Minnesota corporations should review their articles and bylaws to determine whether they should be updated in light of recently enacted amendments to the Minnesota Business Corporation Act (MBCA), which take effect on Aug. 1, 2025.
Signed into law on April 30, 2025 by Gov. Tim Walz, the amendments include changes that clarify, modernize and formalize new frameworks. They cover emergency bylaws and powers, defective corporate acts, board approval of corporate documents, officer liability and a range of other topics.
Key Changes
- Corporations will be permitted to adopt emergency bylaws that contain provisions necessary to manage the corporation during an emergency, including procedures for calling a meeting of the board, quorum requirements for the meeting, designation of additional or substitute directors and procedures for the board to determine the duration of an emergency.
- Unless otherwise provided by a corporation’s emergency bylaws, during an emergency, corporations may act in accordance with certain emergency powers prescribed by statute, such as:
- Providing notice of a meeting of the board only to directors that are practicable to reach and, if ordinary notice is impracticable, may provide notice in any practicable manner.
- Including officers previously designated by the board as directors for a meeting to the extent required to reach a quorum.
- Postponing shareholder meetings or holding shareholder meetings by means of remote communication.
- Corporations may ratify and validate defective corporate acts in accordance with a prescribed framework, including:
- Adopting board resolutions detailing the defective corporate act and approving ratification of the defective corporate act.
- Submitting the act for shareholder approval, if applicable.
- Filing a certificate of validation with the Secretary of State if a certificate was required to be filed to carry out the act.
- Boards will be permitted to approve documents in final form or in substantially final form.
- A corporation’s articles may limit officer liability, except for:
- Breach of an officer’s duty of loyalty.
- Acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law.
- Violations of Minnesota Statute 80A.76.
- Any transaction from which the officer derived an improper personal benefit.
- Any action by or in the right of the corporation.
- Any act or omission occurring prior to the date when the provision in the articles limiting liability becomes effective.
- Shareholders, beneficial owners and holders of voting trust certificates will have the right to specifically enforce certain provisions pertaining to inspection rights and may be awarded related expenses, including attorney fees.
- Shareholders may dissent from and obtain payment for the fair value of their shares in the event of the corporation’s articles are amended to diminish or abolish the board’s right to manage, or to direct the management of, the corporation’s business and affairs, unless otherwise provided in the corporation’s articles.
- If provided in a plan of merger or exchange, and if certain conditions are met, a corporation may receive from a counterparty that fails to perform its obligations payment of any amount representing or based on the loss of any premium shareholders would be entitled to receive had the merger or exchange been consummated.
- Shareholders will have the right to appoint a representative at or after the time at which a plan of merger or exchange is approved by shareholders to take action and bring claims on behalf of the shareholders.
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