SECTION 1. Section 7-1.1-14 of the General Laws in Chapter 7-1.1 entitled "Business Corporations" is hereby amended to read as follows:

7-1.1-14. Authorized shares. -- (a) Each corporation has power to create and issue the number of shares stated in its articles of incorporation. The shares may be divided into one or more classes, any or all of which classes may consist of shares with par value or shares without par value, with the designations, preferences, limitations, and relative rights that are stated in the articles of incorporation. To the extent not inconsistent with the provisions of this chapter, the articles of incorporation may limit or deny the voting rights of any class, or provide special voting rights for the shares of any class, including the power to elect one or more directors, or contain restrictions on transferability of ownership designed to permit a corporation to qualify as: (1) a real estate investment trust under the provisions of the Internal Revenue Code of 1986, as heretofore or hereafter amended, or regulations adopted thereunder; or (2) an investment company under the Investment Company Act of 1940, as heretofore or hereafter amended, or regulations adopted thereunder.

(b) Without limiting the authority contained in these provisions, a corporation, when provided for in its articles of incorporation, may issue shares of preferred or special classes:

(1) Subject to the right of the corporation to redeem any of the shares for the consideration fixed by the articles of incorporation for the redemption of the shares.

(2) Entitling the holders of the shares to cumulative, noncumulative, or partially cumulative dividends.

(3) Having preference over any other class or classes of shares as to the payment of dividends.

(4) Having preference in the assets of the corporation over any other class or classes of shares upon the voluntary or involuntary liquidation of the corporation.

(5) Convertible into shares of any other class or into shares of any series of the same or any other class, except a class having prior or superior rights and preferences as to dividends or distribution of assets upon liquidation, but no shares, whether with or without par value, shall be converted into shares with par value unless that part of the stated capital of the corporation represented by the shares to be converted is, at the time of conversion, at least equal to the aggregate par value of the shares into which the shares are to be converted.

(c) Notwithstanding the provisions of subsection (a) of this section, the board of directors of a corporation that is registered or intends to register as an open-end company under the Investment Company Act of 1940, as heretofore or hereafter amended, after the registration as an open-end company takes effect, may increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class that the corporation has authority to issue unless a provision has been included in the charter of the corporation after July 1, 2001 prohibiting such an action by the board of directors to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class that the corporation has authority to issue.

SECTION 2. This act shall take effect upon passage and shall be applicable to all articles of incorporation and all amendments to the articles of incorporation of any Rhode Island corporation filed with the Secretary of State of Rhode Island on and after December 5, 2001.