Chapter 216
2004 -- S 2726
SUBSTITUTE B AS AMENDED
Enacted 06/30/04
A N A C T
RELATING
TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS
Introduced
By: Senators McCaffrey, and Walaska
Date
Introduced: February 11, 2004
It
is enacted by the General Assembly as follows:
SECTION
1. Chapter 7-1.1 of the General Laws entitled "Business Corporations"
is
hereby
repealed in its entirety.
CHAPTER
7-1.1
Business
Corporations
7-1.1-1.
Short title. -- This chapter shall be known and may be cited as
the "Rhode Island
Business
Corporation Act."
7-1.1-2.
Definitions. -- As used in this chapter, unless the context
otherwise requires, the
term:
(1) "Corporation" or "domestic corporation" means a
corporation for profit subject to the
provisions
of this chapter, except a foreign corporation.
(2) "Foreign corporation" means a corporation for profit organized
under laws other than
the
laws of this state for a purpose or purposes for which a corporation may be
organized under
this
chapter.
(3) "Articles of incorporation" means the original or restated
articles of incorporation or
articles
of consolidation and all of their amendments including agreements of merger.
(4) "Shares" means the units into which the proprietary interests in
a corporation are
divided.
(5) "Subscriber" means one who subscribes for shares in a
corporation, whether before or
after
incorporation.
(6) (i) "Shareholder" means one who is a holder of record of shares
in a corporation. If
the
articles of incorporation or the bylaws so provide, the board of directors may
adopt by
resolution
a procedure under which a shareholder of the corporation certifies in writing
to the
corporation
that all or a portion of the shares registered in the name of the shareholder
are held for
the
account of a specified person or persons. The resolution shall set forth:
(A) The classification of shareholder who may certify;
(B) The purpose or purposes for which the certification may be made;
(C) The form of certification and information it is to contain;
(D) If the certification is with respect to a record date or closing of the
stock transfer
books
within which the certification must be received by the corporation; and
(E) Any other provisions as to the procedure that are deemed necessary or
desirable.
(ii) Upon receipt by the corporation of a certification complying with the
procedure, the
persons
specified in the certification are deemed, for the purpose or purposes set
forth in the
certification,
to be the holders of record of the number of shares specified in place of the
shareholder
making the certification.
(7) "Authorized shares" means the shares of all classes which the
corporation is
authorized
to issue.
(8) "Treasury shares" means shares of a corporation which have been
issued, have been
subsequently
acquired by and belong to the corporation, and have not, either by reason of
the
acquisition
or subsequently, been cancelled or restored to the status of authorized but
unissued
shares.
Treasury shares are deemed to be "issued" shares, but not
"outstanding" shares.
(9) "Net assets" means the amount by which the total assets of a
corporation exceed the
total
debts of the corporation.
(10) (i) "Stated capital" means, at any particular time, the sum of:
(A) The par value of all shares of the corporation having a par value that have
been
issued,
or, if the shares have a preference in the assets of the corporation in the
event of
involuntary
liquidation which is greater than the par value, then to the extent of the
preference;
(B) The amount of the consideration received by the corporation for all shares
of the
corporation
without par value that have been issued, except the part of the consideration for
the
shares
that may have been allocated to capital surplus in a manner permitted by law;
and
(C) The amounts not included in subdivisions (10)(i) and (10)(ii) that have
been
transferred
to stated capital of the corporation, whether upon the issue of shares as a
share
dividend
or otherwise, minus all reductions from the sum that have been effected in a
manner
permitted
by law.
(ii) Irrespective of the manner of designation of the stated capital by the laws
under
which
a foreign corporation is organized, the stated capital of a foreign corporation
is determined
on
the same basis and in the same manner as the stated capital of a domestic
corporation, for the
purpose
of computing fees, franchise taxes, and other charges imposed by this chapter.
(11) "Surplus" means the excess of the net assets of a corporation
over its stated capital.
(12) "Earned surplus" means the portion of the surplus of a
corporation equal to the
balance
of its net profits, income, gains, and losses from the date of incorporation,
or from the
latest
date when a deficit was eliminated by an application of its capital surplus or
stated capital
or
otherwise, after deducting subsequent distributions to shareholders and
transfers to stated
capital
and capital surplus to the extent the distributions and transfers are made out
of earned
surplus.
Earned surplus also includes any portion of surplus allocated to earned surplus
in
mergers,
consolidations, or acquisitions of all or substantially all of the outstanding
shares or of
the
property and assets of another corporation, domestic or foreign.
(13) "Capital surplus" means the entire surplus of a corporation
other than its earned
surplus.
Capital surplus, but not earned surplus, may include surplus arising from the
revaluation
of
assets, including good will, if made in good faith upon demonstrably adequate
bases of
valuation.
(14) "Insolvent" means the inability of a corporation to pay its
debts as they become due
in
the usual course of its business.
(15) "Employee" includes officers but not directors. A director may
accept duties which
also
make him or her an employee.
7-1.1-3.
Purposes. -- Corporations may be organized under this chapter
for any lawful
purpose
or purposes, except for the purpose of carrying on within this state the
business of a
bank,
savings bank, trust company, building and loan association, loan and investment
company,
safe
deposit company, railroad, electric railroad or street railway company,
telegraph or telephone
company,
gas or electric light, heat or power company, canal, aqueduct, or water
company,
turnpike
company, or any corporation which now has or may subsequently have the right to
take
or
condemn land or other property within this state under the power of eminent
domain, or to
exercise
or acquire franchises in streets or highways of this state; provided, however,
that
corporations
organized for any of the purposes specified in chapter 5.1 of this title shall
be
organized
under the provisions of that chapter.
7-1.1-4.
General powers. -- Each corporation shall have power to:
(1) Have perpetual succession by its corporate name unless a limited period of
duration
is
stated in its articles of incorporation.
(2) Sue and be sued, complain and defend, in its corporate name.
(3) Have a corporate seal which may be altered at pleasure, and to use the seal
by
causing
it, or a facsimile of it, to be impressed or affixed or reproduced in any other
manner.
(4) Purchase, take, receive, lease, or otherwise acquire, own, hold, improve,
use, and
otherwise
deal in and with, real or personal property, or any interest in that property,
wherever
situated.
(5) Sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise
dispose of
all
or any part of its property and assets.
(6) Lend money and use its credit to assist its employees.
(7) Purchase, take, receive, subscribe for, or otherwise acquire, own, hold,
vote, use,
employ,
sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and
deal in and
with,
shares or other interests in, or obligations of, other domestic or foreign
corporations,
associations,
partnerships or individuals, or direct or indirect obligations of the United
States or of
any
other government, state, territory, governmental district or municipality or of
any of their
instrumentalities.
(8) Make contracts and guarantees and incur liabilities, borrow money at the
rate of
interest
that the corporation may determine, issue its notes, bonds, and other
obligations, and
secure
any of its obligations by mortgage or pledge of all or any of its property,
franchises, and
income.
(9) Lend money for its corporate purposes, invest and reinvest its funds, and
take and
hold
real and personal property as security for the payment of the funds loaned or
invested.
(10) Conduct its business, carry on its operations, and have offices and
exercise the
powers
granted by this chapter, within or without this state.
(11) Elect or appoint officers and agents of the corporation, and define their
duties and
fix
their compensation.
(12) Make and alter bylaws, not inconsistent with its articles of incorporation
or with the
laws
of this state, for the administration and regulation of the affairs of the
corporation.
(13) Make donations for the public welfare or for charitable, scientific, or
educational
purposes.
(14) Transact any lawful business which the board of directors finds will aid
governmental
authority.
(15) Pay pensions and establish pension plans, pension trusts, profit sharing
plans, stock
bonus
plans, stock option plans, and other incentive plans for any or all of its
directors, officers,
and
employees.
(16) Provide insurance for its benefit on the life of any of its directors,
officers, or
employees,
or on the life of any stockholder for the purpose of acquiring at his or her
death shares
of
its stock owned by the stockholder.
(17) Be a promoter, partner, member, associate, or manager of any partnership,
joint
venture,
trust, or other enterprise.
(18) Have and exercise all powers necessary or convenient to effect its
purposes.
7-1.1-4.1.
Indemnification. -- (a) As used in this section:
(1) "Director" means any person who is or was a director of the
corporation and any
person
who, while a director of the corporation, is or was serving at the request of
the corporation
as
a director, officer, partner, trustee, employee, or agent of another foreign or
domestic
corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan.
(2) (i) "Corporation" includes (A) any domestic or foreign
corporation, profit or
nonprofit,
and (B) any domestic or foreign predecessor entity of the corporation in a
merger,
consolidation,
or other transaction in which the predecessor's existence ceased upon
consummation
of the transaction.
(ii) "Corporation" also includes any of the classes of quasi public
corporations with
purposes
enumerated as exceptions in section 7-1.1-3 to the extent that the corporations
are not
subject
to other provisions of the general laws or special acts authorizing
indemnification of their
directors
and officers.
(3) "Expenses" include attorneys' fees.
(4) "Official capacity" means:
(i) When used with respect to a director, the office of director in the
corporation; and
(ii) When used with respect to a person other than a director, as contemplated
in
subsection
(a)(1), the elective or appointive office in the corporation held by the
officer or the
employment
or agency relationship undertaken by the employee or agent on behalf of the
corporation,
but in each case does not include service for any other foreign or domestic
corporation
or any partnership, joint venture, trust, other enterprise, or employee benefit
plan.
(5) "Party" includes a person who was, is, or is threatened to be
made, a named
defendant
or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed action,
suit, or
proceeding,
whether civil, criminal, administrative, or investigative.
(b) (1) A corporation has power to indemnify any person made a party to any
proceeding
by
reason of the fact that he or she is or was a director if:
(i) He or she conducted him or herself in good faith; and
(ii) He or she reasonably believed,
(A) In the case of conduct in his or her official capacity with the
corporation, that his or
her
conduct was in its best interests, and
(B) In all other cases, that his or her conduct was at least not opposed to its
best interests;
and
(iii) In the case of any criminal proceeding, he or she had no reasonable cause
to believe
his
or her conduct was unlawful.
(2) Indemnification may be made against judgments, penalties, fines,
settlements, and
reasonable
expenses actually incurred by the person in connection with the proceeding;
except
that
if the proceeding was by or in the right of the corporation, indemnification
may be made only
against
the reasonable expenses and shall not be made in respect of any proceeding in
which the
person
has been adjudged to be liable to the corporation. The termination of any
proceeding by
judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall
not,
of itself, be determinative that the person did not meet the requisite standard
of conduct set
forth
in this subsection.
(c) A director shall not be indemnified under subsection (b) in respect of any
proceeding
charging
improper personal benefit to him or her, whether or not involving action in his
or her
official
capacity, in which he or she has been adjudged to be liable on the basis that
personal
benefit
was improperly received by the director.
(d) (1) Unless limited by the articles of incorporation:
(i) A director who has been wholly successful, on the merits or otherwise, in
the defense
of
any proceeding referred to in subsection (b) is indemnified against reasonable
expenses
incurred
by him or her in connection with the proceeding; and
(ii) A court of appropriate jurisdiction, upon application of a director and
any notice that
the
court requires, has authority to order indemnification in the following
circumstances:
(A) If it determines a director is entitled to reimbursement under subdivision
(d)(1)(A),
the
court shall order indemnification, in which case the director is also entitled
to recover the
expenses
of securing the reimbursement; or
(B) If it determines that the director is fairly and reasonably entitled to
indemnification
in
view of all the relevant circumstances, whether or not he or she has met the
standard of
conduct
set forth in subsection (b) or has been adjudged liable in the circumstances
described in
subsection
(c), the court may order such indemnification as the court shall deem proper,
except
that
indemnification with respect to any proceeding by or in the right of the
corporation or in
which
liability has been adjudged in the circumstances described in subsection (c)
are limited to
expenses.
(2) A court of appropriate jurisdiction may be the same court in which the
proceeding
involving
the director's liability took place.
(e) (1) No indemnification under subsection (b) shall be made by the
corporation unless
authorized
in the specific case after a determination has been made that indemnification
of the
director
is permissible in the circumstances because he or she has met the standard of
conduct set
forth
in subsection (b). The determination shall be made:
(i) By the board of directors by a majority vote of a quorum consisting of
directors not at
the
time parties to the proceeding; or
(ii) If such a quorum cannot be obtained, then by a majority vote of a
committee of the
board,
duly designated to act in the matter by a majority vote of the full board (in
which
designation
directors who are parties may participate), consisting solely of two (2) or
more
directors
not at the time parties to the proceeding; or
(iii) By special legal counsel, selected by the board of directors or a
committee of the
board
by vote as set forth in subsection (e)(1)(i) or (e)(1)(ii), or, if the
requisite quorum of the full
board
cannot be obtained for the vote and the committee cannot be established, by a
majority vote
of
the full board (in which selection directors who are parties may participate);
or
(iv) By the shareholders.
(2) Authorization of indemnification and determination as to reasonableness of
expenses
shall
be made in the same manner as the determination that indemnification is
permissible, except
that
if the determination that indemnification is permissible is made by special
legal counsel,
authorization
of indemnification and determination as to reasonableness of expenses shall be
made
in a manner specified in subsection (e)(1)(iii) for the selection of the
counsel. Shares held
by
directors who are parties to the proceeding shall not be voted on the subject
matter under this
subsection.
(f) Reasonable expenses incurred by a director who is a party to a proceeding
may be
paid
or reimbursed by the corporation in advance of the final disposition of the
proceeding upon
receipt
by the corporation of:
(1) A written affirmation by the director of his or her good faith belief that
he or she has
met
the standard of conduct necessary for indemnification by the corporation as
authorized in this
section,
and
(2) A written undertaking by or on behalf of the director to repay the amount
if it is
ultimately
determined that he or she has not met that standard of conduct, and after a
determination
that the facts then known to those making the determination would not preclude
indemnification
under this section. The undertaking required by this subdivision is an
unlimited
general
obligation of the director but need not be secured and may be accepted without
reference
to
financial ability to make repayment. Determinations and authorizations of
payments under this
subsection
shall be made in the manner specified in subsection (e).
(g) The indemnification provided by this section is not deemed exclusive of any
other
rights
to which those seeking indemnification are entitled under any bylaw, agreement,
vote of
stockholders
or disinterested directors or otherwise, both as to action in his or her
official capacity
and
as to action in another capacity while holding office, and shall continue as to
a person who
has
ceased to be a director, officer, partner, trustee, employee, or agent and
shall inure to the
benefit
of the heirs, executors, and administrators of a person. Nothing contained in
this section
limits
the corporation's power to pay or reimburse expenses incurred by a director in
connection
with
his or her appearance as a witness in a proceeding at a time when he or she has
not been
made
a named defendant or respondent in the proceeding.
(h) For purposes of this section, the corporation is deemed to have requested a
director to
serve
an employee benefit plan whenever the performance by a director of his or her
duties to the
corporation
also imposes duties on, or otherwise involves services by, him or her to the
plan or
participants
or beneficiaries of the plan; excise taxes assessed on a director with respect
to an
employee
benefit plan pursuant to applicable law are deemed "fines"; and
action taken or omitted
by
him or her with respect to an employee benefit plan in the performance of his
or her duties for
a
purpose reasonably believed by him or her to be in the interest of the
participants and
beneficiaries
of the plan is deemed to be for a purpose which is not opposed to the best
interests
of
the corporation.
(i) Unless limited by the articles of incorporation:
(1) An officer of the corporation is indemnified as and to the same extent
provided in
subsection
(d) for a director, and is entitled to the same extent as a director to seek
indemnification
pursuant to the provisions of subsection (d);
(2) A corporation has the power to indemnify and to advance expenses to an
officer,
employee,
or agent of the corporation to the same extent that it may indemnify and
advance
expenses
to directors pursuant to this section; and
(3) A corporation, in addition, has the power to indemnify and to advance
expenses to an
officer,
employee, or agent who is not a director to a further extent, consistent with
law, that is
provided
by its articles of incorporation, bylaws, general or specific action of its
board of
directors,
or contract.
(j) A corporation has power to purchase and maintain insurance on behalf of any
person
who
is or was a director, officer, employee, or agent of the corporation, or who,
while a director,
officer,
employee, or agent of the corporation, is or was serving at the request of the
corporation
as
a director, officer, partner, trustee, employee, or agent of another foreign or
domestic
corporation,
partnership, joint venture, trust, other enterprise, or employee benefit plan,
against
any
liability asserted against him or her and incurred by him or her in any
corporate capacity or
arising
out of his or her status as a director, officer, employee, or agent of the
corporation,
whether
or not the corporation would have the power to indemnify him or her against the
liability
under
the provisions of this section.
(k) Any indemnification of, or advance of expenses to, a director in accordance
with this
section,
if arising out of a proceeding by or in the right of the corporation, shall be
reported in
writing
to the shareholders with or before the notice of the next shareholders'
meeting.
7-1.1-4.2.
Guarantee authorized by shareholders. -- Each corporation has
the power to
make
guarantees, although not in furtherance of its corporate purposes, when
authorized at a
meeting
of shareholders by the affirmative vote of the holders of a majority of the
shares of the
corporation
entitled to vote on guarantees, or a greater percentage that is provided in the
articles
of
incorporation or bylaws. If authorized by a like vote, a corporation has the
power to mortgage,
pledge,
or give a security interest in all or any of its property, franchises, and
income to secure a
guarantee
or to secure obligations other than its own.
7-1.1-5.
Right of corporation to acquire and dispose of its own shares. --
(a) A
corporation
has the right to purchase, take, receive, or otherwise acquire, hold, own,
pledge,
transfer,
or otherwise dispose of its own shares, but purchases of its own shares,
whether direct or
indirect,
shall be made only to the extent of its unreserved and unrestricted earned
surplus
available
for purchases of its own shares, or, if it has no earned surplus, to the extent
of its
unreserved
and unrestricted capital surplus pursuant to the provisions of section
7-1.1-41.
(b) Until disposition or cancellation of treasury shares, the cost of the
shares is treated as
a
deduction from the total of the stated capital and surplus of the corporation:
and the earned
surplus
or capital surplus used as the measure of the corporation's right to purchase
its own shares
is
restricted so long as the shares are held as treasury shares. Upon the
disposition or cancellation
of
any treasury shares, the restriction on earned surplus or capital surplus is
removed pro tanto,
but
the earned surplus or capital surplus previously restricted is reduced by the
amount of any
excess
of the cost of the shares over the proceeds (if any) received upon their
disposition or
cancellation.
(c) Notwithstanding the foregoing limitations, a corporation may purchase or
otherwise
acquire
its own shares out of its capital surplus, or, if it has no capital surplus,
out of its stated
capital
(but in that event at a price not exceeding the stated capital attributable to
the shares
purchased),
for the purpose of:
(1) Eliminating fractional shares.
(2) Collecting or compromising indebtedness to the corporation.
(3) Satisfying the claim of dissenting shareholders entitled to payment for
their shares
under
the provisions of this chapter.
(4) Effecting, subject to the other provisions of this chapter, the retirement
of its
redeemable
shares by redemption or by purchase at an amount not to exceed the
consideration
payable
upon redemption.
(d) The acquisition by a corporation of its own shares pursuant to a conversion
or
exchange
of shares shall not be treated as a purchase of shares subject to the
provisions of this
section.
(e) An open end investment company, registered as such under the Federal
Investment
Company
Act of 1940 (15 U.S.C. sections 80a-1 -- 80a-64), as amended, may, if its
articles of
incorporation
so provide, purchase its own shares out of any unrestricted surplus or out of
stated
capital.
(f) No purchase of or payment for its own shares shall be made at a time when
the
corporation
is insolvent or when the purchase or payment would make it insolvent.
7-1.1-6.
Defense of ultra vires. -- No act of a corporation and no
conveyance or transfer
of
real or personal property to or by a corporation is invalid because the
corporation was without
capacity
or power to do the act or to make or receive the conveyance or transfer, but
the lack of
capacity
or power may be asserted:
(1) In a proceeding by a shareholder against the corporation to enjoin the
doing of any
act
or the transfer of real or personal property by or to the corporation. If the
unauthorized act or
transfer
sought to be enjoined is being, or is to be, performed or made pursuant to a
contract to
which
the corporation is a party, the court may, if all of the parties to the
contract are parties to
the
proceeding and if it deems the same to be equitable, set aside and enjoin the
performance of
the
contract, and in so doing may allow to the corporation or to the other parties
to the contract, as
the
case may be, compensation for the loss or damage sustained by either of them
which may
result
from the action of the court in setting aside and enjoining the performance of
the contract,
but
anticipated profits to be derived from the performance of the contract shall
not be awarded by
the
court as a loss or damage sustained.
(2) In a proceeding by the corporation, whether acting directly or through a
receiver,
trustee,
or other legal representative, or through shareholders in a representative
suit, against the
incumbent
or former officers or directors of the corporation.
(3) In a proceeding by the attorney general, as provided in this chapter, to
dissolve the
corporation,
or in a proceeding by the attorney general to enjoin the corporation from the
transaction
of unauthorized business.
7-1.1-7.
Corporate name. -- (a) The corporate name:
(1) Shall contain the word "corporation," "company,"
"incorporated," or "limited," or
shall
contain an abbreviation of one of the words.
(2) Shall not contain any word or phrase which indicates or implies that it is
organized
for
any purpose other than one or more of the purposes contained in its articles of
incorporation.
(3) Shall not be the same as, or deceptively similar to, the name of any
domestic
corporation,
whether for profit or not for profit, or limited partnership existing under the
laws of
this
state or any foreign corporation, whether for profit or not for profit, or
limited partnership
authorized
to transact business in this state, or domestic or foreign limited liability
company or a
name
the exclusive right to which is, at the time filed, reserved or registered in
the manner
provided
in this chapter, or the name of a corporation or a limited partnership which
has in effect
a
registration of its corporate or limited partnership name as provided in this
title, subject to the
following:
(i) This provision does not apply if the applicant files with the secretary of
state either of
the
following:
(A) The written consent of the other corporation, limited partnership, limited
liability
company
or holder of a filed, reserved or registered name to use that name or
deceptively similar
name,
and one or more words are added to make the name distinguishable from the other
name;
or
(B) A certified copy of a final decree of a court of competent jurisdiction
establishing the
prior
right of the applicant to the use of the name in this state; and
(ii) The name may be the same as, or deceptively similar to, the name of a
corporation or
other
association the certificate of incorporation or organization of which has been
revoked by the
secretary
of state as permitted by law and the revocation has not been withdrawn within
one year
from
the date of the revocation.
(b) A corporation with which another corporation, domestic or foreign, is
merged, or
which
is formed by the reorganization or consolidation of one or more domestic or
foreign
corporations
or upon a sale, lease, or other disposition to, or exchange with, a domestic
corporation
of all or substantially all the assets of another corporation, domestic or
foreign,
including
its name, may have the same name as that used in this state by any of the
corporations if
at
the time the other corporation was organized under the laws of, or is
authorized to transact
business
in, this state.
7-1.1-7.1.
Fictitious business name. -- (a) Any corporation organized and
existing under
the
laws of any state or territory of the United States may transact business in
this state under a
fictitious
name, provided that it files a fictitious business name statement in accordance
with this
section
prior to the time it commences to transact the business under the fictitious
name.
(b) The fictitious business name statement shall be filed in duplicate with the
secretary of
state
on forms to be furnished by the secretary of state and shall be executed by an
officer of the
corporation
and shall state:
(1) The fictitious business name to be used;
(2) The name of the applicant corporation and the state or territory under the
laws of
which
it is incorporated, the date of its incorporation, and a brief statement of the
business in
which
it is engaged; and
(3) The address of its registered office within the state.
(c) The fictitious business name statement expires upon the filing of the
statement of
abandonment
of use of a fictitious business name registered in accordance with this section
or
upon
the dissolution of the applicant corporation.
(d) The statement of abandonment of use of a fictitious business name under
this section
may
be filed in duplicate with the secretary of state on forms furnished by the
secretary of state
and
shall be executed by an officer of the corporation and shall state:
(1) The fictitious business name being abandoned;
(2) The date on which the original fictitious business name statement being
abandoned
was
filed;
(3) The name of the applicant corporation and the state or territory under the
laws of
which
it is incorporated; and
(4) The address of its registered office within the state.
(e) No domestic or foreign corporation transacting business under a fictitious
business
name
contrary to the provisions of this section, or its assignee, may maintain any
action upon or
on
account of any contract made, or transaction had, in the fictitious business
name in any court
of
this state until a fictitious business name statement has been filed in accordance
with this
section.
(f) No corporation may be permitted to transact business under a fictitious
business name
pursuant
to this section which is the same as or deceptively similar to the name of any
domestic
corporation,
any domestic limited partnership or any domestic limited liability company
existing
under
the laws of this state, or the name of any foreign corporation, foreign limited
partnership or
foreign
limited liability company authorized to transact business in the state, or any
corporate
name
filed, reserved or registered under this title.
(g) A filing fee of fifty dollars ($50.00) is collected by the secretary of
state for each
statement
filed.
7-1.1-8.
Reserved name. -- (a) The exclusive right to the use of a
corporate name may be
reserved
by:
(1) Any person intending to organize a corporation under this chapter.
(2) Any domestic corporation intending to change its name.
(3) Any foreign corporation intending to make application for a certificate of
authority to
transact
business in this state.
(4) Any foreign corporation authorized to transact business in this state and
intending to
change
its name.
(5) Any person intending to organize a foreign corporation and intending to
have the
corporation
make application for a certificate of authority to transact business in this
state.
(b) The reservation is made by filing with the secretary of state an
application to reserve
a
specified corporate name, executed by the applicant. If the secretary of state
finds that the name
is
available for corporate use, he or she shall reserve the name for the exclusive
use of the
applicant
for a period of one hundred and twenty (120) days.
(c) The right to the exclusive use of a specified corporate name so reserved
may be
transferred
to any other person or corporation by filing in the office of the secretary of
state a
notice
of the transfer, executed by the applicant for whom the name was reserved, and
specifying
the
name and address of the transferee.
7-1.1-9.
Registered name. -- (a) Any corporation organized and existing
under the laws
of
any state or territory of the United States may register its corporate name
under this chapter,
provided
its corporate name is not the same as or deceptively similar to, the name of
any domestic
corporation,
limited partnership or limited liability company existing under the laws of
this state,
or
the name of any foreign corporation, limited partnership or limited liability
company
authorized
to transact business in this state, or any corporate name reserved, filed or
registered
under
this title.
(b) The registration is made by:
(1) Filing with the secretary of state:
(i) An application for registration executed by an officer of the corporation,
stating the
name
of the corporation, the state or territory under the laws of which it is
incorporated, the date
of
its incorporation, a statement that it is carrying on or doing business, and a
brief statement of
the
business in which it is engaged; and
(ii) A certificate stating that the corporation is in good standing under the
laws of the
state
or territory wherein it is organized, executed by the secretary of state of the
state or territory
or
by any other official that may have custody of the records pertaining to
corporations; and
(2) Paying to the secretary of state a registration fee of fifty dollars
($50.00).
(c) The registration is effective for a period of one year.
7-1.1-10.
Renewal of registered name. -- A corporation, which has in
effect a
registration
of its corporate name, may renew the registration from year to year by annually
filing
an
application for renewal stating the facts required to be stated in an original
application for
registration
and a certificate of good standing as required for the original registration
and by
paying
a fee of fifty dollars ($50.00). A renewal application shall be filed prior to
the expiration
of
the one year period from the filing of an original application for registration
or its last renewal
and
extends the registration for the following year.
7-1.1-11.
Registered office and registered agent -- Designation of registered agent
without
authority. -- (a) Each corporation shall have and continuously maintain
in this state:
(1) A registered office, which may be, but need not be, the same as its place
of business.
(2) A registered agent, who may be either an individual resident in this state
whose
business
office is identical with the registered office, or a domestic corporation, or a
foreign
corporation
authorized to transact business in this state, having a business office
identical with the
registered
office; provided, however, that in the case where the registered agent of a
corporation
is
an attorney, the business address of the agent need not be identical with the
registered office,
but
may be the usual business address of the attorney.
(b) Any incorporator, officer, agent, or servant of a corporation, who
designates a
registered
agent for that corporation without the registered agent's authority, is guilty
of a
misdemeanor
and shall, upon conviction, be punished by a fine of not more than one thousand
dollars
($1,000) or by imprisonment of not more than one year, or both.
7-1.1-12.
Change of registered office or registered agent. -- (a) A corporation
may
change
its registered office or change its registered agent, or both, upon filing in
the office of the
secretary
of state a statement stating:
(1) The name of the corporation.
(2) The address of its then registered office.
(3) If the address of its registered office has changed, the new address of the
registered
office.
(4) The name of its then registered agent.
(5) If its registered agent has changed, the name of its successor registered
agent.
(6) The address of its registered office and the address of the business office
of its
registered
agent, as changed.
(7) That the change was authorized by resolution duly adopted by its board of
directors.
(b) The statement shall be executed by the corporation by its president or a
vice
president,
and verified by him or her, and delivered to the secretary of state. If the
secretary of
state
finds that the statement conforms to the provisions of this chapter, the
secretary shall file the
statement
in his or her office, and upon that filing or upon a later date not more than
thirty (30)
days
after the filing, as is set forth in the statement, the change of address of
the registered office,
or
the appointment of a new registered agent, or both, as the case may be, shall
become effective.
(c) Any registered agent of a corporation may resign as an agent upon filing a
written
notice
of the resignation, executed in duplicate, with the secretary of state, who
shall immediately
mail
a copy of the resignation to the corporation at its registered office. The
appointment of the
agent
terminates upon the expiration of thirty (30) days after receipt of the notice
by the secretary
of
state.
(d) If a registered agent changes his or her or its business address to another
place within
the
state, he or she or it may change the address and the address of the registered
office of any
corporations
of which he or she or it is a registered agent by filing a statement as
required above,
except
that it need be signed only by the registered agent and need not be responsive
to
subsection
(a)(5) or (a)(7) and must recite that a copy of the statement has been mailed
to each
corporation.
