S477: Amend Bus. Corp. Act/Bus. Opp. Disclosures. Latest Version
Session: 2023 - 2024
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION LAW 2023-130
SENATE BILL 477
AN ACT to make various changes to the north carolina business corporation act and to eliminate duplicative state disclosure rEQUIREMENTS for business opportunity sellers that file comparable disclosures with the federal trade commission, as recommended by the North carolina bar association, to modify the right of a shareholder of a corporation to inspect the records of a subsidiary entity of that corporation, and to standardize the evidence required to prove a debt.
The General Assembly of North Carolina enacts:
PART I. FACILITATE THE USE OF Email AND OTHER COMMUNICATIONS WITH SHAREHOLDERS
SECTION 1.(a) G.S. 55‑1‑40 reads as rewritten:
§ 55‑1‑40. Chapter definitions.
In The following definitions apply in this Chapter unless otherwise specifically provided:
Articles of incorporation include Articles of incorporation. – Include amended and restated articles of incorporation and articles of merger.
Authorized shares means the Authorized shares. – The shares of all classes a domestic or foreign corporation is authorized to issue.
Business entity, Business entity, as used in G.S. 55‑11‑10 and Article 11A of this Chapter, means a Chapter. – A domestic corporation (including corporation, including a professional corporation as defined in G.S. 55B‑2), G.S. 55B‑2, a foreign corporation, a domestic or foreign nonprofit corporation, a domestic or foreign limited liability company, a domestic or foreign limited partnership, a registered limited liability partnership or foreign limited liability partnership as defined in G.S. 59‑32, or any other partnership as defined in G.S. 59‑36 whether or not formed under the laws of this State.
Conspicuous means so Conspicuous. – So written that a reasonable person against whom the writing is to operate should have noticed it. For example, printing in italics or boldface or contrasting color, or typing in capitals or underlined, is conspicuous.
Corporation or domestic corporation means a Corporation or domestic corporation. – A corporation for profit or a corporation having capital stock that is incorporated under or subject to the provisions of this Chapter and that is not a foreign corporation except that in G.S. 55‑9‑01 and G.S. 55‑15‑21 corporation includes domestic and foreign corporations.
Deliver includes Deliver. – Includes mail.
Distribution means a Distribution. – A direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. A distribution may be in the form of a declaration or payment of a dividend; a purchase, redemption, or other acquisition of shares; a distribution of indebtedness; or otherwise.
Dividend credit Dividend credit, as used in G.S. 55‑6‑01(d)(5) means the G.S. 55‑6‑01(d)(5). – The aggregate of all yearly dividend credits. Yearly dividend credit means with respect to noncumulative preferred shares, the amount by which the full dividend preference of such a share, to the extent that such the preference is earned by the corporation with respect to such a the share in a particular fiscal year, exceeds the dividends paid on said the share for that year; provided, that no however, dividend credit shall not accrue unless, and only to the extent that, there exists an earned surplus at the end of such that fiscal year. Computations of earnings allocable to classes of shares made in good faith by the board of directors in accordance with generally accepted accounting principles shall be are conclusive. For the purpose of this definition, a dividend is deemed paid if it has been declared and funds for its payment have been set aside.
Domestic limited liability company has the Domestic limited liability company. – The same meaning as the term LLC in G.S. 57D‑1‑03.
Domestic limited partnership has the Domestic limited partnership. – The same meaning as in G.S. 59‑102.
Domestic nonprofit corporation means a Domestic nonprofit corporation. – A corporation as defined in G.S. 55A‑1‑40.
Effective date of notice is defined Effective date of notice. – Defined in G.S. 55‑1‑41.
Electronic has the Electronic. – The same meaning as in G.S. 66‑312.
Electronic record has the Electronic record. – The same meaning as in G.S. 66‑312.
Electronic signature has the Electronic signature. – The same meaning as in G.S. 66‑312.
(8c) Email. – An electronic transmission directed to a unique email address.
(8d) Email address. – A destination, commonly expressed as a string of characters, consisting of a unique username or mailbox, commonly referred to as the local part of the address, and a reference to an internet domain, commonly referred to as the domain part of the address, whether or not displayed, to which an email may be sent or delivered.
Entity includes (without Entity. – Without limiting the meaning of such the term in Article 9 of this Chapter): Chapter, includes any of the following:
a. Any of the following, whether domestic or foreign:
1. Corporation; nonprofit corporation; professional
2. Limited liability
3. Profit and nonprofit unincorporated
4. Business trust, estate, partnership,
b. Two or more persons having a joint or common economic
c. The United States, and any state and foreign government.
