Title 13.1. Corporations
Chapter 10. Virginia Nonstock Corporation Act
Article 1.1. Ratification of Defective Corporate Actions.
§ 13.1-814.2. (Effective January 1, 2027) Definitions.As used in this article, unless the context requires a different meaning:
"Corporate action" means any action taken by or on behalf of the corporation, including any action taken by the incorporator, the board of directors, a committee, an officer, or an agent of the corporation, or the members.
"Date of the defective corporate action" means the date, or the approximate date if the exact date is unknown, the defective corporate action was purported to have been taken.
"Defective corporate action" means any corporate action purportedly taken that is, and at the time such corporate action was purportedly taken would have been, within the power of the corporation, but is void or voidable due to a failure of authorization.
"Failure of authorization" means the failure to authorize, approve, or otherwise effect a corporate action in compliance with the provisions of this chapter, the articles of incorporation or bylaws, a corporate resolution, or any plan or agreement to which the corporation is a party, if and to the extent such failure would render such corporate action voidable.
"Validation effective time" with respect to any defective corporate action ratified under this article means the later of:
1. The time at which the ratification of the defective corporate action is approved by the members or, if approval of members is not required, the time at which the notice required by § 13.1-814.6 becomes effective in accordance with § 13.1-810; and
2. The time at which any document filed in accordance with § 13.1-814.8 becomes effective.
The validation effective time shall not be affected by the filing or pendency of a proceeding under § 13.1-814.9 or otherwise, unless ordered by the Commission.
§ 13.1-814.3. (Effective January 1, 2027) Defective corporate actions.A. No defective corporate action shall be void or voidable if ratified in accordance with § 13.1-814.4 or validated in accordance with § 13.1-814.9.
B. Ratification under § 13.1-814.4 or validation under § 13.1-814.9 shall not be deemed to be the exclusive means of ratifying or validating any defective corporate action, and the absence or failure of ratification in accordance with this article shall not, of itself, affect the validity or effectiveness of any corporate action properly ratified under this chapter, common law, or otherwise, nor shall it create a presumption that any such corporate action is or was a defective corporate action or void or voidable.
§ 13.1-814.4. (Effective January 1, 2027) Ratification of defective corporate actions.A. To ratify a defective corporate action under this section, other than the ratification of an election of the initial board of directors under subsection B, the board of directors shall adopt resolutions ratifying the action in accordance with § 13.1-814.5, stating:
1. The defective corporate action to be ratified;
2. The date of the defective corporate action;
3. The nature of the failure of authorization with respect to the defective corporate action to be ratified; and
4. That the board of directors approves the ratification of the defective corporate action.
B. In the event that a defective corporate action to be ratified relates to the election of the initial board of directors of the corporation under subdivision A 2 of § 13.1-822, a majority of the persons who, at the time of the ratification, are exercising the powers of directors may take an action stating:
1. The name of the person or persons who first took action in the name of the corporation as the initial board of directors of the corporation;
2. The earlier of the date on which such persons first took such action or were purported to have been elected as the initial board of directors; and
3. That the ratification of the election of such person or persons as the initial board of directors is approved.
C. If any provision of this chapter, the articles of incorporation or bylaws, any corporate resolution, or any plan or agreement to which the corporation is a party in effect at the time action under subsection A is taken requires member approval or would have required member approval at the date of the occurrence of the defective corporate action, the ratification of defective corporate action approved in the action taken by the directors under subsection A shall be submitted to the members for approval in accordance with § 13.1-814.5.
D. Unless otherwise provided in the action taken by the board of directors under subsection A, after the action by the board of directors has been taken and, if required, approved by the members, the board of directors may abandon the ratification at any time before the validation effective time without further action of the members.
§ 13.1-814.5. (Effective January 1, 2027) Action of ratification.A. The quorum and voting requirements applicable to a ratifying action by the board of directors under subsection A of § 13.1-814.4 shall be the quorum and voting requirements applicable to the corporate action proposed to be ratified at the time such ratifying action is taken.
B. If the ratification of the defective corporate action requires approval by the members under subsection C of § 13.1-814.4, and if the approval is to be given at a meeting, the corporation shall notify each member as of the record date for notice of the meeting and as of the date of the occurrence of defective corporate action, provided that notice shall not be required to be given to members whose identities or addresses for notice cannot be determined from the records of the corporation. The notice shall state that the purpose, or one of the purposes, of the meeting, is to consider ratification of a defective corporate action and shall be accompanied by (i) either a copy of the action taken by the board of directors in accordance with subsection A of § 13.1-814.4 or the information required by subdivisions A 1 through 4 of § 13.1-814.4 and (ii) a statement that any claim that the ratification of such defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days from the applicable validation effective time.
C. Except as provided in subsection D with respect to the voting requirements to ratify the election of a director, the quorum and voting requirements applicable to the approval by the members required by subsection C of § 13.1-814.4 shall be the quorum and voting requirements applicable to the corporate action proposed to be ratified at the time of such member approval.
D. The approval by members to ratify the election of a director requires that the votes cast within the voting group favoring such ratification exceed the votes cast opposing such ratification of the election at a meeting at which a quorum is present.