7-1.1-13.
Service of process on corporation. -- (a) The registered agent
appointed by a
corporation
is an agent of the corporation upon whom any process, notice, or demand
required or
permitted
by law to be served upon the corporation may be served.
(b) Whenever a corporation fails to appoint or maintain a registered agent in
this state, or
whenever
its registered agent cannot with reasonable diligence be found at the
registered office,
then
the secretary of state is an agent of the corporation upon whom any process,
notice, or
demand
may be served. Service on the secretary of state of any process, notice, or
demand is
made
by delivering to and leaving with him or her or with any clerk having charge of
the
corporation
department of his or her office, duplicate copies of the process, notice, or
demand. In
the
event any process, notice, or demand is served on the secretary of state, he or
she shall
immediately
forward one of the copies by certified mail, addressed to the corporation at
its
registered
office. Any service upon the secretary of state is returnable in not less than
thirty (30)
days.
(c) The secretary of state shall keep a record of all processes, notices, and
demands
served
upon him or her under this section, and shall record in the record the time of
service and
his
or her action with reference to these.
(d) Nothing contained in these provisions limits or affects the right to serve
any process,
notice,
or demand required or permitted by law to be served upon a corporation in any
other
manner
now or subsequently permitted by law.
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 [26 U.S.C.
section
1 et seq.] or regulations adopted pursuant to the Internal Revenue Code; or (2)
an
investment
company under the Investment Company Act of 1940 [15 U.S.C. section 80a-1 et
seq.]
or regulations adopted pursuant to the Investment Company Act.
(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 [15 U.S.C. section 80a-1 et seq.] 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 that
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.
7-1.1-15.
Issuance of shares of preferred or special classes in series. --
(a) If the
articles
of incorporation so provide, the shares of any preferred or special class may
be divided
into
and issued in series, with variations in relative rights and preferences,
including variations in
voting
rights, if any, and designations, preferences, and relative, participating,
optional or other
special
rights and qualifications, limitations, and restrictions on the shares, as may
be desired. If
the
articles of incorporation expressly vest authority in the board of directors,
then, to the extent
that
the articles of incorporation have not established series and fixed and
determined the
variations
in the relative rights and preferences as between the series, the board of
directors has
authority
to divide any or all of the classes into series and, within the limitations, if
any, stated in
the
articles of incorporation, to fix and determine the relative rights and
preferences of the shares
of
any series established.
(b) The holders of preferred or special stock of any class or of any series of
that stock are
entitled
to receive dividends at the rates, on the conditions and at the times that are
stated and
expressed
in the articles of incorporation, or in any amendment of the articles, or in
the vote or
votes
providing for the issue of the stock adopted by the board of directors as
previously
provided,
payable in preference to, or in relation to, the dividends, payable on any
other class or
classes
of stock, or of any other series of stock, and cumulative, non-cumulative or
partially
cumulative
as is stated and expressed. When dividends upon the preferred and special
stocks, if
any,
to the extent of the preferences to which the stocks are entitled, have been
paid or declared
and
set apart for payment, a dividend on the remaining class or classes or series
of stock may then
be
paid out of the remaining assets of the corporation available for dividends.
(c) Any preferred or special stock of any class or of any series may be made
redeemable
for
cash, property, or rights, including securities of any other corporation, at
the option of either
the
holder or the corporation or upon the happening of a specified event, at the
time or times, at
the
price or prices, or the rate or rates, and with the adjustments stated and
expressed or provided
for
in the articles of incorporation or any amendment of the articles or in the
vote or votes
providing
for the issuance of the stock adopted by the board of directors as previously
provided.
(d) The holders of the preferred or special stock of any class or of any series
of that stock
are
entitled to the rights upon the dissolution of, or upon any distribution of the
assets or
liquidation,
voluntary or involuntary, of the corporation as are stated and expressed in the
articles
of
incorporation or any amendment of the articles, or in the vote or votes
providing for the issue
of
the stock adopted by the board of directors as previously provided.
(e) Any stock of any class or of any series of the stock may be made
convertible into, or
exchangeable
for, shares of any other class or classes or of any other series of the same or
any
other
class or classes of stock of the corporation, except a class having prior or
superior rights and
preferences
as to dividends or distribution of assets upon liquidation, at the price or
prices or at
the
rates of exchange and with the adjustments that are stated and expressed or
provided for in the
articles
of incorporation, or in any amendment to the articles, or in the vote or votes
providing for
the
issue of the stocks adopted by the board of directors as previously provided,
but no shares,
whether
with or without par value, are convertible 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.
(f) If any corporation is authorized to issue more than one class of stock or
more than
one
series of any class, the designation, preferences, and relative, participating,
optional, or other
special
rights of each class of stock or series of the stock and the qualifications,
limitations, or
restrictions
of the preferences and/or rights shall be stated in full or summarized on the
face or
back
of the certificate which the corporation issues to represent the class or
series of stock;
provided,
however, that except as otherwise provided in section 6A-8-103, in lieu of the
foregoing
requirements, there may be stated on the face or back of the certificate which
the
corporation
issues to represent the class or series of stock, a statement that the
corporation will
furnish
without charge to each stockholder who requests, the designations, preferences,
and
relative,
participating, optional, or other special rights of each class of stock or
series of the stock
and
the qualifications, limitations, or restrictions of the preferences and/or
rights.
(g) Before any corporation issues any shares of stock of any class or of any
series of any
class
of which the voting powers, designations, preferences, and relative,
participating, optional,
or
other rights, if any, or the qualifications, limitations, or restrictions of
the stock, if any, have
not
been stated in the articles of incorporation or in any amendment to the
articles but are
provided
for in a vote or votes adopted by the board of directors pursuant to authority
expressly
vested
in it by the provisions of the articles of incorporation or an amendment to the
articles, a
certificate
presenting a copy of the vote or votes and the number of shares of stock of the
class or
series
shall be made under the seal of the corporation and signed by the president or
a vice
president
and by the secretary or an assistant secretary of the corporation and
acknowledged by
the
president or vice president before an officer authorized by the laws of Rhode
Island to take
acknowledgments
of deeds, and shall be filed and a copy of the certificate shall be filed in
the
same
manner as articles of incorporation are required to be filed. Upon the filing
the certificate
constitutes
an amendment to the articles of incorporation. Unless otherwise provided in any
vote
or
votes, the number of shares of stock of any class or series as stated in the vote
or votes may be
increased
or decreased (but not below the number of shares of stock then outstanding) by
a
certificate
likewise made, signed, and filed presenting a statement that a specified
increase or
decrease
in the number of shares of stock had been authorized and directed by a vote or
votes
likewise
adopted by the board of directors. In case the number of shares shall be
decreased, the
number
of shares specified in the certificate resume the status which they had prior
to the
adoption
of the first resolution or resolutions.
7-1.1-16.
Subscription for shares. -- (a) A subscription for shares of a
corporation to be
organized
is irrevocable for a period of six (6) months, unless otherwise provided by the
terms of
the
subscription agreement or unless all of the subscribers consent to the
revocation of the
subscription.
(b) Unless otherwise provided in the subscription agreement, subscriptions for
shares,
whether
made before or after the organization of a corporation, shall be paid in full
at a time, or in
installments
and at times, that are determined by the board of directors. Any call made by
the
board
of directors for payment on subscriptions shall be uniform as to all shares of
the same class
or
as to all shares of the same series, as the case may be. In case of default in
the payment of any
installment
or call when the payment is due, the corporation may proceed to collect the
amount
due
in the same manner as any debt due the corporation. The bylaws may prescribe
other
penalties
for failure to pay installments or calls that may become due, but no penalty
working a
forfeiture
of a subscription, or of the amounts paid on the subscription, shall be
declared as
against
any subscriber unless the amount due on the subscription remains unpaid for a
period of
twenty
(20) days after written demand has been made for the amount. If mailed, the
written
demand
shall be deemed to be made when deposited in the United States mail in a sealed
envelope
addressed to the subscriber at his or her last post office address known to the
corporation,
with postage on the envelope prepaid. In the event of the sale of any shares by
reason
of
any forfeiture, the excess of proceeds realized over the amount due and unpaid
on the shares
shall
be paid to the delinquent subscriber or to his or her legal representative.
7-1.1-17.
Consideration for shares. -- (a) Shares having a par value may
be issued for
the
consideration expressed in dollars, not less than the par value of the shares,
as is fixed from
time
to time by the board of directors.
(b) Shares without par value may be issued for the consideration expressed in
dollars that
is
fixed from time to time by the board of directors unless the articles of
incorporation reserve to
the
shareholders the right to fix the consideration. In the event that the right is
reserved as to any
shares,
the shareholders shall, prior to the issuance of the shares, fix the
consideration to be
received
for the shares, by a vote of the holders of a majority of all shares entitled
to vote on the
consideration.
(c) Treasury shares may be disposed of by the corporation for the consideration
expressed
in dollars that may be fixed from time to time by the board of directors.
(d) The part of the surplus of a corporation which is transferred to stated
capital upon the
issuance
of shares as a share divided is deemed to be the consideration for the issuance
of the
shares.
(e) In the event of the issuance of shares upon the conversion or exchange of
indebtedness
or shares, the consideration for the shares issued shall be:
(1) The principal sum of, and accrued interest on, the indebtedness exchanged
or
converted,
or the stated capital then represented by the shares exchanged or converted;
and
(2) That part of surplus, if any, transferred to stated capital upon the
issuance of shares
for
the shares exchanged or converted; and
(3) Any additional consideration paid to the corporation upon the issuance of
shares for
the
indebtedness or shares exchanged or converted.
7-1.1-18.
Payment for shares. -- (a) The consideration for the issuance of
shares may be
paid,
in whole or in part, in money, in other property, tangible or intangible, or in
labor or
services
actually performed for the corporation. When payment of the consideration for
which
shares
are to be issued has been received by the corporation, the shares are deemed to
be fully
paid
and nonassessable.
(b) Neither promissory notes nor future services constitute payment or part
payment, for
the
issuance of shares of a corporation.
(c) In the absence of fraud in the transaction, the judgment of the board of
directors or
the
shareholders, as the case may be, as to the value of the consideration received
for shares is
conclusive.
7-1.1-18.1.
Stock rights and options. -- Subject to any provisions in
respect to rights and
options
stated in its articles of incorporation, a corporation may create and issue,
whether or not
in
connection with the issuance and sale of any of its shares or other securities,
rights or options
entitling
the holders to purchase from the corporation shares of any class or classes.
Those rights
or
options shall be evidenced in any manner that the board of directors approves
and, subject to
the
provisions of the articles of incorporation, shall state the terms upon which,
the time or times
within
which and the price or prices at which the shares may be purchased from the
corporation
upon
the exercise of any right or option. In the absence of fraud in the
transaction, the judgment
of
the board of directors as to the adequacy of the consideration received for the
rights or options
is
conclusive. The price or prices to be received for any shares having a par
value, other than
treasury
shares, to be issued upon the exercise of the rights or options shall not be
less than the
par
value of those shares.
7-1.1-19.
Determination of amount of stated capital. -- (a) In the case of
the issuance
by
a corporation of shares having a par value, the consideration received for the
shares constitutes
stated
capital to the extent of the par value of the shares, or, if the shares have a
preference in the
assets
of the corporation in the event of involuntary liquidation which is greater
than the par
value,
then to the extent of the preference, and the excess, if any, of the
consideration constitutes
capital
surplus.
(b) In the case of the issuance by a corporation of shares without par value,
the entire
consideration
received for the shares constitutes stated capital unless the corporation
determines
as
provided in this section that only a part of the shares is stated capital.
Within a period of sixty
(60)
days after the issuance of any shares without par value, the board of directors
may allocate to
capital
surplus any portion of the consideration received for the issuance of the
shares. No
allocation
shall be made of any portion of the consideration received for shares without
par value
having
a preference in the assets of the corporation in the event of involuntary
liquidation except
the
amount, if any, of the consideration in excess of the preference.
(c) If shares have been or are issued by a corporation in merger or
consolidation or in
acquisition
of all or substantially all of the outstanding shares or of the property and
assets of
another
corporation, whether domestic or foreign, any amount that would otherwise
constitute
capital
surplus under the foregoing provisions of this section may instead be allocated
to earned
surplus
by the board of directors of the issuing corporation except that its aggregate
earned
surplus
shall not exceed the sum of the earned surpluses as defined in this chapter of
the issuing
corporation
and of all other corporations, domestic or foreign, that were merged or
consolidated
or
of which the shares or assets were acquired.
(d) The stated capital of a corporation may be increased from time to time by
resolution
of
the board of directors directing that all or a part of the surplus of the
corporation be transferred
to
stated capital. The board of directors may direct that the amount of the
surplus transferred is
deemed
to be stated capital in respect of any designated class of shares.
7-1.1-20.
Expenses of organization, reorganization, and financing. -- The
reasonable
charges
and expenses of organization or reorganization of a corporation, and the
reasonable
expenses
of and compensation for the sale or underwriting of its shares, may be paid or
allowed
by
the corporation out of the consideration received by it in payment for its
shares without
rendering
the shares not fully paid or assessable.
7-1.1-21.
Certificates representing shares. -- (a) The shares of a
corporation shall be
represented
by certificates provided that the board of directors of the corporation may
provide by
resolution
or resolutions that some or all of any or all classes or series of its stock
are
uncertificated
shares. This resolution does apply to shares represented by a certificate until
the
certificate
is surrendered to the corporation. Notwithstanding the adoption of the
resolution by the
board
of directors, every holder of stock represented by certificates and upon
request every holder
of
uncertificated shares is entitled to have a certificate signed by the officer
or officers designated
for
the purpose by the bylaws of the corporation, and in absence of any
designation, by the
chairperson
or the vice chairperson of the board of directors, or the president or a vice
president,
and
by the treasurer or the assistant treasurer, or the secretary or an assistant
secretary of the
corporation,
representing the number of shares registered in certificate form and may be
sealed
with
the seal of the corporation or a facsimile of the seal. Any or all of the signatures
on the
certificate
may be a facsimile. In case any officer, transfer agent, or registrar who has
signed or
whose
facsimile signature has been placed upon the certificate has ceased to be the
officer,
transfer
agent, or registrar before the certificate is issued, it may be issued by the
corporation with
the
same effect as if he or she were the officer, transfer agent, or registrar at
the date of its issue.
(b) Every certificate representing shares issued by a corporation which is
authorized to
issue
shares of more than one class shall state upon the face or back of the
certificate, or shall
state
that the corporation will furnish to any shareholder upon request and without
charge, a full
statement
of the designations, preferences, limitations, and relative rights of the
shares of each
class
authorized to be issued and, if the corporation is authorized to issue any
preferred or special
class
in series, the variations in the relative rights and preferences between the
shares of each
series
so far as the series have been fixed and determined and the authority of the
board of
directors
to fix and determine the relative rights and preferences of subsequent series.
(c) Each certificate representing shares shall state upon the face of the
certificate:
(1) That the corporation is organized under the laws of this state.
(2) The name of the person to whom issued.
(3) The number and class of shares, and the designation of the series, if any,
which the
certificate
represents.
(4) If the shares are without par value, a statement of the fact.
(d) No certificate shall be issued for any share until the share is fully paid.
(e) Within a reasonable time after the issuance or transfer of uncertificated
shares, the
corporation
shall send to the registered owner of the shares a written notice containing
the
information
and statements required to be presented or stated on certificates pursuant to
subsections
(b) and (c) and section 7-1.1-21.1(b). Except as otherwise expressly provided
by law,
the
rights and obligations of owners of shares are not affected by whether the
shares are
represented
by certificates or are uncertificated.
7-1.1-21.1.
Stock transfer restrictions. -- (a) The shares of a corporation
are personal
property
and are transferable in accordance with the provisions of section 6A-8-204, as
amended
from
time to time, except as may otherwise be provided in this chapter.
(b) The articles of incorporation, bylaws, an agreement among all or less than
all of the
shareholders,
or an agreement between all or less than all of the shareholders and the
corporation
may
impose restrictions on the transfer or registration of transfer of shares of
the corporation. A
restriction
does not affect shares issued before the restriction was adopted unless the
holders of
the
shares are parties to the restriction agreement or voted in favor of the
restriction.
(c) A restriction on the transfer or registration of transfer of shares is
valid and
enforceable
against the holder or a transferee of the holder if the restriction is
authorized by this
chapter
and its existence is noted conspicuously on the front or back of the
certificate or is
contained
in the initial transaction statement required by section 6A-8-204(b). Unless
noted, a
restriction
is not enforceable against a person without knowledge of the restriction.
(d) A restriction on the transfer or registration of transfer of shares is
authorized:
(1) To maintain the corporation's status when it is dependent on the number or
identity of
its
shareholders;
(2) To preserve exemptions under federal or state securities law;
(3) For any other reasonable purpose;
(e) A restriction on the transfer or registration of transfer of shares may:
(1) Obligate the shareholder first to offer the corporation or other persons
(separately,
consecutively,
or simultaneously) an opportunity to acquire the restricted shares;
(2) Obligate the corporation or other persons (separately, consecutively, or
simultaneously)
to acquire the restricted shares;
(3) Require the corporation, the holders of any class of its shares, or another
person to
approve
the transfer of the restricted shares, if the requirement is not manifestly
unreasonable;
(4) Prohibit the transfer of the restricted shares to designated persons or
classes of
persons,
if the prohibition is not manifestly unreasonable.
(f) For the purposes of this section, "shares" includes a security
convertible into or
carrying
a right to subscribe for or acquire shares.
7-1.1-22.
Fractional shares. -- A corporation may:
(1) Issue fractions of a share,
(2) Arrange for the disposition of fractional interests by those entitled to
those interests,
(3) Pay in cash the fair value of fractions of a share as of the time when
those entitled to
receive
the fractions are determined, or
(4) Issue scrip in registered or bearer form which entitles the holder to
receive a
certificate
for a full share upon the surrender of the scrip aggregating a full share.
A certificate for a fractional share shall, but scrip shall not, unless it
otherwise provides,
entitle
the holder to exercise voting rights, to receive dividends on that share, and
to participate in
any
of the assets of the corporation in the event of liquidation. The board of
directors may issue
scrip
subject to the condition that it becomes void if not exchanged for certificates
representing
full
shares before a specified date, or subject to the condition that the shares for
which scrip is
exchangeable
may be sold by the corporation and the proceeds from the sale distributed to
the
holders
of scrip, or subject to any other conditions which the board of directors deems
advisable.
7-1.1-22.1.
Bonds -- Facsimile signatures and seals. -- The seal of the
corporation and
any
or all signatures of the officers or other agents of the corporation upon a
bond and any
coupon
attached to the bond may be facsimiles if the bond is countersigned by an
officer or other
agent
of a trustee or other certifying or authenticating authority. In case any
officer or other agent
who
has signed or whose facsimile signature has been placed upon the bond or coupon
has ceased
to
be the officer or agent before the bond is issued, it may be issued by the
corporation with the
same
effect as if he or she were the officer or agent at the date of its issue.
7-1.1-23.
Liability of subscribers and shareholders. -- (a) A holder of or
subscriber to
shares
of a corporation is under no obligation to the corporation or its creditors
with respect to the
shares
other than the obligation to pay to the corporation the unpaid portion of the
consideration
for
which the shares were issued or to be issued, which in no event shall be less
than the amount
of
the consideration for which the shares could be lawfully issued.
(b) Any person becoming an assignee or transferee of shares or of a
subscription for
shares
in good faith and without knowledge or notice that the full consideration for
the shares has
not
been paid is not personally liable to the corporation or its creditors for any
unpaid portion of
the
consideration. An executor, administrator, conservator, guardian, trustee,
assignee for the
benefit
of creditors, or receiver is not personally liable to the corporation as a
holder of or
subscriber
to shares of a corporation but the estate and funds in his or her hands is so
liable.
(c) No pledgee or other holder of shares as collateral security is personally
liable as a
shareholder.
7-1.1-24.
Shareholders' preemptive rights. -- (a) Except to the extent
limited or denied
by
this section or by the articles of incorporation, shareholders have a
preemptive right to acquire
unissued
or treasury shares or securities convertible into shares or carrying a right to
subscribe to
or
acquire shares.
(b) Unless otherwise provided in the articles of incorporation:
(1) No preemptive right exists:
(i) To acquire any shares issued to directors, officers, or employees pursuant
to approval
by
the affirmative vote of the holders of a majority of the shares entitled to vote
on the acquisition
or
when authorized by and consistent with a plan previously approved by a vote of
shareholders;
or
(ii) To acquire any shares sold other than for money.
(2) Holders of shares of any class that is preferred or limited as to dividends
or assets are
not
entitled to any preemptive right.
(3) Holders of shares of common stock are not entitled to any preemptive right
to shares
of
any class that is preferred or limited as to dividends or assets or to any
obligations, unless
convertible
into shares of common stock or carrying a right to subscribe to or acquire
shares of
common
stock.
(4) Holders of common stock without voting power have no preemptive right to
shares
of
common stock with voting power.
(5) The preemptive right is only an opportunity to acquire shares or other
securities
under
terms and conditions that the board of directors may fix for the purpose of providing
a fair
and
reasonable opportunity for the exercise of the right.
7-1.1-25.
Bylaws. -- The bylaws may contain any provisions for the
regulation and
management
of the affairs of the corporation not inconsistent with law or the articles of
incorporation.
The initial bylaws of a corporation shall be adopted by its incorporators or by
its
board
of directors at its organization meeting. Subsequently, the bylaws may be
amended by the
shareholders,
or, unless otherwise provided in the articles of incorporation or bylaws, by
the
board
of directors, but any amendment to the bylaws by the board of directors may be
changed by
the
shareholders.
7-1.1-25.1.
Bylaws and other powers in emergency. -- (a) The board of
directors of any
corporation
may adopt emergency bylaws, subject to repeal or change by action of the
shareholders,
which are, notwithstanding any different provision elsewhere in this chapter or
in
the
articles of incorporation or bylaws, operative during any emergency in the
conduct of the
business
of the corporation resulting from an attack on the United States or any nuclear
or atomic
disaster.
The emergency bylaws may make any provision that may be practical and necessary
for
the
circumstances of the emergency, including provisions that:
(1) A meeting of the board of directors may be called by any officer or
director in any
manner
and under conditions prescribed in the emergency bylaws;
(2) The director or directors in attendance at the meeting, or any greater
number fixed by
the
emergency bylaws, constitutes a quorum; and
(3) The officers or other persons designated on a list approved by the board of
directors
before
the emergency, all in the order of priority and subject to the conditions, and
for a period of
time
(not longer than reasonably necessary after the termination of the emergency)
that may be
provided
in the emergency bylaws or in the resolution approving the list, are, to the
extent
required
to provide a quorum at any meeting of the board of directors, deemed directors
for the
meeting.
(b) The board of directors, either before or during any emergency, may provide,
and
from
time to time modify, lines of succession in the event that during an emergency
any or all
officers
or agents of the corporation are for any reason rendered incapable of
discharging their
duties.
(c) The board of directors, either before or during any emergency, may,
effective in the
emergency,
change the head office or designate several alternative head offices or
regional
offices,
or authorize the officers so to do.
(d) To the extent not inconsistent with any adopted emergency bylaws, the
bylaws of the
corporation
remain in effect during any emergency, and upon its termination the emergency
byaws
cease to be operative.
(e) Unless otherwise provided in emergency bylaws, notice of any meeting of the
board
of
directors during any emergency may be given only to those directors that it may
be feasible to
reach
at the time and by any means that may be feasible at the time, including
publication or
radio.
(f) To the extent required to constitute a quorum at any meeting of the board
of directors
during
any emergency, the officers of the corporation who are present are, unless otherwise
provided
in emergency bylaws, deemed, in order of rank and within the same rank in order
of
seniority,
directors for the meeting.
(g) No officer, director, or employee acting in accordance with any emergency
bylaws is
liable
except for willful misconduct. No officer, director, or employee is liable for
any action
taken
by him or her in good faith in an emergency in furtherance of the ordinary
business affairs
of
the corporation even though not authorized by the bylaws then in effect.
7-1.1-26.
Meetings of shareholders. -- (a) Meetings of shareholders may be
held at any
place,
either within or without this state, that may be stated in or fixed in
accordance with the
bylaws.
If no other place is stated or fixed, all meetings shall be held at the
registered office of the
corporation.
An annual meeting of shareholders shall be held at any time that may be stated
or
fixed
in accordance with the bylaws. Failure to hold the annual meeting at the
designated time
does
not work a forfeiture or dissolution of the corporation. If the annual meeting
is not held
within
any thirteen (13) month period the superior court may, in its discretion, on
the application
of
any shareholder, summarily order a meeting to be held.
(b) Special meetings of the shareholders may be called by the board of
directors, or by a
person
or persons that may be authorized by the articles of incorporation or by the
bylaws.
(c) Upon the application of any shareholder, director, or person aggrieved, the
superior
court
for the county where the principal office of the corporation is located, shall
immediately
hear
and determine the validity of any election or appointment of any director or
officer of a
corporation
and the right of any person to hold the office, and, if any office is claimed
by more
than
one person, determine the person entitled to the office, and to that end shall
determine the
voting
and other rights of persons claiming those rights in respect of the election or
appointment,
and
confirm the election or appointment, order a new election, or direct s any
other relief that
may
be just and proper.
7-1.1-27.
Notice of shareholders' meetings. -- Written notice stating the
place, day, and
hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the
meeting
is called, shall be delivered not less than ten (10) nor more than sixty (60)
days before
the
date of the meeting, either personally or by mail, by or at the direction of
the president, the
secretary,
or the officer or persons calling the meeting, to each shareholder of record
entitled to
vote
at the meeting. If mailed, the notice is deemed to be delivered when deposited
in the United
States
mail addressed to the shareholder at his or her address as it appears on the
stock transfer
books
of the corporation, with prepaid postage on the mail. In the case of any
corporation which
has
fifty (50) or more shareholders of record, if two (2) successive notices,
reports, or other
communications
addressed to a shareholder of the corporation at the address of the shareholder
appearing
on the books of the corporation have been returned to the corporation by the
United
States
postal service marked to indicate that the United States postal service is
unable to deliver
the
notices, reports, or other communications to the shareholder at the address,
all future notices,
reports,
or other communications are deemed to have been given without further mailing
if they
are
available for the shareholder upon written demand of the shareholder at the
principal
executive
office of the corporation for a period of one year from the date of the giving
of the
notice,
report, or other communication to other shareholders.
7-1.1-28.
Closing of transfer books and fixing record date. -- For the
purpose of
determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any
adjournment
of a meeting of shareholders, or entitled to receive payment of any dividend,
or in
order
to make a determination of shareholders for any other proper purpose, the board
of directors
of
a corporation may provide that stock transfer books are closed for a stated
period, not less than
that
specified in any applicable bylaw and not more than sixty (60) days. In lieu of
closing the
stock
transfer books, the bylaws, or in the absence of an applicable bylaw the board
of directors,
may
fix in advance a date as the record date for any determination of shareholders,
the date in any
case
to be not more than sixty (60) days prior to the date on which the particular
action, requiring
the
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no
record
date is fixed for the determination of shareholders entitled to notice of or to
vote at a
meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on
which
notice of the meeting is mailed or the date on which the resolution of the
board of directors
declaring
the dividend is adopted, as the case may be, is the record date for the
determination of
shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders
has been made as provided in this section, the determination applies to any
adjournment,
of the meeting.
7-1.1-29.
Voting list. -- A list of shareholders as of the record date,
certified by the
corporate
officer responsible for its preparation or by a transfer agent, shall be made
available to
the
inspectors of election, or person presiding at a meeting of stockholders, at
any meeting of
shareholders
upon the request of any shareholder at the meeting or prior to the meeting. The
persons
who appear from the list to be shareholders entitled to vote at the meeting may
vote at the
meeting.
If the right to vote at any meeting is challenged, the inspectors of election,
or the person
presiding
at the meeting, shall rely on the list to determine the right of the challenged
person to
vote.
7-1.1-30.
Quorum of shareholders required for shareholders' action. --
Unless
otherwise
provided in the articles of incorporation or bylaws, a majority of the shares
entitled to
vote,
represented in person or by proxy, constitutes a quorum at a meeting of
shareholders, but in
no
event does a quorum consist of less than one-third ( 1/3) of the shares
entitled to vote at the
meeting.
If a quorum is present, the affirmative vote of the majority of the shares
represented at
the
meeting and entitled to vote on the subject matter is the act of the
shareholders, unless the
vote
of a greater number or voting by classes is required by this chapter or the
articles of
incorporation
or bylaws. No amendment to the bylaws made by the board of directors pursuant
to
section
7-1.1-25 shall require a greater number or voting by classes.
7-1.1-30.1.
Greater voting requirements. -- Whenever, with respect to any
action to be
taken
by the shareholders of a corporation, the articles of incorporation require the
vote or
concurrence
of the holders of a greater proportion of the shares, or of any class or series
of the
shares,
than required by this chapter with respect to the action, the provisions of the
articles of
incorporation
control. An amendment of the articles of incorporation which changes or deletes
a
provision
is authorized by the same vote as would be required to take action under the
provision.
7-1.1-30.2.
Waiver of notice. -- Whenever any notice is required to be given
any person
under
the provisions of this chapter or under the provisions of the articles of
incorporation or
bylaws
of the corporation, a waiver of the notice in writing signed by the person or
persons
entitled
to notice, whether before or after the time stated in the writing, is
equivalent to the giving
of
notice. Attendance of a person at a meeting constitutes a waiver of notice of
the meeting,
except
when the person attends a meeting for the express purpose of objecting to the
transactions
of
any business because the meeting is not lawfully called or convened. Neither
the business to be
transacted
at, nor the purpose of, any meeting of the shareholders or members of a
committee of
the
corporation need be specified in any written waiver of notice unless required
by the by-laws.