Foreign corporation means a Foreign corporation. – A corporation for profit incorporated under a law other than the law of this State.
Foreign limited liability company has the Foreign limited liability company. – The same meaning as the term foreign LLC in G.S. 57D‑1‑03.
Foreign limited partnership has the Foreign limited partnership. – The same meaning as in G.S. 59‑102.
Foreign nonprofit corporation means a Foreign nonprofit corporation. – A foreign corporation as defined in G.S. 55A‑1‑40.
Governmental subdivision includes Governmental subdivision. – Includes authority, county, district, and municipality.
Includes means a Includes. – A partial definition.
Individual denotes Individual. – Denotes a natural person legally competent to act and also includes the estate of an incompetent or deceased individual.
Mail, Mail, when used as a verb, means to verb. – 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. (14) Means denotes an exhaustive definition.
Merger Merger, as used in Article 9 includes Article 9. – Includes a share exchange as used in Article 11.
Notice includes Notice. – Includes demand and is defined in G.S. 55‑1‑41.
Person includes Person. – Includes individual and entity.
Principal office means the office (in Principal office. – The office, in or out of this State) State, where the principal executive offices of a domestic or foreign corporation are located, as designated in its most recent annual report filed with the Secretary of State or, in the case of a domestic or foreign corporation that has not yet filed an annual report, in its articles of incorporation or application for a certificate of authority, respectively.
Proceeding includes Proceeding. – Includes civil suit and criminal, administrative, and investigatory action.
Public corporation means any Public corporation. – Any corporation that has a class of shares registered under Section 12 of the Securities Exchange Act of 1934, as amended (15 U.S.C. § 78l).
Record date means the Record date. – The date established under Article 6 or 7 on which a corporation determines the identity of its shareholders for purposes of this Chapter.
Secretary means the Secretary. – The corporate officer to whom the board of directors has delegated responsibility under G.S. 55‑8‑40(c) for custody of the minutes of the meetings of the board of directors and of the shareholders and for authenticating records of the corporation.
Service‑disabled veteran means a Service‑disabled veteran. – A veteran with a disability that was incurred or aggravated during the veteran's service in the Armed Forces of the United States.
Service‑disabled veteran‑owned small business means a Service‑disabled veteran‑owned small business. – A business that satisfies both of the following requirements:
a. The business's net annual receipts do not exceed one million dollars ($1,000,000).
b. One or more service‑disabled veterans own more than fifty percent (50%) of the business.
Shares means the Shares. – The units into which the proprietary interests in a corporation are divided.
Shareholder means the Shareholder. – The person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.
State, State, when referring to a part of the United States, includes States. – Includes a state and commonwealth (and and their agencies and governmental subdivisions) subdivisions and a territory and insular possession (and and their agencies and governmental subdivisions) subdivisions of the United States.
Subscriber means a Subscriber. – A person who subscribes for shares in a corporation, whether before or after incorporation.
Unincorporated entity means a Unincorporated entity. – A domestic or foreign limited liability company, a domestic or foreign limited partnership, a registered limited liability partnership or foreign limited liability partnership as defined in G.S. 59‑32, or any other partnership as defined in G.S. 59‑36, whether or not formed under the laws of this State.
United States includes United States. – Includes district, authority, bureau, commission, department, and any other agency of the United States.
Veteran means an Veteran. – An individual entitled to any benefits or rights under the laws of the United States by reason of service in the Armed Forces of the United States.
Veteran‑owned small business means a Veteran‑owned small business. – A business that satisfies both of the following requirements:
a. The business's net annual receipts do not exceed one million dollars ($1,000,000).
b. One or more veterans own more than fifty percent (50%) of the business.
Voting group means all Voting group. – All shares of one or more classes or series that under the articles of incorporation or this Chapter are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled by the articles of incorporation or this Chapter to vote generally on the matter are for that purpose a single voting group.
SECTION 1.(b) G.S. 55‑1‑41 reads as rewritten:
§ 55‑1‑41. Notice.
(b) Notice may be communicated in person; by electronic means; or by mail or private carrier. If these forms of personal notice are impracticable as to one or more persons, notice may be communicated to
such those persons by publishing notice in a newspaper in the county wherein where the corporation has its principal place of business in the State, or if it has no principal place of business in the State, the county wherein where it has its registered office; or by radio, television, or other form of public broadcast communication.
