The Florida legislature is reviewing a proposed statutory ratification procedure for defective
corporate actions. These proposed sections would provide a ratification procedure for corporate
actions that were improperly authorized and shares that have been improperly issued. These
proposed sections would serve as a supplement to common law ratification.
What are examples of defective corporate actions?
Corporate actions taken without approval from the board of directors, failure to validly appoint
an initial board of directors, failure to obtain required shareholder approval prior to corporate
action, overissuing shares without the required approval, lack of compliance with appraisal
requirements, and the issuance of shares without confirmation that the corporation had received
consideration payable for the shares.
When will this ratification procedure be available?
This ratification procedure will be available when there is evidence that a corporate action was
defectively implemented. These proposed provisions would allow the ratification of shares that
were deemed improperly issued, but would not allow a corporation to issue shares retroactively
if there was no evidence that these shares were previously issued. Evidence can include share
certificates, resolutions, share purchase agreements, or correspondence that clearly indicates that
shares were issued or were intended to be.