# Corporations and Associations (GCA)

## Title 2. Corporations in General -- Formation, Organization, and Operation

### Subtitle 7. Ratification of Defective Corporate Acts

#### Section 2-701

(a) In this subtitle the following words have the meanings indicated.

(b) "Date of the defective corporate act" means:

  (1) The date and the time a defective corporate act was purportedly taken; or

  (2) If the exact time is unknown, the date and approximate time a defective corporate act was purportedly taken.

(c) "Defective corporate act" means:

  (1) Any corporate act purportedly taken that, at the date of the defective corporate act, would have been within the power of the corporation but is void or voidable due to a failure of authorization; or

  (2) An overissue.

(d) "Failure of authorization" means the failure of a corporation to authorize, approve, or otherwise effect a corporate act in compliance with the Maryland General Corporation Law, its charter or bylaws, any action taken by its board of directors, a committee of its board of directors, or its stockholders, or any plan or agreement to which the corporation is a party, if and to the extent that the failure would render the corporate act void or voidable.

(e) "Overissue" means the purported issuance by a corporation of stock of:

  (1) A class or series in excess of the number of shares of the class or series that the corporation has the power to issue under Sec. 2-201(a) of this title or the corporation's charter at the time of the purported issuance; or

  (2) Any class or series that is not authorized for issuance by the corporation's charter at the time of the purported issuance.

(f) "Putative stock" means:

  (1) Stock, including stock purportedly issued upon exercise of rights, options, warrants, or other securities convertible into or exercisable for stock, purportedly created or issued as a result of a defective corporate act, that but for the failure of authorization would constitute valid stock;

  (2) Stock purportedly issued in an overissue; and

  (3) Stock that cannot be determined by the board of directors to be valid stock.

(g) "Valid stock" means stock that has been duly authorized and validly issued in accordance with the provisions of this title.

#### Section 2-702

(a) The board of directors of a corporation may ratify a defective corporate act under this subtitle by adopting a resolution stating:

  (1)

    (i) The defective corporate act to be ratified; and

    (ii) If the defective corporate act involved the issuance of putative stock, the number of shares and the class or series of putative stock;

  (2) The date of the defective corporate act;

  (3) The nature of the failure of authorization of the defective corporate act; and

  (4)

    (i) If stockholder action is not required under subsection (b) of this section, that the board of directors ratifies the defective corporate act; or

    (ii) If stockholder action is required under subsection (b) of this section, that the board of directors approves the ratification of the defective corporate act and directs that the ratification be submitted for consideration at a meeting of the stockholders.

(b)

  (1) Ratification of a defective corporate act approved in a resolution adopted under subsection (a) of this section shall be submitted for consideration at a meeting of the stockholders if stockholder approval is required or would have been required on the date of the defective corporate act by any provision of:

    (i) The Maryland General Corporation Law;

    (ii) The charter or bylaws of the corporation;

    (iii) Any action taken by the board of directors, a committee of the board of directors, or the stockholders; or

    (iv) Any plan or agreement to which the corporation is a party in effect at the time a resolution was adopted under subsection (a) of this section.

  (2) To ratify a defective corporate act under this subsection, the stockholders shall adopt a resolution stating:

    (i) The defective corporate act to be ratified;

    (ii) If the defective corporate act involved the issuance of putative stock, the number of shares and the class or series of putative stock;

    (iii) The date of the defective corporate act; and

    (iv) That the stockholders ratify the defective corporate act.

(c)

  (1) The quorum and voting requirements applicable to action by the board of directors or the stockholders to ratify a defective corporate act under this section shall be the approval standard requiring the larger number or portion of votes under:

    (i) The requirements that would be applicable to the defective corporate act proposed to be ratified at the time of ratification; or

    (ii) The requirements that would have been applicable to the defective corporate act on the date of the defective corporate act.

  (2)

    (i) Except as provided in subparagraph (ii) of this paragraph, approval by stockholders of the ratification of the election of a director shall require a majority of the votes cast at a meeting at which a quorum is present.

    (ii) If the charter or bylaws of the corporation in effect at the time of the ratification of the defective corporate act or in effect at the time of the defective corporate act requires or required a larger number or portion of votes cast by stockholders, by holders of any class or series of stock, or by any specified stockholders to elect the director, then the affirmative vote of the larger number or portion of votes cast shall be required to ratify election of the director.

  (3) The presence or approval of holders of stock of any class or series of which no stock is outstanding at the time of ratification or of any person that is no longer a stockholder may not be required.

  (4) Holders of putative stock on the record date for determining which stockholders are entitled to vote on a ratification submitted to stockholders under this section shall not be entitled to vote or be counted for quorum purposes in any vote to consider ratification.

(d) Ratification of a defective corporate act under this section shall make the ratified defective corporate act binding on the corporation in accordance with Sec. 2-703 of this subtitle.

#### Section 2-703

(a)

  (1) Except as provided in paragraph (2) of this subsection, ratification of a defective corporate act becomes effective on the date that the board of directors adopts a resolution under Sec. 2-702(a) of this subtitle or, if required by this subtitle, the date that stockholders adopt a resolution under Sec. 2-702(b) of this subtitle.

  (2) If the defective corporate act would have required a filing with the Department, ratification of the defective corporate act becomes effective on the later of:

    (i) The time that articles of validation filed in accordance with Sec. 2-705 of this subtitle are accepted for record by the Department; or

    (ii) The time established in the articles of validation, not to exceed 30 days after the articles are accepted for record.

