DC To Amend Corporation Laws
By: Lawrence P. Postol
Vice President of Legislative Affairs
DC Proposes Comprehensive Overhaul of Its Business Organizations Code
Spurred on by comments from those in the industry that the current laws affecting business organizations are “incomplete,” “disorganized,” and a “mess,” the District of Columbia is considering a comprehensive update to its business organizations laws. The current business organizations laws were enacted in piecemeal fashion between 1870 and 1962 without any regard for organization or consistency. The result is an out of date patchwork of laws and regulations that acts to deter business owners from establishing business in the District.
The new act, “District of Columbia Official Code Title 29 (Business Organizations) Enactment Act of 2009” (Bill 18-0500), consists of 12 chapters, ten of which are based uniform or model acts, that attempt to incorporate best practices in entity laws. Updated chapters include: Chapter 1 (General Provisions); Chapter 2 (Entity Transactions); Chapter 3 (Business Corporations); Chapter 4 (Nonprofit Corporations); Chapter 6 (General Partnerships); Chapter 7 (Limited Partnerships); Chapter 8 (Limited Liability Companies); Chapter 10 (Limited Cooperative Associations); Chapter 11 (Unincorporated Nonprofit Associations); and Chapter 12 (Statutory Trusts).
The new act proposes numerous improvements, including:
Amendments to the new act are expected to be more easily undertaken, as the new act is based on uniform and model acts, which will be easy for the Council of the District of Columbia to keep up to date. This should enable the Council to maintain the code with minimal burden by adopting officially proposed amendments.
The bill is currently in committee hearings, with the next hearing scheduled on February 11, 2010.
If you have any questions about the information in this article, you may e-mail Mr. Postol at Lpostol@seyfarth.com or call him at 202-828-5385.