§ 13.1-814.6. (Effective January 1, 2027) Notice.A. Unless member approval is required under subsection C of § 13.1-814.4, prompt notice of an action taken under § 13.1-814.4 shall be given to each member, regardless of whether entitled to vote, as of (i) the date of such action by the board of directors and (ii) the date of the defective corporate action ratified, provided that notice shall not be required to be given to members whose identities or addresses for notice cannot be determined from the records of the corporation.
B. The notice shall contain (i) either a copy of the action taken by the board of directors in accordance with subsection A or B of § 13.1-814.4 or the information required by subdivisions A 1 through 4 or B 1, 2, and 3 of § 13.1-814.4, as applicable, and (ii) a statement that any claim that the ratification of the defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days from the applicable validation effective time.
C. No notice under this section is required with respect to any action required to be submitted to members for approval under subsection C of § 13.1-814.4 if notice is given in accordance with § 13.1-814.5.
D. A notice required by this section may be given in any manner permitted by § 13.1-810.
§ 13.1-814.7. (Effective January 1, 2027) Effect of ratification.From and after the validation effective time, and without regard to the 120-day period during which a claim may be brought under § 13.1-814.9:
1. Each defective corporate action ratified in accordance with § 13.1-814.4 shall not be void or voidable as a result of the failure of authorization identified in the action taken under subsection A or B of § 13.1-814.4 and shall be deemed a valid corporate action effective as of the date of the defective corporate action; and
2. Any corporate action taken subsequent to the defective corporate action ratified in accordance with this article in reliance on such defective corporate action having been validly effected and any subsequent defective corporate action resulting directly or indirectly from such original defective corporate action shall be valid as of the time taken.
§ 13.1-814.8. (Effective January 1, 2027) Filings.A. After a defective corporate action is ratified under this article for a document required by this chapter to be filed with the Commission, the corporation shall deliver to the Commission for filing:
1. If a filing with the Commission was previously made with respect to such defective corporate action and the Commission issued with respect thereto a certificate, the articles of ratification, which may serve to amend or substitute for the filing previously made; or
2. If no filing with the Commission was previously made with respect to such defective corporate action, the articles required by this chapter.
B. The document required by subsection A shall set forth:
1. The defective corporate action that is the subject of the filed document;
2. The date of the defective corporate action;
3. The nature of the failure of authorization in respect of the defective corporate action;
4. A statement that the defective corporate action was ratified in accordance with § 13.1-814.4, including the date on which the board of directors ratified such defective corporate action and the date, if any, on which the members approved the ratification of such defective corporate action; and
5. The information required by subsection C.
C. The document shall also contain the following information:
1. If a filing with the Commission was previously made in respect of the defective corporate action and no changes to such filing are required to give effect to the ratification of such defective corporate action in accordance with § 13.1-814.4, the filed document shall set forth (i) the name, title, and filing date of the filing previously made and any articles of correction to that filing and (ii) a statement that a copy of the filing previously made, together with any articles of correction to that filing, is attached as an exhibit;
2. If a filing was previously made in respect of the defective corporate action and such filing requires any change to give effect to the ratification of such defective corporate action in accordance with § 13.1-814.4, the filed document shall set forth (i) the name, title, and filing date of the filing previously made and any articles of correction to that filing; (ii) a statement that a filing containing all of the information required to be included under the applicable sections of this chapter to give effect to such defective corporate action is attached as an exhibit; and (iii) the date and time that such filing is deemed to have become effective; or
3. If a filing was not previously made in respect of the defective corporate action and the defective corporate action ratified under § 13.1-814.4 would have required a filing under any other section of this chapter, the filed document shall set forth (i) a statement that a filing containing all of the information required to be included under the applicable sections of this chapter to give effect to such defective corporate action is attached as an exhibit and (ii) the date and time that such filing is deemed to have become effective.
D. If the Commission finds that the filed document complies with the requirements of law and that all required fees have been paid, it shall issue a certificate of ratification of defective corporate action.
§ 13.1-814.9. (Effective January 1, 2027) Commission proceedings regarding validity of corporate actions.A. Upon application by the corporation, any successor entity to the corporation, a director of the corporation, any member of the corporation, including any such member as of the date of the defective corporate action ratified under § 13.1-814.4, or any other person claiming to be substantially and adversely affected by a ratification under § 13.1-814.4, the Commission may:
1. Determine the validity and effectiveness of any corporate action or defective corporate action;
2. Determine the validity and effectiveness of any ratification under § 13.1-814.4; and
3. Modify or waive any of the procedures specified in § 13.1-814.4 or 13.1-814.5 to ratify a defective corporate action.
B. In connection with an action under this section, the Commission may make such findings or orders and take into account any factors or considerations regarding such matters as it deems proper under the circumstances.
C. Service of process of the application under subsection A on the corporation may be made in any manner provided by statutes of the Commonwealth or by rule of the Commission for service on the corporation, and no other party need be joined in order for the Commission to adjudicate the matter. In an action filed by the corporation, the Commission may require that notice of the action be provided to other persons specified by the Commission and permit such other persons to intervene in the action.
D. Notwithstanding any other provision of this section or otherwise under applicable law, any action asserting that the ratification of any defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought in a petition filed within 120 days of the validation effective time.