7-1.1-30.3.
Action by shareholders without a meeting. -- (a) Any action
required or
permitted
to be taken at a meeting of shareholders by this chapter or the certificate of
incorporation
or bylaws of a corporation, may be taken without a meeting if all the
shareholders
entitled
to vote on the action consent to the action in writing.
(b) (1) Except for actions pursuant to section 7-1.1-67, section 7-1.1-70.1, or
section 7-
1.1-72,
any action required or permitted to be taken at a meeting of shareholders by
this chapter
or
the certificate of incorporation or bylaws of a corporation, may be taken
without a meeting
upon
the written consent of less than all the shareholders entitled to vote on the
action, if:
(i) shareholders who consent would be entitled to cast at least the minimum
number of
votes
which would be required to take the action at a meeting at which all
shareholders entitled to
vote
on the action are present; and
(ii) Action pursuant to this section is authorized by the articles of
incorporation.
(2) Prompt notice of the action shall be given to all shareholders who would
have been
entitled
to vote upon the action if the meeting were held.
(c) Whenever action is taken pursuant to this section, the written consents of
the
shareholders
consenting to the action shall be filed with the minutes of proceedings of
shareholders.
(d) Any action taken pursuant to this section has the same effect for all
purposes as if the
action
had been taken at a meeting of the shareholders.
(e) If any other provision of this chapter requires the filing of a certificate
upon the
taking
of an action by shareholders, and action is taken in the manner authorized by
this section,
the
certificate shall state that the action was taken without a meeting pursuant to
the written
consents
of the shareholders and shall state the number of shares represented by the
consents.
(f) The record date for determining shareholders entitled to express consent in
writing
without
a meeting, when no notice of the meeting is mailed, is the day on which the
first written
consent
is expressed.
7-1.1-31.
Voting of shares. -- (a) Each outstanding share, regardless of
class, is entitled
to
one vote on each matter submitted to a vote at a meeting of shareholders,
except to the extent
that
the voting rights of the shares of any class or classes are limited, enlarged,
or denied by the
articles
of incorporation as permitted by this chapter. If the articles of incorporation
provide for
more
or less than one vote for any share, on any matter, every reference in this
chapter to a
majority
or other proportion of shares shall refer to a majority or other proportion of
votes entitled
to
be cast.
(b) Neither treasury shares, nor shares held, directly or indirectly, by
another corporation
if
a majority of the shares entitled to vote for the election of directors of the
other corporation is
held
by the corporation, shall be voted at any meeting or counted in determining the
total number
of
outstanding shares at any given time. Nothing contained in these provisions is
construed as
limiting
the right of any corporation to vote stock, including, but not limited to, its
own stock,
held
in a fiduciary capacity.
(c) Every shareholder entitled to vote at a meeting of shareholders or to
express consent
without
a meeting may authorize another person or persons to act for him or her by
proxy,
executed,
in writing, by the shareholder or by his or her duly authorized attorney in
fact. No
proxy
is valid after eleven (11) months from the date of its execution, unless
otherwise provided
in
the proxy.
(1) Without limiting the manner in which a stockholder may authorize another
person or
persons
to act for him or her as proxy pursuant to subsection (c), the following
constitutes a valid
means
by which a stockholder may grant that authority:
(i) A stockholder may execute a writing authorizing another person or persons
to act for
him
or her as proxy. Execution may be accomplished by the stockholder or his or her
authorized
officer,
director, employee or agent signing the writing or causing his or her signature
to be
affixed
to the writing by any reasonable means including, but not limited to, facsimile
signature.
(ii) A stockholder may authorize another person or persons to act for him or
her as proxy
by
transmitting or authorizing the transmission of a telegram, cablegram, or other
means of
electronic
transmission, including Internet and telephonic transmissions, to the person
who will
be
the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or an
agent
authorized by the person who will be the holder of the proxy to receive the
transmission,
provided
that the telegram, cablegram or other means of electronic transmission must
either state
or
be submitted or communicated with information from which it can be determined
that the
telegram,
cablegram or other electronic transmission, including Internet and telephonic
transmissions,
was authorized by the stockholder. If it is determined that the telegrams,
cablegrams
or other electronic transmissions, including Internet and telephonic
transmissions, are
valid,
the inspectors or, if there are no inspectors, the other persons making that
determination
shall
specify the information upon which they relied.
(2) Any copy, facsimile telecommunication or other reliable reproduction of the
writing
or
transmission created pursuant to this section may be substituted or used in
lieu of the original
writing
or transmission for any and all purposes for which the original writing or
transmission
could
be used, provided that the copy, facsimile telecommunication or other
reproduction is a
complete
reproduction of the entire original writing or transmission.
(d) The articles of incorporation may provide that at each election of
directors, or at
elections
held under specified circumstances, every shareholder entitled to vote at the
election has
the
right to vote, in person or by proxy, the number of shares owned by him or her
for as many
persons
as there are directors to be elected and for whose election he or she has a
right to vote, or
to
cumulate his or her votes by giving one candidate as many votes as the number
of directors
multiplied
by the number of his or her shares shall equal, or by distributing the votes on
the same
principle
among any number of the candidates.
(e) Shares standing in the name of another corporation, domestic or foreign,
may be
voted
by any officer, agent, or proxy that the bylaws of the corporation may
prescribe, or, in the
absence
of a provision, as the board of directors of the corporation may determine.
(f) Shares held by an administrator, executor, guardian, custodian under a gift
to minors
act,
or conservator may be voted by him or her, either in person or by proxy,
without a transfer of
the
shares into his or her name. Shares standing in the name of a trustee may be
voted by him or
her,
either in person or by proxy, but no trustee is entitled to vote shares held by
him or her
without
a transfer of the shares into his or her name.
(g) Shares held by two (2) or more persons as joint tenants or as tenants in
common may
be
voted at any meeting of the shareholders by any one of the persons, unless
another joint tenant
or
tenant in common seeks to vote any of the shares in person or by proxy. In the
latter event, the
written
agreement, if any, which governs the manner in which the shares are voted,
controls if
presented
at the meeting. If there is no agreement presented at the meeting, the majority
in
number
of the joint tenants or tenants in common present shall control the manner of
voting. If
there
is no majority, or if there are two (2) joint tenants or tenants in common,
both of whom seek
to
vote the shares, the shares shall, for the purpose of voting, be divided
equally among the joint
tenants
or tenants in common present.
(h) Shares standing in the name of a receiver may be voted by the receiver, and
shares
held
by or under the control of a receiver may be voted by the receiver without the
transfer of
those
shares into his or her name if authority to do so is contained in an
appropriate order of the
court
by which the receiver was appointed.
(i) A shareholder whose shares are pledged is entitled to vote the shares until
the shares
have
been transferred into the name of the pledgee, and thereafter the pledgee is
entitled to vote
the
shares so transferred.
(j) On and after the date on which written notice of redemption of redeemable
shares has
been
mailed to the holders of the shares and a sum sufficient to redeem the shares
has been
deposited
with a bank or trust company with irrevocable instruction and authority to pay
the
redemption
price to the holders of the shares upon surrender of certificates for the shares,
the
shares
shall not be entitled to vote on any matter and shall not be deemed to be
outstanding
shares.
(k) (1) An executed proxy is irrevocable if it specifies that it is irrevocable
and if, and
only
so long as, it is coupled with an interest sufficient in law to support an
irrevocable power
coupled
with it.
(2) Without limiting the generality of subsection (a) and subject to that
subsection, a
proxy
is coupled with an interest and irrevocable if it is held by any of the
following or a nominee
of
any of the following:
(i) A pledgee under a valid pledge;
(ii) A person who has agreed to purchase the shares under an executory contract
of sale;
(iii) A creditor or creditors of the corporation who extend or continue credit
to the
corporation
in consideration of the proxy if the proxy states that it was given in
consideration of
the
extension or continuation of credit, the amount of the credit, and the name of
the person
extending
or continuing credit; and
(iv) A person who has contracted to perform services for the corporation if a
proxy is
required
by the contract of employment, as part of the consideration for the contract of
employment,
if the proxy states that it was given in consideration of the contract of
employment,
the
name of the employee, and the period of employment contracted for; provided the
proxies
shall
respectively be revocable after the pledge is redeemed, or the executory
contract of sale is
performed,
or the debt of the corporation is paid, or the period of employment has
terminated.
(3) A provision contained in a proxy making it irrevocable is not enforceable
against a
purchaser
for value of the shares subject to the provision without actual knowledge of
the
existence
of the provision, unless notice of the proxy and its irrevocability appears
plainly on the
certificate
or certificates representing the shares.
7-1.1-32.
Voting trusts and agreements among shareholders. -- (a) Any
number of
shareholders
of a corporation may create a voting trust for the purpose of conferring upon a
trustee
or trustees the right to vote or otherwise represent their shares, for a period
not to exceed
ten
(10) years, by entering into a written voting trust agreement specifying the
terms and
conditions
of the voting trust, by depositing a counterpart of the agreement with the
corporation at
its
registered office, and by transferring their shares to the trustee or trustees
for the purposes of
the
agreement. The trustee or trustees shall keep a record of the holders of voting
trust certificates
evidencing
a beneficial interest in the voting trust, giving the names and addresses of
all the
holders
and the number and class of the shares in respect of which the voting trust
certificates
held
by each are issued, and shall deposit a copy of the record with the corporation
at its
registered
office. The counterpart of the voting trust agreement and the copy of the
record
deposited
with the corporation are subject to the same right of examination by a
shareholder of
the
corporation, in person or by agent or attorney, as are the books and records of
the corporation,
and
the counterpart and the copy of the record is subject to examination by any
holder of record
of
voting trust certificates, either in person or by agent or attorney, at any
reasonable time for any
proper
purpose. In the trust certificates it shall be stated that they are issued
pursuant to the voting
trust
agreement, and that fact shall be stated in the stock ledger of the
corporation.
(b) Agreements among shareholders regarding the voting of their shares are
valid and
enforceable
in accordance with their terms for a period of not to exceed ten (10) years. An
agreement
is not subject to the provision of this section regarding voting trusts unless
it is stated
in
the agreement that it is a voting trust.
(c) The provisions of this section are construed as permissive and shall not be
interpreted
to
invalidate any voting or other agreement among stockholders, or any irrevocable
proxy which
is
otherwise not illegal.
(d) A voting trust or shareholders agreement may at any time or times be
extended for an
additional
period not in excess of ten (10) years, but the extension is binding only with
respect to
those
shares owned of record or beneficially by parties to the extension.
7-1.1-32.1.
Voting and inspection rights of bondholders and debentureholders. --
The
articles of incorporation may, to the extent and in the manner provided in the
articles, confer
on
the holders of bonds or other evidences of indebtedness of the corporation
rights to vote in the
election
of directors and on any other matters on which shareholders may vote and rights
to
inspect
the books and records of the corporation. The articles of incorporation may
also, to the
extent
and in the manner provided in the articles, divest the holders of voting
shares, in whole or
in
part, of their right to vote on any corporate matter whatsoever, except as set
forth in section 7-
1.1-55.
7-1.1-33.
Board of directors. -- (a) The business and affairs of a
corporation are
managed
by a board of directors. Directors need not be residents of this state or
shareholders of
the
corporation unless the articles of incorporation or bylaws require it. The
articles of
incorporation
or bylaws may prescribe other qualifications for directors. The board of
directors
has
authority to fix the compensation of directors unless otherwise provided in the
articles of
incorporation.
(b) A director shall discharge his or her duties as a director, including his
or her duties as
a
member of a committee:
(1) In good faith;
(2) With the care an ordinarily prudent person in a like position would
exercise under
similar
circumstances; and
(3) In a manner he or she reasonably believes to be in the best interests of
the
corporation.
(c) In discharging his or her duties, a director is entitled to rely on
information, opinions,
reports,
or statements, including financial statements and other financial data, if prepared
or
presented
by:
(1) One or more officers or employees of the corporation whom the director
reasonably
believes
to be reliable and competent in the matters presented;
(2) Legal counsel, public accountants, or other persons as to matters the
director
reasonably
believes are within the person's professional or expert competence; or
(3) A committee of the board of directors of which he or she is not a member if
the
director
reasonably believes the committee merits confidence.
(d) A director is not acting in good faith if he or she has knowledge
concerning the
matter
in question that makes reliance otherwise permitted by subsection (c)
unwarranted.
(e) A director is not liable for any action taken as a director, or any failure
to take any
action,
if he or she performed the duties of his or her office in compliance with this
section.
(f) For the purposes of subsections (b) through (e), "corporation"
also includes any
financial
institution, insurance company, public utility or other quasi-public
corporation having
purposes
enumerated as exceptions to this chapter in section 7-1.1-3 and the provisions
of
subsections
(b) through (e) of this section are applicable to the directors of that
corporation.
7-1.1-34.
Number and election of directors. -- The board of directors of a
corporation
consists
of one or more members. The number of directors are fixed by, or in the manner
provided
in, the articles of incorporation or the bylaws except as to the number
constituting the
initial
board of directors, which number is fixed by the articles of incorporation. The
number of
directors
may be increased or decreased from time to time by amendment to, or in the
manner
provided
in, the articles of incorporation or the bylaws, but no decrease has the effect
of
shortening
the term of any incumbent director. If the articles of incorporation provide
for the
election
of directors in the manner specified in subsection (d) of section 7-1.1-31, the
number of
directors
may not be decreased unless approved by the stockholders with less than the
number of
shares
previously entitled to elect one director voting against the decrease. In the
absence of a
bylaw
fixing the number of directors, the number is the same as that provided for in
the articles of
incorporation.
The names and addresses of the members of the first board of directors shall be
stated
in the articles of incorporation. Those persons hold office until the first
annual meeting of
shareholders,
and until their successors have been elected and qualified. At the first annual
meeting
of shareholders and at each subsequent annual meeting, the shareholders shall
elect
directors
to hold office until the next succeeding annual meeting, except in the case of
the
classification
of directors as permitted by this chapter. Each director holds office for the
term for
which
he or she is elected and until his or her successor has been elected and
qualified.
7-1.1-35.
Classification of directors. -- When the board of directors
consists of nine (9)
or
more members, in lieu of electing the whole number of directors annually, the
articles of
incorporation
may provide that the directors be divided into either two (2) or three (3)
classes,
each
class to be as nearly equal in number as possible, the term of office of
directors of the first
class
to expire at the first annual meeting of shareholders after their election,
that of the second
class
to expire at the second annual meeting after their election, and that of the
third class, if any,
to
expire at the third annual meeting after their election. At each annual meeting
after the
classification,
the number of directors equal to the number of the class whose term expires at
the
time
of the meeting shall be elected to hold office until the second succeeding
annual meeting, if
there
are two (2) classes, or until the third succeeding annual meeting, if there are
three (3)
classes.
No classification of directors is effective prior to the first annual meeting
of shareholders.
The
articles of incorporation may confer upon holders of any class or series of
stock the right to
elect
one or more directors who serve for any term and have any voting powers stated
in the
articles
of incorporation. The terms of office and voting powers of the directors
elected in the
manner
provided in the articles of incorporation may be greater than or less than
those of any
other
director or class of directors.
7-1.1-36.
Vacancies. -- Any vacancy occurring in the board of directors
may be filled by
the
affirmative vote of a majority of the remaining directors though less than a
quorum of the
board
of directors. A director elected to fill a vacancy is elected for the unexpired
term of his or
her
predecessor in office. Any directorship to be filled by reason of an increase
in the number of
directors
may be filled by the board of directors for a term of office continuing only
until the next
election
of directors by the shareholders.
7-1.1-36.1.
Removal of directors. -- (a) Any or all of the directors may be
removed for
cause
by vote of the shareholders. The certificate of incorporation or the specific
provisions of a
bylaw
adopted by the shareholders may provide for the removal by action of the board,
except in
the
case of any director elected by cumulative voting, or by the holders of the
shares of any class
or
series, or holders of bonds, voting as a class, when entitled by the provisions
of the articles of
incorporation.
(b) If the articles of incorporation or the bylaws provide, any or all of the
directors may
be
removed without cause by vote of the shareholders.
(c) The removal of directors, with or without cause, as provided in subsections
(a) and
(b)
is subject to the following:
(1) In the case of a corporation having cumulative voting, no director may be
removed
when
the votes cast against his or her removal would be sufficient to elect him or
her if voted
cumulatively
at an election at which the same total number of votes were cast and the entire
board,
or the entire class of directors of which he or she is a member, were then
being elected;
and
(2) When by the provisions of the articles of incorporation the holders of the
shares of
any
class or series, or holders of bonds, voting as a class, are entitled to elect
one or more
directors,
any director so elected may be removed only by the applicable vote of the
holders of
the
shares of that class or series or the holders of the bonds, voting as a class.
(d) An action to procure a judgment removing a director for cause may be
brought by the
attorney
general or by the holders of ten percent (10%) of the outstanding shares,
whether or not
entitled
to vote. The court having jurisdiction may bar from reelection any directors so
removed
for
a period fixed by the court.
7-1.1-37.
Quorum of directors. -- A majority of the number of directors
fixed by or in
the
manner provided in the bylaws, or by the stockholders or in the absence of a
bylaw or
stockholder
action fixing the number of directors, then of the number stated in the
articles of
incorporation,
constitutes a quorum for the transaction of business unless a greater number is
required
by the articles of incorporation or the bylaws. The act of the majority of the
directors
present
at a meeting at which a quorum is present is the act of the board of directors,
unless the
act
of a greater number is required by the articles of incorporation or the bylaws.
7-1.1-37.1.
Director conflicts of interest. -- (a) No contract or
transaction between a
corporation
and one or more of its directors or officers, or between a corporation and any
other
corporation,
partnership, association, or other organization in which one or more of its
directors
or
officers are directors or officers or have a financial interest, is void or
voidable nor are the
directors
or officers liable with respect to the contract or transaction solely for this
reason, or
solely
because the director or officer is present at or participates in the meeting of
the board or
committee
of the board which authorizes the contract or transaction, or solely because
his or her
or
their votes are counted for that purpose, if:
(1) The material facts as to his or her or their interest or relationship are
disclosed or are
known
to the board of directors or the committee, and the board of directors or
committee
authorizes,
approves, or ratifies the contract or transaction by the affirmative votes of a
majority
of
the disinterested directors, even though the disinterested directors are less
than a quorum; or
(2) The material facts as to his or her or their interest or relationship are
disclosed or are
known
to the shareholders entitled to vote on the contract or transaction, and the
contract or
transaction
is specifically authorized, approved, or ratified by vote of the shareholders;
or
(3) The contract or transaction is fair and reasonable as to the corporation.
(b) Common or interested directors may be counted in determining the presence
of a
quorum
at a meeting of the board of directors or of a committee which authorizes the
contract or
transaction.
7-1.1-38.
Executive and other committees. -- If the articles of
incorporation or the
bylaws
provide, the board of directors, by resolution adopted by a majority of the
full board of
directors,
may designate from among its members an executive committee and one or more
other
committees
each of which, to the extent provided in the resolution or in the articles of
incorporation
or the bylaws of the corporation, have and may exercise all the authority of
the
board
of directors, but no committee has the authority of the board of directors in
reference to
amending
the articles of incorporation, adopting a plan of merger or consolidation,
recommending
to the shareholders the sale, lease, exchange, or other disposition of all or
substantially
all the property and assets of the corporation other than in the usual and
regular
course
of its business, recommending to the shareholders a voluntary dissolution or
revocation of
the
corporation, or amending the bylaws of the corporation. The designation of any
committee
and
the delegation to the committee of authority does not operate to relieve the
board of directors,
or
any member of the board, of any responsibility imposed by law.
7-1.1-39.
Place, notice, and form of directors' and committee meetings. --
(a)
Meetings
of the board of directors, or any committee designated by the board, regular or
special,
may
be held either within or without this state.
(b) Regular meetings of the board of directors or any committee designated by
the board
may
be held with or without notice as prescribed in the bylaws. Special meetings of
the board of
directors
or any committee designated by the board shall be held upon notice that is
prescribed in
the
bylaws. Attendance of a director at a meeting constitutes a waiver of notice of
the meeting,
except
where a director attends a meeting for the express purpose of objecting to the
transaction
of
any business because the meeting is not lawfully called or convened. Neither
the business to be
transacted
at, nor the purpose of, any regular or special meeting of the board of
directors or any
committee
designated by the board of directors need be specified in the notice or waiver
of notice
of
the meeting unless required by the bylaws. Except as may be otherwise
restricted by the
articles
of incorporation or bylaws, members of the board of directors or any committee
designated
by the board of directors may participate in a meeting of the board or
committee by
means
of a conference telephone or similar communications equipment, by means of
which all
persons
participating in the meeting can hear each other at the same time and
participation by
those
means constitutes presence in person at a meeting.
7-1.1-39.1.
Action by directors without a meeting. -- Unless otherwise
provided by the
articles
of incorporation or bylaws, any action required by this chapter to be taken at
a meeting of
the
directors of a corporation, or any action which may be taken at a meeting of
the directors or of
a
committee, may be taken without a meeting if a consent, in writing, stating the
action to be
taken,
is signed before or after the action by all of the directors, or all of the
members of the
committee,
as the case may be. The consent has the same effect as a unanimous vote for all
purposes,
and that may be stated in any certificate or other document filed with the
secretary of
state.
7-1.1-40.
Dividends. -- (a) The board of directors of a corporation may,
from time to
time,
declare and the corporation may pay dividends on its outstanding shares in
cash, property,
or
its own shares, except when the corporation is insolvent or when the payment of
dividends
would
render the corporation insolvent or when the declaration or payment of
dividends would be
contrary
to any restrictions contained in the articles of incorporation, subject to the
following
provisions:
(1) No distribution may be made if, after giving it effect, any of the
following would
occur:
(i) The corporation would not be able to pay its debts as they become due in
the usual
course
of business.
(ii) The corporation's total assets would be less than the sum of its total
liabilities plus,
unless
the articles of incorporation permit otherwise, the amount that would be
needed, if the
corporation
were to be dissolved at the time of the distribution, to satisfy the
preferential rights
upon
dissolution of shareholders whose preferential rights are superior to those
receiving the
distribution.
(2) If the articles of incorporation of a corporation engaged in the business
of exploiting
natural
resources provides, dividends may be declared and paid in cash out of the
depletion
reserves,
but each dividend shall be identified as a distribution of the reserves and the
amount per
share
paid from the reserves shall be disclosed to the shareholders receiving the
dividend
concurrently
with the distribution of the dividend.
(3) Dividends may be declared and paid by a corporation in its own treasury
shares.
(4) Dividends may be declared and paid in its own authorized but unissued
shares upon
the
following conditions:
(i) If a dividend is payable in its own shares having a par value, the shares
shall be issued
at
not less than the par value of the shares and there shall be transferred to
stated capital at the
time
the dividend is paid an amount of surplus equal to the aggregate par value of
the shares to be
issued
as a dividend.
(ii) If a dividend is payable in its own shares without par value, the shares
shall be issued
at
the stated value that is fixed by the board of directors by resolution adopted
at the time the
dividend
is declared, and there shall be transferred to stated capital at the time the
dividend is paid
an
amount of surplus equal to the aggregate stated value fixed in respect of the shares;
and the
amount
per share transferred to stated capital shall be disclosed to the shareholders
receiving the
dividend
concurrently with that payment.
(5) No dividend payable in shares of any class shall be paid to the holders of
shares of
any
other class unless the articles of incorporation provide or the payment is
authorized by the
affirmative
vote or the written consent of the holders of at least a majority of the
outstanding
shares
of the class in which the payment is to be made.
(b) A split up or division of the issued shares of any class into a greater
number of shares
of
the same class without increasing the stated capital of the corporation is not
construed to be a
share
dividend within the meaning of this section.
7-1.1-41.
Distribution from capital surplus. -- (a) Upon the vote of its
board of
directors,
a corporation may, from time to time distribute to its shareholders, directly
or by the
purchase
of its own shares, a portion of its assets, in cash or property, out of the
unreserved and
unrestricted
capital surplus of the corporation, subject to the following provisions:
(1) No distribution shall be made at a time when the corporation is insolvent
or when the
distribution
would render the corporation insolvent.
(2) No distribution shall be made unless the articles of incorporation provide
for one or
the
distribution is authorized by the affirmative vote of the holders of a majority
of the
outstanding
shares of each class whether or not entitled to vote on the distribution by the
provisions
of the articles of incorporation of the corporation.
(3) No distribution shall be made to the holders of any class of shares unless
all
cumulative
dividends accrued on all preferred or special classes of shares entitled to
preferential
dividends
have been fully paid.
(4) No distribution shall be made to the holders of any class of shares unless
the fair
value
of the net assets of the corporation remaining after the distribution is at
least equal to the
largest
of the following:
(i) The total stated capital of the corporation;
(ii) The aggregate preferential amount payable in the event of involuntary
liquidation to
the
holders of shares having preferential rights to the assets of the corporation
in the event of
liquidation;
and
(iii) Twenty-five percent (25%) of the total liabilities of the corporation.
(5) No distribution shall be made if the corporation has any earned surplus.
(6) Any distribution shall be identified as a distribution from capital
surplus, and, if that
is
the case, specifically from revaluation surplus; and the amount per share shall
be disclosed to
the
shareholders receiving the amount concurrently with its distribution.
(b) Notwithstanding the foregoing limitations, the board of directors of a
corporation
may
also, from time to time, distribute to the holders of its outstanding shares
having a
cumulative
preferential right to receive dividends, in discharge of their cumulative
dividend
rights,
dividends payable in cash out of the capital surplus of the corporation, if at
the time the
corporation
has no earned surplus and is not insolvent and would not be rendered insolvent
as a
result.
Each distribution, when made, shall be identified as a payment of cumulative
dividends out
of
capital surplus.
7-1.1-42.
Loans to employees and directors. -- A corporation shall not
lend money to or
use
its credit to assist its directors without authorization in the particular case
by its shareholders,
but
may lend money to, guarantee any obligation of, or otherwise use its credit to
assist any
employee
of the corporation or of a subsidiary, including any employee who is a director
of the
corporation
or of a subsidiary, if the board of directors decides that the loan, guaranty,
or other
assistance
may benefit the corporation. The loan, guaranty, or other assistance may be
with or
without
interest, and may be unsecured, or secured in any manner that the board of
directors
approves,
including, without limitation, a pledge of shares of stock of the corporation.
Nothing
contained
in this section is deemed to deny, limit, or restrict the powers of guaranty or
warranty
of
any corporation at common law or under any statute.
7-1.1-43.
Liability of directors in certain cases. -- (a) In addition to
any other liabilities
imposed
by law upon directors of a corporation:
(1) Directors of a corporation who vote for or assent to the declaration of any
dividend or
other
distribution of the assets of a corporation to its shareholders contrary to the
provisions of
this
chapter or contrary to any restrictions contained in the articles of incorporation,
are jointly
and
severally liable to the corporation for the amount of the dividend which is
paid or the value of
the
assets which are distributed in excess of the amount of the dividend or
distribution which
could
have been paid or distributed without a violation of the provisions of this
chapter or the
restrictions
in the articles of incorporation.
(2) Directors of a corporation who vote for or assent to the purchase of its
own shares
contrary
to the provisions of this chapter are jointly and severally liable to the
corporation for the
amount
of consideration paid for the shares which is in excess of the maximum amount
which
could
have been paid for the shares without a violation of the provisions of this
chapter.
(3) The directors of a corporation who vote for or assent to any distribution
of assets of a
corporation
to its shareholders during the liquidation of the corporation without the
payment and
discharge
of, or making adequate provision for, all known debts, obligations, and
liabilities of the
corporation
are jointly and severally liable to the corporation for the value of the assets
which are
distributed,
to the extent that the debts, obligations, and liabilities of the corporation
are not
subsequently
paid and discharged.
(b) A director of a corporation who is present at a meeting of its board of
directors at
which
action on any corporate matter is taken is presumed to have assented to the
action taken
unless
his or her dissent is entered in the minutes of the meeting or unless he or she
files his or
her
written dissent to the action with the person acting as the secretary of the
meeting before the
meeting's
adjournment or forwards the dissent by registered mail to the secretary of the
corporation
immediately after the adjournment of the meeting. The right to dissent does not
apply
to
a director who voted in favor of the action.
(c) A director is not liable under this section if under the circumstances he
or she acted
with
due care and in good faith, and without limiting the generality of what has
just been stated, is
not
liable if he or she relied in good faith upon financial statements of the
corporation represented
to
him or her to be correct and to be based upon generally accepted accounting
principles by the
president
or the officer of the corporation having charge of its books of account, or
stated in a
written
report by an independent public or certified public accountant or firm of
accountants
fairly
to reflect the financial condition of the corporation.
(d) Any director against whom a claim is asserted under or pursuant to this
section for
the
payment of a dividend or other distribution of assets of a corporation and who
is held liable on
the
claim, is entitled to contribution from the shareholders who accepted or
received any dividend
or
assets, knowing the dividend or distribution to have been made in violation of
this chapter, in
proportion
to the amounts received by them respectively.
7-1.1-43.1.
Actions by shareholders. -- (a) No action shall be brought in
this state by a
shareholder
in the right of a domestic or foreign corporation unless the plaintiff was a
holder of
record
of shares or of voting trust certificates for the shares at the time of the
transaction of which
he
or she complains, or his or her shares or voting trust certificates
subsequently devolved upon
him
or her by operation of law from a person who was a holder of record at the
time.
(b) In any action hereafter instituted in the right of any domestic or foreign
corporation
by
the holder or holders of record of shares of the corporation or of voting trust
certificates for the
shares,
the court having jurisdiction, upon final judgment and a finding that the
action was
brought
without reasonable cause, may require the plaintiff or plaintiffs to pay to the
parties
named
as defendant the reasonable expenses, including attorney's fees, incurred by
them in the
defense
of the action.
