Maine Bar Journal
Winter 2005 #6.
Zimpritch on Maine Corporation Law & Practice
Maine Bar JournalWinter 2005ZIMPRITCH ON MAINE CORPORATION LAW & PRACTICEby Michael E. HighThe enactment of Title 13-C, the new Maine Business Corporation Act (the "Act"),(fn1) was the most important legislative development in many years for Maine's business lawyers. The Act is the first comprehensive change in Maine's corporation law since 1971, when Title 13-A was adopted (the "1971 Act"),(fn2) and the Act replaces the 1971 Act in its entirety.
The Act contains new constructs (e.g., domestications, conversions and share exchanges), new procedures, rules and tests governing familiar actions and concepts (e.g., dissolution, appraisal rights, and distributions to shareholders), expanded planning opportunities for some old workhorses (e.g., shareholder agreements, provisions relating to the indemnification of directors, and the types of consideration that may be given for share issuances) and important transition rules for pre-Act corporations. There are even new issues for counsel to consider when forming a corporation under the Act or drafting its Bylaws.
It is against this background that Pierce Atwood's Jim Zimpritch published the second edition of his Maine Corporation Law & Practice (2004, Tower Publishing) (hereinafter the treatise is referred to simply as Zimpritch and its author as Zimpritch). Zimpritch is a complete rewrite of the first edition of the author's Maine Corporation Law & Practice, the definitive treatise on the 1971 Act and Maine corporation law developments under the 1971 Act. As was the first edition, Zimpritch is well organized, well written, user-friendly at every stage, and informed by the insights of an experienced, indeed preeminent, practitioner with a keen intellectual interest in the subject matter. A balance between the pragmatic and the scholarly is evident throughout Zimpritch and is one of its important distinguishing features. At one level, the treatise contains very practical, useful information for practitioners that is articulated in a style that is readily understandable, with exemplary practice aids (forms and checklists) that are readily accessible. If your interests take you to another level, however, Zimpritch contains extensive case law analysis and commentary on unsettled issues that will challenge and educate the most accomplished specialist. Moreover, even when Zimpritch explores some of the most complex matters confronting corporate lawyers, such as the scope of director duties and liabilities or case law developments relating to the fiduciary duties of majority shareholders to minority shareholders, the analysis is not abstract but at once thorough and anchored in why his conclusions may matter to the reader in his or her practice.
Zimpritch is an imposing work, with 581 pages of text, a supplement on the Revised Maine Securities Act by Zimpritch's colleagues at Pierce Atwood, David Champoux and Jon Liland, and numerous checklists and forms. He proceeds chapter by chapter through the Act, usually beginning with an informative overview of the chapter (which typically includes a review of pre-Act case law and comparisons of the Act to the 1971 Act) and then on to a section-by-section analysis, with particular attention to changes in Maine practice affected by the Act. A comprehensive review of such a treatise and its contents is well beyond the scope of this brief comment. Instead, I will focus my discussion on an overview of a few sections of Zimpritch that should be relevant to many Maine practitioners and that illustrate Zimpritch as an expert guide through this new landscape.
Corporate Formation and Forms
Forming a corporation - what could be more elementary? Many of us have already formed corporations under the Act and we frequently do so without giving it a great deal of thought. Practitioners (including lawyers in my own firm) ask "What should we be doing differently when organizing a corporation under the new Act?"
My answer to colleagues is to refer them to fifteen pages or so in Zimpritch. If you spend just a few minutes with this book you will understand the meaning and import of all the "check-the-box" provisions, and minimize the likelihood of making front-end mistakes. Zimpritch discusses numerous areas of potential concern that counsel will want to review before ordering the paralegal to "file the articles."(fn3) A review of each of these items is beyond the scope of this brief discussion, but there are a few items that warrant comment.
First, Article Fifth of the State of Maine's form of Articles of Incorporation provides an opt-in option for (a) director exculpation to the maximum extent allowed by Section 202(2)(D) of the Act, and (b) director and officer indemnification to the fullest extent permitted by law.
The director exculpation provision (applicable only to directors) provides directors with exculpation from liabilities for any breach of duties...