WashingtonSB 50062025-2026 Regular SessionSenate

Making updates to Washington's corporation acts.

Sponsored By: Jamie Pedersen (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

7 provisions identified: 3 benefits, 1 costs, 3 mixed.

Nonprofit and other boards gain smaller committees

Beginning July 27, 2025, Washington nonprofit boards can form committees with one or more directors instead of at least two. Their governing law, articles, or bylaws can set another rule. Corporations covered by Washington’s nonprofit miscellaneous and mutual corporation law also gain one-director committees when their articles or bylaws allow committees. Those appointments require approval by a majority of directors in office, and delegation does not remove directors’ legal responsibility. Core board powers remain protected from delegation, and nonprofit advisory groups cannot substitute for board authority.

Business boards gain smaller, more flexible committees

Beginning July 27, 2025, Washington business boards can use committees with one or more directors instead of at least two. Law, company articles, or bylaws can set another rule; formation and appointments need a board majority or any higher governing-document requirement. Authorized committee powers can include article amendments, certain merger plans, and share issuances or sales. Committees cannot approve actions needing shareholder approval, fill specified vacancies, or adopt, amend, or repeal bylaws. Boards can name alternate directors; members present can unanimously choose temporary director replacements for absent or disqualified members only when governing documents or the committee resolution allow.

Shareholders gain payment rights in other conversions

Beginning July 27, 2025, shareholders can dissent when a corporation completes a conversion to another type of entity. This right covers conversions other than those to corporations governed outside Washington. Dissenting shareholders can seek payment of their shares’ fair value. The provision sets no dollar amount or formula for that value.

Some out-of-state conversions limit shareholder objections

Beginning July 27, 2025, completed conversions from Washington corporations to corporations governed elsewhere limit access to dissenters’ rights. The rule applies to shareholders entitled to vote on the conversion. They cannot claim those rights if their replacement shares meet both protections. The terms must be at least as favorable in all important respects, with at least the same percentage of voting power.

Company shutdown votes depend on formation date

Beginning July 27, 2025, shareholder votes to dissolve a Washington corporation follow defaults based on its formation date. Companies formed before August 1, 2024, generally need two-thirds of all votes entitled to be cast. This also applies to each separately voting group; a different requirement can apply, but not below a majority. Companies formed on or after August 1, 2024, generally need a majority of those votes, including each separately voting group. The articles of incorporation or board can require a higher vote where authorized.

Corporate boards gain stock award flexibility

Beginning July 27, 2025, boards can approve rights, options, or warrants to buy shares or other securities, unless company articles provide otherwise. Boards set their terms, including when they can be used, exchanged, or converted; approval also authorizes the underlying securities. Terms can block use, transfer, or receipt by substantial-control seekers, void rights, or depend on outside facts and events. Boards can let officers choose stock-award recipients and set award numbers and terms within board and applicable shareholder limits. Officers cannot choose themselves or anyone the board bars.

Share exchanges replace investors’ former rights

Beginning July 27, 2025, the law clarifies investors’ rights when a share exchange takes effect. Shares named in the exchange plan are exchanged. Their former holders then have only the rights in that plan or Washington’s dissenters’ rights law.

Sponsors & Cosponsors

Sponsor

Jamie Pedersen
Democratic • Senate

Cosponsors

Jeff Holy
Republican • Senate
Lisa Wellman
Democratic • Senate
T'wina Nobles
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 141 • No: 6

House vote • 3/26/2025

3rd Reading & Final Passage

Yes: 92 • No: 6

Senate vote • 2/5/2025