available
to
the
public,
including
via
internet
4
access,
without
charge.
5
EXPLANATION
6
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
7
the
explanation’s
substance
by
the
members
of
the
general
assembly.
8
BILL’S
PROVISIONS
——
VOTING
TRUSTS
AND
SHAREHOLDER
9
AGREEMENTS.
This
bill
amends
provisions
which
govern
voting
10
trusts
and
shareholder
agreements.
Through
these
arrangements,
11
shareholders
may
fundamentally
affect
how
a
corporation
is
12
controlled,
the
management
of
its
assets,
and
the
rights
and
13
duties
of
its
shareholders
and
officers
by
entering
into
14
certain
arrangements
(Code
sections
490.730
and
490.732).
This
15
bill
eliminates
a
10-year
term
restriction
imposed
on
a
voting
16
trust
or
shareholder
agreement.
However,
a
voting
trust
or
17
shareholder
agreement
formed
prior
to
the
effective
date
of
the
18
bill
continues
to
be
subject
to
the
10-year
term
restriction.
19
BILL’S
PROVISIONS
——
FINANCIAL
STATEMENTS
FOR
SHAREHOLDERS.
20
The
bill
provides
that
a
corporation
other
than
a
public
21
corporation
(e.g.,
closed
corporation),
is
not
required
to
22
deliver
financial
statements
to
shareholders
if
the
corporation
23
files
certain
reports
with
a
state
or
federal
agency.
The
24
reports
must
include
a
balance
sheet
as
of
the
end
of
the
25
fiscal
year
and
an
income
statement
for
that
year.
The
reports
26
must
be
filed
with
a
state
or
federal
agency
within
120
days
27
after
the
close
of
the
fiscal
year.
Finally,
the
records
must
28
be
available
to
the
public
without
charge.
29
CURRENT
LAW
——
VOTING
TRUSTS.
A
voting
trust
is
a
special
30
arrangement
between
one
or
more
shareholders
and
a
trustee
31
(either
through
a
single
agreement
or
many
separate
agreements
32
made
between
a
number
of
shareholders
and
a
trustee)
in
which
33
the
shareholder
or
shareholders
surrenders
legal
ownership
of
34
their
respective
shares
of
common
stock
and
the
trustee
acts
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on
their
behalf
as
a
principal
rather
than
a
proxy.
A
voting
1
trust
becomes
effective
on
the
date
the
first
shares
subject
to
2
the
trust
are
registered
in
the
trustee’s
name,
and
continues
3
for
a
term
not
to
exceed
10
years
but
which
may
be
extended
4
for
additional
terms
each
not
to
exceed
10
years
(Code
section
5
490.730).
6
CURRENT
LAW
——
SHAREHOLDER
AGREEMENTS.
The
shareholders
7
of
a
closed
corporation
(whose
stock
is
not
publicly
traded)
8
may
execute
a
shareholder
agreement
that
governs
the
exercise
9
of
the
corporate
powers
or
the
management
of
its
business
10
and
affairs
(Code
section
490.732).
This
includes
how
it
is
11
controlled;
how
distributions
are
made;
the
management
by
a
12
board
of
directors
or
offices;
the
rights
and
duties
of
its
13
shareholders,
including
voting
rights;
the
management
of
its
14
property,
assets,
and
contracts;
and
its
dissolution.
It
15
must
be
approved
or
signed
by
all
shareholders.
There
is
no
16
requirement
that
a
shareholder
agreement
be
filed
with
the
17
secretary
of
state.
Purchasers
of
shares
take
subject
to
the
18
agreement
only
if
they
are
notified
of
the
agreement
(printed
19
on
the
share
certificates
or
on
an
information
statement).
20
The
shareholder
agreement
may
be
inconsistent
with
another
21
provision
of
the
Code
chapter,
but
presumably
cannot
conflict
22
with
the
corporation’s
articles
of
incorporation.
23
CURRENT
LAW
——
FINANCIAL
STATEMENTS
FOR
SHAREHOLDERS.
A
24
corporation
is
required
to
prepare
and
submit
to
shareholders
25
various
financial
statements
at
the
end
of
the
corporation’s
26
fiscal
year,
including
a
balance
sheet,
an
income
statement,
27
and
a
statement
of
changes
in
shareholders’
equity.
The
28
financial
statements
are
to
be
sent
to
each
shareholder
within
29
120
days
after
the
close
of
the
fiscal
year
(Code
section
30
490.1620(3)).
In
2013,
the
general
assembly
enacted
HF
469
31
(2013
Iowa
Acts,
chapter
31)
which
allows
a
public
corporation
32
to
fulfill
these
requirements
by
delivering
or
making
the
33
financial
statements
available
in
accordance
with
rules
and
34
regulations
of
the
United
States
securities
and
exchange
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commission.
A
public
corporation
has
a
class
of
voting
stock
1
listed
on
a
national
securities
exchange
or
is
held
of
record
2
by
more
than
2,000
shareholders
(Code
section
490.140(27)).
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