(c) Written notice by a
domestic or foreign corporation to its shareholder is effective when deposited in the United States mail with postage thereon prepaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders. Unless the shareholder has previously notified the corporation in writing that the shareholder objects to receiving notices and other communications by email, any notice by a corporation may be delivered to its shareholder in the form of email to the email address shown in the corporation's current record of shareholders and is effective when it is sent as provided in G.S. 66‑325. To the extent the corporation pursuant to G.S. 55‑1‑50 and the shareholder have agreed, and the shareholder has not provided notice of objection to the corporation, notice by a domestic corporation to its shareholder may be delivered in the form of an electronic record sent by any other electronic means and is effective when it is sent as provided in G.S. 66‑325. A shareholder may terminate any such agreement provide notice to the corporation of the shareholder's objection to receiving notices and other communications by email or other electronic means at any time on a prospective basis effective upon written notice of termination to the corporation or upon such later date as may be specified in the notice.
(c1) A notice or other communication shall no longer be delivered to an email address or by other electronic means pursuant to subsection (c) of this section if (i) the corporation receives notice from the information processing system into which the notice or other communication was entered that two consecutive notices or other communications given by email or other electronic means have not been delivered as directed and (ii) the notice of non‑delivery becomes known to the secretary, transfer agent, or another person responsible for the giving of notices or other communications for the corporation. The inadvertent failure to recognize the notice of non‑delivery as a cessation of authority to provide a shareholder with notice by email or other electronic means shall not invalidate any meeting or other action.
(d) Written notice to a domestic or foreign corporation
(authorized authorized to transact business in this State) State may be addressed to its registered agent at its registered office or to the corporation or its secretary at its principal office shown in its most recent annual report on file in the office of the Secretary of State or, in the case of a domestic or foreign corporation that has not yet filed an annual report, in its articles of incorporation or application for a certificate of authority, respectively.
(e) Except as provided in subsection
(c), (c) of this section, written notice is effective at the earliest of the following:
(2) Five days after its deposit in the United States mail, as evidenced by the postmark or otherwise, if mailed with at least first‑class postage
thereon prepaid and correctly addressed;addressed.
(3) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.
In the case of notice in the form of an electronic record sent by electronic means, the time of receipt shall be determined as provided in G.S. 66‑325.
SECTION 1.(c) G.S. 55‑7‑20 reads as rewritten:
§ 55‑7‑20. Shareholders' list for meeting.
(a) After fixing a record date for a meeting, a corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of a shareholders' meeting. The list shall be arranged by voting group, by class or series of shares within each voting group, and shall show the address of and number of shares held by each shareholder. If the notice or other communications regarding the meeting have been or will be sent by the corporation to a shareholder by email or other electronic means, the list shall also show that shareholder's email address or address for transmission by other electronic means.
(b) The shareholders' list shall be available for inspection by any shareholder, beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, (i) at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held or (ii) on a reasonably accessible electronic
network, provided that network so long as the information required to gain access to the list is provided with the notice of the meeting. In the event that the corporation determines to make the list available on an electronic network, the corporation may take reasonable steps to ensure that the information is available only to shareholders of the corporation. A shareholder, personally or by or with the shareholder's representative, is entitled on written demand to inspect and, subject to the requirements of G.S. 55‑16‑02(c), to copy the list, during regular business hours and at the shareholder's expense, during the period it is available for inspection.
(d) If the corporation refuses to allow a shareholder or the shareholder's representative to inspect the shareholders' list before or at the meeting, or copy the list as permitted by subsection (b) of this section, the superior court of the county where a corporation's principal office is located, or, if the corporation has no principal office in this State, the superior court of the county where the corporation's registered office is located, on application of the shareholder, after notice is given to the corporation, may summarily order the inspection or copying at the corporation's expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete.
SECTION 1.(d) G.S. 55‑16‑06 reads as rewritten:
§ 55‑16‑06. Exception to notice requirements.
(a) Whenever notice is required to be given to a shareholder under any provision of this
Chapter to a shareholder, Chapter, the notice shall is not be required to be given if either the corporation is not permitted to deliver notice by email or other electronic means pursuant to G.S. 55‑1‑41 and any of the following applies:apply:
(3) No address has been provided to the corporation by or on behalf of a shareholder and the corporation has not otherwise obtained an address for the shareholder it believes is reliable.
