The Florida Business Corporation Act requires a Florida corporation to have bylaws. The law requires a corporation to adopt provisions for managing and regulating its activities, so long as these provisions are in accordance with the corporation’s articles of incorporation and the law. In the event that a corporation is faced with an issue that is not outlined in its bylaws, the Florida Business Corporation Act default rules will govern.
Must a Corporation’s Bylaws be Signed to be Valid in Florida?
Florida Bylaws statute § 607.0206, does not require a corporation’s bylaws to be signed in order to be enforceable. However, a corporation’s Articles of Incorporation does require signature of its registered agent. This signature confirms the agent is aware of and accepts the obligations of a registered agent in a Florida corporation.
What is a Corporate Deadlock?
A corporate deadlock exists when shareholders or directors of a corporation are unable to reach a decision in the management of the company’s affairs. This situation typically arises when there is a 50:50 ownership of the corporation and there is no casting vote that can break the deadlock. A corporate deadlock paralyses a company’s operations thus a swift resolution is imperative.
How to Break a Corporate Deadlock in Florida?
Under the Florida Business Corporation Act, a corporation has the following recourses to break a corporate deadlock:
- Judicial Dissolution § 607.1430:A circuit court may dissolve a Florida corporation or order an alternative remedy in a proceeding brought by a shareholder or member if either:
- The directors are deadlocked in the management of the corporate affairs, the shareholders or members are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered; or
- The shareholders or members are deadlocked in voting power and have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors.
- Alternative to Dissolution § 375:In an action brought by a shareholder or member for the dissolution of a Florida corporation, the court may, upon a showing of sufficient merit to do so:
- Appoint a provisional director;
- Appoint a receiver or custodian pendente lite;
- Order a purchase of the complaining shareholder’s shares; or
- Make any order or grant any equitable relief other than dissolution as in its discretion it may deem appropriate.
What Happens if the Court Orders a Purchase of the Complaining Shareholder’s Shares?
If the court enters an order directing the purchase of the complaining shareholder’s shares, the court must then dismiss the petition to dissolve the corporation. Subsequently, the petitioning shareholder will no longer have any rights or status as a shareholder in the corporation. The exception being the right to receive the awarded amounts.