Changes in the Model Business Corporation Act—Amendments to Sections 6.04 and 6.25 Relating to Bearer Shares and Scrip

The Corporate Laws Committee of the ABA Business Law Section (the “Committee”) from time to time makes changes in the Model Business Corporation Act (the “Model Act”).

By publication after second reading in the Fall 2022 issue of The Business Lawyer, the Committee proposed amendments to sections 6.04 and 6.25 of the Model Act relating to bearer shares and scrip.

At its meeting on December 3, 2022, the Committee approved the amendments upon third and final reading without change except for the following change to the third bullet point in the Official Comment to section 6.04. Changes are marked with deletions shown by strikeout and additions by underscoring:

• The corporation may authorize the immediate prompt sale of all fractional share interests, typically by an agent on behalf of the holders, thereby avoiding the expense and delay of other methods of dealing with fractional shares. Although this procedure denies shareholders the benefit of any subsequent rise in the market price of the shares, it protects them against any subsequent decline and ensures them of recognition based on market prices at the time of the transaction.