(b) If a shareholder delivers to the corporation a written notice setting forth
that the shareholder's current address, the requirement that notice be given to the shareholder shall be is reinstated.
SECTION 1.(e) This section becomes effective October 1, 2023, and applies to notices provided on or after that date.
PART II. PROVIDE GREATER FLEXIBILITY FOR THE USE OF WRITTEN CONSENT WITHOUT MEETING
SECTION 2.(a) G.S. 55‑7‑04 reads as rewritten:
§ 55‑7‑04. Action without meeting.
Action Any action required or permitted by this Chapter to be taken at a shareholders' meeting may be taken without a meeting and without prior notice except as required by subsection (d) of this section, if the action is taken by all the shareholders entitled to vote on the action or, subject action or if the action is taken by either of the following:
(1) For corporations incorporated prior to October 1, 2023, subject to subsection (a1) of this section, if so provided in the articles of incorporation of a corporation that is not a public corporation at the time the action is taken, by shareholders having not less than the minimum number of votes that would be necessary to take the action at a meeting at which all shareholders entitled to vote were present and voted.
(2) For corporations incorporated on or after October 1, 2023, subject to subsection (a1) of this section, if not prohibited by the articles of incorporation of a corporation that is not a public corporation at the time the action is taken, by shareholders having not less than the minimum number of votes that would be necessary to take the action at a meeting at which all shareholders entitled to vote were present and voted.
The action must be evidenced by one or more unrevoked written consents
bearing the date of signature and signed by shareholders sufficient to take the action without a meeting, before or after such the action, describing the action taken and delivered to the corporation for inclusion in the minutes or filing with the corporate records. To the extent the corporation has agreed pursuant to G.S. 55‑1‑50, a shareholder's consent or revocation of consent to action taken without meeting or revocation thereof may be in electronic form and delivered by electronic means.
(a1) Notwithstanding subsection (a) of this section, the following actions may be taken without a meeting only by all the shareholders entitled to vote on the action:
(1) If cumulative voting is not authorized, the election of directors at the annual
(2) If cumulative voting is authorized, the election of directors and the removal of a director unless the entire board of directors is to be
removed, and if removed. If G.S. 55‑7‑28(e) applies to the corporation, an amendment to the articles of incorporation to deny or limit the right of shareholders to vote cumulatively and an amendment to the articles of incorporation or bylaws to decrease the number of directors.
(b) A shareholder's written consent to action to be taken without a meeting shall
cease to not be effective on the sixty‑first day after the date of signature appearing on the consent unless prior to the sixty‑first day the corporation has to take the corporate action referred to in the consent unless the corporation has, within 60 days following the first date on which a consent for that action is received by the corporation, received unrevoked written consents sufficient under subsection (a) of this section to take the action without meeting. If not otherwise fixed under G.S. 55‑7‑03 or G.S. 55‑7‑07, the record date for determining shareholders entitled to take action without a meeting is the earliest date of signature appearing on that any consent that is to be counted in satisfying the requirements of subsection (a) of this section. section is received by the corporation. A shareholder may only revoke a written consent if such the shareholder delivers to the corporation a written revocation prior to the corporation's receipt of unrevoked written consents sufficient under subsection (a) of this section to take the action.
(e) If action is taken without a meeting by fewer than all shareholders entitled to vote on the action, the corporation shall give written notice to all shareholders who have not consented to the action and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting with the same record date as the action taken without a meeting, within 10 days after the action is taken. The notice shall describe the action and indicate that the action has been taken without a meeting of shareholders. Failure to comply with the requirements of this subsection
shall does not invalidate any action taken that otherwise complies with this section.
SECTION 2.(b) This section becomes effective October 1, 2023, and applies to written consents received on or after that date.
PART III. PERMIT THE BOARD OF DIRECTORS TO DELETE FROM THE ARTICLES OF INCORPORATION UNUSED CLASSES OF SHARES CREATED BY THE BOARD
SECTION 3.(a) G.S. 55‑10‑02 reads as rewritten:
§ 55‑10‑02. Amendment by board of directors.