7-1.1-44.
Officers. -- (a) The officers of a corporation consist of a
chairperson of the
board
of directors, if prescribed by the by-laws, a president, one or more vice
presidents, if
prescribed
by the bylaws, a secretary, and a treasurer, each of whom is elected by the
board of
directors
or by the stockholders at a time and in a manner as prescribed by the bylaws.
Any other
officers
and assistant officers and agents as that are necessary may be elected or
appointed by the
board
of directors or by the stockholders or chosen in another manner prescribed by
the bylaws.
Any
two (2) or more offices may be held by the same person. A failure to elect
officers does not
dissolve
or otherwise affect the corporation.
(b) All officers and agents of the corporation, as between themselves and the
corporation,
have the authority and perform any duties in the management of the corporation
that
may
be provided in the bylaws, or that may be determined by resolution of the board
of directors,
subject
to any limitations on the authority contained in the bylaws.
7-1.1-45.
Removal of officers. -- Any officer or agent may be removed by
the board of
directors
whenever, in its judgment, the best interests of the corporation will be served
by the
removal,
but the removal shall be without prejudice to the contract rights, if any, of
the person
removed.
Election or appointment of an officer or agent does not of itself create
contract rights.
7-1.1-46.
Books and records. -- (a) Each corporation shall keep correct
and complete
books
and records of account, l keep minutes of the proceedings of its shareholders
and of the
board
of directors and committees of the board, and shall also keep at its registered
office or
principal
place of business, or at the office of its transfer agent or registrar, a
record of its
shareholders
giving the names and addresses of all shareholders and the number and class of
the
shares
held by each. Any books, records, and minutes may be in written form or any
other form
capable
of being converted into written form within a reasonable time.
(b) Any person who has been a shareholder of record or of voting trust
certificates for
the
shares for at least six (6) months immediately preceding his or her demand or
is be the holder
of
record of, or the holder of record of voting trust certificates for, at least
five percent (5%) of all
the
outstanding shares of a corporation, upon written demand stating the purpose
for the demand,
shall
have the right to examine, in person, or by agent or attorney, at any
reasonable time or
times,
for any proper purpose, its relevant books and records of account, minutes, and
record of
shareholders
and to make extracts from those books and records of account, minutes, and
record
of
shareholders.
(c) Any officer or agent who, or a corporation which, refuses to allow any
shareholder or
holder
of voting trust certificates, or his or her agent or attorney, to examine and
make extracts
from
its books and records of account, minutes, and record of shareholders, for any
proper
purpose,
is liable to the shareholder or holder of voting trust certificates in a
penalty of ten
percent
(10%) of the value of the shares owned by the shareholder, or in respect of
which the
voting
trust certificates are issued, in addition to any other damages or remedy
afforded him or
her
by law. It is a defense to any action for penalties under this section that the
person bringing
the
suit has within two (2) years sold or offered for sale any list of shareholders
or of holders of
voting
trust certificates for shares of the corporation or any other corporation or
has aided or
abetted
any person in procuring any list of shareholders or of holders of voting trust
certificates
for
that purpose, or has improperly used any information secured through any prior
examination
of
the books and records of account, or minutes, or record of shareholders, or of
holders of voting
trust
certificates for shares of the corporation or any other corporation, or was not
acting in good
faith
or for a proper purpose in making his or her demand.
(d) Nothing contained in these provisions impairs the power of any court of
competent
jurisdiction,
upon proof by a shareholder or holder of voting trust certificates of proper
purpose,
irrespective
of the period of time during which the shareholder or holder of voting trust
certificates
has been a shareholder of record or a holder of record of voting trust
certificates and
irrespective
of the number of shares held by him or her, or represented by voting trust
certificates
held
by him or her, to compel the production for examination by the shareholder or
holder of
voting
trust certificates of the books and records of account, minutes, and record of
shareholders
of
a corporation.
(e) Upon the written request of any shareholder or holder of voting trust
certificates for
shares
of a corporation, the corporation shall mail to the shareholder or holder of
voting trust
certificates
its most recent financial statements showing in reasonable detail its assets
and
liabilities
and the results of its operations.
7-1.1-47.
Incorporators. -- (a) One or more persons may act as incorporator
or
incorporators
of a corporation by delivering in duplicate to the secretary of state articles
of
incorporation
for the corporation, which shall be signed and acknowledged before a notary
public.
(b) Until the corporation issues shares of stock, the incorporator or
incorporators has all
the
powers of the shareholders. Until the directors, if any, are elected and have
assumed their
duties,
the incorporator or incorporators has all the powers of directors with respect
to the
management
of the business and affairs of the corporation, and may do whatever is
necessary and
proper
to perfect the organization of the corporation, including, but not limited to,
the adoption
and
amendment of bylaws, amendment of the articles of incorporation, election of
officers, and
issuance
of shares of stock and the fixing of the consideration for the shares.
(c) The incorporator or incorporators calling a meeting under this section
shall give at
least
three (3) days' notice of the meeting by mail to each incorporator. The notice
shall state the
time
and place of the meeting.
(d) Any action permitted to be taken at the meeting or meetings of incorporators,
under
this
section may be taken without a meeting if a consent, in writing, stating the
action to be taken,
is
signed by all of the incorporators.
7-1.1-48.
Articles of incorporation. -- (a) The articles of incorporation shall
state:
(1) The name of the corporation.
(2) The period of duration, which may be perpetual.
(3) The specific purpose or purposes for which the corporation is organized and
which
may
include the transaction of any or all lawful business for which corporations
may be
incorporated
under this chapter.
(4) (i) If the corporation is to be authorized to issue only one class of
stock, the total
number
of shares of stock which the corporation has authority to issue; and:
(A) The par value of each of the shares; or
(B) A statement that all the shares are to be without par value; or
(ii) If the corporation is to be authorized to issue more than one class of
stock, the total
number
of shares of all classes of stock which the corporation has authority to issue
and:
(A) The number of the shares of each class of stock that are to have a par
value and the
par
value of each share of each class; and/or
(B) The number of the shares that are to be without par value; and
(C) A statement of all or any of the designations and the powers, preferences,
and rights,
including
voting rights, and the qualifications, limitations, or restrictions of them,
which are
permitted
by the provisions of this chapter in respect of any class or classes of stock
of the
corporation
and the fixing of which by the articles of association is desired, and an
express grant
of
the authority as it may then be desired to grant to the board of directors to
fix by vote or votes
any
of them that may be desired but which is not fixed by the articles.
(5) Any provisions dealing with the preemptive right of shareholders pursuant
to the
provisions
of section 7-1.1-24.
(6) Any provision, not inconsistent with law, which the incorporators elect to
set forth in
the
articles of incorporation for the regulation of the internal affairs of the
corporation, including,
but
not limited to, a provision eliminating or limiting the personal liability of a
director to the
corporation
or to its stockholders for monetary damages for breach of the director's duty
as a
director;
provided that the provision does not eliminate or limit the liability of a
director for:
(i) Any breach of the director's duty of loyalty to the corporation or its
stockholders;
(ii) Acts or omissions not in good faith or which involve intentional
misconduct or a
knowing
violation of law;
(iii) Liability imposed pursuant to the provisions of section 7-1.1-43; or
(iv) Any transaction from which the director derived an improper personal benefit
(unless
the transaction is permitted by section 7-1.1-37.1); and also including;
(v) Any provision which under this chapter is required or permitted to be set
forth in the
bylaws.
No provision eliminating or limiting the personal liability of a director will
be effective
with
respect to causes of action arising prior to the inclusion of the provision in
the articles of
incorporation
of the corporation.
(7) The address of its initial registered office, and the name of its initial
registered agent
at
the address.
(8) The number of directors, if any, constituting the initial board of
directors, or, if none,
the
titles of the initial officers of the corporation and the names and addresses
of the persons who
are
to serve as directors or officers until the first annual meeting of
shareholders or until their
successors
are elected and qualify.
(9) The name and address of each incorporator.
(10) If, pursuant to section 7-1.1-50, the corporate existence is to begin at a
time
subsequent
to the issuance of the certificate of incorporation by the secretary of state,
the date
when
corporate existence begins.
(b) It is not necessary to set forth in the articles of incorporation any of
the corporate
powers
enumerated in this chapter.
(c) The provisions permitted by subsection (a)(6) may also be included in the
articles of
incorporation
or legislative charter of any existing or future financial institution,
insurance
company,
public utility, or other quasi public corporation having purposes enumerated as
exceptions
to this chapter in section 7-1.1-3.
7-1.1-49.
Filing of articles of incorporation. -- (a) Duplicate originals
of the articles of
incorporation
shall be delivered to the secretary of state. If the secretary of state finds
that the
articles
of incorporation conform to law, he or she shall, when all fees have been paid;
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Issue a certificate of incorporation to which he or she affixes the other
duplicate
original.
(b) The certificate of incorporation, together with the duplicate original of
the articles of
incorporation
affixed to it by the secretary of state, shall be returned to the incorporators
or their
representative.
7-1.1-50.
Effect of issuance of certificate of incorporation. -- Upon the
issuance of the
certificate
of incorporation or upon a later date, not more than thirty (30) days after the
filing of
the
articles of incorporation, as is set forth in the articles, the corporate
existence begins, and the
certificate
of incorporation is conclusive evidence that all conditions precedent required
to be
performed
by the incorporators have been complied with and that the corporation has been
incorporated
under this chapter, except as against this state in a proceeding to cancel or
revoke
the
certificate of incorporation or for involuntary dissolution of the corporation.
7-1.1-51.
Close corporations. -- (a) Provisions of the articles of
incorporation or bylaws
of
a corporation organized under this chapter, or provisions of an agreement
relating to a
corporation,
which would otherwise be invalid because they:
(1) Restrict, or assign to one or more shareholders or other persons, any or
all of the
powers
normally vested in the board of directors or provide that there is no board of
directors, or
(2) Grant the right to one or more stockholders to dissolve the corporation at
will or on
the
occurrence of a specified contingency, or
(3) Impose too great a restraint on the transfer of shares of the corporation,
are nevertheless valid if the provisions have been approved by all the
shareholders of the
corporation
and if the corporation's original or amended articles of incorporation contain
a
heading
immediately after the name of the corporation stating that it is a close
corporation
pursuant
to this section. This subsection is not deemed to invalidate any provision in
articles of
incorporation,
bylaws, or agreements that would otherwise be valid. A provision authorized by
subsection
(a) (1) may include a provision that there shall be no board of directors.
(b) The provisions of section 7-1.1-32 limiting the duration of a voting trust
or
shareholders'
agreement to ten (10) years is not applicable to a close corporation that
complies
with
subsection (a). If close corporation status is terminated pursuant to
subsection (d), the
effective
term of voting trust or shareholders' agreement shall be ten (10) years from
the
termination
or the term provided in the voting trust or shareholders' agreement, whichever
is
shorter.
(c) The effect of any provision authorized by subsection (a) (1) is to relieve
the directors
and
to impose on the person or persons undertaking to exercise responsibility the
liability for
managerial
acts or omissions that would otherwise be imposed on directors to the extent
that and
so
long as the discretion or powers of the board in its management of corporate
affairs is
controlled
by the provision. Action which is valid pursuant to subsection (a) (1) is
deemed to be
action
by the board of directors for purposes of compliance with any provision of this
chapter
providing
for action by the board of directors.
(d) (1) The articles of incorporation shall be amended to terminate close
corporation
status
pursuant to this section if:
(A) All of the shareholders, or a lesser number is specified in the articles of
incorporation,
the bylaws, or an agreement relating to the corporation, approve the
termination; or
(B) There are more than thirty (30) shareholders of record and any shareholder,
after
thirty
(30) days' notice to the corporation of his or her intention to do so during
which time the
number
is not reduced to thirty (30) or less, demands termination; or
(C) Any person who acquires record shares of the corporation without notice or
knowledge
of its close corporation status demands termination; provided, that notice is
conclusively
presumed if certificates representing the shares so acquired state on their
face, under
the
name of the corporation, that it is a close corporation pursuant to this
section.
(2) If the directors and shareholders fail to effect the amendment promptly,
the superior
court
has jurisdiction to enter whatever order is necessary to effect the amendment.
The
termination
does not affect the validity of any provision relating to the corporation or
its
management
which would be valid, notwithstanding the provisions of this section.
7-1.1-52.
Organization meeting of directors. -- After the issuance of the
certificate of
incorporation
an organization meeting of the board of directors named in the articles of
incorporation
shall be held, either within or without this state, at the call of a majority
of the
directors
named in the articles of incorporation, for the purpose of adopting bylaws,
electing
officers,
and the transaction of any other business that may come before the meeting. The
directors
calling the meeting shall give at least three (3) days' notice of the meeting
by mail to
each
director named, which notice shall state the time and place of the meeting.
7-1.1-53.
Right to amend articles of incorporation. -- (a) A corporation
may amend its
articles
of incorporation, from time to time, in any and as many respects as is desired,
so long as
its
articles of incorporation, as amended, contain only provisions that might be
lawfully contained
in
original articles of incorporation at the time of making the amendment, and, if
a change in
shares
or the rights of shareholders, or an exchange, reclassification, or
cancellation of shares or
rights
of shareholders is to be made, the provisions that may be necessary to effect
the change,
exchange,
reclassification, or cancellation.
(b) In particular, and without limitation upon the general power of amendment,
a
corporation
may amend its articles of incorporation, from time to time, so as to:
(1) Change its corporate name.
(2) Change its period of duration.
(3) Change, enlarge, or diminish its corporate purposes.
(4) Increase or decrease the aggregate number of shares, or shares of any
class, which the
corporation
has authority to issue.
(5) Increase or decrease the par value of the authorized shares of any class
having a par
value,
whether issued or unissued.
(6) Exchange, classify, reclassify, or cancel all or any part of its shares,
whether issued
or
unissued.
(7) Change the designation of all or any part of its shares, whether issued or
unissued,
and
to change the preferences, limitations, and relative rights in respect of all
or any part of its
shares,
whether issued or unissued.
(8) Change shares having a par value, whether issued or unissued, into the same
or a
different
number of shares without par value, and to change shares without par value,
whether
issued
or unissued, into the same or a different number of shares having a par value.
(9) Change the shares of any class, whether issued or unissued, and whether
with or
without
par value, into a different number of shares of the same class or into the same
or a
different
number of shares, either with or without par value, of other classes.
(10) Create new classes of shares having rights and preferences either prior
and superior
or
subordinate and inferior to the shares of any class then authorized, whether
issued or unissued.
(11) Cancel or otherwise affect the right of the holders of the shares of any
class to
receive
dividends which have accrued but have not been declared.
(12) Divide any preferred or special class of shares, whether issued or
unissued, into
series
and fix and determine the designations of the series and the variation in the
relative rights
and
preferences as between the shares of the series.
(13) Authorize the board of directors to establish, out of authorized but
unissued shares,
series
of any preferred or special class of shares and fix and determine the relative
rights and
preferences
of the shares of any series so established.
(14) Authorize the board of directors to fix and determine the relative rights
and
preferences
of the authorized but unissued shares of series previously established, in
respect of
which
either the relative rights and preferences have not been fixed and determined
or the relative
rights
and preferences previously fixed and determined are to be changed.
(15) Revoke, diminish, or enlarge the authority of the board of directors to
establish
series
out of authorized but unissued shares of any preferred or special class and fix
and
determine
the relative rights and preferences of the shares of any series so established.
(16) Limit, deny, or grant to shareholders of any class the preemptive right to
acquire
additional
or treasury shares of the corporation, whether then or subsequently authorized.
7-1.1-53.1.
Right to amend legislative charters. -- Any corporation created
by special
act
of the general assembly, which is organized under this chapter, whose charter
is subject to
amendment
or repeal at the will of the general assembly, may make any amendment to its
charter
that
corporations organized under the provisions of this chapter may make to their
articles of
incorporation
under section 7-1.1-53; and the proposed amendment shall be effected and
evidenced
in the same manner, by the same vote and upon the same terms and conditions as
are
prescribed
in sections 7-1.1-54 and 7-1.1-55.
7-1.1-54.
Procedure to amend articles of incorporation. -- (a) Amendments
to the
articles
of incorporation are made in the following manner:
(1) The board of directors adopts a resolution setting forth the proposed
amendment and
directing
that it be submitted to a vote at a meeting of shareholders, which may be
either the
annual
or a special meeting. If no shares have been issued, the amendment is adopted
by
resolution
of the board of directors and the provisions subsequently stated for adoption
by
shareholders
do not apply. The resolution may incorporate the proposed amendment in restated
articles
of incorporation which contain a statement that, except for the designated
amendment, the
restated
articles of incorporation correctly state without change the corresponding
provisions of
the
articles of incorporation as previously amended, and that the restated articles
of incorporation,
together
with the designated amendment, supersede the original articles of incorporation
and all
amendments
to those articles.
(2) Written notice stating the proposed amendment or a summary of the changes
to be
affected
by the amendment shall be given to each shareholder of record entitled to vote
on the
amendment
within the time and in the manner provided in this chapter for the giving of
notice of
meetings
of shareholders. If the meeting is an annual meeting, the proposed amendment or
the
summary
may be included in the notice of the annual meeting.
(3) At the meeting a vote of the shareholders entitled to vote on the amendment
shall be
taken
on the proposed amendment. The proposed amendment is adopted upon receiving the
affirmative
vote of the holders of a majority of the shares entitled to vote on the
amendment
unless
any class of shares is entitled to vote on the amendment as a class, pursuant
to either the
articles
of incorporation or the provisions of section 7-1.1-55, in which event approval
of the
proposed
amendment also requires the affirmative vote of the holders of a majority of
the shares
of
each class of shares entitled to vote as a class on the amendment.
(b) Any number of amendments may be submitted to the shareholders, and voted
upon
by
them, at one meeting.
(c) The resolution authorizing a proposed amendment to the certificate of
incorporation
may
provide that at any time prior to the filing of the amendment with the
secretary of state,
notwithstanding
authorization of the proposed amendment by the stockholders of the corporation
or
by the members of a nonstock corporation, the board of directors or governing
body may
abandon
the proposed amendment without further action by the stockholders or members.
7-1.1-55.
Class voting on amendments. -- (a) Except as otherwise provided
in this
section,
the holders of the outstanding shares of a class are entitled to vote as a
class upon a
proposed
amendment, whether or not entitled to vote on the amendment by the provisions
of the
articles
of incorporation, if the amendment would:
(1) Increase or decrease the aggregate number of authorized shares of the
class.
(2) Increase or decrease the par value of the shares of the class.
(3) Effect an exchange, reclassification, or cancellation of all or part of the
shares of the
class.
(4) Effect an exchange, or create a right of exchange, of all or any part of
the shares of
another
class into the shares of the class.
(5) Change the designations, preferences, limitations, or relative rights of
the shares of
the
class.
(6) Change the shares of the class, whether with or without par value, into the
same or a
different
number of shares, either with or without par value, of the same class or
another class or
classes.
(7) Create a new class of shares having rights and preferences prior and
superior to the
shares
of the class, or increase the rights and preferences or the number of
authorized shares of
any
class having rights and preferences prior or superior to the shares of the
class.
(8) In the case of a preferred or special class of shares, divide the shares of
the class into
series
and fix and determine the designation of the series and the variations in the
relative rights
and
preferences between the shares of the series, or authorize the board of
directors to do so.
(9) Limit or deny any existing preemptive rights of the shares of the class.
(10) Cancel or otherwise affect dividends on the shares of the class which have
accrued
but
have not been declared.
(b) If the proposed amendment would affect only the shares of one series of a
class and
not
the entire class, then only the shares of the series so affected is considered
a separate class for
the
purpose of this section. Any class and any series within a class is considered
a separate class
for
purposes of this section if the effect of the proposed amendment upon the class
or series
would
be different than the effect of the amendment upon the other classes or other
series within
the
class. If the proposed amendment would affect two (2) or more classes or series
within a class
in
the same way but would not affect the remaining classes or series within the
class in the same
way,
the two (2) or more classes or series affected in the same way are together
considered a
separate
class for purposes of this section. Except as otherwise provided in the
articles of
incorporation
or the certificate referred to in section 7-1.1-15(g), if the proposed
amendment
would
have no effect upon one or more classes or series of a class, the classes or
series are not
entitled
to any vote on the proposed amendment and, for the purposes of this section,
are not
counted
in determining the number of shares constituting the class.
7-1.1-56.
Articles of amendment. -- The articles of amendment shall be
executed in
duplicate
by the corporation by its president or a vice president and by its secretary or
an assistant
secretary,
and verified by one of the officers signing the articles, and shall state:
(1) The name of the corporation.
(2) The amendment so adopted.
(3) The date of the adoption of the amendment by the shareholders or by the
board of
directors
where no shares have been issued.
(4) The number of shares outstanding, and the number of shares entitled to vote
on the
amendment,
and if the shares of any class are entitled to vote on the amendment as a
class, the
designation
and number of outstanding shares entitled to vote on the amendment of each
class.
(5) The number of shares voted for and against the amendment, respectively,
and, if the
shares
of any class are entitled to vote on the amendment as a class, the number of
shares of each
class
voted for and against the amendment, respectively, or if no shares have been
issued, a
statement
to that effect.
(6) If the amendment provides for an exchange, reclassification, or
cancellation of issued
shares,
and if the manner in which that shall be effected is not set forth in the
amendment, then a
statement
of the manner in which the exchange, reclassification, or cancellation of issued
shares
shall
be effected.
(7) If the amendment effects a change in the amount of stated capital, then a
statement of
the
manner in which the change is effected and a statement, expressed in dollars,
of the amount of
stated
capital as changed by the amendment.
(8) If, pursuant to section 7-1.1-58, the amendment is to become effective at a
time
subsequent
to the issuance of the certificate of amendment by the secretary of state, the
date when
the
amendment is to become effective.
7-1.1-57.
Filing of articles of amendment. -- (a) Duplicate originals of
the articles of
amendment
shall be delivered to the secretary of state. If the secretary of state finds
that the
articles
of amendment conform to law, he or she shall, when all fees and franchise taxes
have
been
paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Issue a certificate of amendment to which he or she affixes the other
duplicate
original.
(b) The certificate of amendment, together with the duplicate original of the
articles of
amendment
affixed to it by the secretary of state, shall be returned to the corporation
or its
representative.
7-1.1-58.
Effect of certificate of amendment. -- (a) Upon the issuance of
the certificate
of
amendment by the secretary of state or upon a later date, not more than thirty
(30) days after
the
filing of the articles of amendment, as stated in the articles, the amendment
becomes effective
and
the articles of incorporation are deemed to be amended accordingly.
(b) No amendment affects any existing cause of action in favor of or against
the
corporation,
or any pending suit to which the corporation is a party, or the existing rights
of
persons
other than shareholders; and, in the event the corporate name is changed by
amendment,
no
suit brought by or against the corporation under its former name abates for
that reason.
7-1.1-59.
Restated articles of incorporation. -- (a) A domestic corporation
may at any
time
restate its articles of incorporation as previously amended, by a resolution
adopted by the
board
of directors.
(b) Upon the adoption of a resolution, restated articles of incorporation shall
be executed
in
duplicate by the corporation by its president or a vice president and by its
secretary or assistant
secretary
and verified by one of the officers signing the articles and shall state all of
the
provisions
of the articles of incorporation, as previously amended, together with a
statement that
the
restated articles of incorporation correctly set forth without change the
corresponding
provisions
of the articles of incorporation, as previously amended, and that the restated
articles of
incorporation
supersede the original articles of incorporation and all amendments to the
articles.
(c) Duplicate originals of the restated articles of incorporation shall be
delivered to the
secretary
of state. If the secretary of state finds that the restated articles of
incorporation conform
to
law, he or she shall, when all fees and franchise taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Issue a restated certificate of incorporation, to which he or she affixes
the other
duplicate
original.
(d) The restated certificate of incorporation, together with the duplicate
original of the
restated
articles of incorporation affixed to it by the secretary of state, shall be
returned to the
corporation
or its representative.
(e) Upon the issuance of the restated certificate of incorporation by the
secretary of state
or
upon a later date, not more than thirty (30) days after the filing of the
restated articles of
incorporation,
as stated in the articles, the restated articles of incorporation become
effective and
supersede
the original articles of incorporation and all amendments to those articles.
7-1.1-59.1.
Amendment of articles of incorporation in reorganization proceedings. --
(a)
Whenever a plan of reorganization of a corporation has been confirmed by decree
or order of
a
court of competent jurisdiction in proceedings for the reorganization of the
corporation,
pursuant
to the provisions of any applicable statute of the United States relating to
reorganizations
of
corporations, the articles of incorporation of the corporation may be amended,
in the manner
provided
in this section, in as many respects as are necessary to carry out the plan and
put into
effect,
as long as the articles of incorporation, as amended, contain only provisions
that might be
lawfully
contained in original articles of incorporation at the time of making the
amendment.
(b) In particular and without limitation upon the general power of amendment,
the
articles
of incorporation may be amended for that purpose so as to:
(1) Change the corporate name, period of duration, or corporate purposes of the
corporation;
(2) Repeal, alter, or amend the bylaws of the corporation;
(3) Change the aggregate number of shares, or shares of any class, which the
corporation
has
authority to issue;
(4) Change the preferences, limitations, and relative rights in respect of all
or any part of
the
shares of the corporation, and classify, reclassify, or cancel all or any part
of the shares,
whether
issued or unissued;
(5) Authorize the issuance of bonds, debentures, or other obligations of the
corporation,
whether
or not convertible into shares of any class or bearing warrants or other
evidences of
optional
rights to purchase or subscribe for shares of any class, and fix the terms and
conditions
of
them; and
(6) Constitute or reconstitute and classify or reclassify the board of
directors of the
corporation,
and appoint directors and officers in place of or in addition to all or any of
the
directors
or officers then in office.
(c) Amendments to the articles of incorporation pursuant to this section shall
be made in
the
following manner:
(1) Articles of amendment approved by decree or order of the court shall be
executed
and
verified in duplicate by the person or persons that the court designates or
appoints for the
purpose,
and shall state the name of the corporation, the amendments of the articles of
incorporation
approved by the court, the date of the decree or order approving the articles
of
amendment,
the title of the proceedings in which the decree or order was entered, and a
statement
that
the decree or order was entered by a court having jurisdiction of the
proceedings for the
reorganization
of the corporation pursuant to the provisions of an applicable statute of the
United
States.
(2) Duplicate originals of the articles of amendment shall be delivered to the
secretary of
state.
If the secretary of state finds that the articles of amendment conform to law,
he or she shall,
when
all fees and franchise taxes have been paid:
(i) Endorse on each of the duplicate originals the word "Filed", and
the month, day, and
year
of the filing.
(ii) File one of the duplicate originals in his or her office.
(iii) Issue a certificate of amendment to which he or she affixes the other
duplicate
original.
(d) The certificate of amendment, together with the duplicate original of the articles
of
amendment
affixed to it by the secretary of state, shall be returned to the corporation
or its
representative.
(e) The amendment becomes effective upon the issuance of the certificate of
amendment
by
the secretary of state, or upon a later date, not more than thirty (30) days
subsequent to the
filing
of the amendments with the secretary of state, as is provided for in the
articles of
amendment
without any action on the amendment by the directors or shareholders of the
corporation
and with the same effect as if the amendments had been adopted by unanimous
action
of
the directors and shareholders of the corporation.
7-1.1-60.
Restriction on redemption or purchase of redeemable shares. --
No
redemption
or purchase of redeemable shares shall be made by a corporation when it is
insolvent
or
when the redemption or purchase would render it insolvent, or which would
reduce the net
assets
below the aggregate amount payable to the holders of shares having prior or
equal rights to
the
assets of the corporation upon involuntary dissolution.
7-1.1-61.
Cancellation of redeemable shares by redemption or purchase. --
(a) When
redeemable
shares of a corporation are redeemed or purchased by the corporation, the
redemption
or
purchase effects a cancellation of the shares, and a statement of cancellation
shall be filed as
provided
in this section. Thereupon the shares are restored to the status of authorized
but unissued
shares,
unless the articles of incorporation provide that the shares, when redeemed or
purchased,
are
not to be reissued, in which case the filing of the statement of cancellation
constitutes an
amendment
to the articles of incorporation and reduces the number of shares of the class
cancelled
which the corporation is authorized to issue by the number of shares cancelled.
(b) The statement of cancellation shall be executed in duplicate by the
corporation by its
president
or a vice president and by its secretary or an assistant secretary, and
verified by one of
the
officers signing the statement, and shall state:
(1) The name of the corporation.
(2) The number of redeemable shares cancelled through redemption or purchase,
itemized
by classes and series.
(3) The aggregate number of issued shares, itemized by classes and series,
after giving
effect
to the cancellation.
(4) If the articles of incorporation provide that the cancelled shares are not
to be reissued,
then
the number of shares which the corporation has authority to issue, itemized by
classes and
series,
after giving effect to the cancellation.
(c) Duplicate originals of the statement shall be delivered to the secretary of
state. If the
secretary
of state finds that the statement conforms to law, the secretary of state
shall, when all
fees
and franchise taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed", and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Return the other duplicate original to the corporation or its
representative.
(d) Upon the filing of the statement of cancellation, the stated capital of the
corporation
is
deemed to be reduced by that part of the stated capital which was, at the time
of the
cancellation,
represented by the shares cancelled.
(e) Nothing contained in this section is construed to forbid a cancellation of
shares or a
reduction
of stated capital in any other manner permitted by this chapter.
7-1.1-62.
Cancellation of other reacquired shares. -- (a) A corporation
may at any
time,
by resolution of its board of directors, cancel all or any part of the shares
of the corporation
of
any class reacquired by it, other than redeemable shares redeemed or purchased,
and in that
event
a statement of cancellation shall be filed as provided in this section.
(b) The statement of cancellation shall be executed in duplicate by the
corporation by its
president
or a vice president and by its secretary or an assistant secretary, and
verified by one of
the
officers signing the statement, and shall state
(1) The name of the corporation.
