Vermont's Virtual Farce: Corporate Law Changes Are No Improvement

The state of Vermont is getting some undeserved credit for adopting amendments to its corporate statute that permit so-called virtual corporations.  It is much ado about nothing.

A visiting law professor at New York Law School who doesn't know much about corporate law, David Johnson, is touting the changes as unique in the country.  They are not.  He makes a big deal out of the fact that Vermont corporations will no longer be required to hold face-to-face annual meetings (I can't help but think of the Town Hall meeting episode from "Newhart").  Iowa has permitted telephonic and video conference meetings for years, and written actions without a meeting have been around even longer.

Iowa, and many other states I am sure, is also ahead of Vermont when it comes to filing annual reports online and permitting electronic signatures.

There are unique aspects to the Vermont law.  Start with the name of the legislation, H.0888 Miscellaneous Tax Documents.  Yep. That is the name of the act.  In Iowa it would be unconstitutional.

But it gets better.  Vermont goes off the deep end in a number of places.  Notice to a shareholder can now be delivered by voice mail. (Is it delivered if not listened to?) And, get this, and I quote: "terms of shares may be made dependent upon facts objectively ascertainable outside the articles of incorporation."  Say What?  Are they serious or did the maple syrup ferment?

If anyone wants to read this zany bill you can get it here.

-Marc Ward