Unless the articles of incorporation provide otherwise, a corporation's board of directors may adopt any of the following amendments to the corporation's articles of incorporation without shareholder approval:
(5b) To delete a class of shares from the articles of
incorporation, as a result of the operation of G.S. 55‑6‑31(b), when incorporation in either of the following circumstances:
a. If, as a result of the operation of G.S. 55‑6‑31(b), there are no remaining authorized shares of the class because the corporation has acquired all authorized shares of the class and the articles of incorporation prohibit the reissue of the acquired shares.
b. If, under G.S. 55‑6‑02, the articles of incorporation authorized the board of directors to create the class and no shares of the class or rights to acquire shares of the class are outstanding.
SECTION 3.(b) This section becomes effective October 1, 2023.
PART IV. PERMIT EXCEPTIONS TO CERTAIN REQUIREMENTS FOR SEPARATE VOTES BY VOTING GROUPS
SECTION 4.(a) G.S. 55‑10‑04 reads as rewritten:
§ 55‑10‑04. Voting on amendments by voting groups.
The Except as provided in subsection (e) of this section, the holders of the outstanding shares of a class are entitled to vote as a separate voting group (if group, if shareholder voting is otherwise required by this Chapter) Chapter, on a proposed amendment if the amendment would:would do any of the following:
(1) Increase or decrease the aggregate number of authorized shares of the
(2) Effect an exchange or reclassification of all or part of the shares of the class into shares of another
(3) Effect an exchange or reclassification, or create the right of exchange, of all or part of the shares of another class into shares of the
(4) Change the designation, rights, preferences, or limitations of all or part of the shares of the
(5) Change the shares of all or part of the class into a different number of shares of the same
(6) Create a new class of shares having rights or preferences with respect to distributions or to dissolution that are prior, superior, or substantially equal to the shares of the
(7) Increase the rights, preferences, or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to distributions or to dissolution that are prior, superior, or substantially equal to the shares of the
(8) Limit or deny an existing preemptive right of all or part of the shares of the
(9) Cancel or otherwise affect rights to distributions or dividends that have accumulated but not yet been declared on all or part of the shares of the
(10) Change the corporation into a nonprofit corporation or a cooperative organization.
If Except as provided in subsection (e) of this section, if a proposed amendment would affect a series of a class of shares in one or more of the ways described in subsection (a), the shares of that series are entitled to vote as a separate voting group on the proposed amendment.
(c) If a proposed amendment that entitles two or more series of shares to vote as separate voting groups under this section would affect those two or more series in the same or a substantially similar way, the shares of all the series so affected must vote together as a single voting group on the proposed amendment.
(d) A class or series of shares is entitled to the voting rights granted by this section although the articles of incorporation provide that the shares are nonvoting shares.
(e) The right of a class or series to vote as a separate voting group under subdivision (6) or (7) of subsection (a) of this section may be restricted in whole or in part if so provided in the original articles of incorporation or by an amendment to the articles of incorporation that is adopted prior to the issuance of any shares of the class or series or that is approved by a majority of the votes of the class or series entitled to be cast on the amendment.
SECTION 4.(b) This section becomes effective October 1, 2023.
PART V. eliminate duplicative state disclosure rEQUIREMENTS for business opportunity sellers that file comparable disclosures with the federal trade commission
SECTION 5.(a) G.S. 66‑95 reads as rewritten:
§ 66‑95. Required disclosure statement.
At least 48 hours prior to the time the purchaser signs a business opportunity contract, or at least 48 hours prior to the receipt of any consideration by the seller, whichever occurs first, the seller
must shall provide the prospective purchaser a written document, the a cover sheet of which is that includes a statement entitled in at least 10‑point bold face capital letters DISCLOSURES REQUIRED BY NORTH CAROLINA LAW. Under this title shall appear the statement in at least 10‑point type that The State of North Carolina has not reviewed and does not approve, recommend, endorse or sponsor any business opportunity. The information contained in this disclosure has not been verified by the State. If you have any questions about this investment, see an attorney before you sign a contract or agreement. Nothing except Only the title and required statement shall appear on the cover sheet. sheet, except that franchisors subject to this Article may include other material pursuant to 16 C.F.R. Part 436 or guidelines of the North American Securities Administrators Association. The disclosure document shall contain the either of the following:
(1) A franchise disclosure document that complies in all material respects with 16 C.F.R. Part 436.