(2) The number of reacquired shares cancelled by resolution duly adopted by the
board
of
directors, itemized by classes and series, and the date of its adoption.
(3) The aggregate number of issued shares, itemized by classes and series,
after giving
effect
to the cancellation.
(c) Duplicate originals of the statement shall be delivered to the secretary of
state. If the
secretary
of state finds that the statement conforms to law, the secretary of state
shall, when all
fees
and franchise taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Return the other duplicate original to the corporation or its
representative.
(d) Upon the filing of the statement of cancellation, the stated capital of the
corporation
is
deemed to be reduced by that part of the stated capital which was, at the time
of the
cancellation,
represented by the cancelled shares, and the cancelled shares are restored to
the
status
of authorized but unissued shares.
(e) Nothing contained in this section is construed to forbid a cancellation of
shares or a
reduction
of stated capital in any other manner permitted by this chapter.
7-1.1-63.
Reduction of stated capital in certain cases. -- (a) A reduction
in the stated
capital
of a corporation which does not involve either an amendment of the articles of
incorporation
or a cancellation of shares may be made in the following manner:
(1) The board of directors adopts a resolution stating the amount of the
proposed
reduction
and the manner in which the reduction is to be effected, and directing that the
question
of
the reduction be submitted to a vote at a meeting of shareholders, which may be
either an
annual
or a special meeting.
(2) Written notice, stating that the purpose or one of the purposes of the
meeting is to
consider
the question of reducing the stated capital of the corporation in the amount
and manner
proposed
by the board of directors, shall be given to each shareholder of record
entitled to vote on
the
reduction of stated capital within the time and in the manner provided in this
chapter for the
giving
of notice of meetings of shareholders.
(3) At the meeting a vote of the shareholders entitled to vote on the reduction
of stated
capital
shall be taken on the question of approving the proposed reduction of stated
capital, which
requires
for its adoption the affirmative vote of the holders of a majority of the
shares entitled to
vote
on the question.
(b) No reduction of stated capital shall be made under the provisions of this
section
which
would reduce the amount of the aggregate stated capital of the corporation to
an amount
equal
to or less than the aggregate preferential amounts payable upon all issued
shares having a
preferential
right in the assets of the corporation in the event of involuntary liquidation,
plus the
aggregate
par value of all issued shares having a par value but no preferential right in
the assets of
the
corporation in the event of involuntary liquidation.
7-1.1-64.
Creation and application of surplus and reserves. -- (a) The
surplus created
by
or arising out of a reduction of the stated capital of a corporation is capital
surplus.
(b) The capital surplus of a corporation may be increased from time to time by
resolution
of
the board of directors directing that all or a part of the earned surplus of
the corporation is
transferred
to capital surplus.
(c) A corporation may, by resolution of its board of directors, apply any part
or all of its
capital
surplus to the reduction or elimination of any deficit arising from losses,
however
incurred,
but only after first eliminating the earned surplus, if any, of the corporation
by applying
the
losses against earned surplus and only to the extent that the losses exceed the
earned surplus,
if
any. Each application of capital surplus shall, to the extent of the
application, effect a reduction
of
capital surplus.
(d) A corporation may, by resolution of its board of directors, create a
reserve or reserves
out
of its earned surplus for any proper purpose or purposes, and may abolish any
reserve in the
same
manner. Earned surplus of the corporation, to the extent so reserved, is not
available for the
payment
of dividends or other distributions by the corporation except as expressly
permitted by
this
chapter.
7-1.1-65.
Procedure for merger. -- (a) Any two (2) or more domestic
corporations may
merge
into one of the corporations pursuant to a plan of merger approved in the
manner provided
in
this chapter.
(b) The board of directors of each corporation shall, by resolution adopted by
each
board,
approve a plan of merger stating:
(1) The names of the corporations proposing to merge, and the name of the
corporation
into
which they propose to merge, which is hereinafter designated as the surviving
corporation.
(2) The terms and conditions of the proposed merger.
(3) The manner and basis of converting the shares of each merging corporation
(other
than
those held by the surviving corporation) into shares or obligations or other
securities of the
surviving
corporation or, in whole or in part, into cash, property, or shares,
obligations, or other
securities
of any other corporation.
(4) A statement of any changes in the articles of incorporation of the
surviving
corporation
to be effected by the merger, or if no changes are desired, a statement that
the articles
of
incorporation of one of the corporations are the articles of incorporation of
the surviving
corporation.
(5) Any other provisions with respect to the proposed merger that are deemed
necessary
or
desirable.
7-1.1-66.
Procedure for consolidation. -- (a) Any two (2) or more domestic
corporations
may
consolidate into a new corporation pursuant to a plan of consolidation approved
in the
manner
provided in this chapter.
(b) The board of directors of each corporation shall, by a resolution adopted
by each
board,
approve a plan of consolidation stating:
(1) The names of the corporations proposing to consolidate, and the name of the
new
corporation
into which they propose to consolidate, which is subsequently designated as the
new
corporation.
(2) The terms and conditions of the proposed consolidation.
(3) The manner and basis of converting the shares of each corporation into
shares or
obligations
or other securities of the new corporation or, in whole or in part, into cash,
property,
or
shares, obligations, or other securities of any other corporation.
(4) With respect to the new corporation, all of the statements required to be
stated in
articles
of incorporation for corporations organized under this chapter.
(5) Any other provisions with respect to the proposed consolidation that are
deemed
necessary
or desirable.
7-1.1-67.
Approval by shareholders of merger or consolidation. -- (a) The
board of
directors
of each corporation, upon approving the plan of merger or plan of
consolidation, shall,
by
resolution, direct that the plan be submitted to a vote at a meeting of
shareholders, which may
be
either an annual or a special meeting. Written notice shall be given to each
shareholder of
record,
whether or not entitled to vote at the meeting, not less than twenty (20) days
before the
meeting,
in the manner provided in this chapter for the giving of notice of meetings of
shareholders,
and, whether the meeting is an annual or a special meeting, shall state that
the
purpose
or one of the purposes is to consider the proposed plan of merger or
consolidation. A
copy
or a summary of the plan of merger or the agreement of consolidation, as the
case may be,
together
with a statement of the stockholder's right to dissent and a copy or a summary
of section
7-1.1-74,
shall be included in or enclosed with the notice except where no such right is
available.
(b) At each meeting, a vote of the shareholders shall be taken on the proposed
plan of
merger
or consolidation. The plan of merger or consolidation is be approved upon
receiving the
affirmative
vote of the holders of a majority of the shares entitled to vote on the plan of
merger or
consolidation
of each corporation, unless any class of shares of any corporation is entitled
to vote
as
a class on it, in which event, as to the corporation, approval of the plan of
merger or
consolidation
also requires the affirmative vote of the holders of a majority of the shares
of each
class
of shares entitled to vote as a class on it. Any class of shares of the
surviving corporation
and
the merged corporation in a merger is entitled to vote as a class, whether or
not the class is
otherwise
entitled to vote, if the plan of merger contains any provision which, if
contained in a
proposed
amendment to articles of incorporation, would entitle the class of shares to a
class vote.
(c) (1) Notwithstanding the foregoing provisions of this section, except as may
be
required
by the articles of incorporation, no approval of a plan of merger by the
stockholders of
the
surviving corporation in a merger, and no notice to any of the stockholders of
the corporation,
are
required if:
(i) The plan of merger does not amend the articles of incorporation of the
corporation;
and
(ii) The plan of merger does not involve the issuance or transfer by the
corporation
(either
directly or through the medium of options or warrants for, or shares or debt
instruments
convertible
within one year into, the shares) of shares possessing more than one-third (
1/3) of the
total
combined voting power of all classes of stock then entitled to vote for the
election of
directors
which will be outstanding immediately after the merger.
(2) If a plan of merger is adopted by the surviving corporation in a merger
without any
approval
by its shareholders, pursuant to the provisions of this subsection, that fact
shall be
certified
in the articles of merger.
(d) After approval as already stated by each corporation, and at any time prior
to the
filing
of the articles of merger or consolidation, the merger or consolidation may be
abandoned
pursuant
to provisions for abandonment, if any, set forth in the plan of merger or consolidation.
(e) Except as otherwise expressly provided in this chapter, the provisions and
requirements
of this section and section 7-1.1-73(a)(1) do not apply to any transaction
unless
articles
of merger or consolidation have been filed in connection with the transaction
under
section
7-1.1-68.
7-1.1-68.
Articles of merger or consolidation. -- (a) Upon approval,
articles of merger
or
articles of consolidation shall be executed in duplicate by each corporation by
its president or a
vice
president and by its secretary or an assistant secretary, and verified by one
of the officers of
each
corporation signing the articles, and shall state:
(1) The plan of merger or the plan of consolidation.
(2) As to each corporation (except one whose shareholders are not required to
approve
the
agreement under section 7-1.1-67, in which event that fact shall be stated),
the total number of
shares
outstanding entitled to vote on the plan, respectively, and, if the shares of
any class are
entitled
to vote on the plan as a class, the designation and number of outstanding
shares of each
class,
and the number of shares of each class voted for and against the plan,
respectively.
(3) If, pursuant to section 7-1.1-69, the merger or consolidation is to become
effective at
a
time subsequent to the issuance of the certificate of merger or the certificate
of consolidation by
the
secretary of state, the date when the merger or consolidation is to become
effective.
(b) Duplicate originals of the articles of merger or articles of consolidation
shall be
delivered
to the secretary of state. If the secretary of state finds that the articles
conform to law,
he
or she shall, when all fees and franchise taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Issue a certificate of merger or a certificate of consolidation to which he
or she
affixes
the other duplicate original.
(c) The certificate of merger or certificate of consolidation, together with
the duplicate
original
of the articles of merger or articles of consolidation affixed to it by the
secretary of state,
shall
be returned to the surviving or new corporation, as the case may be, or its
representative.
7-1.1-68.1.
Merger of subsidiary corporation. -- (a) Any corporation owning
at least
ninety
percent (90%) of the outstanding shares of each class of another corporation
may merge
the
other corporation into itself without approval by a vote of the shareholders of
either
corporation.
Its board of directors shall, by resolution, approve a plan of merger stating:
(1) The name of the subsidiary corporation and the name of the corporation
owning at
least
ninety percent (90%) of its shares, which is subsequently in these provisions
designated as
the
surviving corporation.
(2) The manner and basis of converting the shares of the subsidiary corporation
(other
than
those held by the surviving corporation) into shares or other securities or
obligations of the
surviving
corporation or of any other corporation, or in whole or in part, into cash or
other
consideration
to be paid upon the surrender of each share of the subsidiary corporation.
(b) A copy of the plan of merger shall be mailed to each shareholder of record
of the
subsidiary
corporation.
(c) Articles of merger shall be executed in duplicate by the surviving
corporation by its
president
or a vice president and by its secretary or an assistant secretary, and
verified by one of
its
officers signing the articles, and shall state:
(1) The plan of merger;
(2) The number of outstanding shares of each class of the subsidiary
corporation and the
number
of the shares of each class owned by the surviving corporation; and
(3) The date of the mailing to shareholders of the subsidiary corporation of a
copy of the
plan
of merger.
(4) If, pursuant to section 7-1.1-69, the merger is to become effective at a
time
subsequent
to the issuance of the certificate of merger by the secretary of state, the
date when the
merger
is to become effective.
(d) On and after the thirtieth day after the mailing of a copy of the agreement
of merger
to
shareholders of the subsidiary corporation or upon the waiver of the mailing by
the holders of
all
outstanding shares, duplicate originals of the articles of merger shall be
delivered to the
secretary
of state. If the secretary of state finds that the articles conform to law, the
secretary of
state
shall, when all fees and franchise taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing;
(2) File one of the duplicate originals in his or her office, and
(3) Issue a certificate of merger to which he or she affixes the other
duplicate original.
(e) The certificate of merger, together with the duplicate original of the
articles of merger
affixed
to it by the secretary of state, shall be returned to the surviving corporation
or its
representative.
7-1.1-69.
Effect of merger or consolidation. -- (a) A merger or
consolidation becomes
effective
upon the issuance of a certificate of merger or the certificate of
consolidation by the
secretary
of state or on a later date, not more than thirty (30) days after the filing of
the articles of
merger
or the articles of consolidation, as is stated in the plan.
(b) When a merger or consolidation becomes effective:
(1) The several corporations, parties to the plan of merger or consolidation,
are a single
corporation,
which, in the case of a merger, is that corporation designated in the plan of
merger as
the
surviving corporation, and, in the case of a consolidation, is the new corporation
provided for
in
the plan of consolidation.
(2) The separate existence of all corporations, parties to the plan of merger
or
consolidation,
except the surviving or new corporation, ceases.
(3) The surviving or new corporation has all the rights, privileges,
immunities, and
powers
and is subject to all the duties and liabilities of a corporation organized
under this chapter.
(4) The surviving or new corporation at that time and subsequently possesses
all the
rights,
privileges, immunities, and franchises, as well of a public as of a private
nature, of each of
the
merging or consolidating corporations; and all property, real, personal, and
mixed, all debts
due
on whatever account, including subscriptions to shares, all other choses in
action, and all and
every
other interest of or belonging to or due to each of the corporations merged or
consolidated,
is
taken and deemed to be transferred to and vested in the single corporation
without further act or
deed;
and the title to any real estate, or any interest in real estate, vested in any
of the corporations
does
not revert or is in any way impaired because of the merger or consolidation.
(5) The surviving or new corporation is subsequently responsible and liable for
all the
liabilities
and obligations of each of the corporations merged or consolidated; and any
claim
existing
or action or proceeding pending by or against any of the corporations may be
prosecuted
as
if the merger or consolidation had not taken place, or the surviving or new
corporation may be
substituted
in its place. Neither the rights of creditors nor any liens upon the property
of any
corporation
is impaired by the merger or consolidation.
(6) In the case of a merger, the articles of incorporation of the surviving
corporation are
deemed
to be amended to the extent, if any, that changes in its articles of incorporation
are stated
in
the plan of merger; and, in the case of consolidation, the statements in the
articles of
consolidation
and which are required or permitted to be stated in the articles of
incorporation of
corporations
organized under this chapter are deemed to be the original articles of
incorporation
of
the new corporation.
(7) The shares of the corporation or corporations party to the plan that are,
under the
terms
of the plan, to be converted or exchanged, cease to exist, and the holders of
the shares are
entitled
only to the shares, obligations, other securities, cash, or other property into
which they
have
been converted or for which they have been exchanged in accordance with the
plan, subject
to
any rights under section 7-1.1-73.
7-1.1-70.
Merger or consolidation of domestic and foreign corporations. --
(a) One or
more
foreign corporations and one or more domestic corporations may be merged or
consolidated
in
the following manner, if the merger or consolidation is permitted by the laws
of the state under
which
each foreign corporation is organized:
(1) Each domestic corporation shall comply with the provisions of this chapter
with
respect
to the merger or consolidation, as the case may be, of domestic corporations,
and each
foreign
corporation shall comply with the applicable provisions of the laws of the
state under
which
it is organized.
(2) If the surviving or new corporation, as the case may be, is to be governed
by the laws
of
any state other than this state, it shall comply with the provisions of this
chapter with respect to
foreign
corporations if it is to transact business in this state, and in every case it
shall file with the
secretary
of state of this state:
(i) An agreement that it may be served with process in this state in any
proceeding for
the
enforcement of any obligation of any domestic corporation which is a party to
the merger or
consolidation
and in any proceeding for the enforcement of the rights of a dissenting
shareholder
of
any domestic corporation against the surviving or new corporation;
(ii) An irrevocable appointment of the secretary of state of this state as its
agent to accept
service
of process in any proceeding; and
(iii) An agreement that it will promptly pay to the dissenting shareholders of
any
domestic
corporation the amount, if any, to which they are entitled under the provisions
of this
chapter
regarding the rights of dissenting shareholders.
(b) The effect of the merger or consolidation is the same as in the case of the
merger or
consolidation
of domestic corporations, if the surviving or new corporation is to be governed
by
the
laws of this state. If the surviving or new corporation is to be governed by
the laws of any
state
other than this state, the effect of the merger or consolidation is the same as
in the case of
the
merger or consolidation of domestic corporations except insofar as the laws of
the other state
provide
otherwise.
(c) At any time prior to the filing of the articles of merger or consolidation,
the merger or
consolidation
may be abandoned pursuant to provisions for abandonment, if any, stated in the
plan
of merger or consolidation.
7-1.1-70.1.
Shareholder approval of certain acquisitions. -- Before any
domestic
corporation
acquires, directly or through a subsidiary, either:
(1) All or substantially all of the assets of one or more corporations, with or
without
good
will or the assumption of liabilities, or
(2) Shares of one or more corporations possessing two-thirds ( 2/3) or more of
the total
combined
voting power of all classes of stock of the acquired corporation or
corporations entitled
at
that time to vote for the election of directors, for a consideration which
includes (either directly
or
through the medium of options or warrants for, or shares or debt instruments
convertible within
one
year into, those shares) shares of the acquiring corporation possessing more
than one-third (
1/3)
of the total combined voting power of all classes of stock of the acquiring
corporation
entitled
at that time to vote for the election of directors which will be outstanding
immediately
after
the acquisition, the acquisition shall be approved by the shareholders of the
acquiring
corporation
pursuant to the terms and conditions of section 7-1.1-67 applicable to the
surviving
corporation
in a merger.
7-1.1-71.
Sale of assets in regular course of business and mortgage or pledge of
assets.
--
The sale, lease, exchange, or other disposition of all, or substantially all,
the property
and
assets of a corporation in the usual and regular course of its business, and
the mortgage or
pledge
of any or all property and assets of a corporation, whether or not in the usual
and regular
course
of business, may be made upon terms and conditions and for any consideration,
which
may
consist in whole or in part of money or property, real or personal, including
shares of any
other
corporation, domestic or foreign, as is authorized by its board of directors;
and in any case
no
authorization or consent of the shareholders is required.
7-1.1-72.
Sale of assets other than in regular course of business. -- A
sale, lease,
exchange,
or other disposition of all, or substantially all, the property and assets,
with or without
the
good will, of a corporation, if not in the usual and regular course of its
business, may be made
upon
terms and conditions and for any consideration, which may consist in whole or
in part of
money
or property, real or personal, including shares of any other corporation,
domestic or
foreign,
as is authorized in the following manner:
(1) The board of directors adoption of a resolution recommending the sale,
lease,
exchange,
or other disposition, and directing the submission of the resolution to a vote
at a
meeting
of shareholders, which may be either an annual or a special meeting.
(2) Written notice shall be given to each shareholder of record, whether or not
entitled to
vote
at the meeting, not less than twenty (20) days before the meeting, in the
manner provided in
this
chapter for the giving of notice of meeting of shareholders, and, whether the
meeting is an
annual
or a special meeting, shall state that the purpose, or one of the purposes, is
to consider the
proposed
sale, lease, exchange, or other disposition. A statement of the stockholder's
right to
dissent
and a copy or summary of section 7-1.1-74 shall be included in or enclosed with
the
notice.
(3) At the meeting the shareholders may authorize the sale, lease, exchange, or
other
disposition
and may fix, or may authorize the board of directors to fix, any or all of the
terms and
conditions
of it and the consideration to be received by the corporation for it. The
authorization
requires
the affirmative vote of the holders of a majority of the shares of the
corporation entitled
to
vote on the authorization, unless any class of shares is entitled to vote on it
as a class, pursuant
to
the articles of incorporation, in which event approval of the resolution also
requires the
affirmative
vote of the holders of a majority of the shares of each class of shares
entitled to vote
as
a class on the resolution.
(4) After the authorization by a vote of shareholders, the board of directors
nevertheless,
in
its discretion, may abandon the sale, lease, exchange, or other disposition of
assets, subject to
the
rights of third parties under any related contracts, without any further action
or approval by
shareholders.
(5) A transfer of all or substantially all of the property and assets of a
corporation to (i)
one
or more subsidiary corporations in which the transferor corporation owns shares
possessing at
least
two-thirds ( 2/3) of the total combined voting power of all classes of stock
entitled to vote at
that
time for election of directors, or (ii) for cash, with or without an assumption
of liabilities of
the
transferor corporation, after the filing of a statement of intent to dissolve
pursuant to section
7-1.1-78,
is governed by the provisions of section 7-1.1-71 and not by this section. The
sale,
lease,
exchange, or other disposition of all, or substantially all, the property and
assets, with or
without
the good will, of one or more subsidiaries in which the parent corporation owns
shares
possessing
two-thirds ( 2/3) or more of the total combined voting power of all classes of
stock
entitled
at that time to vote for the election of directors shall be treated as a
disposition of all, or
substantially
all, the property and assets of the parent corporation within the meaning of
this
section
if the shares of the subsidiary or subsidiaries constitute all or substantially
all the property
and
assets of the parent corporation.
7-1.1-73.
Right of shareholders to dissent. -- (a) Any shareholder of a
corporation has
the
right to dissent from any of the following corporate actions:
(1) Any plan of merger or consolidation to which the corporation is a party,
unless the
corporation
is the surviving corporation in a merger and the approval of its stockholders
was not
required
by virtue of the provisions of either section 7-1.1-67 or section 7-1.1-68.1;
or
(2) Any acquisition which requires the approval of the shareholders under
section 7-1.1-
70.1;
(3) Any sale or exchange of all or substantially all of the property and assets
of a
corporation
which requires the approval of the shareholders under section 7-1.1-72.
(b) A shareholder may not dissent as to less than all of the shares registered
in his or her
name
which are owned beneficially by him or her. A nominee or fiduciary may not
dissent on
behalf
of any beneficial owner as to less than all of the shares of the owner
registered in the name
of
the nominee or fiduciary.
(c) Unless otherwise provided in the articles of incorporation of the issuing
corporation,
there
is no right to dissent for the holders of the shares of any class or series of
stock which, on
the
date fixed to determine the stockholders entitled to receive notice of the
proposed transaction
(or
a copy of the agreement of merger under section 7-1.1-68.1), were:
(1) Registered on a national securities exchange or included as national market
securities
in
the national association of securities dealers automated quotations system or
any successor
national
market system; or
(2) Held of record by not less than two thousand (2,000) stockholders.
7-1.1-74.
Rights of dissenting shareholders. -- (a) Any shareholder
electing to exercise
the
right of dissent shall file with the corporation, prior to or at the meeting of
shareholders at
which
the proposed corporate action is submitted to a vote, a written objection to
the proposed
corporate
action. If the proposed corporate action is approved by the required vote and
the
shareholder
has not voted in favor of it, the shareholder may, within ten (10) days after
the date
on
which the vote was taken, or if a corporation is to be merged without a vote of
its shareholders
into
another corporation, any of its shareholders may, within fifteen (15) days
after the plan of the
merger
has been mailed to the shareholders, make written demand on the corporation,
or, in the
case
of a merger or consolidation, on the surviving or new corporation, domestic or
foreign, for
payment
of the fair value of the shareholder's shares. If the proposed corporate action
is effected,
the
corporation shall pay to the shareholder, upon surrender of the certificate or
certificates
representing
the shares, the fair value of the shares as of the day prior to the date on
which the
vote
was taken approving the proposed corporate action, excluding any appreciation
or
depreciation
in anticipation of the corporate action. Any shareholder failing to make demand
within
the ten (10) day period or the fifteen (15) day period, as the case may be, is
bound by the
terms
of the proposed corporate action. Any shareholder making the demand is
thereafter only
entitled
to payment as provided in this section and is not entitled to vote or to
exercise any other
rights
of a shareholder.
(b) No demand may be withdrawn unless the corporation consents to it. If, however,
the
demand
is withdrawn upon consent, or if the proposed corporate action is abandoned or
rescinded
or
the shareholders revoke the authority to effect the action, or if, in the case
of a merger, on the
date
of the filing of the articles of merger the surviving corporation is the owner
of all the
outstanding
shares of the other corporations, domestic and foreign, that are parties to the
merger,
or
if no demand or petition for the determination of fair value by a court has
been made or filed
within
the time provided in this section, or if a court of competent jurisdiction
determines that the
shareholder
is not entitled to the relief provided by this section, then the right of the
shareholder
to
be paid the fair value of his or her shares ceases and his or her status as a
shareholder is
restored,
without prejudice to any corporate proceedings taken during the interim.
(c) Within ten (10) days after the corporate action is effected, the
corporation, or, in the
case
of a merger or consolidation, the surviving or new corporation, domestic or
foreign, shall
give
written notice of the action to each dissenting shareholder who has made demand
as
provided
in these provisions, and shall make a written offer to each shareholder to pay
for the
shares
at a specified price deemed by the corporation to be the fair value of the
shares. The notice
and
offer shall be accompanied by a balance sheet of the corporation the shares of
which the
dissenting
shareholder holds, as of the latest available date and not more than twelve
(12) months
prior
to the making of the offer, and a profit and loss statement of the corporation
for the twelve
(12)
month period ended on the date of the balance sheet.
(d) If within thirty (30) days after the date on which the corporate action was
effected the
fair
value of the shares is agreed upon between any dissenting shareholder and the
corporation,
payment
for the shares shall be made within ninety (90) days after the date on which
the
corporate
action was effected, upon surrender of the certificate or certificates
representing the
shares.
Upon payment of the agreed value, the dissenting shareholder ceases to have any
interest
in
the shares.
(e) If within the period of thirty (30) days a dissenting shareholder and the
corporation
do
not agree on the matter, then the corporation, within thirty (30) days after
receipt of written
request
for the filing from any dissenting shareholder given within sixty (60) days
after the date
on
which the corporate action was effected, shall, or at its election at any time
within the period
of
sixty (60) days may, file a petition in any court of competent jurisdiction in
the county in this
state
where the registered office of the corporation is located praying that the fair
value of the
shares
is found and determined. If, in the case of a merger or consolidation, the
surviving or new
corporation
is a foreign corporation without a registered office in this state, the
petition shall be
filed
in the county where the registered office of the domestic corporation was last
located. If the
corporation
fails to institute the proceeding as provided, any dissenting shareholder may
do so in
the
name of the corporation. All dissenting shareholders, wherever they reside,
shall be made
parties
to the proceeding as an action against their shares quasi in rem. A copy of the
petition
shall
be served on each dissenting shareholder who is a resident of this state and
shall be served
by
registered or certified mail on each dissenting shareholder who is a
nonresident. Service on
nonresidents
shall also be made by publication as provided by law. The jurisdiction of the
court is
plenary
and exclusive. All shareholders who are parties to the proceeding are entitled
to judgment
against
the corporation for the amount of the fair value of their shares. The court
may, if it so
elects,
appoint one or more persons as appraisers to receive evidence and recommend a
decision
on
the question of fair value. The appraisers have the power and authority that is
specified in the
order
of their appointment or an amendment of the order. The judgment is payable only
upon and
concurrently
with the surrender to the corporation of the certificate or certificates
representing the
shares.
Upon payment of the judgment, the dissenting shareholder ceases to have any
interest in
the
shares.
(f) The judgment shall include an allowance for interest at the rate of
interest on
judgments
in civil actions from the date on which the vote was taken on the proposed
corporate
action
to the date of payment.
(g) The costs and expenses of any proceeding shall be determined by the court
and
assessed
against the corporation, but all or any part of the costs and expenses may be
apportioned
and
assessed as the court deems equitable against any or all of the dissenting
shareholders who
are
parties to the proceeding to whom the corporation has made an offer to pay for
the shares if
the
court finds that the action of the shareholders in failing to accept the offer
was arbitrary or
vexatious
or not in good faith. The expenses include reasonable compensation for and
reasonable
expenses
of the appraisers, but exclude the fees and expenses of counsel for and experts
employed
by any party; but if the fair value of the shares as determined materially
exceeds the
amount
which the corporation offered to pay for the shares, or if no offer was made,
the court in
its
discretion may award to any shareholder who is a party to the proceeding a sum
that the court
determines
to be reasonable compensation to any expert or experts employed by the
shareholder
in
the proceeding.
(h) Within twenty (20) days after demanding payment for his or her shares, each
shareholder
demanding payment shall submit the certificate or certificates representing his
or her
shares
to the corporation for notation on the certificate that the demand has been
made. His or her
failure
to do so shall, at the option of the corporation, terminate his or her rights
under this section
unless
a court of competent jurisdiction, for good and sufficient cause shown, directs
otherwise. If
shares
represented by a certificate on which notation has been made are transferred,
each new
certificate
issued for the shares shall bear similar notation, together with the name of
the original
dissenting
holder of the shares, and a transferee of the shares acquires by the transfer
no rights in
the
corporation other than those which the original dissenting shareholder had
after making
demand
for payment of the fair value of the shares.
(i) Shares acquired by a corporation pursuant to payment of the agreed value
for the
shares
or to payment of the judgment entered for the shares, as provided in this
section, may be
held
and disposed of by the corporation as in the case of other treasury shares.
However, in the
case
of a merger or consolidation, they may be held and disposed of as the plan of
merger or
consolidation
otherwise provides.
7-1.1-75.
Voluntary dissolution by incorporators. -- (a) A corporation
which has not
commenced
business and which has not issued any shares, may be voluntarily dissolved by
its
incorporators
at any time in the following manner:
(1) Articles of dissolution are executed in duplicate by a majority of the
incorporators,
and
verified by them, and state:
(i) The name of the corporation.
(ii) The date of issuance of its certificate of incorporation.
(iii) That none of its shares has been issued.
(iv) That the corporation has not commenced business.
(v) That the amount, if any, actually paid in on subscriptions for its shares,
less any part
of
the amount disbursed for necessary expenses, has been returned to those
entitled to it.
(vi) That no debts of the corporation remain unpaid.
(vii) That a majority of the incorporators elect that the corporation be
dissolved.
(2) Duplicate originals of the articles of dissolution are delivered to the
secretary of state.
