Vol. 76, No. 7, July
Improving Wisconsin's Business Climate
\Soon-to-be introduced legislation revises chapter 180, Wisconsin's
corporation law, to fix an unintended result of the Next Economy
Legislation, among other improvements in process and efficiency.
by Cathy Stepp
Sen. Cathy Stepp represents the 21st Senate
District, which includes most of Racine County. She was elected as a
freshman senator in November 2002 and serves as chair of the Senate
Committee on Economic Development, Job Creation and Housing. She also
serves on the Board of Directors of Freddie Mac and is a past member of
the Wisconsin Natural Resources Board.
As a legislator and a small business owner, I often find myself
saying, "There has to be a better way." All too often it seems that our
laws and regulations are overly complicated and confusing, which results
in barriers to progress and an incentive to do business elsewhere. This
is especially true with respect to many aspects of Wisconsin's corporate
law in chapter 180. Fortunately, it doesn't need to be that way. In
fact, I'm working on a proposal with the State Bar's Business Law
Section that will streamline many aspects of our corporate law and
eliminate confusing and complicated requirements.
By way of background, I am a freshman senator with small-business
experience, and I also serve on the Board of Directors for Freddie Mac.
Because I represent an area with historically high unemployment, growing
our economy through economic development is my top legislative priority.
As chair of the Senate Committee on Economic Development, Job Creation
and Housing, I have a unique opportunity to craft legislation that
positively affects Wisconsin's business climate. Making changes that
will simplify our laws governing business corporations will be an
important piece of that puzzle.
To do that, I am partnering with the Business Law Section on a
package of changes to update and modernize Wisconsin's corporations law.
The process by which corporations communicate with shareholders, create
committees, execute mergers, and transfer property often is cumbersome
and more complicated than need be. Our bill will make it simpler and
more efficient for a corporation to conduct these functions as a
corporate entity. The bill also seeks to fix a problem created by last
session's passage of the Next Economy Legislation (2001 WI Act 44)
relating to recording deeds for mergers or conversions.
The so-called "Next Economy Glitch" creates confusion and uncertainty
in the merger/conversion process, and gives corporations an incentive to
execute these mergers/conversions under other states' more attractive
business combination laws. Specifically, the Next Economy law requires
the transfer of the entity's property to a surviving entity by recording
the transferring instrument with the county Register of Deeds - a
provision not found under previous law. (Please see a related
article.) Our bill fixes this cumbersome problem by allowing real
property to transfer to surviving entities without a requirement to
record deeds or execute real estate transfer tax returns. Making this
change will capture the true intent of the Next Economy law by allowing
cross-species mergers with a simple filing. It also reflects the way
real estate has been transferred under corporate law for years.
Other aspects of the bill will make important changes, such as to
allow articles of incorporation to specify the manner in which
shareholder meetings will be conducted, streamline filings, and give
boards of directors more flexibility in the process of executing
mergers. I will be circulating this legislation for sponsorship in the
very near future and hope to have the bill introduced in time for
consideration during the floor session this fall. It is particularly
important to move quickly on this legislation because fixing the Next
Economy Glitch will be an important part of making Wisconsin an easier
place to do business. I am very thankful for all of the help the State
Bar of Wisconsin has given toward making this bill a reality, and I look
forward to working with the Bar toward successful passage.