(2) The following information:
(1)a. The name of the seller, whether the seller is doing business as an individual, partnership, or corporation, the names under which the seller has done, is doing doing, or intends to do business, and the name of any parent or affiliated company that will engage in business transactions with purchasers or who that takes responsibility for statements made by the seller. (2)b. The names and addresses and titles of the seller's officers, directors, trustees, general partners, general managers, principal executives, and any other persons charged with responsibility for the seller's business activities relating to the sale of business opportunities. The disclosure document shall additionally contain a statement disclosing who, if any, of the above persons:persons has been either of the following: a.1. Has been the The subject of any legal or administrative proceeding alleging the violation of any business opportunity or franchise law, or fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property property, or comparable allegations;allegations. b.2. Has been the The subject of any bankruptcy, reorganization reorganization, or receivership proceeding, proceeding or was an owner, a principal officer officer, or a general partner of any entity which that has been subject to such proceeding.any of these proceedings.
The disclosure document shall set forth the name of the person, the nature of and the parties to the action or proceeding, the court or other forum, the date, the current status of the action or proceeding, the terms and conditions of any order of decree, the penalties or damages
assessed and/or assessed, any terms of settlement, and any other information to enable the purchaser to assess the prior business activities of the seller. (3)c. The prior business experience of the seller relating to business opportunities including:including all of the following: a.1. The name, address, and a description of any business opportunity previously offered by the seller;seller. b.2. The length of time the seller has offered each such business opportunity;opportunity. c.3. The length of time the seller has conducted the business opportunity currently being offered to the purchaser. (4)d. A full and detailed description of the actual services that the business opportunity seller undertakes to perform for the purchaser. (5)e. A copy of a current (not older than 13 months) financial statement of the seller, updated to reflect any material changes in the seller's financial condition. (6)f. If training of any type is promised by the seller, the disclosure statement must shall set forth a complete description of the training and the length of the training. (7)g. If the seller promises services to be performed in connection with the placement of the equipment, product(s) products, or supplies at various location(s), locations, the disclosure statement must shall set forth the full nature of those services as well as the nature of the agreements to be made with the owners or managers of these location(s) locations where the purchaser's equipment, product(s) products, or supplies will be placed. (8)h. If the business opportunity seller is required to secure a bond or establish a trust deposit pursuant to G.S. 66‑96, the document shall state either:either of the following: a.1. As required by North Carolina law, the seller has secured a bond issued by ________________________________
(name and address of surety company)
a surety company authorized to do business in this State. Before signing a contract to purchase this business opportunity, you should check with the surety company to determine the bond's current
status, orstatus. b.2. As required by North Carolina law, the seller has established a trust account ______________________________________
(number of account)
(name and address of bank or savings institution)
Before signing a contract to purchase this business opportunity, you should check with the bank or savings institution to determine the current status of the trust account.
(9)i. The following statement:
If the seller fails to deliver the product(s), equipment or supplies necessary to begin substantial operation of the business within 45 days of the delivery date stated in your contract, you may notify the seller in writing and demand that the contract be cancelled.
(10)j. If the seller makes any statement concerning sales or earnings, earnings or range of sales or earnings that may be made through this business opportunity, the document must disclose:shall disclose all of the following: a.1. The total number of purchasers of business opportunities involving the product(s), products, equipment, supplies supplies, or services being offered who that, to the seller's knowledge knowledge, have actually received earnings in the amount or range specified, specified within three years prior to the date of the disclosure statement. b.2. The total number of purchasers of business opportunities involving the product(s), products, equipment, supplies supplies, or services being offered within three years prior to the date of the disclosure statement.
SECTION 5.(b) G.S. 66‑97 reads as rewritten:
§ 66‑97. Filing with Secretary of State.
(a) The seller of every business opportunity shall file with the Secretary of State two copies of
the either disclosure statement required by used to satisfy the requirements of G.S. 66‑95, accompanied by a fee in the amount of two hundred fifty dollars ($250.00) made payable to the Secretary of State, prior to placing any advertisement or making any other representations to prospective purchasers in this State. The seller shall update this filing as any material change in the required information occurs, but no less than annually.
(b) Every seller shall file, in
such a form as the Secretary of State may prescribe, an irrevocable consent appointing the Secretary of State or his or her successors in office to be his the seller's attorney to receive service of any lawful process in any noncriminal suit, action action, or proceeding against the seller or his the seller's successor, executor executor, or administrator which that arises under this Article after the consent has been filed, with the same force and validity as if served personally on the person filing the consent. Service may be made by leaving a copy of the process in the office of the Secretary of State, but is not effective unless (i) the plaintiff, who may be the Attorney General in a suit, action action, or proceeding instituted by him, forthwith the Attorney General, immediately sends notice of the service and a copy of the process by registered mail to the defendant or respondent at his or her address on file with the Secretary of State, and (ii) the plaintiff 's affidavit of compliance with this section is filed in the case on or before the return date of the process, if any, or within such further time as the court allows.
