On October 16, 2020, Governor John Bel Edwards signed into law Senate Bill 33 amending the Louisiana Business Corporation Act (LBCA) in several areas.
Remote Shareholder Meetings (La. R.S. 12:1-709)
The new law, which became Act No. 3 of the 2020 Second Extraordinary Session, allows for meetings of shareholders to be held solely by means of remote communication, unless the corporation’s bylaws expressly require otherwise. Although the prior law allowed shareholders to participate in any shareholder meeting by remote communication, it was unclear if an in-person meeting was required to be held simultaneously with any remote participation. The LBCA is now clear that virtual-only shareholder meetings are acceptable, a practice which is expected to increase as a repercussion of the COVID-19 pandemic.
Corporate Name Changes (La. R.S. 12:1-1005)
Act No. 3 also empowers the board of directors to change the name of a corporation without shareholder approval, unless the articles of incorporation provide otherwise. Under the prior law, the board was only allowed to change the name of a corporation without shareholder approval in very limited scenarios, such as changing the word “corporation” or “company” to an abbreviation or similar word or adding or deleting a geographical attribution to the name.
Parent-Subsidiary Mergers (La. R.S. 12:1-1105)
Under the new law, a parent corporation may carry out a merger with a subsidiary of which it owns at least 90% of the outstanding voting shares without the approval of the board of directors or shareholders of the subsidiary and, when the parent corporation will be the surviving entity, without the approval of the parent corporation’s shareholders. These powers are restricted to the extent otherwise provided in the articles of incorporation of any corporation involved in the merger or, in the case of a foreign subsidiary, if prior approval by the subsidiary’s directors or shareholders is required by the laws under which it is organized.
Louisiana corporations which are considering taking advantage of the new rules on remote shareholder meetings, name changes, or parent-subsidiary mergers should first carefully review their bylaws and articles of incorporation to make sure there are no restrictions to doing so.