The Tennessee Business Corporation Act, as amended (“TBCA”), is the primary governing authority over the formation and operation of all Tennessee for-profit corporations. The TBCA was enacted in 1986 and became effective on January 1, 1987, replacing the Tennessee General Corporation Act of 1968. The TBCA is codified in sections 48-11-101 through 48-27-103 of the Tennessee Code Annotated.
In general, the TBCA was enacted as an enabling statute and was written to conform to the standards of the Revised Model Business Corporation Act (“MBCA”), which was adopted by the Corporate Law Committee of the Business Section of the American Bar Association and is continually reviewed and updated. As a result, a large part of the language of the TBCA mirrors that of the MBCA.
In order to modernize the current TBCA and, in particular, to keep up with the changes to the MBCA and the General Corporate Law of the State of Delaware (“DGCL”), the Tennessee Bar Association (“TBA”) asked it Business Law Section to review the current TBCA and suggest changes. This effort was undertaken by the TBA’s Business Law Section as part of a larger project, the Business Entity Study Committee, which encompasses a review of all of Tennessee’s key business law statutes to develop helpful edits and additions (and to better coordinate those statutes). Over the past three years, sixteen lawyers in various practice settings from across the state of Tennessee collaborated to review existing provisions in the TBCA, develop recommendations for revisions to the TBCA, formulate a process for developing revisions to the current TBCA, and in fact, develop, draft, and successfully advocate for the adoption of those revisions by the state legislature. Representatives of the office of the Secretary of State, legislative staff, legislative committees, both houses, and the Governor were also involved in this revisionary process. The amendments to the TBCA represent a significant update to the current TBCA, rather than a complete overhaul, formulated and drafted with intent to modernize the current TBCA and allow Tennessee to remain an attractive competitor in the market for incorporations (and, thus, the markets for business development and investment). On May 21, 2012, Tennessee Governor Bill Haslam signed into law House Bill 3459, which revises multiple provisions of the TBCA effective on January 1, 2013.
This paper presupposes a general understanding of corporate law generally and the workings and implications of the current Tennessee Business Corporation Act specifically. The purpose of this article is to outline the most important 2012 revisions to the TBCA and identify their importance to attorneys—especially corporate counsel—practicing in Tennessee.