(c) If the seller of a business opportunity is required by G.S. 66‑96 to provide a bond or establish a trust account,
he the seller shall file with the Secretary of State two copies of the bond or two copies of the formal notification by the depository that the trust account is established contemporaneously with compliance with subsections (a) or (d).subsection (a) of this section. (d) The Secretary of State may accept the Uniform Franchise Offering Circular (UFOC) or the Federal Trade Commission Basic Disclosure Document, provided, that the alternative disclosure document shall be accompanied by a separate sheet setting forth the caption and statement and any other information required by G.S. 66‑95.
(e) Failure to
so file shall be as required by this section is a Class 1 misdemeanor.
SECTION 5.(c) This section is effective when it becomes law and applies to required disclosure statements and filings provided on or after that date.
PART VI. right of a shareholder of a corporation to inspect records of subsidiary entity of that corporation
SECTION 6.(a) G.S. 55‑16‑01.1 reads as rewritten:
§ 55‑16‑01.1. Definitions.
In this Article, the following definitions apply:
(5) Subsidiary. – Any domestic or foreign entity directly or indirectly owned, in whole or in part, by the corporation of which the shareholder is a shareholder and over the affairs of which the corporation directly or indirectly exercises control. The term includes domestic and foreign corporations, including professional corporations and nonprofit corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies, business trusts, and joint ventures.
SECTION 6.(b) G.S. 55‑16‑02 reads as rewritten:
§ 55‑16‑02. Inspection of records by shareholders.
(c) A qualified shareholder may inspect and copy the records described in subsection (b) of this section only if all of the following apply:
(1) The qualified shareholder's demand is made in good faith and for a proper purpose.
(2) The qualified shareholder describes with reasonable particularity the qualified shareholder's purpose and the records the qualified shareholder desires to inspect.
(3) The records are directly connected with the qualified shareholder's purpose.
(h) A qualified shareholder of a corporation
that has the power to elect, appoint, or designate a majority of the directors of another domestic or foreign corporation or of a domestic or foreign nonprofit corporation, has the inspection rights provided in this section with respect to the records of that other corporation.a subsidiary of the corporation to the extent that either of the following applies:
(1) The corporation has actual possession and control of the records of the subsidiary.
(2) The corporation could obtain the records through the exercise of control over the subsidiary and, as of the date of the making of the demand, the qualified shareholder inspection of the books and records of the subsidiary would not constitute a breach of an agreement between the corporation or the subsidiary and a person not affiliated with the corporation.
SECTION 6.(c) This section becomes effective October 1, 2023, and applies to written notices of demand for inspection given on or after that date.
PART VII. STANDARDIZE THE EVIDENCE TO PROVE A DEBT
SECTION 7.(a) G.S. 58‑70‑90 reads as rewritten:
§ 58‑70‑90. Definitions.
As used in this Part, the following terms have the meanings specified:
Collection agency means a Collection agency. – A collection agency as defined in G.S. 58‑70‑15 which engages, directly or indirectly, in debt collection from a consumer.
Consumer means an Consumer. – An individual, aggregation of individuals, corporation, company, association, or partnership that has incurred a debt or alleged debt.
(2a) Credit card debt. – A debt stemming from a revolving or open‑end credit card account pursuant to which a creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance.
Debt means any Debt. – Any obligation owed or due or alleged to be owed or due from a consumer.
(4) Itemized accounting. – If the debt has not been charged-off, the itemized accounting is an accounting of the amount claimed to be owed, including the amount of the principal, the amount of any interest, fees or charges, and whether the charges were imposed by the original creditor, a debt collector, or a subsequent owner of the consumer debt. If the debt has been charged off, the itemized accounting is: (i) the charge‑off balance; (ii) any post charge‑off interest and fees; (iii) any post charge‑off payments or credits; and (iv) the most recent twelve account statements sent to the debtor prior to charge‑off. For accounts less than one year old prior to charge‑off, the accounting must include every statement sent to the debtor prior to charge‑off.
SECTION 7.(b) G.S. 58‑70‑130 reads as rewritten:
§ 58‑70‑130. Civil liability.