If
the secretary of state finds that the articles of dissolution conform to law,
he or she shall, when
all
fees and franchise taxes have been paid:
(i) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(ii) File one of the duplicate originals in his or her office.
(iii) Issue a certificate of dissolution to which he or she affixes the other
duplicate
original.
(b) The certificate of dissolution, together with the duplicate original of the
articles of
dissolution
affixed to it by the secretary of state, is returned to the incorporators or
their
representative.
Upon the issuance of the certificate of dissolution by the secretary of state,
the
existence
of the corporation ceases.
7-1.1-76.
Voluntary dissolution by consent of shareholders. -- (a) A
corporation may
be
voluntarily dissolved by the written consent of all of its shareholders.
(b) Upon the execution of the written consent, a statement of intent to
dissolve is
executed
in duplicate by the corporation by its president or a vice president and by its
secretary or
an
assistant secretary, and verified by one of the officers signing the statement.
The statement
proclaims:
(1) The name of the corporation.
(2) The names and respective addresses of its officers.
(3) The names and respective addresses of its directors.
(4) A copy of the written consent signed by all shareholders of the
corporation.
(5) A statement that the written consent has been signed by all shareholders of
the
corporation
or signed in their names by their duly authorized attorneys.
7-1.1-77.
Voluntary dissolution by act of corporation. -- A corporation
may be
dissolved
by the act of the corporation, when authorized in the following manner:
(1) The board of directors adopts a resolution recommending that the
corporation be
dissolved,
and directing that the question of the dissolution be submitted to a vote at a
meeting of
the
shareholders, which may be either an annual or a special meeting.
(2) Written notice is given to each shareholder of record entitled to vote at
the meeting
within
the time and in the manner provided in this chapter for the giving of notice of
meetings of
shareholders,
and, whether the meeting is an annual or special meeting, states that the
purpose, or
one
of the purposes, of the meeting is to consider the advisability of dissolving
the corporation.
(3) At the meeting a vote of shareholders entitled to vote at the meeting is
taken on a
resolution
to dissolve the corporation. The resolution is adopted upon receiving the
affirmative
vote
of the holders of a majority of the shares of the corporation entitled to vote
on the resolution,
unless
any class of shares is entitled to vote on the resolution as a class, in which
event approval
of
the resolution also requires the affirmative vote of the holders of a majority
of the shares of
each
class of shares entitled to vote as a class and of the total shares entitled to
vote on the
resolution.
(4) Upon the adoption of the resolution, a statement of intent to dissolve is
executed in
duplicate
by the corporation by its president or a vice president and by its secretary or
an assistant
secretary,
and verified by one of the officers signing the statement, which statement
proclaims:
(i) The name of the corporation.
(ii) The names and respective addresses of its officers.
(iii) The names and respective addresses of its directors.
(iv) A copy of the resolution adopted by the shareholders authorizing the
dissolution of
the
corporation.
(v) The number of shares outstanding, and, if the shares of any class are
entitled to vote
as
a class, the designation and number of outstanding shares of each class.
(vi) The number of shares voted for and against the resolution, respectively,
and, if the
shares
of any class are entitled to vote as a class, the number of shares of each
class voted for and
against
the resolution, respectively.
(vii) If, pursuant to section 7-1.1-79, the date when the corporation is to
cease to carry on
its
business is to be subsequent to the date of the filing, the date when the
corporation is to cease
to
carry on its business.
7-1.1-78.
Filing of statement of intent to dissolve. -- Duplicate
originals of the
statement
of intent to dissolve, whether by consent of shareholders or by act of the
corporation,
shall
be delivered to the secretary of state. If the secretary of state finds that
the statement
conforms
to law, he or she shall, when all fees and franchise taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Return the other duplicate original to the corporation or its
representative.
7-1.1-79.
Effect of statement of intent to dissolve. -- Upon the filing by
the secretary of
state
of a statement of intent to dissolve, whether by consent of shareholders or by
act of the
corporation
or upon the later date, not more than thirty (30) days after the filing, as is
proclaimed
in
the statement, the corporation ceases to carry on its business, except insofar
as may be
necessary
for the winding up, but its corporate existence continues until a certificate
of
dissolution
has been issued by the secretary of state or until a decree dissolving the
corporation
has
been entered by a court of competent jurisdiction as provided in this chapter.
7-1.1-80.
Procedure after filing of statement of intent to dissolve. --
After the filing by
the
secretary of state of a statement of intent to dissolve:
(1) The corporation immediately mails notice of the filing to each known
creditor of the
corporation.
(2) The corporation shall process to collect its assets, sell or otherwise
dispose of those
of
its properties that are not to be distributed in kind to its shareholders, pay,
satisfy, and
discharge
its liabilities and obligations and do all other acts required to liquidate its
business and
affairs.
After paying or adequately providing for the payment of all its obligations,
the
corporation
distributes the remainder of its assets, either in cash or in kind, among its
shareholders
according to their respective rights and interests.
(3) The corporation, at any time during the liquidation of its business and
affairs, may
apply
to a court of competent jurisdiction within the state and county in which the
registered
office
or principal place of business of the corporation is situated, to have the
liquidation
continued
under the supervision of the court as provided in this chapter.
7-1.1-81.
Revocation of voluntary dissolution proceedings by consent of
shareholders.
--
(a) By the written consent of all of its shareholders, a corporation may, at
any
time
prior to the issuance of a certificate of dissolution by the secretary of
state, revoke voluntary
dissolution
proceedings previously taken, in the following manner:
(b) Upon the execution of the written consent, a statement of revocation of
voluntary
dissolution
proceedings is executed in duplicate by the corporation by its president or a
vice
president
and by its secretary or an assistant secretary, and verified by one of the
officers signing
the
statement. The statement proclaims:
(1) The name of the corporation.
(2) The names and respective addresses of its officers.
(3) The names and respective addresses of its directors.
(4) A copy of the written consent signed by all shareholders of the corporation
revoking
the
voluntary dissolution proceedings.
(5) That the written consent has been signed by all shareholders of the
corporation or
signed
in their names by their authorized attorneys.
7-1.1-82.
Revocation of voluntary dissolution proceedings by act of corporation. --
By
the act of the corporation, a corporation may, at any time prior to the
issuance of a certificate
of
dissolution by the secretary of state, revoke voluntary dissolution proceedings
previously
taken,
in the following manner:
(1) The board of directors adopts a resolution recommending that the voluntary
dissolution
proceedings be revoked, and directing that the question of the revocation be
submitted
to
a vote at a special meeting of shareholders.
(2) Written notice, stating that the purpose, or one of the purposes, of the
meeting is to
consider
the advisability of revoking the voluntary dissolution proceedings, is given to
each
shareholder
of record entitled to vote at the meeting within the time and in the manner
provided
in
this chapter for the giving of notice of special meetings of shareholders.
(3) At the meeting, a vote of the shareholders entitled to vote at the meeting
is taken on a
resolution
to revoke the voluntary dissolution proceedings, which requires for its
adoption the
affirmative
vote of the holders of a majority of the shares entitled to vote on the
resolution.
(4) Upon the adoption of the resolution, a statement of revocation of voluntary
dissolution
proceedings is executed in duplicate by the corporation by its president or a
vice
president
and by its secretary or an assistant secretary, and verified by one of the
officers signing
the
statement. The statement proclaims:
(i) The name of the corporation.
(ii) The names and respective addresses of its officers.
(iii) The names and respective addresses of its directors.
(iv) A copy of the resolution adopted by the shareholders revoking the
voluntary
dissolution
proceedings.
(v) The number of shares outstanding.
(vi) The number of shares voted for and against the resolution, respectively.
7-1.1-83.
Filing of statement of revocation of voluntary dissolution proceedings. --
Duplicate
originals of the statement of revocation of voluntary dissolution proceedings,
whether
by
consent of shareholders or by act of the corporation, are delivered to the
secretary of state. If
the
secretary of state finds that the statement conforms to law, he or she shall,
when all fees and
franchise
taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Return the other duplicate original to the corporation or its
representative.
7-1.1-84.
Effect of statement of revocation of voluntary dissolution proceedings. --
Upon
the filing by the secretary of state of a statement of revocation of voluntary
dissolution
proceedings,
whether by consent of shareholders or by act of the corporation, the revocation
of
the
voluntary dissolution proceedings becomes effective and the corporation may
again carry on
its
business.
7-1.1-85.
Articles of dissolution. -- If voluntary dissolution proceedings
have not been
revoked,
then when all debts, liabilities, and obligations of the corporation have been
paid and
discharged,
or adequate provision has been made for them, and all of the remaining property
and
assets
of the corporation have been distributed to its shareholders, articles of
dissolution shall be
executed
in duplicate by the corporation by its president or a vice president and by its
secretary or
an
assistant secretary, and verified by one of the officers signing the statement.
The statement
proclaims:
(1) The name of the corporation.
(2) That the secretary of state has previously filed a statement of intent to
dissolve the
corporation,
and the date on which the statement was filed.
(3) That all debts, obligations, and liabilities of the corporation have been
paid and
discharged
or that adequate provision has been made for the payment.
(4) That all the remaining property and assets of the corporation have been distributed
among
its shareholders in accordance with their respective rights and interests.
(5) That there are not suits pending against the corporation in any court, or
that adequate
provision
has been made for the satisfaction of any judgment, order, or decree which may
be
entered
against it in any pending suit.
7-1.1-86.
Filing of articles of dissolution. -- (a) Duplicate originals of
the articles of
dissolution
are delivered to the secretary of state. If the secretary of state finds that
the articles of
dissolution
conform to law, he or she shall, when all fees and franchise taxes have been
paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Issue a certificate of dissolution to which he or she shall affixes the
other duplicate
original.
(b) The certificate of dissolution, together with the duplicate original of the
articles of
dissolution
affixed to it by the secretary of state, are returned to the representative of
the
dissolved
corporation. Upon the issuance of the certificate of dissolution the existence
of the
corporation
ceases, except for the purpose of suits, other proceedings, and appropriate
corporate
action
by shareholders, directors, and officers as provided in this chapter.
7-1.1-87.
Revocation of certificate of incorporation. -- (a) The
certificate of
incorporation
of a corporation may be revoked by the secretary of state upon the conditions
prescribed
in this section when it is established that:
(1) The corporation procured its articles of incorporation through fraud; or
(2) The corporation has continued to exceed or abuse the authority conferred
upon it by
law;
or
(3) The corporation has failed to file its annual report within the time required
by this
chapter,
or has failed to pay any fees, when they have become due and payable; or
(4) The corporation has failed for thirty (30) days to appoint and maintain a
registered
agent
in this state as required by this chapter; or
(5) The corporation has failed, after change of its registered office or
registered agent, to
file
in the office of the secretary of state a statement of the change as required
by this chapter; or
(6) The corporation has failed to file in the office of the secretary of state
any
amendment
to its articles of incorporation or any articles of merger within the time
prescribed by
this
chapter; or
(7) A misrepresentation has been made of any material matter in any
application, report,
affidavit,
or other document submitted by the corporation pursuant to this chapter.
(b) No certificate of incorporation of a corporation shall be revoked by the
secretary of
state
unless:
(1) The secretary of state shall have given the corporation not less than sixty
(60) days
notice
thereof by regular mail addressed to the registered office of the corporation
in this state on
file
with the secretary of state's office; provided, however, that if a prior
mailing addressed to the
registered
office of the corporation in this state currently on file with the secretary of
state's office
has
been returned to the secretary of state as undeliverable by the United States
Postal Service for
any
reason, or if the revocation notice is returned as undeliverable to the
secretary of state's office
by
the United States Postal Service for any reason, the secretary of state shall
give notice as
follows:
(i) To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice shall be required; or
(ii) In the case of a domestic corporation which has not yet filed an annual
report, then to
any
one of the incorporators listed on the articles of incorporation, and no
further notice shall be
required;
and
(2) The corporation fails prior to revocation to file the annual report or pay
the fees, or
file
the required statement of change of registered agent or registered office, or
file the articles of
amendment
or articles of merger, or correct the misrepresentation.
7-1.1-88.
Issuance of certificates of revocation. -- (a) Upon revoking any
certificate of
incorporation,
the secretary of state shall:
(1) Issue a certificate of revocation in duplicate;
(2) File one certificate in his or her office; and
(3) Send to the corporation by regular mail a certificate of revocation,
addressed to the
registered
office of the corporation in this state on file with the secretary of state's
office;
provided,
however, that if a prior mailing addressed to the registered office of the
corporation in
this
state currently on file with the secretary of state's office has been returned
to the secretary of
state
as undeliverable by the United States Postal Service for any reason, or if the
revocation
certificate
is returned as undeliverable to the secretary of state's office by the United
States Postal
Service
for any reason, the secretary of state shall give notice as follows:
(i) To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice shall be required; or
(ii) In the case of a domestic corporation which has not yet filed an annual
report, then to
any
one of the incorporators listed on the articles of incorporation, and no
further notice shall be
required.
(b) Upon the issuance of the certificate of revocation, the authority of the
corporation to
transact
business in this state ceases.
7-1.1-88.1.
Withdrawal of certificate of revocation. -- (a) Within ten (10)
years after
issuing
a certificate of revocation as provided in section 7-1.1-88, the secretary of
state may
withdraw
the certificate of revocation and retroactively reinstate the corporation in
good standing
as
if its certificate of incorporation had not been revoked, except as
subsequently provided:
(1) Upon the filing by the corporation of the documents it had previously
failed to file as
set
forth in subdivisions (3) through (6) inclusive, of section 7-1.1-87(a);
(2) Upon the payment by the corporation of a penalty in the amount of fifty
dollars
($50.00)
for each year or part of a year that has elapsed since the issuance of the
certificate of
revocation;
and
(3) Upon the filing by the corporation of a certificate of good standing from
the Rhode
Island
division of taxation.
(b) If, as permitted by the provisions of this title, another corporation,
whether business
or
nonprofit limited partnership or limited liability company, or domestic or
foreign, qualified to
transact
business in this state, bears or has filed a fictitious business name statement
with respect
to
or reserved or registered a name which is the same as, or deceptively similar
to, the name of a
corporation
with respect to which the certificate of revocation is proposed to be
withdrawn, then
the
secretary of state shall condition the withdrawal of the certificate of
revocation upon the
reinstated
corporation's amending its articles of incorporation or otherwise complying
with the
provisions
of this chapter with respect to the use of a name available to it under the
laws of this
state
so as to designate a name which is not the same as, or deceptively similar to,
its former
name.
(c) Upon the withdrawal of the certificate of revocation and reinstatement of
the
corporation
in good standing as provided in subsection (a), title to any real estate, or
any interest
in
real estate, held by the corporation at the time of the issuance of the
certificate of revocation
and
not conveyed subsequent to the revocation of its certificate of incorporation
shall be deemed
to
be revested in the corporation without further act or deed.
7-1.1-89.
Appeal from revocation of articles of incorporation. -- Any
corporation
aggrieved
by the action of the secretary of state in revoking its articles of
incorporation may
appeal
the action in the manner provided in section 7-1.1-133.
7-1.1-90.
Jurisdiction of court to liquidate assets and business of corporation. --
(a)
The
superior court has full power to liquidate the assets and business of a
corporation:
(1) In an action by a shareholder when it is established that, whether or not
the corporate
business
has been or could be operated at a profit, dissolution would be beneficial to
the
shareholders
because:
(i) The directors or those other persons that may be responsible for management
pursuant
to
section 7-1.1-51(a) are deadlocked in the management of the corporate affairs
and the
shareholders
are unable to break the deadlock; or
(ii) The acts of the directors or those in control of the corporation are
illegal, oppressive,
or
fraudulent; or
(iii) The shareholders are deadlocked in voting power, and have failed, for a
period
which
includes at least two (2) consecutive annual meeting dates, to elect successors
to directors
whose
terms have expired or would have expired upon the election of their successors;
or
(iv) The corporate assets are being misapplied or are in danger of being wasted
or lost; or
(v) Two (2) or more factions of shareholders are divided and there is such
internal
dissension
that serious harm to the business and affairs of the corporation is threatened;
or
(vi) The holders of one-half ( 1/2) or more of all the outstanding capital
stock of the
corporation
have voted to dissolve the corporation;
(2) (i) In an action by a creditor:
(A) When it is established that the corporation is insolvent; or
(B) When it is established that the corporate assets are being misapplied or
are in danger
of
being wasted or lost.
(ii) If it is established that the claim of a creditor has been reduced to
judgment and an
execution
on the judgment returned unsatisfied or that a corporation has admitted, in
writing, that
the
claim of a creditor is due and owing, the establishment of the facts are prima
facie evidence of
insolvency.
(iii) Every petition filed by a creditor for the liquidation of the assets and
business of a
corporation
shall contain a statement as to whether the creditor is or is not an officer,
director, or
shareholder
of the corporation. Every petition for the liquidation of the assets and
business of a
corporation
filed by an officer, director, or shareholder of a corporation or by a creditor
who is an
officer,
director or shareholder, shall contain, to the best of petitioner's knowledge,
information,
and
belief, the names and addresses of all known creditors of any class of the
corporation.
(3) Upon application by a corporation which has filed a statement of intent to
dissolve,
as
provided in this chapter, to have its liquidation continued under the
supervision of the court.
The
application shall contain, to the best of petitioner's knowledge, information,
and belief, the
names
and addresses of all known creditors of any class of the corporation.
(4) When an action has been filed by the attorney general to dissolve a
corporation and it
is
established that liquidation of its business and affairs should precede the
entry of a decree of
dissolution.
(b) Proceedings under subsections (a)(1), (a)(2), or (a)(3) shall be brought in
the county
in
which the registered or principal office of the corporation is situated.
(c) It is not necessary to make shareholders parties to any action or
proceeding unless
relief
is sought against them personally.
7-1.1-90.1.
Avoidance of dissolution by stock buyout. -- Whenever a petition
for
dissolution
of a corporation is filed by one or more shareholders (subsequently in this
section
referred
to as the "petitioner") pursuant to either section 7-1.1-90 or a
right to compel dissolution
which
is authorized under section 7-1.1-51 or is otherwise valid, one or more of its
other
shareholders
may avoid the dissolution by filing with the court prior to the commencement of
the
hearing,
or, in the discretion of the court, at any time prior to a sale or other
disposition of the
assets
of the corporation, an election to purchase the shares owned by the petitioner
at a price
equal
to their fair value. If the shares are to be purchased by other shareholders,
notice shall be
sent
to all shareholders of the corporation other than the petitioner, giving them
an opportunity to
join
in the election to purchase the shares. If the parties are unable to reach an
agreement as to the
fair
value of the shares, the court shall, upon the giving of a bond or other
security sufficient to
assure
to the petitioner payment of the value of the shares, stay the proceeding and
determine the
value
of the shares, in accordance with the procedure set forth in section 7-1.1-74,
as of the close
of
business on the day on which the petition for dissolution was filed. Upon
determining the fair
value
of the stock, the court shall state in its order directing that the stock be
purchased, the
purchase
price and the time within which the payment is to be made, and may decree any
other
terms
and conditions of sale that it determines to be appropriate, including payment
of the
purchase
price in installments extending over a period of time, and, if the shares are
to be
purchased
by shareholders, the allocation of shares among shareholders electing to
purchase
them,
which, so far as practicable, are to be proportional to the number of shares
previously
owned.
The petitioner is entitled to interest, at the rate on judgments in civil
actions, on the
purchase
price of the shares from the date of the filing of the election to purchase the
shares, and
all
other rights of the petitioner as owner of the shares terminate on that date.
The costs of the
proceeding,
which include reasonable compensation and expenses of appraisers but not fees
and
expenses
of counsel or of experts retained by a party, shall be allocated between or
among the
parties
as the court determines. Upon full payment of the purchase price, under the
terms and
conditions
specified by the court, or at any other time that is ordered by the court, the
petitioner
shall
transfer the shares to the purchaser.
7-1.1-91.
Procedure in liquidation of corporation by court. -- (a) In
proceedings to
liquidate
the assets and business of a corporation the court has general equity
jurisdiction and
power
to issue any orders, injunctions, and decrees that justice and equity require,
to appoint a
receiver
or receivers pendente lite, with any powers and duties that the court, from time
to time,
directs,
and to take any other proceedings that are requisite to preserve the corporate
assets
wherever
situated, and carry on the business of the corporation until a full hearing can
be had.
(b) After a hearing had upon any notice that the court directs to be given to
all parties to
the
proceedings and to any other parties in interest designated by the court, the
court may appoint
a
liquidating receiver or receivers with authority to take charge of any of the
corporation's estate
and
effects of which he or she has been appointed receiver and to collect the
assets of the
corporation,
including all amounts owing to the corporation whether by shareholders on
account
of
any unpaid portion of the consideration for the issuance of shares or
otherwise.
(c) The hearing date for the appointment of a permanent receiver is not to be
more than
twenty-one
(21) days after commencement of the action, unless the hearing date is extended
by
the
court for good cause shown.
(d) The liquidating receiver or receivers has authority subject to court order,
to sue and
defend
in all courts in his or her own name as receiver of the corporation, or in its
name, to
intervene
in any action or proceeding relating to its assets or business, to compromise
any dispute
or
controversy, to preserve the assets of the corporation, to carry on its
business, to sell, convey,
and
dispose of all or any part of the assets of the corporation wherever situated,
either at public or
private
sale, to redeem any mortgages, security interests, pledges, or liens of or upon
any of its
assets,
and generally to do all other acts which might be done by the corporation or
that is
necessary
for the administration of his or her trust according to the course of equity.
The assets of
the
corporation or the proceeds resulting from a sale, conveyance, or other
disposition of the
assets
shall be applied to the expenses of the liquidation and to the payment of the
liabilities and
obligations
of the corporation, and any remaining assets or proceeds shall be distributed
under the
direction
of the court among its shareholders according to their respective rights and
interests.
The
order appointing the receiver or receivers shall state their powers and duties.
The powers and
duties
may be increased or diminished at any time during the proceeding.
(e) The court has power to allow from time to time as expenses of the
liquidation
compensation
to the receiver or receivers and to attorneys in the proceeding, and to direct
the
payment
of the compensation out of the assets of the corporation or the proceeds of any
sale or
disposition
of the assets.
(f) The court appointing the receiver has exclusive jurisdiction of the
corporation and its
property,
wherever situated, and of all questions arising in the proceedings concerning
the
property.
7-1.1-92.
Bond of receivers. -- A receiver shall in all cases give any
bond that the court
directs
with any sureties that the court requires.
7-1.1-93.
Filing of claims in liquidation proceedings. -- In proceedings
to liquidate the
assets
and business of a corporation, the court may require all creditors of the
corporation to file
with
the receiver, in any form that the court prescribes, proofs under oath of their
respective
claims.
If the court requires the filing of claims it shall fix a date, which is not to
be less than four
(4)
months from the date of the order, as the last day for the filing of claims,
and shall prescribe
the
notice that is to be given to creditors and claimants of the fixed date. Prior
to the fixed date,
the
court may extend the time for the filing of claims. Creditors and claimants
failing to file
proofs
of claim on or before the fixed date may be barred, by court order, from
participating in
the
distribution of the assets of the corporation.
7-1.1-94.
Discontinuance of liquidation proceedings. -- The liquidation of
the assets
and
business of a corporation may be discontinued at any time during the liquidation
proceedings
when
it is established that cause for liquidation no longer exists. In that event
the court shall
dismiss
the proceedings, direct the receiver to redeliver to the corporation all its
remaining
property
and assets, and order any notice to creditors that the court deems proper under
the
circumstances.
7-1.1-95.
Decree of involuntary dissolution. -- In proceedings to
liquidate the assets and
business
of a corporation, when the costs and expenses of the proceedings and all debts,
obligations,
and liabilities of the corporation have been paid and discharged and all of its
remaining
property and assets distributed to its shareholders, or in case its property
and assets are
not
sufficient to satisfy and discharge the costs, expenses, debts, and
obligations, all the property
and
assets have been applied as far as they will go to their payment, the court
shall enter a decree
dissolving
the corporation, at which time the existence of the corporation ceases.
7-1.1-96.
Filing of decree of dissolution. -- In case the court enters a
decree dissolving a
corporation,
it is the duty of the clerk of the court to file a certified copy of the decree
with the
secretary
of state. No fee shall be charged by the secretary of state for that filing.
7-1.1-97.
Deposit with state treasury of amount due certain shareholders. --
Upon the
voluntary
or involuntary dissolution of a corporation, the portion of the assets
distributable to a
creditor
or shareholder who is unknown or cannot be found, or who is under disability
and there
is
no person legally competent to receive the distributive portion, shall be
reduced to cash and
deposited
with the general treasury and paid over to the creditor or shareholder or to
his or her
legal
representative upon satisfactory proof to the general treasury of his or her
right to the
payment.
7-1.1-97.1.
Jurisdiction of court to appoint a receiver. -- Upon the
establishment of
any
of the grounds for liquidation of the assets and business of (1) a domestic
corporation or (2) a
foreign
corporation, to the extent the foreign corporation has assets within the state,
stated in
section
7-1.1-90, and upon the establishment that the liquidation would not be
appropriate, the
superior
court has full power to appoint a receiver, with any powers and duties that the
court,
from
time to time, directs, and to take any other proceedings that the court deems
advisable under
the
circumstances. The provisions of sections 7-1.1-90 -- 7-1.1-97, insofar as they
are consistent
with
the nature of the proceeding, apply to the proceeding, and in the proceeding
the court has the
full
powers of a court of equity to make or enter any orders, injunctions, and
decrees and grant
any
other relief in the proceeding that justice and equity require.
7-1.1-98.
Survival of remedy after dissolution. -- The dissolution of a
corporation
either:
(1) by the issuance of a certificate of dissolution by the secretary of state;
or
(2) by a decree of court when the court has not liquidated the assets and
business of the
corporation
as provided in this chapter; or
(3) by expiration of its period of duration, shall not take away or impair any
remedy
available
to or against the corporation, its directors, officers, or shareholders, for
any right or
claim
existing, or any liability incurred, prior to the dissolution if action or
other proceeding on
the
right, claim, or liability is commenced within two (2) years after the date of
the dissolution.
Any
action or proceeding by or against the corporation may be prosecuted or
defended by the
corporation
in its corporate name. The shareholders, directors, and officers have power to
take
any
corporate or other action that is appropriate to protect the remedy, right, or
claim. If the
corporation
was dissolved by the expiration of its period of duration, the corporation may
amend
its
articles of incorporation at any time during the period of two (2) years so as
to extend its
period
of duration.
7-1.1-98.1.
Continuation of certain corporate powers. -- Any corporation
dissolved in
any
manner under this chapter or any corporation whose existence is terminated
under section 44-
12-8
or any corporation whose certificate of incorporation is revoked by the
secretary of state
under
section 7-1.1-87 nevertheless continues for five (5) years after the date of
the dissolution,
termination,
or revocation for the purpose of enabling it to settle and close its affairs,
to dispose
of
and convey its property, to discharge its liabilities, and to distribute its
assets, but not for the
purpose
of continuing the business for which it was organized. The shareholders,
directors, and
officers
have power to take any corporate or other action that is appropriate to carry
out the
purposes
of this section.
7-1.1-99.
Admission of foreign corporation. -- (a) No foreign corporation
has the right
to
transact business in this state until it has procured a certificate of
authority to do so from the
secretary
of state. No foreign corporation is entitled to procure a certificate of
authority under this
chapter
to transact any business in this state which a corporation organized under this
chapter is
not
permitted to transact. A foreign corporation shall not be denied a certificate
of authority
because
the laws of the state or country under which the corporation is organized
governing its
organization
and internal affairs differ from the laws of this state, and nothing contained
in this
chapter
shall be construed to authorize this state to regulate the organization or the
internal affairs
of
the corporation.
(b) Without excluding other activities which may not constitute transacting
business in
this
state, a foreign corporation is not considered to be transacting business in
this state, for the
purposes
of this chapter, because of carrying on in this state any one or more of the
following
activities:
(1) Maintaining or defending any action or suit or any administrative or
arbitration
proceeding,
or effecting the settlement of the suit or the settlement of claims or disputes.
(2) Holding meetings of its directors or shareholders or carrying on other
activities
concerning
its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange, and
registration of its
securities,
or appointing and maintaining trustees or depositaries with relation to its
securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through employees or
agents or
otherwise,
where the orders require acceptance outside of this state before becoming
binding
contracts.
(7) Creating as borrower or lender, or acquiring indebtedness or mortgages or
other
security
interests in real or personal property.
(8) Securing or collecting debts or enforcing any rights in property securing
the debts.
(9) Transacting any business in interstate commerce.
(10) Conducting an isolated transaction completed within a period of thirty
(30) days and
not
in the course of a number of repeated transactions of like nature.
(11) Acting as a general partner of a limited partnership which has filed a certificate
of
limited
partnership as provided in section 7-13-8 or has registered with the secretary
of state as
provided
in section 7-13-49.
7-1.1-99.1.
Admission of foreign business trusts. -- Any Massachusetts trust
or business
trust
established by law of any other state, desiring to do business in this state,
is deemed to be a
foreign
corporation and is required to register under, and comply with the provisions
of, this
chapter.
7-1.1-100.
Powers of foreign corporation. -- A foreign corporation which
has received a
certificate
of authority under this chapter shall, until a certificate of revocation or of
withdrawal
has
been issued as provided in this chapter, enjoy the same, but no greater, rights
and privileges
as
a domestic corporation organized for the purposes stated in the application
pursuant to which
the
certificate of authority is issued; and, except as otherwise provided in this
chapter, is subject
to
the same duties, restrictions, penalties, and liabilities now or subsequently
imposed upon a
domestic
corporation of like character.
7-1.1-101.
Corporate name of foreign corporation. -- No certificate of
authority shall
be
issued to a foreign corporation unless the corporate name of the corporation:
(1) Contains the word "corporation," "company,"
"incorporated," or "limited," or
contains
an abbreviation of one of the words, or the corporation, for use in this state,
adds at the
end
of its name one of the words or an abbreviation of the word.
