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Maryland
Protection for
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to Discussion of Protection of The Maryland Assemby is considering a bill that would allow self-dealing directors to prevent funds from bringing lawsuits against companies that have defrauded the fund. By requiring courts to treat fund directors as independent even when they have significant conflicts of interest, the bill would effectively prevent tens of millions of fund shareholders from being able to sue companies that defraud their funds. The text of Senate Bill No. 264 and House Bill No. 1045, which are virtually identical, read as follows: SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, That the Laws of Maryland read as follows: Chapter 397 of the Acts of 1998, as reenacted by Chapter 1 of the Acts of 2000 SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read as follows: A Article - Corporations and Associations 2-405.3. (A) THIS SECTION APPLIES TO A CORPORATION THAT IS AN INVESTMENT COMPANY, AS DEFINED BY THE INVESTMENT COMPANY ACT OF 1940. (B) A DIRECTOR OF A CORPORATION WHO WITH RESPECT TO THE CORPORATION IS NOT AN INTERESTED PERSON, AS DEFINED BY THE INVESTMENT COMPANY ACT OF 1940, SHALL BE DEEMED TO BE INDEPENDENT AND DISINTERESTED WHEN MAKING ANY DETERMINATION OR TAKING ANY ACTION AS A DIRECTOR. SECTION 3. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall be construed retroactively and shall be applied to and interpreted to affect only those cases filed on or after January 30, 1998. SECTION 2. AND BE IT FURTHER ENACTED, That it is the intent of the General Assembly to repeal and reenact without amendments Sections 2 and 3 of Chapter 397 of the Acts of the General Assembly of 1998 in order to validate their enactment. SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect June 1, 2001. |