(b) Any collection agency which violates Part 3 of this Article with respect to any debtor shall, in addition to actual damages sustained by the debtor as a result of the violation, also be liable to the debtor for a penalty in such amount as the court may allow, which shall not be less than five hundred dollars ($500.00) for each violation nor greater than four thousand dollars ($4,000) for each violation. The debtor need not prove actual damages to recover the civil penalty; the civil penalty is in addition to the actual damages, if any.
SECTION 7.(c) G.S. 58‑70‑145 reads as rewritten:
§ 58‑70‑145. Complaint of a collection agency plaintiff must contain certain allegations.
In any cause of action that arises out of the conduct of a business for which a plaintiff must secure a permit pursuant to this Article, the complaint shall allege as part of the cause of action that the plaintiff is duly licensed under this
Article and Article, shall contain the name and number, if any, of the license and the governmental agency that issued it.it, shall allege that notice required by 58‑70‑115(6) was sent, and shall incorporate documents sent with that notice. Any complaint that fails to comply with this section shall be dismissed by the court upon motion of the debtor or sua sponte.
SECTION 7.(d) G.S. 58‑70‑150 reads as rewritten:
§ 58‑70‑150. Complaint of a debt buyer plaintiff must be accompanied by certain materials.
In addition to the requirements of G.S. 58‑70‑145, in any cause of action initiated by a debt buyer, as that term is defined in G.S. 58‑70‑15, all of the following materials shall be attached to the complaint or claim:
(1) A copy of the contract or other writing evidencing the original debt, which must contain a signature of the defendant. If a claim is based on credit card debt and the debt buyer alleges in the complaint that no such signed writing evidencing the original debt ever existed, then copies of documents generated when the credit card was actually
used used, such as a purchase or cash advance, must be attached.
(2) A copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. If the debt has been assigned more than once, then each assignment or other writing evidencing transfer of ownership must be attached to establish an unbroken chain of ownership. Each assignment or other writing evidencing transfer of ownership must contain the original account number of the debt purchased and must clearly show the debtor's name associated with that account number.
Any complaint that fails to comply with this section shall be dismissed by the court upon motion of the debtor or sua sponte.
SECTION 7.(e) G.S. 58‑70‑155 reads as rewritten:
§ 58‑70‑155. Prerequisites to entering a default or summary judgment against a debtor under this Part.
The If the claim is not based on a credit card debt, the only evidence sufficient to establish the amount and nature of the debt shall be properly authenticated business records that satisfy the requirements of Rule 803(6) of the North Carolina Rules of Evidence. The authenticated business records shall include at least all of the following items:following:
(1) The original account number.
(2) The original creditor.
(3) The amount of the original debt.
(4) An itemization of charges and fees claimed to be owed.
(5) The original charge‑off balance, or, if the balance has not been charged off, an explanation of how the balance was calculated.
(6) An itemization of post charge‑off additions, where applicable.
(7) The date of last payment.
(8) The amount of interest claimed and the basis for the interest charged.
(c) If the claim is based on a credit card debt, the only evidence sufficient to establish the amount and nature of the debt shall be properly authenticated business records that satisfy the requirements of Rule 803(6) of the North Carolina Rules of Evidence. The authenticated business records shall include at least all of the following:
(1) The original account number.
(2) The original creditor.
(3) An itemized accounting, as defined in G.S. 58‑70‑90.
(4) The date of last payment, if any.
(5) The basis for the interest charged.
(6) The date the account was opened.
(d) If a debt buyer fails to satisfy the requirements of this section, the debt buyer's motion for summary judgment or default judgment shall be denied and any judgments entered in favor of the non‑compliant debt buyer are void and subject to vacatur under Rule 60(b) of the Rules of Civil Procedure.
SECTION 7.(f) This section becomes effective on January 1, 2024, and applies to debt collection activities undertaken and actions filed on or after that date.
PART VIII. effective date and Authorization to print comments
SECTION 8.(a) The Revisor of Statutes shall cause to be printed, as annotations to Chapter 55 of the published General Statutes, all relevant portions of the Official Comments to the Model Business Corporation Act and all explanatory comments of the drafters of this act as the Revisor may deem appropriate.
SECTION 8.(b) Except as otherwise provided, this act is effective when it becomes law.
In the General Assembly read three times and ratified this the 22nd day of September, 2023.
s/ Phil Berger
President Pro Tempore of the Senate
s/ Tim Moore
Speaker of the House of Representatives
s/ Roy Cooper
Approved 4:03 p.m. this 29th day of September, 2023