(2) Does not contain any word or phrase which indicates or implies that it is
organized
for
any purpose other than one or more of the purposes contained in its articles of
incorporation
or
that it is authorized or empowered to conduct the business of any types
prohibited by section 7-
1.1-3.
(3) Is not the same as, or deceptively similar to, the name of any domestic corporation,
limited
partnership or limited liability company existing under the laws of this state
or any
foreign
corporation, limited partnership or limited liability company authorized to
transact
business
in this state, or a name the exclusive right to which is, at the time, filed,
reserved or
registered
in the manner provided in this title, subject to the following:
(i) This provision does not apply if the foreign corporation applying for a
certificate of
authority
files with the secretary of state any one of the following:
(A) A fictitious business name statement pursuant to section 7-1.1-7.1; or
(B) The written consent of the other corporation or holder of a filed, reserved
or
registered
name to use that name or a deceptively similar name and one or more words are
added
to
make the name distinguishable from the other name; or
(C) A certified copy of a final decree of a court of competent jurisdiction
establishing the
prior
right of the foreign corporation to the use of the name in this state; and
(ii) The name may be the same as, or deceptively similar to, the name of a
corporation or
other
association, the certificate of incorporation or organization of which has been
revoked by
the
secretary of state as permitted by law.
7-1.1-102.
Change of name by foreign corporation. -- Whenever a foreign
corporation
which
is authorized to transact business in this state changes its name to one under
which a
certificate
of authority would not be granted to it on application, the certificate of
authority of the
corporation
is suspended and it shall not subsequently transact any business in this state
until it
has
changed its name to a name which is available to it under the laws of this
state or has
otherwise
complied with the provisions of this chapter.
7-1.1-103.
Application for certificate of authority. -- (a) A foreign
corporation, in order
to
procure a certificate of authority to transact business in this state, shall
make application for the
certificate
of authority to the secretary of state, which application shall state:
(1) The name of the corporation and the state or country under the laws of
which it is
incorporated.
(2) If the name of the corporation does not contain the word
"corporation," "company,"
"incorporated,"
or "limited," or does not contain an abbreviation of one of those
words, then the
name
of the corporation with the word or abbreviation which it elects to add for use
in this state.
(3) The date of incorporation and the period of duration of the corporation.
(4) The address of the principal office of the corporation in the state or
country under the
laws
of which it is incorporated.
(5) The address of the proposed registered office of the corporation in this
state, and the
name
of its proposed registered agent in this state at the address.
(6) The purpose or purposes of the corporation which it proposes to pursue in
the
transaction
of business in this state.
(7) The names and respective addresses of the directors and officers of the
corporation.
(8) A statement of the aggregate number of shares which the corporation has
authority to
issue,
itemized by classes, par value of shares, shares without par value, and series,
if any, within
a
class.
(9) A statement of the aggregate number of issued shares itemized by classes,
par value
of
shares, shares without par value, and series, if any, within a class.
(10) An estimate, expressed as a percentage, of the proportion that the
estimated value of
the
property of the corporation to be located within this state during the
following year bears to
the
value of all property of the corporation to be owned during the following year,
wherever
located,
and an estimate, expressed as a percentage, of the proportion that the gross
amount of
business
to be transacted by the corporation at or from places of business in this state
during the
year
bears to the gross amount which will be transacted by the corporation during
the year.
(11) Any additional information that is necessary or appropriate in order to
enable the
secretary
of state to determine whether the corporation is entitled to a certificate of
authority to
transact
business in this state and to determine and assess the fees payable as
prescribed in this
chapter.
(b) The application shall be made on forms prescribed and furnished by the
secretary of
state
and executed in duplicate by the corporation by its president or a vice
president and by its
secretary
or an assistant secretary, and verified by one of the officers signing the
application.
7-1.1-104.
Filing of application for certificate of authority. -- (a)
Duplicate originals of
the
application of the corporation for a certificate of authority shall be
delivered to the secretary
of
state, together with a copy of its articles of incorporation and all amendments
to the articles,
duly
authenticated by the proper officer of the state or country under the laws of
which it is
incorporated.
(b) If the secretary of state finds that the application conforms to law, he or
she shall,
when
all fees have been paid:
(1) Endorse on each of the documents the word "Filed," and the month,
day, and year of
the
filing.
(2) File in his or her office one of the duplicate originals of the application
and the copy
of
the articles of incorporation and amendments to the articles.
(3) Issue a certificate of authority to transact business in this state to
which he or she
affixes
the other duplicate original application.
(c) The certificate of authority, together with the duplicate original of the
application
affixed
to it by the secretary of state, shall be returned to the corporation or its
representatives.
7-1.1-105.
Effect of certificate of authority. -- Upon the issuance of a
certificate of
authority
by the secretary of state, the corporation is authorized to transact business
in this state
for
the purposes stated in its application, subject, however, to the right of this
state to suspend or
to
revoke the authority as provided in this chapter.
7-1.1-106.
Registered office and registered agent of foreign corporation. --
(a) Each
foreign
corporation authorized to transact business in this state shall have and
continuously
maintain
in this state:
(1) A registered office which may be, but need not be, the same as its place of
business
in
this state.
(2) A registered agent, who may be either an individual resident in this state
whose
business
is identical with the registered office, or a domestic corporation, or a
foreign corporation
authorized
to transact business in this state, having a business office identical with the
registered
office;
provided, however, that in the case where the registered agent of a corporation
is an
attorney
the business address of the agent need not be identical with the registered
office, but may
be
at the usual business address of the attorney.
(b) Foreign corporations who are the holders of mortgages on real estate
located within
this
state which do not maintain the loan documentation and records within the state
shall
authorize
the registered agent to accept mortgage discharge payment and to issue a
discharge of
the
mortgages upon the payment.
7-1.1-107.
Change of registered office or registered agent of foreign corporation. --
(a)
A foreign corporation authorized to transact business in this state may change
its registered
office
or change its registered agent, or both, upon filing in the office of the
secretary of state a
statement
stating:
(1) The name of the corporation.
(2) The address of its then registered office.
(3) If the address of its registered office is changed, the address to which
the registered
office
is to be changed.
(4) The name of its then registered agent.
(5) If its registered agent is changed, the name of its successor registered agent.
(6) The address of its registered office and the address of the business office
of its
registered
agent, as changed.
(7) That the change was authorized by a resolution adopted by its board of
directors.
(b) The statement shall be executed by the corporation by its president or a
vice
president,
and verified by him or her, and delivered to the secretary of state. If the
secretary of
state
finds that the statement conforms to the provisions of this chapter, he or she
shall file the
statement
in this office, and upon the filing, the change of address of the registered
office, or the
appointment
of a new registered agent, or both, becomes effective.
(c) Any registered agent of a foreign corporation may resign as the agent upon
filing a
written
notice of resignation, executed in duplicate, with the secretary of state, who
shall
immediately
mail a copy of the notice to the corporation at its principal office in the
state or
country
under the laws of which it is incorporated. The appointment of the agent
terminates upon
the
expiration of thirty (30) days after receipt of the notice by the secretary of
state.
(d) If a registered agent changes his or her or its business address to another
place within
the
state, he or she or it may change the address and the address of the registered
office of any
corporations
of which he or she or it is registered agent by filing a statement as required
above
except
that it must be signed only by the registered agent, need not be responsive to
subsection (a)
(5)
or (a) (7), and must recite that a copy of the statement has been mailed to
each corporation.
7-1.1-108.
Service of process on foreign corporation. -- (a) The registered
agent
appointed
by a foreign corporation authorized to transact business in this state shall be
an agent of
the
corporation upon whom any process, notice, or demand required or permitted by
law to be
served
upon the corporation may be served.
(b) Whenever a foreign corporation authorized to transact business in this
state fails to
appoint
or maintain a registered agent in this state, or whenever any registered agent
cannot with
reasonable
diligence be found at the registered office, or whenever the certificate of
authority of a
foreign
corporation is suspended or revoked, the secretary of state is an agent of the
corporation
upon
whom any process, notice, or demand may be served. Service on the secretary of
state of
any
process, notice, or demand shall be made by delivering to and leaving with him
or her, or
with
any clerk having charge of the corporation department of his or her office,
duplicate copies
of
the process, notice, or demand. In the event any process, notice, or demand is
served on the
secretary
of state, he or she shall immediately forward one of the copies by registered
mail,
addressed
to the corporation at its principal office if known to him or her, in the state
or country
under
the laws of which it is incorporated. Any service had in this manner on the
secretary of
state
is returnable in not less than thirty (30) days.
(c) Every foreign corporation as a condition precedent to carrying on business
in this
state
shall, and by so carrying on business in this state does, consent that any
process, including
the
process of garnishment, may be served upon the secretary of state in the manner
provided by
this
section, except that notice of the service shall be given by the plaintiff or
his or her attorney
in
the manner as the court in which the action is commenced or pending orders as
affording the
corporation
reasonable opportunity to defend the action or to learn of the garnishment.
Notwithstanding
the preceding requirements, however, once service has been made on the
secretary
of state as provided, the court has the authority in the event of failure to
comply with the
requirement
of notice to the foreign corporation to order notice that is sufficient to
apprise it of
the
pendency of the action against it, and additionally, may extend the time for
answering by the
foreign
corporation.
(d) The secretary of state shall keep a record of all processes, notices, and
demands
served
upon him or her under this section, and record in the record the time of the service
and his
or
her action on it.
(e) Nothing contained in these provisions limits or affects the right to serve
any process,
notice,
or demand, required or permitted by law to be served upon a corporation in any
manner
now
or subsequently permitted by law.
7-1.1-109.
Amendment to articles of incorporation of foreign corporation. --
Whenever
the articles of incorporation of a foreign corporation authorized to transact
business in
this
state are amended, the foreign corporation shall, within thirty (30) days after
the amendment
becomes
effective, file in the office of the secretary of state a copy of the amendment
duly
authenticated
by the proper officer of the state or country under the laws of which it is
incorporated;
but the filing of the copy does not of itself enlarge or alter the purpose or
purposes
which
the corporation is authorized to pursue in the transaction of business in this
state, nor
authorize
the corporation to transact business in this state under any other name than
the name
stated
in its certificate of authority.
7-1.1-110.
Merger of foreign corporation authorized to transact business in this
state.
--
Whenever a foreign corporation authorized to transact business in this state is
a party to a
statutory
merger permitted by the laws of the state or country under the laws of which it
is
incorporated,
and the corporation is the surviving corporation, it shall, within thirty (30)
days
after
the merger becomes effective, file with the secretary of state a copy of the
articles of merger
duly
authenticated by the proper officer of the state or country under the laws of
which the
statutory
merger was effected; and it is not necessary for the corporation to procure
either a new
or
amended certificate of authority to transact business in this state unless the
name of the
corporation
is changed by the merger or unless the corporation desires to pursue in this
state other
or
additional purposes than those which it is then authorized to transact in this
state. Whenever a
foreign
corporation authorized to transact business in this state ceases to exist
because of a
statutory
merger or consolidation, it shall comply with section 7-1.1-112.
7-1.1-111.
Amended certificate of authority. -- (a) A foreign corporation
authorized to
transact
business in this state shall procure an amended certificate of authority if it
changes its
corporate
name, increases its number of authorized shares, or desires to pursue in this
state other
or
additional purposes than those stated in its prior application for a
certificate of authority, by
making
application for those additional purposes to the secretary of state.
(b) The requirements in respect to the form and contents of the application,
the manner
of
its execution, the filing of duplicate originals of the application with the
secretary of state, the
issuance
of an amended certificate of authority, and the effect of it, is the same as in
the case of
an
original application for a certificate of authority.
7-1.1-112.
Withdrawal of foreign corporation. -- (a) A foreign corporation
authorized
to
transact business in this state may withdraw from this state upon procuring
from the secretary
of
state a certificate of withdrawal. In order to procure a certificate of
withdrawal, the foreign
corporation
shall deliver to the secretary of state an application for withdrawal, stating:
(1) The name of the corporation and the state or country under the laws of
which it is
incorporated.
(2) That the corporation is not transacting business in this state.
(3) That the corporation surrenders its authority to transact business in this
state.
(4) That the corporation revokes the authority of its registered agent in this
state to
accept
service of process and consents that service of process in any action, suit, or
proceeding
based
upon any cause of action arising in this state during the time the corporation
was authorized
to
transact business in this state may subsequently be made on the corporation by
service on the
secretary
of state.
(5) The post office address to which the secretary of state may mail a copy of
any
process
against the corporation that is served on him or her.
(6) A statement of the aggregate number of shares which the corporation has
authority to
issue,
itemized by classes, par value of shares, shares without par value, and series,
if any, within
a
class, as of the date of the application.
(7) A statement of the aggregate number of issued shares, itemized by classes,
par value
of
shares, shares without par value, and series, if any, within a class, as of the
date of the
application.
(8) A statement, expressed in dollars, of the amount of stated capital of the
corporation,
as
of the date of the application.
(9) Any additional information that may be necessary or appropriate in order to
enable
the
secretary of state to determine and assess any unpaid fees payable by the
foreign corporation.
(b) The application for withdrawal shall be made on forms prescribed and
furnished by
the
secretary of state and executed by the corporation by its president or a vice
president and by
its
secretary or an assistant secretary, and verified by one of the officers
signing the application,
or,
if the corporation is in the hands of a receiver or trustee, executed on behalf
of the corporation
by
the receiver or trustee and verified by him or her.
7-1.1-113.
Filing of application for withdrawal. -- (a) Duplicate originals
of the
application
for withdrawal shall be delivered to the secretary of state. If the secretary
of state
finds
that the application conforms to the provisions of this chapter, he or she
shall, when all fees
and
taxes have been paid:
(1) Endorse on each of the duplicate originals the word "Filed," and
the month, day, and
year
of the filing.
(2) File one of the duplicate originals in his or her office.
(3) Issue a certificate of withdrawal to which he or she affixes the other
duplicate
original.
(b) The certificate of withdrawal, together with the duplicate original of the
application
for
withdrawal affixed to it by the secretary of state, shall be returned to the
corporation or its
representative.
Upon the issuance of the certificate of withdrawal, the authority of the corporation
to
transact business in this state ceases.
7-1.1-114.
Revocation of certificate of authority. -- (a) The certificate
of authority of a
foreign
corporation to transact business in this state may be revoked by the secretary
of state
under
the conditions prescribed in this section when:
(1) The corporation fails to file its annual report within the time required by
this chapter,
or
fails to pay any fees, when they become due and payable; or
(2) The corporation fails to appoint and maintain a registered agent in this
state as
required
by this chapter; or
(3) The corporation fails, after changing its registered office or registered
agent, to file in
the
office of the secretary of state a statement of the change as required by this
chapter; or
(4) The corporation fails to file in the office of the secretary of state any
amendment to
its
articles of incorporation or any articles of merger within the time prescribed
by this chapter; or
(5) A misrepresentation has been made of any material matter in any
application, report,
affidavit,
or other document submitted by the corporation pursuant to this chapter.
(b) No certificate of authority of a foreign corporation shall be revoked by
the secretary
of
state unless:
(1) The secretary of state shall have given the corporation not less than sixty
(60) days
notice
thereof by regular mail addressed to the registered office of the corporation
in this state on
file
with the secretary of state's office; provided, however, that if a prior
mailing addressed to the
registered
office of the corporation in this state currently on file with the secretary of
state's office
has
been returned to the secretary of state as undeliverable by the United States
Postal Service for
any
reason, or if the revocation notice is returned as undeliverable to the
secretary of state's office
by
the United States Postal Service for any reason, the secretary of state shall
give notice as
follows:
(i) To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice shall be required; or
(ii) In the case of a foreign corporation which has not yet filed an annual
report, then to
the
corporation at its principal office shown in its application for certificate of
authority, and no
further
notice shall be required; and
(2) The corporation fails prior to revocation to file the annual report, or pay
the fees, or
file
the required statement of change of registered agent or registered office, or
file the articles of
amendment
or articles of merger, or correct the misrepresentation.
7-1.1-115.
Issuance of certificate of revocation. -- (a) Upon revoking any
certificate of
authority,
the secretary of state shall:
(1) Issue a certificate of revocation in duplicate.
(2) File one of the certificates in his or her office.
(3) Send to the corporation by regular mail a certificate of revocation,
addressed to the
registered
office of the corporation in this state on file with the secretary of state's
office;
provided,
however, that if a prior mailing addressed to the registered office of the
corporation in
this
state currently on file with the secretary of state's office has been returned
to the secretary of
state
as undeliverable by the United States Postal Service for any reason, or if the
revocation
certificate
is returned as undeliverable to the secretary of state's office by the United
States Postal
Service
for any reason, the secretary of state shall give notice as follows:
(i) To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice shall be required; or
(ii) In the case of a foreign corporation that has not yet filed an annual
report then to the
corporation
at its principal office shown in its application for certificate of authority,
and no
further
notice shall be required.
(b) Upon the issuance of the certificate of revocation, the authority of the
corporation to
transact
business in this state ceases.
7-1.1-115.1.
Withdrawal of certificate of revocation. -- (a) Within ten (10)
years after
issuing
a certificate of revocation as provided in section 7-1.1-115, the secretary of
state may
withdraw
the certificate of revocation retroactively and retroactively reinstate the
corporation in
good
standing as though its certificate of authority had not been revoked, except as
subsequently
provided;
(1) Upon the filing by the corporation of the documents it had previously
failed to file as
stated
in subdivisions (1) -- (3) of section 7-1.1-115(a);
(2) Upon the payment by the corporation of a penalty in the amount of fifty
dollars
($50.00)
for each year or part of a year that has elapsed since the issuance of the
certificate of
revocation;
and
(3) Upon the filing by the corporation of a certificate of good standing from
the Rhode
Island
division of taxation.
(b) If, as permitted by the provisions of this title, another corporation,
whether business
or
nonprofit, limited partnership or limited liability company, domestic or foreign,
qualified to
transact
business in this state, bears or has filed a fictitious business name statement
with respect
to
or reserved or registered a name which is the same as, or deceptively similar
to, the name of a
corporation
with respect to which the certificate of revocation is proposed to be
withdrawn, then
the
secretary of state shall condition the withdrawal of the certificate of
revocation on the
reinstated
corporation's amending its application for a certificate of authority or
otherwise
complying
with the provisions of this chapter with respect to the use of the name
available to it
under
the laws of this state.
7-1.1-116.
Application to corporations previously authorized to transact business in
this
state. --
Foreign corporations which are authorized to transact business in this state as
of
May
14, 1969, for a purpose or purposes for which a corporation might secure
authority under
this
chapter, are, subject to the limitations stated in their certificates of
authority, entitled to all the
rights
and privileges applicable to foreign corporations procuring certificates of
authority to
transact
business in this state under this chapter, and as of May 14, 1969 the
corporations are
subject
to all the limitations, restrictions, liabilities, and duties prescribed in
these provisions for
foreign
corporations procuring certificates of authority to transact business in this
state under this
chapter.
7-1.1-117.
Transacting business without certificate of authority. -- (a) No
foreign
corporation
transacting business in this state without a certificate of authority is
permitted to
maintain
any action, suit, or proceeding in any court of this state, until the
corporation has
obtained
a certificate of authority. Nor shall any action, suit, or proceeding be
maintained in any
court
of this state by any successor or assignee of the corporation on any right,
claim, or demand
arising
out of the transaction of business by the corporation in this state, until a
certificate of
authority
has been obtained by the corporation or by a corporation which has acquired all
or
substantially
all of its assets.
(b) The failure of a foreign corporation to obtain a certificate of authority
to transact
business
in this state does not impair the validity of any contract or act of the
corporation, and
does
not prevent the corporation from defending any action, suit, or proceeding in
any court of
this
state.
(c) A foreign corporation which transacts business in this state without a
certificate of
authority
is liable to this state, for the years or parts of years during which it
transacted business
in
this state without a certificate of authority, in an amount equal to all fees
and franchise taxes
which
would have been imposed upon the corporation had it duly applied for and
received a
certificate
of authority to transact business in this state as required by this chapter and
subsequently
filed all reports required by this chapter, plus all penalties imposed by this
chapter
for
failure to pay the fees and franchise taxes. The attorney general shall bring
proceedings to
recover
all amounts due this state under the provisions of this section.
(d) The Superior Court has jurisdiction to enjoin any foreign corporation, or
any agent of
a foreign
corporation, from transacting any business in this state if the corporation
fails to comply
with
any section of this subchapter applicable to it or if the corporation secured a
certificate of the
secretary
of state under section 7-1.1-103 on the basis of false or misleading
representations. The
attorney
general shall, upon his or her own motion or upon the relation of proper
parties, proceed
for
this purpose by complaint in any county in which the corporation is doing business.
7-1.1-118.
Annual report of domestic and foreign corporations. -- (a) Each
domestic
corporation,
and each foreign corporation authorized to transact business in this state,
shall file,
within
the time prescribed by this chapter, an annual report stating:
(1) The name of the corporation and the state or country under the laws of
which it is
incorporated.
(2) A brief statement of the character of the business in which the corporation
is actually
engaged
in this state.
(3) The names and respective addresses of the directors and officers of the
corporation.
(4) A statement of the aggregate number of shares which the corporation has
authority to
issue,
itemized by classes, par value of shares, shares without par value, and series,
if any, within
a
class.
(5) A statement of the aggregate number of issued shares, itemized by classes,
par value
of
shares, shares without par value, and series, if any, within a class.
(6) Any additional information that is by the secretary of state.
(b) The annual report shall be made on forms prescribed and furnished by the
secretary
of
state, and the information contained therein shall be given as of the date of
the execution of the
report.
It shall be executed by the corporation by its president, a vice president,
secretary, an
assistant
secretary, or treasurer, or, if the corporation is in the hands of a receiver
or trustee, it
shall
be executed on behalf of the corporation by the receiver or trustee.
7-1.1-119.
Filing of annual report of domestic and foreign corporations. --
The
annual
report of a domestic or foreign corporation shall be delivered to the secretary
of state
between
January 1 and the March 1 of each year, except that the first annual report of
a domestic
or
foreign corporation shall be filed between January 1 and March 1 of the year
following the
calendar
year in which its certificate of incorporation or its certificate of authority
was issued by
the
secretary of state. Proof to the satisfaction of the secretary of state that
prior to March 1 the
report
was deposited in the United States mail in a sealed envelope, properly
addressed, with
postage
prepaid, is deemed to be a compliance with this requirement. If the secretary
of state
finds
that the report conforms to the requirements of this chapter, he or she shall
file the report. If
he
or she finds that it does not conform, he or she shall promptly return the
report to the
corporation
for any necessary corrections, in which event the penalties subsequently
prescribed
for
failure to file the report within the time previously provided do not apply, if
the report is
corrected
to conform to the requirements of this chapter and returned to the secretary of
state
within
thirty (30) days from the date on which it was mailed to the corporation by the
secretary of
state.
7-1.1-120.
Fees and charges collected by secretary of state. -- (a) The
secretary of state
shall
charge and collect in accordance with the provisions of this chapter:
(1) Fees for filing documents and issuing certificates.
(2) Miscellaneous charges.
(3) License fees.
(b) The secretary of state shall, between the first and fifteenth day of each
month, make
an
itemized return, in writing, to the state controller of the amount of all fees
and charges
collected
by him or her, and pay to the general treasurer all of the state moneys in his
or her
hands.
7-1.1-121.
Fees for filing documents and issuing certificates. -- The
secretary of state
shall
charge and collect for filing:
(1) Articles of incorporation and issuing a certificate of incorporation,
seventy dollars
($70.00).
(2) Articles of amendment and issuing a certificate of amendment, fifty dollars
($50.00).
(3) Restated articles of incorporation, seventy dollars ($70.00).
(4) Articles of merger or consolidation and issuing a certificate of merger or
consolidation,
one hundred dollars ($100).
(5) An application to reserve a corporate name, fifty dollars ($50.00).
(6) A notice of transfer of a reserved corporate name, fifty dollars ($50.00).
(7) (i) Filing a statement of change of registered agent and registered office
or filing a
statement
of change of registered agent, twenty dollars ($20.00).
(ii) Filing a statement of change of registered office only, without fee.
(8) A statement of the establishment of a series of shares, ten dollars
($10.00).
(9) A statement of cancellation of shares, ten dollars ($10.00).
(10) A statement of reduction of stated capital, ten dollars ($10.00).
(11) A statement of intent to dissolve, without fee.
(12) A statement of revocation of voluntary dissolution proceedings, ten
dollars
($10.00).
(13) Articles of dissolution, fifty dollars ($50.00).
(14) An application of a foreign corporation for a certificate of authority to
transact
business
in this state and issuing a certificate of authority, one hundred fifty dollars
($150).
(15) An application of a foreign corporation for an amended certificate of
authority to
transact
business in this state and issuing an amended certificate of authority,
seventy-five dollars
($75.00).
(16) A copy of an amendment to the articles of incorporation of a foreign
corporation
holding
a certificate of authority to transact business in this state, fifty dollars
($50.00).
(17) A copy of articles of merger of a foreign corporation holding a
certificate of
authority
to transact business in this state, one hundred fifty dollars ($150).
(18) An application for withdrawal of a foreign corporation and issuing a
certificate of
withdrawal,
fifty dollars ($50.00).
(19) An annual report, fifty dollars ($50.00).
(20) Any other statement or report, except an annual report, of a domestic or
foreign
corporation,
ten dollars ($10.00).
7-1.1-122.
Miscellaneous charges. -- The secretary of state shall charge
and collect:
(1) For furnishing a certified copy of any document, instrument, or paper
relating to a
corporation,
fifty cents (50/c) per page and five dollars ($5.00) for the certificate and
affixing the
seal
to it.
(2) At the time of any service of process on him or her as resident agent of a
corporation,
fifteen
dollars ($15.00), which amount may be recovered as taxable costs by the party
to the suit
or
action making the service if the party prevails in the suit or action.
7-1.1-123.
License fees payable by domestic corporations. -- (a) The secretary
of state
shall
charge and collect from each domestic corporation license fees, based on the
number of
shares
which it has authority to issue or the increase in the number of shares which
it has
authority
to issue, at the time of:
(1) Filing articles of incorporation;
(2) Filing articles of amendment increasing the number of authorized shares;
and
(3) Filing articles of merger or consolidation increasing the number of
authorized shares
which
the surviving or new corporation, if a domestic corporation, has the authority
to issue
above
the aggregate number of shares which the constituent domestic corporations and
constituent
foreign corporations authorized to transact business in this state had
authority to issue.
(b) The license fees are at the rate of (i) one-fifth cent (1/5/c) per share
for each
authorized
share if the total number of new shares being authorized is seventy-five
million
(75,000,000)
shares or greater, or (ii) one hundred and sixty dollars ($160) if the total
number of
new
shares being authorized is less than seventy-five million (75,000,000) shares.
(c) The license fees payable on an increase in the number of authorized shares
is
imposed
only on the increased number of shares, and the number of previously authorized
shares
is
to be taken into account in determining the rate applicable to the increased
number of
authorized
shares.
7-1.1-124.
License fees payable by foreign corporations. -- (a) The
secretary of state
shall
charge and collect from each foreign corporation license fees, based on the
proportion
represented
in this state of the number of shares which it has authority to issue or the
increase in
the
number of shares which it has authority to issue, at the time of:
(1) Filing an application for a certificate of authority to transact business
in this state;
(2) Filing articles of amendment which increased the number of authorized
shares; and
(3) Filing articles of merger or consolidation which increased the number of
authorized
shares
which the surviving or new corporation, if a foreign corporation, has authority
to issue
above
the aggregate number of shares which the constituent domestic corporations and
constituent
foreign corporations authorized to transact business in this state had
authority to issue.
(b) The license fees are at the rate of (i) one-fifth cent (1/5/c) per share if
the total
number
of new shares being authorized is seventy-five million (75,000,000) shares or
greater, or
(ii)
one hundred and sixty dollars ($160) if the total number of new shares being
authorized is less
than
seventy-five million (75,000,000) shares.
(c) The license fees payable on an increase in the number of authorized shares
is
imposed
only on the increased number of the shares represented in this state, and the
number of
previously
authorized shares represented in this state is to be taken into account in
determining
the
rate applicable to the increased number of authorized shares.
(d) The number of authorized shares represented in this state is that
proportion of its total
authorized
shares which the sum of the value of its property located in this state and the
gross
amount
of business transacted by it at or from places of business in this state bears
to the sum of
the
value of all of its property, wherever located, and the gross amount of its
business, wherever
transacted.
The proportion is determined from information contained in the application for
a
certificate
of authority to transact business in this state or in the application for an
amended
certificate
of authority to transact business in this state.
7-1.1-125.
-- 7-1.1-127. [Reserved.] --
7-1.1-128.
Penalties imposed upon corporations. -- (a) Each corporation,
domestic or
foreign,
that fails or refuses to file its annual report for any year within the time
prescribed by this
chapter
is subject to a penalty of ten percent (10%) of the amount of the franchise tax
assessed
against
it for the period beginning July 1 of the year in which the report should have
been filed.
The
penalty shall be assessed by the tax administrator at the time of the
assessment of the
franchise
tax. If the amount of the franchise tax as originally assessed against the
corporation is
subsequently
adjusted, the amount of the penalty shall likewise be adjusted to ten percent
(10%)
of
the amount of the adjusted franchise tax. The amount of the franchise tax and
the amount of
the
penalty shall be separately stated in any related notice to the corporation.
(b) Each corporation, domestic or foreign, that fails or refuses to answer
truthfully and
fully
within the time prescribed by this chapter interrogatories propounded by the
secretary of
state
in accordance with the provisions of this chapter, is guilty of a misdemeanor
and upon
conviction
of it may be fined in any amount not exceeding five hundred dollars ($500).
7-1.1-129.
