H.F. No. 747: Minnesota Business Corporation Act Amendments Now In Effect

On April 30, 2025, Governor Tim Walz signed H.F. No. 747 into law, enacting significant amendments to the Minnesota Business Corporation Act (MBCA). The legislation introduces new provisions and modifies several existing ones, and became effective Aug. 1, 2025.

Below is a high-level summary of some of the key changes under H.F. No. 747:

1. Emergency Powers for Corporate Governance
New Section 302A.181, subd. 4 authorizes the adoption of emergency bylaws, applicable during emergencies (e.g., catastrophic events). In the absence of specific emergency bylaws, the following default rules apply during an emergency:

• Board Meeting Notices: Must be given only to directors who are "practicable to reach" and may be delivered in "any practicable manner."
• Temporary Board Members: Pre-authorized officers may serve as directors for the purpose of holding a board meeting.
• Shareholder Meetings: If holding a meeting is impracticable, the board may postpone it or authorize remote participation.
• Corporate Acts: Any act taken in good faith during the emergency to further corporate affairs is binding on the corporation.

2. Ratification of Defective Corporate Acts
New Section 302A.166 provides a mechanism to ratify or validate defective corporate acts or putative shares, including failure to properly authorize prior actions. Key provisions of this new Section include:

• A defective act is not void or voidable solely due to lack of authorization if subsequently ratified or validated under the framework prescribed under Section 302A.166 or by court order.
• Subject to certain exceptions, a 120-day limitation period applies to legal challenges after the later of the validation effective time and the notice of ratification.

3. Board Approval of Corporate Instruments
Section 302A.237, subd. 4 permits the board to approve agreements, instruments, plans, or documents in final or substantially final form. If a document is filed with or referenced in a filing with the Secretary of State, the board may ratify it by resolution after approval and before the effective date of the filing.

4. Officer Liability Standards
Section 302A.361, subd. 2 allows a corporation to eliminate or limit personal liability of officers to shareholders for monetary damages for breach of fiduciary duty while the corporation is publicly held, except in the following circumstances:

1. Breach of the duty of loyalty.
2. Acts or omissions in bad faith, involving intentional misconduct or knowing legal violations.
3. Violations of Section 80A.76 (related to securities regulation).
4. Transactions from which the officer received an improper personal benefit.
5. Derivative actions brought by or on behalf of the corporation.
6. Acts or omissions occurring before the liability limitation takes effect.

5. Enforcement of Inspection Rights
Amended Section 302A.461 now explicitly authorizes courts to specifically enforce a shareholder's inspection rights. Courts may also award expenses to the shareholder, beneficial owner, or voting trust certificate holder if the corporation, officer, or director violates this right.

6. Updated Provisions for Mergers and Exchanges
Amended Section 302A.611 introduces two important updates:

• A plan of merger or exchange may now include penalties or consequences for parties to the plan that fail to fulfill their obligations.
• The plan may appoint one or more shareholder representatives with exclusive authority to act on behalf of shareholders or rights holders. Such appointments are irrevocable and binding on all shareholders.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.