(b) Beginning at the time ratification is effective and without regard to the 120-day period during which a claim may be brought under Sec. 2-706(b) of this subtitle:

  (1) A defective corporate act ratified in accordance with this subtitle is not void or voidable as a result of the failure of authorization identified in a board action under Sec. 2-702(a) of this subtitle and shall be deemed a valid corporate act effective as of the date of the defective corporate act;

  (2) Putative stock purportedly issued pursuant to a defective corporate act identified in a board action under Sec. 2-702(a) of this subtitle is not void or voidable and shall be deemed valid stock as of the time it was purportedly issued; and

  (3) Any corporate act taken after a defective corporate act ratified in accordance with this subtitle in reliance on the defective corporate act having been validly effected, and any subsequent defective corporate act resulting from the original defective corporate act, shall be valid as of the time the act was taken.

#### Section 2-704

(a) If ratification of a defective corporate act requires approval by stockholders under Sec. 2-702(b) of this subtitle, the secretary of the corporation shall give notice of the proposed ratification to all stockholders entitled to notice of the meeting in accordance with Sec. 2-504 of this title, stockholders as of the date of the defective corporate act, and holders of putative stock.

(b)

  (1) If a defective corporate act is ratified by the board of directors in accordance with Sec. 2-702(a) of this subtitle without action by stockholders, and notice is not required under subsection (a) of this section, notice of the ratification may be given to stockholders as of the ratification and as of the date of the defective corporate act and holders of putative stock.

  (2) In the case of a corporation with a class of equity securities registered under the Securities Exchange Act of 1934, notice of a ratification that does not require approval of stockholders shall be deemed to be given when the ratification has been publicly disclosed in a document furnished to or filed with the Securities and Exchange Commission.

(c)

  (1) Except as provided in paragraph (2) of this subsection, notice given to holders of putative stock in accordance with this section shall be given to:

    (i) Holders of putative stock as of the date of the defective corporate act;

    (ii) Where notice is required under subsection (a) of this section, holders of putative stock as of the record date of the meeting; and

    (iii) Where notice is given under subsection (b) of this section, holders of putative stock as of the date on which the board of directors adopted a resolution ratifying the defective corporate act.

  (2) Notice is not required to be given to holders of putative stock whose identities or addresses cannot be reasonably determined from the records of the corporation.

#### Section 2-705

(a)

  (1) If a defective corporate act ratified under this subtitle would have required the filing of a charter document with the Department under any provision of this article, the corporation shall file articles of validation in accordance with this section.

  (2) If a charter document that was required to be filed with respect to the defective corporate act was not filed, the articles of validation required by this section shall be filed in lieu of the charter document that was not filed.

(b) Articles of validation required by this section shall include:

  (1) The title and date of filing of any charter document previously filed with respect to the defective corporate act and any charter document that amended, supplemented, or corrected that charter document;

  (2) A statement describing the defective corporate act;

  (3) The date of the defective corporate act;

  (4) A statement that the defective corporate act was ratified in accordance with this subtitle and a description of the manner of ratification; and

  (5)

    (i) If a charter document was previously filed with respect to the defective corporate act and no change to the charter document is required to ratify the defective corporate act under Sec. 2-702 of this subtitle, a statement that no change is made to the charter document;

    (ii) If a charter document was previously filed with respect to the defective corporate act and a change to the charter document is required to ratify the defective corporate act under Sec. 2-702 of this subtitle, a statement describing the change and all information required to be included under this title; or

    (iii) If a charter document was not previously filed with respect to the defective corporate act and the defective corporate act ratified under Sec. 2-702 of this subtitle would have required a charter document to be filed under this title, a statement of the section of this title under which the charter document was required to be filed and any information required to be included in the charter document under that section.

#### Section 2-706

(a) Upon application by the corporation, any successor entity to the corporation, any director of the corporation, any record or beneficial holder of valid stock or putative stock, any record or beneficial holder of putative stock as of the date of the defective corporate act, any holder of a voting trust certificate, any holder of a voting trust certificate as of the date of the defective corporate act, or any other person claiming to be substantially and adversely affected by a ratification under this subtitle, a court of the State or a federal court sitting in the State may:

  (1) Determine the validity of any ratification under this subtitle; and

  (2) Modify or waive any of the procedures required by this subtitle to ratify a defective corporate act.

(b) An action under this section shall be brought within 120 days after:

  (1) If the ratification was approved by stockholders, and the notice required by Sec. 2-704(a) of this subtitle was given prior to the stockholder action, the date on which ratification became effective; or

  (2) If notice was given or deemed given within 60 days after the ratification, the date on which notice was given or deemed given to stockholders and any holders of putative stock in accordance with Sec. 2-704(b) of this subtitle.

#### Section 2-707

(a) Nothing in this subtitle may be construed to require that ratification of a defective corporate act under this subtitle be the exclusive means of ratifying or validating a defective corporate act or to limit the right of a corporation to file certificates or charter documents in accordance with any other provision of this article.

(b) The absence or failure of ratification in accordance with this subtitle shall not, of itself, affect the validity or effectiveness of any corporate act otherwise lawfully ratified, nor may it create a presumption that any corporate act is or was a defective corporate act or void or voidable.

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Md. Code Ann., Corps. & Ass'ns (as displayed at mgaleg.maryland.gov, October 16, 2026)