Presented by David G. Budd and Charles C. Whittington, Shareholders, Grant Fridkin Pearson, P.A.
This is Part IV of our series. This paper is presented for the Florida corporation clients of GFP in Florida and other parts of the US and in Europe.
The Florida Business Corporation Act, Chapter 607, Florida Statutes (FBCA) was amended by the Florida Legislature in 2019 (Ch. 2019-90 Laws of Florida) and became effective January 1, 2020. The FBCA is based on the Model Business Corporation Act of the American Bar Association, as last revised in 2016 (MBCA). As a result of this legislation, the FBCA was entirely updated and modernized.
In Part I, we reviewed the basics of the formation of a Florida business corporation, including, in part, the introduction of Directors. In Part II, we reviewed mergers and alternatives, indemnification of directors and officers, and authority of a foreign corporation to do business in Florida. In Part III, we reviewed basic matters pertaining to the operation of the corporation by the shareholders, directors, and officers, including the standards of conduct required of the Directors.
In Part IV, we will review the Compensation of the Directors and the use of Committees by the Board of Directors.
COMPENSATION OF THE DIRECTORS
Under the FBCA, the Compensation of the Directors may be fixed by the Board of Directors unless the Articles of Incorporation or the Bylaws of the corporation provide otherwise. Typically, this is not restricted by the Articles or the Bylaws of the corporation.
The Directors may also be reimbursed for their expenses, if any, for attending meetings.
In addition, a Director may serve as an officer of the corporation and receive compensation for those services.
This further underscores the importance of the Directors who, as pointed out in Part 1 of our series, exercise the powers of the corporation and manage its business, including the appointment and supervision of the officers who conduct its usual day to day business.
COMMITTEES BY THE BOARD OF DIRECTORS
Unless the FBCA, the Articles or the Bylaws provide otherwise, the Board of Directors may establish an executive committee and other committees to perform functions of the board. A committee to perform those duties must be composed of one or more directors.
Typically, the Articles or the Bylaws do not prohibit this. However, the FBCA does specify that the board may not delegate its power for certain functions, such as to recommend to the shareholders an action required to be approved, in turn, by the shareholders.
In setting up a committee to perform board functions, the board is required to act pursuant to its required standards of conduct, including the duties of care and good faith. See Part III of our series. As a result, non-committee directors may still be liable for a committee’s actions.
The FBCA contains commentary to aid the reader, notably the attorneys, in interpretation of the statutes. As noted in our introduction, the FBCA is based on the MBCA. For committees of the board to exercise board functions, the commentary in the FBCA refers to the MBCA to illustrate that this does not prohibit the board from establishing other committees to act in an advisory capacity to the board.
Examples of advisory committees that may be set up are audit, compensation, and nominating committees. These committees may be composed of directors, employees, or others.
Thus, the FBCA provides us with a good selection of tools in our corporate toolbox.
If you have any questions about the FBCA or formation of a Florida corporation, please contact David G. Budd and Charles C. Whittington at 239-514-1000.