Washington State passed a law creating a new entity type during the 2019 session: The Limited Cooperative Association. This new entity is an unincorporated association jointly owned by persons for a mutual benefit for any lawful purpose, except for the business of generating, distributing, purchasing or selling electric energy. In contrast to traditional cooperatives, ownership of a limited cooperative association is open to “investor-members” who do not patronize the entity, in addition to “patron-members.” The statute limits the role of investor-members in several key ways in order to protect the interests of patron-members.
In addition to the new chapter on Limited Cooperative Associations, Washington legislators amended or added more than 125 sections to Washington’s business laws during the 2019 legislative session. Changes include:
Electronic Records: An electronic record may not be denied legal effect, validity, or enforceability solely because it is generated or stored using distributed ledger technology. “Distributed ledger technology” means any distributed ledger protocol and supporting infrastructure, including blockchain, using a distributed, decentralized, shared, and replicated ledger. “Blockchain” means a cryptographically secured, chronological, and decentralized consensus ledger or consensus database maintained via Internet, peer-to-peer network, or other similar interaction.
Corporate Crimes: The criminal liability standards for corporations were changed to include domestic and foreign business and nonprofit entities, including business corporations, limited liability companies, partnerships, limited partnerships, and nonprofit corporations and associations. The definition of “high managerial agent” has been modified to mean a governor or person in a position of comparable authority in an entity not governed by the Uniform Business Organizations Code, and any other agent who manages subordinate employees. The fines for corporations convicted of offenses were expanded to include business and nonprofit entities, and the maximum thresholds for fines were increased.
Cumulative Voting: A shareholder of a corporation formed on or after January 1, 2020 is not entitled to cumulate votes in a director election unless the articles of incorporation provide for cumulative voting. For earlier-formed corporations, a shareholder is entitled to cumulate votes in a director election. For authorized cumulative voting to occur, the meeting notice must clearly state that cumulative voting at the meeting is authorized, or a shareholder with the right to cumulate votes must notify the corporation no less than 72 hours before the meeting that they intend to cumulate votes. If one shareholder gives this notice, the other shareholders in the voting group may cumulate their votes without giving further notice.
Disposition of Corporate Assets—Shareholder Approval: When a corporation sells or otherwise disposes of corporate property and assets outside the regular course of business, the shareholders must approve the decision if the result would leave the corporation without a significant continuing business activity. A significant continuing business activity exists if the remaining activity represents 25 percent of the total assets at the end of the most recently completed fiscal year, as well as either 25 percent of income from continuing operations for that fiscal year or 25 percent of revenues from continuing operations for that fiscal year.
Unissued Stock Shares—Preemptive Rights: A shareholder of a corporation formed on or after January 1, 2020 does not have a preemptive right to acquire a corporation’s unissued shares unless the articles of incorporation provide for preemptive rights. For earlier-formed corporations, a shareholder has preemptive rights, but may waive their rights to acquire unissued shares.
These and other changes are captured in the 2020 Edition of CSCPublishing’s Washington Laws Governing Business Entities Annotated. With up-to-date annotated business entity legislation for Washington, as well as other valuable features that make legal research faster and more efficient, this publication is a valuable resource for the legal and business communities in the State and the surrounding region.
All legislative changes made during the 2019 session are listed in the Table of Sections Affected. An analysis of the legislative changes is also included.
The 2020 Edition is annotated with the latest new case notes from from state and federal courts interpreting the law. The Table of New Annotations lists added case notes, and gray bars in the body of the text indicate where new case notes have been added. There is also an up-to-date Filing Fee Table for various state business services, and a compilation of more than 30 Washington forms for incorporation/formation, qualification, mergers, dissolution, and name reservation for all entity types. A listing of forms and contact information for Washington’s Division of Revenue, Business Services, can be found in the book’s appendix. New for this 2020 edition: Readers can also access the forms online via the LexisNexis download center.
With up-to-date annotated business entity legislation for Washington, as well as other valuable features that make legal research faster and more efficient, this publication is a valuable resource for the legal and business communities in Washington and the surrounding region.
To learn more about the 2020 Edition of Washington Laws Governing Business Entities, call 1.800.533.1637 or visit us online at www.lexisnexis.com/csc.
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