Legislative Update
Article Date: Thursday, November 03, 2011
Written By: Stephen F. Later & Mark Griffith
Business Legislation
The 2011-2012 biennium of the North Carolina General Assembly convened on January 26, 2011 and adjourned on June 18, 2011. With due credit to Kim Crouch, below are summaries of some bills that may be relevant to the practice of our members. We commend you to the North Carolina Bar Association Legislative Bulletin for further coverage of these and other legislative matters.
1. Attorneys' Fees in Business Contracts (S.L. 2011-341)
S.L. 2011-341 enacts G.S. 6-21.6 to provide that reciprocal attorneys' fees provisions are valid and enforceable for the recovery of reasonable attorney's fees and expenses in business contracts that are signed by hand. It establishes 13 factors to be considered in determining reasonable fees and expenses and expressly prohibits reasonable attorneys' fees and expenses from being governed by (a) any statutory presumption or provision in the contract providing for a stated percentage or (b) the amount recovered in other cases in which the business contract contains reciprocal attorneys' fees provisions. This act becomes effective Oct. 1, 2011, and applies to business contracts entered into on or after that date.
2. Amend Article 13 of Business Corporation Act (S.L. 2011-347)
S.L. 2011-347 amends Article 13 of Chapter 55 of the General Statutes in a manner consistent with updates of the Model Business Corporation Act. It narrows the list of corporate transactions that give rise to appraisal rights and simplifies and reorganizes procedures for the exercise of appraisal rights.
The amendments also permit a corporation (a) to include a provision in its articles of incorporation eliminating or limiting appraisal rights for any class or series of preferred shares and (b) to make appraisal rights available by article or bylaw provision or by simple board resolution for any merger, share exchange, disposition of assets or amendment to the articles for which statutory appraisal rights are not provided. S.L. 2011-34 limits the right of appraisal in certain fundamental transactions to voting shareholders but provides a right of appraisal for all shares, whether voting or nonvoting, in the case of a merger, share exchange or sale or exchange of assets. This act becomes effective Oct. 1, 2011.
3. Corporate Net Income Adjustments; Combined Returns (S.L. 2011-390)
S.L. 2011-390 repeals G.S. 105-130.6, concerning the taxation of net income of a corporation that is a parent, subsidiary or affiliate of another corporation. It enacts G.S. 105-130.5A which provides the Secretary of Revenue the authority to adjust net income or require a combined return of corporations under specified circumstances. It also provides a procedure for the Secretary to acquire information from a corporation when the Secretary has reason to believe that any corporation has failed to accurately report state income properly attributed to its business. Some portions of this act became effective June 30, 2011; other parts on Jan. 1, 2012 or later.
4. Communications Service by Cities (S.L. 2011-84)
S.L. 2011-84 establishes new requirements on future municipal broadband, cable, telecommunications, and highspeed internet service providers including, inter alia, (a) limiting the provision of such service to within the corporate limits of the city providing the service, (b) prohibiting the subsidization of such service with funds from other municipal revenue sources, (c) requiring the municipality to annually remit to the city's general fund an amount equivalent to the taxes or fees a private communications service provider would be required to pay, (d) prohibiting the pricing of any such communications service below the cost of providing such service, and (e) requiring a public vote to incur any debt for providing such service. This act becomes effective May 21, 2011.
5. Employers and Local Government Must Use E-Verify (S.L. 2011-263)
S.L. 2011-263 enacts Article 2 of Chapter 64 of the General Statutes, which requires counties, cities, and employers to use the federal E-Verify program to verify the work authorization for newly hired employees. It also requires the employer to retain the work authorization verification while the employee is employed and for one year after employment. It exempts seasonal temporary employees employed for 90 or fewer days during a 12-consecutive month period from the requirement from the act. Sections 4, 5, and 6 of this act become effective Oct. 1, 2011. The remainder of this act becomes effective on Oct. 1, 2012 for employers that employ 500 or more employees, Jan. 1, 2013 for employers that employ 100 or more but fewer than 500 employees, and July 1, 2013 for employers that employ 25 or more but fewer than 100 employees.
6. Workers' Compensation Act Reform (S.L. 2011-287)
S.L. 2011-287 makes significant revisions to the Workers' Compensation Act. It caps the duration for compensation for temporary total disability and extends from 300 to 500 the number of weeks an injured employee is eligible to receive compensation for partial incapacity. It increases the death benefit and burial expense allowance and reduces the Industrial Commission from seven to five members. It repeals the Commission's full exemption from the Administrative Procedures Act thereby subjecting the Commission to rulemaking under Article 2A of Chapter 150B of the General Statutes Commission. It also makes will misrepresentations grounds for disqualification from receiving benefits, and clarifies the rights and responsibilities of employers and employees regarding medical examinations, treatment, and access to medical information. This act became effective June 24, 2011.
7. Business Entity Changes (S.L. 2011-9)
S.L. 2011-9 amends G.S.105-277.3(b1) to revise the ownership requirements for business entities for qualification of land at its present use value for tax purposes. This act is effective for taxable years beginning on or after July 1, 2011. •
For more information on these or other bills of interest, visit h ttp://www.ncbar.org/governmental-affairs/legislative-bulletin/2011-legislative-bulletin.aspx or go to www.ncbar.org and click on the Government Affairs link and then the Legislative Bulletin link.
Stephen Later practices with Robbins May & Rich LLP in Pinehurst and Mark Griffith is Chief Legal and Ethics Officer at ElectriCities of North Carolina, Inc.
Views and opinions expressed in articles published herein are the authors' only and are not to be attributed to this newsletter, the section, or the NCBA unless expressly stated. Authors are responsible for the accuracy of all citations and quotations.