Penalties imposed upon officers and directors. -- Each officer
and director
of
a domestic or foreign corporation who fails or refuses within the time
prescribed by this
chapter
to answer truthfully and fully interrogatories propounded to him or her by the
secretary of
state
in accordance with the provisions of this chapter, or who signs any articles,
statement,
report,
application, or other document filed with the secretary of state which is known
to the
officer
or director to be false in any material respect, is guilty of a misdemeanor,
and upon
conviction
of it may be fined in any amount not exceeding five hundred dollars ($500).
7-1.1-130.
Interrogatories by secretary of state. -- The secretary of state
may propound
to
any domestic or foreign corporation subject to the provisions of this chapter,
and to any of its
officers
or directors, any interrogatories that may be reasonably necessary and proper
to enable
the
secretary of state to ascertain whether the corporation has complied with all
the applicable
provisions
of this chapter. The interrogatories shall be answered within thirty (30) days
after their
mailing,
or within any additional time that is fixed by the secretary of state, and the
answers to the
interrogatories
shall be full and complete and shall be made in writing and under oath. If the
interrogatories
are directed to an individual they shall be answered by him or her, and if directed
to
a corporation they shall be answered by the president, vice president,
secretary, or assistant
secretary
of the corporation. The secretary of state need not file any document to which
the
interrogatories
relate until the interrogatories are answered as provided in these provisions,
and
not
then if the interrogatory answers disclose that the document is not in
conformity with the
provisions
of this chapter. The secretary of state shall certify to the attorney general,
for any
action
that the attorney general deems appropriate, all interrogatories and their
answers which
disclose
a violation of any of the provisions of this chapter.
7-1.1-131.
Information disclosed by interrogatories. -- Interrogatories
propounded by
the
secretary of state and the answers to the interrogatories are not open to
public inspection nor
shall
the secretary of state disclose any facts or information obtained from them
except insofar as
the
secretary's official duty requires the facts or information to be made public
or in the event the
interrogatories
or their answers are required for evidence in any criminal proceedings or in
any
other
action by this state.
7-1.1-132.
Power of secretary of state. -- The secretary of state has the
reasonably
necessary
power and authority to enable him or her to administer this chapter efficiently
and to
perform
the duties imposed upon the secretary by this chapter.
7-1.1-133.
Appeal from secretary of state. -- (a) If the secretary of state
fails to approve
any
articles of incorporation, amendment, merger, consolidation or dissolution, or
any other
document
required by this chapter to be approved by the secretary of state before the
document is
filed
in his or her office, the secretary shall, within ten (10) days after the
delivery of the
document
to him or her, give written notice of his or her disapproval to the person or
corporation,
domestic
or foreign, delivering the document, specifying the reasons for the
disapproval. From
the
disapproval the person or corporation may appeal to the superior court of the
county in which
the
registered office of the corporation is, or is proposed to be, situated by
filing with the clerk of
the
court a petition setting forth a copy of the articles or other document sought
to be filed and a
copy
of the written disapproval of the document by the secretary of state; at which
time the matter
shall
be tried de novo by the court, and the court shall either sustain the action of
the secretary of
state
or direct the secretary to take any action that the court deems proper.
(b) If the secretary of state revokes the certificate of authority to transact
business in this
state
of any foreign corporation pursuant to the provisions of sections 7-1.1-114 and
7-1.1-115, in
addition
to the remedy provided in section 7-1.1-115.1, the foreign corporation may
likewise
appeal
to the superior court of the county where the registered office of the
corporation in this
state
is situated, by filing with the clerk of the court a petition setting forth a
copy of its certificate
of
authority to transact business in this state and a copy of the notice of
revocation given by the
secretary
of state; at that time the matter shall be tried de novo by the court, and the
court shall
either
sustain the action of the secretary of state or direct the secretary to take
any action that the
court
deems proper.
(c) Appeals from all final orders and judgments entered by the superior court
under this
section
in review of any ruling or decision of the secretary of state may be taken as
in other civil
actions.
7-1.1-134.
Certificates and certified copies to be received in evidence. --
All
certificates
issued by the secretary of state in accordance with the provisions of this
chapter, and
all
copies of documents filed in his or her office in accordance with the
provisions of this chapter
when
certified by the secretary, shall be taken and received in all courts, public
offices, and
official
bodies as prima facie evidence of the facts stated in them. A certificate by
the secretary of
state
under the great seal of this state, as to the existence or nonexistence of the
facts relating to
corporations
shall be taken and received in all courts, public offices, and official bodies
as prima
facie
evidence of the existence or nonexistence of the facts stated in them.
7-1.1-135.
Forms to be furnished by secretary of state. -- All reports
required by this
chapter
to be filed in the office of the secretary of state shall be made on forms
which shall be
prescribed
and furnished by the secretary of state. Forms for all other documents to be
filed in the
office
of the secretary of state may be furnished by the secretary of state on request
for the forms,
but
the use of the forms, unless otherwise specifically prescribed in this chapter,
is not mandatory.
7-1.1-136.
Unauthorized assumption of corporate powers. -- All persons who
assume
to
act as a corporation without authority so to do are jointly and severally
liable for all debts and
liabilities
incurred or arising as a result of that action.
7-1.1-137.
Application to existing corporations organized under general acts. --
The
provisions
of this chapter apply to all existing corporations organized under any general
act of
this
state providing for the organization of corporations for a purpose or purposes
for which a
corporation
might be organized under this chapter, where the power has been reserved to
amend,
repeal,
or modify the act under which the corporation was organized and where the act
is repealed
by
this chapter.
7-1.1-138.
Application to foreign and interstate commerce. -- The
provisions of this
chapter
apply to commerce with foreign nations and among the several states only
insofar as the
provisions
are permitted under the constitution of the United States.
7-1.1-138.1.
Applicability to corporations created by special acts. -- The
provisions of
this
chapter apply to all existing corporations previously or subsequently created
by any special
act
of the general assembly of a kind that could be organized under this chapter,
except insofar as
the
provisions are inconsistent with the provisions of any applicable special act
passed after May
5,
1920 or with the provisions of any applicable special act passed that are not
subject to
amendment
or repeal at the will of the general assembly. A corporation created by special
act of
the
kind that could be organized under this chapter but whose charter is not
subject to
amendment,
repeal, or modification by the general assembly, may at a called meeting for
the
purpose,
by a unanimous vote of its stockholders or members, adopt the provisions of
this chapter
upon
the filing in the office of the secretary of state of a certified copy of the
vote, attested by its
president
or vice president and its secretary or assistant secretary under its corporate
seal, and the
payment
to the secretary of state of the fee prescribed by section 7-1.1-123. The
corporation shall
subsequently
be governed in all respects by the provisions of this chapter and its charter
shall
subsequently
be subject to amendment or repeal at the will of the general assembly.
7-1.1-139.
Reservation of power. -- The general assembly at all times has
power to
prescribe
any regulations, provisions, and limitations that it deems advisable, which
regulations,
provisions,
and limitations are binding on any corporation subject to the provisions of
this
chapter.
The general assembly has power to amend, repeal, or modify this chapter at
pleasure.
7-1.1-140.
Effect of repeal of prior acts. -- The repeal of a prior act by
this chapter does
not
affect any right accrued or established, or any liability or penalty incurred,
under the
provisions
of the act, prior to the repeal.
7-1.1-141.
Effect of invalidity of part of this chapter. -- If a court of
competent
jurisdiction
adjudges to be invalid or unconstitutional any clause, sentence, paragraph,
section, or
part
of this chapter, the judgment or decree does not affect, impair, invalidate, or
nullify the
remainder
of this chapter, but the effect is confined to the clause, sentence, paragraph,
section, or
part
of this chapter adjudged to be invalid or unconstitutional.
SECTION
2. Title 7 of the General Laws entitled “Corporations, Associations, and
Partnerships”
is hereby amended by adding thereto the following chapter:
CHAPTER
1.2
RHODE
ISLAND BUSINESS CORPORATION ACT
Part
I. General Provisions.
7-1.2-101.
Short title. --This chapter is and may be cited as the “Rhode Island
Business
Corporation
Act.”
7-1.2-102.
Reservation of power. --The general assembly at all times has power
to
prescribe
any regulations, provisions, and limitations that it deems advisable, which
regulations,
provisions,
and limitations are binding on any corporation subject to the provisions of
this
chapter.
The general assembly has power to amend, repeal, or modify this chapter at
pleasure.
7-1.2-103.
Effect of repeal of prior acts. -- The repeal of a prior act
by this chapter does
not
impair, diminish or affect any right, privilege or immunity accrued or
established, any suit
pending,
any right of action conferred, or any duty, restriction, liability or penalty
imposed or
required,
under the provisions of the act, prior to the repeal.
7-1.2-104.
Severability. -- If any provision of this chapter or its application
to any person
or
circumstance is held invalid by a court of competent jurisdiction, the
invalidity does not affect
other
provisions or applications of the chapter that can be given effect without the
invalid
provision
or application, and to this end the provisions of the chapter are severable.
7-1.2-105.
Execution, Filing and Recording of Instruments. - (a) Whenever any
instrument
is to be filed with the secretary of state or in accordance with this chapter,
the
instrument
must be executed as follows:
(1)
The articles of incorporation, and any other instrument to be filed before the
election
of
the initial board of directors if the initial directors were not named in the
articles of
incorporation,
must be signed by the incorporator or incorporators (or, in the case of any
such
other
instrument, such incorporator’s or incorporators’ successors and assigns).
(2)
All other instruments must be signed:
(i)
By any authorized officer of the corporation; or
(ii)
If it appears from the instrument that there are no authorized officers, then
by a
majority
of the directors or by the director or directors authorized by a majority of
the directors;
or
(iii)
If it appears from the instrument that there are no authorized officers or
directors,
then
by the holders of record of all outstanding shares, or by those holders of
record designated
by
a majority of all outstanding shares; or
(b)
Whenever this chapter requires any instrument to be acknowledged, such
requirement
is satisfied by either:
(1)
The formal acknowledgment by any individual signing the instrument that it is
his act
and
deed or the act and deed of the corporation, and that the facts stated therein
are true. This
acknowledgment
must be made before a individual who is authorized by the law of the place of
execution
to take acknowledgment; or
(2)
The signature, without more, of the individual or individuals signing the
instrument,
in
which case such signature or signatures constitutes the affirmation or
acknowledgment of the
signatory,
under penalties of perjury, that the instrument is that individual’s act and
deed or the
act
and deed of the corporation, and that the facts stated therein are true.
(c)
Whenever any instrument is to be filed with the secretary of state or in
accordance
with
this section or chapter, such requirement means that:
(1)
The signed instrument must be delivered to the office of the secretary of state;
(2)
All taxes and fees authorized by law to be collected by the secretary of state
in
connection
with the filing of the instrument must be tendered to the secretary of state;
and
(3)
Upon delivery of the instrument, the secretary of state shall record the date
and time
of
its delivery. Upon such delivery and tender of the required taxes and fees, the
secretary of state
shall
certify that the instrument has been filed in the secretary of state’s office by
endorsing upon
the
signed instrument the word “Filed”, and the date and time of its filing. This
endorsement is
the
“filing date” of the instrument, and is conclusive of the date and time of its
filing in the
absence
of actual fraud.
(d)
Any instrument filed in accordance with subsection (c) of this section is
effective
upon
its filing date. Any instrument may provide that it is not to become effective
until a
specified
time subsequent to the time it is filed, but not later than the 90th day after
the date of its
filing.
(e)
If another section of this chapter specifically prescribes a manner of
executing,
acknowledging
or filing a specified instrument or a time when that instrument becomes
effective
which
differs from the corresponding provisions of this section, then such other
section governs.
(f)
Whenever any instrument authorized to be filed with the secretary of state
under any
provision
of this chapter, has been so filed and is an inaccurate record of the corporate
action
therein
referred to, or was defectively or erroneously executed, sealed or
acknowledged, the
instrument
may be corrected by filing with the secretary of state a certificate of
correction of the
instrument
which must be executed, acknowledged and filed in accordance with this section.
The
certificate
of correction must specify the inaccuracy or defect to be corrected and set
forth the
portion
of the instrument in corrected form. The corrected instrument must be
specifically
designated
as such in its heading, specify the inaccuracy or defect to be corrected, and
set forth
the
entire instrument in corrected form. An instrument corrected in accordance with
this section
is
effective as of the date the original instrument was filed, except as to those
individuals who are
substantially
and adversely affected by the correction and as to those individuals the
instrument as
corrected
is effective from its filing date.
(g)
Notwithstanding that any instrument authorized to be filed with the secretary
of state
under
this chapter is when filed inaccurately, defectively or erroneously executed,
sealed or
acknowledged,
or otherwise defective in any respect, the secretary of state has no liability
to any
individual
for the preclearance for filing, the acceptance for filing or the filing and
indexing of
such
instrument by the secretary of state.
(h)
Any signature on any instrument authorized to be filed with the secretary of
state
under
this chapter may be a facsimile or an electronically transmitted signature.
7-1.2-106. Definitions. - As used in this chapter: (1) “Articles of
incorporation” means
the
original or restated articles of incorporation and all of their amendments
including agreements
of
merger.
(2)
“Authorized shares” means the shares of all classes which the corporation is
authorized
to issue.
(3)
“Corporation” or “domestic corporation” means a corporation for profit subject
to the
provisions
of this chapter, except a foreign corporation.
(4)
“Electronic transmission” means any form of communication, not directly
involving
the
physical transmission of paper, that creates a record that may be retained,
retrieved, and
reviewed
by a recipient thereof, and that may be directly reproduced in paper form by
such a
recipient
through an automated process.
(5)
“Employee” includes officers but not directors. A director may accept duties
which
also
make him an employee.
(6)
“Foreign corporation” means a corporation for profit organized under laws other
than
the
laws of this state for a purpose or purposes for which a corporation may be
organized under
this
chapter.
(7)
“Individual” means a natural person.
(8)
“Insolvent” means the inability of a corporation to pay its debts as they
become due in
the
usual course of its business.
(9)
“Person” means an individual or an entity. An entity includes domestic and
foreign
business
corporation, domestic and foreign nonprofit corporation; estate; trust;
domestic and
foreign
unincorporated entity; and state, united States and foreign government.
(10)
“Shares” means the units into which the proprietary interests in a corporation
are
divided.
(11)
“Subscriber” means one who subscribes for shares in a corporation, whether
before
or
after incorporation.
(12)
“Shareholder” means one who is a holder of record of shares in a corporation.
(13)
The singular shall be construed to include the plural, the plural the singular,
and the
masculine
the feminine, when consistent with the intent of this chapter.
Part
II. Incorporation.
7-1.2-201.
Incorporators and organization of the corporation. - (a) One or more
individuals
may act as incorporator or incorporators of a corporation by filing articles of
incorporation
for the corporation with the secretary of state.
(b)
After incorporation:
(1)
If initial directors are named in the articles of incorporation, the initial
directors shall
hold
an organizational meeting, at the call of a majority of the directors, to
complete the
organization
of the corporation by appointing officers, adopting bylaws, and transacting on
any
other
business to come before the meeting.
(2)
If initial directors are not named in the articles of incorporation, the
incorporator or
incorporators
shall hold an organizational meeting at the call of the majority of the
incorporators:
(i)
To elect directors and complete the organization of the corporation; or
(ii)
To elect a board of directors who will complete the organization of the
corporation.
(c)
The incorporator or incorporators calling a meeting under this section shall
give at
least
three (3) days’ notice of the meeting by mail to each incorporator. The notice
must state the
time
and place of the meeting.
(d)
The act or decision done or made by a majority of the incorporators are the act
of the
incorporators,
provided that an action permitted to be taken at the meeting or meetings of
incorporators
under this section may be taken without a meeting if a consent, in writing,
stating
the
action to be taken, is signed by all of the incorporators.
7-1.2-202.
Articles of incorporation. - (a) The articles of incorporation must
state:
(1)
A corporate name that satisfies the requirements of Section 7-1.2-401.
(2)
The total number of shares which the corporation has authority to issue, and if
the
corporation
is to be authorized to issue more than one class of shares;
(i)
The total number of shares of each class; and
(ii)
A statement of all or any of the designations and the powers, preferences, and
rights,
including
voting rights, and the qualifications, limitations, or restrictions of them,
which are
permitted
by the provisions of this chapter in respect of any class or classes of shares
of the
corporation
and the fixing of which by the articles of association is desired, and an
express grant
of
the authority as it may then be desired to grant to the board of directors to
fix by vote or votes
any
of them that may be desired but which is not fixed by the articles.
(3)
The address of its initial registered office, and the name of its initial
registered agent
at
the address.
(4)
The name and address of each incorporator.
(b)
The articles of incorporation may state:
(1)
A par value of authorized shares or classes of shares.
(2)
Any provisions electing to provide preemptive rights to shareholders pursuant
to the
provisions
of Section 7-1.2-613.
(3)
Any provision, not inconsistent with law, which the incorporators elect to set
forth in
the
articles of incorporation for the regulation of the internal affairs of the
corporation, including,
but
not limited to, a provision eliminating or limiting the personal liability of a
director to the
corporation
or to its shareholders for monetary damages for breach of the director’s duty
as a
director;
provided that the provision does not eliminate or limit the liability of a
director for:
(i)
Any breach of the director’s duty of loyalty to the corporation or its
shareholders;
(ii)
Acts or omissions not in good faith or which involve intentional misconduct or
a
knowing
violation of law;
(iii)
Liability imposed pursuant to the provisions of Section 7-1.2-811; or
(iv)
Any transaction from which the director derived an improper personal benefit
(unless
the
transaction is permitted by Section 7-1.2-807); and also including;
(v)
Any provision which under this chapter is required or permitted to be set forth
in the
bylaws.
No
provision eliminating or limiting the personal liability of a director will be
effective
with
respect to causes of action arising prior to the inclusion of the provision in
the articles of
incorporation
of the corporation.
(4)
If, pursuant to Section 7-1.2-105(d), the corporate existence is to begin at a
time
subsequent
to the issuance of the certificate of incorporation by the secretary of state,
the date
when
corporate existence begins.
(c)
The provisions permitted by subsection (b)(3) may also be included in the
articles of
incorporation
or legislative charter of any existing or future financial institution,
insurance
company,
public utility, or other quasi public corporation having purposes enumerated as
exceptions
to this chapter in Section 7-1.2-301.
(d)
The period of duration of a corporation is perpetual unless otherwise stated in
the
articles
of incorporation.
(e)
It is not necessary to set forth in the articles of incorporation any of the
corporate
powers
enumerated in this chapter.
7-1.2-203.
Bylaws. - (a) The bylaws may contain any provisions for the
regulation and
management
of the affairs of the corporation not inconsistent with law or the articles of
incorporation.
The initial bylaws of a corporation must be adopted by its incorporators or by
its
board
of directors at its organization meeting. Subsequently, the bylaws may be
amended by the
shareholders,
or, unless otherwise provided in the articles of incorporation or bylaws, by
the
board
of directors, but any amendment to the bylaws by the board of directors may be
changed by
the
shareholders.
(b)
Emergency Bylaws.
(1)
The board of directors of any corporation may adopt emergency bylaws, subject
to
repeal
or change by action of the shareholders, which are, notwithstanding any
different provision
elsewhere
in this chapter or in the articles of incorporation or bylaws, operative during
any
emergency
in the conduct of the business of the corporation resulting from an attack on
the
United
States or any nuclear or atomic disaster. The emergency bylaws may make any
provision
that
may be practical and necessary for the circumstances of the emergency,
including provisions
that:
(i)
A meeting of the board of directors may be called by any officer or director in
any
manner
and under conditions prescribed in the emergency bylaws;
(ii)
The director or directors in attendance at the meeting, or any greater number
fixed by
the
emergency bylaws, constitutes a quorum; and
(iii)
The officers or other individuals designated on a list approved by the board of
directors
before the emergency, all in the order of priority and subject to the
conditions, and for a
period
of time (not longer than reasonably necessary after the termination of the
emergency) that
may
be provided in the emergency bylaws or in the resolution approving the list,
are, to the extent
required
to provide a quorum at any meeting of the board of directors, deemed directors
for the
meeting.
(2)
The board of directors, either before or during any emergency, may provide, and
from
time
to time modify, lines of succession in the event that during an emergency any
or all officers
or
agents of the corporation are for any reason rendered incapable of discharging
their duties.
(3)
The board of directors, either before or during any emergency, may, effective
in the
emergency,
change the head office or designate several alternative head offices or
regional
offices,
or authorize the officers so to do.
(4)
To the extent not inconsistent with any adopted emergency bylaws, the bylaws of
the
corporation
remain in effect during any emergency, and upon its termination the emergency
bylaws
cease to be operative.
(5)
Unless otherwise provided in emergency bylaws, notice of any meeting of the
board
of
directors during any emergency may be given only to those directors that it may
be feasible to
reach
at the time and by any means that may be feasible at the time, including
publication or
radio.
(6)
To the extent required to constitute a quorum at any meeting of the board of
directors
during
any emergency, the officers of the corporation who are present are, unless
otherwise
provided
in emergency bylaws, deemed, in order of rank and within the same rank in order
of
seniority,
directors for the meeting.
(7)
No officer, director, or employee acting in accordance with any emergency
bylaws is
liable
except for willful misconduct. No officer, director, or employee is liable for
any action
taken
by him in good faith in an emergency in furtherance of the ordinary business
affairs of the
corporation
even though not authorized by the bylaws then in effect.
Part
III. Purposes and Powers.
7-1.2-301.
Purposes. - Corporations may be organized under this chapter for any
lawful
purpose
or purposes, except for the purpose of carrying on within this state the
business of a
bank,
savings bank, trust company, building and loan association, loan and investment
company,
safe
deposit company, railroad, electric railroad or street railway company,
telegraph or telephone
company,
gas or electric light, heat or power company, canal, aqueduct, or water
company,
turnpike
company, or any corporation which now has or may subsequently have the right to
take
or
condemn land or other property within this state under the power of eminent
domain, or to
exercise
or acquire franchises in streets or highways of this state, and further except
for the
purpose
of rendering the professional services specified in chapter 5.1 of this title
must be
organized
under the provisions of that chapter.
7-1.2-302. Powers. - (a) In addition to the powers enumerated
below, every corporation,
its
officers, directors and shareholders possess and may exercise all the powers
and privileges
granted
by this chapter or by any other law or by its articles of incorporation,
together with any
powers
incidental thereto, so far as such powers and privileges are necessary or
convenient to the
conduct,
promotion or attainment of its business.
(b)
Each corporation has power to:
(1)
Have perpetual existence unless a limited period of duration is stated in its
articles of
incorporation.
(2)
Sue and be sued, complain and defend, in its corporate name.
(3)
Have a corporate seal which may be altered at pleasure, and to use the seal by
causing
it,
or a facsimile of it, to be impressed or affixed or reproduced in any other
manner.
(4)
Purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use,
and
otherwise
deal in and with, real or personal property, or any interest in that property,
wherever
situated.
(5)
Sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise
dispose of all
or
any part of its property and assets.
(6)
Lend money and use its credit to assist its employees.
(7)
Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote,
use,
employ,
sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and
deal in and
with,
shares or other interests in, or obligations of, other domestic or foreign
corporations,
associations,
partnerships, limited liability companies or individuals, or direct or indirect
obligations
of the United States or of any other government, state, territory, governmental
district
or
municipality or of any of their instrumentalities.
(8)
Make contracts and guarantees and incur liabilities, borrow money at the rate
of
interest
that the corporation may determine, issue its notes, bonds, and other
obligations, and
secure
any of its obligations by mortgage or pledge of all or any of its property,
franchises, and
income.
(9)
Lend money for its corporate purposes, invest and reinvest its funds, and take
and
hold
real and personal property as security for the payment of the funds loaned or
invested.
(10)
Conduct its business, carry on its operations, and have offices and exercise
the
powers
granted by this chapter, within or without this state.
(11)
Elect or appoint officers and agents of the corporation, and define their
duties, and
fix
their compensation.
(12)
Make and alter bylaws, not inconsistent with its articles of incorporation or
with the
laws
of this state, for the administration and regulation of the affairs of the
corporation.
(13)
Make donations for the public welfare or for charitable, scientific, or
educational
purposes.
(14)
Transact any lawful business which the board of directors finds will aid
governmental
authority.
(15)
Pay pensions and establish pension plans, pension trusts, profit sharing plans,
stock
bonus
plans, stock option plans, and other incentive plans for any or all of its
directors, officers,
and
employees.
(16)
Provide insurance for its benefit on the life of any of its directors,
officers, or
employees,
or on the life of any shareholder for the purpose of acquiring at his death
shares of its
share
owned by the shareholder.
(17)
Be a promoter, partner, member, associate, or manager of any partnership,
limited
liability
company, joint venture, trust, or other enterprise.
(18)
Make payments or donations, or do any other act, not inconsistent with law,
that
furthers
the business and affairs of the corporation.
(19)
Indemnify any individual pursuant to Section 7-1.2-814.
(20)
Make guarantees, although not in furtherance of its corporate purposes, when
authorized
at a meeting of shareholders by the affirmative vote of the holders of a
majority of the
shares
of the corporation entitled to vote on guarantees, or a greater percentage that
is provided in
the
articles of incorporation or bylaws.
(21)
If authorized by a like vote, to mortgage, pledge, or give a security interest
in all or
any
of its property, franchises, and income to secure a guarantee or to secure
obligations other
than
its own.
(c)
Every corporation is governed by the provisions and be subject to the
restrictions and
liabilities
contained in this chapter.
7-1.2-303.
Defense of Ultra Vires. - No act of a corporation and no conveyance
or
transfer
of real or personal property to or by a corporation is invalid because the
corporation was
without
capacity or power to do the act or to make or receive the conveyance or
transfer, but the
lack
of capacity or power may be asserted:
(a)
In a proceeding by a shareholder against the corporation to enjoin the doing of
any act
or
the transfer of real or personal property by or to the corporation. If the
unauthorized act or
transfer
sought to be enjoined is being, or is to be, performed or made pursuant to a
contract to
which
the corporation is a party, the court may, if all of the parties to the
contract are parties to
the
proceeding and if it deems the same to be equitable, set aside and enjoin the
performance of
the
contract, and in so doing may allow to the corporation or to the other parties
to the contract, as
the
case may be, compensation for the loss or damage sustained by either of them
which may
result
from the action of the court in setting aside and enjoining the performance of
the contract,
but
anticipated profits to be derived from the performance of the contract shall
not be awarded by
the
court as a loss or damage sustained.
(b)
In a proceeding by the corporation, whether acting directly or through a
receiver,
trustee,
or other legal representative, or through shareholders in a representative
suit, against the
incumbent
or former officers or directors of the corporation.
(c)
In a proceeding by the attorney general, as provided in this chapter, to
dissolve the
corporation,
or in a proceeding by the attorney general to enjoin the corporation from the
transaction
of unauthorized business.
Part
IV. Name.
7-1.2-401.
Corporate name. - (a) The corporate name:
(1)
Must contain the word “corporation,” “company,” “incorporated,” or “limited,”
or an
abbreviation
of one of these words.
(2)
Is not be the same as, or deceptively similar to, the name of any entity on
file with the
secretary
of state or a name the exclusive right to which is, at the time filed, reserved
or registered
in
the manner provided in this chapter, or the name of a corporation, whether
business or
nonprofit,
limited partnership, limited liability partnership or limited liability company
which has
in
effect a registration of its name as provided in this title, subject to the
following:
(b)
This provision does not apply if the applicant files with the secretary of
state a
certified
copy of a final decree of a court of competent jurisdiction establishing the
prior right of
the
applicant to the use of the name in this state.
(c)
The name may be the same as the name of a corporation or other association the
certificate
of incorporation or organization of which has been revoked by the secretary of
state as
permitted
by law and the revocation has not been withdrawn within one year from the date
of the
revocation.
(d)
A corporation with which another corporation, domestic or foreign, is merged,
or
which
is formed by the reorganization of one or more domestic or foreign corporations
or upon a
sale,
lease, or other disposition to, or exchange with, a domestic corporation of all
or substantially
all
the assets of another corporation, domestic or foreign, including its name, may
have the same
name
as that used in this state by any of the corporations if at the time the other
corporation was
organized
under the laws of, or is authorized to transact business in, this state.
7-1.2-402.
Fictitious business name. - (a) Any corporation organized and
existing under
the
laws of this state or authorized to transact business in this state may
transact business in this
state
under a fictitious name, provided that it files a fictitious business name
statement in
accordance
with this section prior to the time it commences to transact the business under
the
fictitious
name.
(b)
The fictitious business name statement must be filed with the secretary of
state on
forms
to be furnished by the secretary of state and must be executed by an authorized
officer of
the
corporation and must state:
(1)
The fictitious business name to be used;
(2)
The name of the applicant corporation and the state or territory under the laws
of
which
it is incorporated, the date of its incorporation, and a brief statement of the
business in
which
it is engaged; and
(3)
The address of its registered office within the state.
(c)
The fictitious business name statement expires upon the filing of the statement
of
abandonment
of use of a fictitious business name registered in accordance with this section
or
upon
the dissolution of the applicant corporation.
(d)
The statement of abandonment of use of a fictitious business name under this
section
may
be filed with the secretary of state on forms furnished by the secretary of
state and must be
executed
by an authorized officer of the corporation and must state:
(1)
The fictitious business name being abandoned;
(2)
The date on which the original fictitious business name statement being
abandoned
was
filed;
(3)
The name of the applicant corporation and the state or territory under the laws
of
which
it is incorporated; and
(4)
The address of its registered office within the state.
(e)
No domestic or foreign corporation transacting business under a fictitious
business
name
contrary to the provisions of this section, or its assignee, may maintain any
action upon or
on
account of any contract made, or transaction had, in the fictitious business
name in any court
of
this state until a fictitious business name statement has been filed in
accordance with this
section.
(f)
No corporation may be permitted to transact business under a fictitious
business name
pursuant
to this section which is the same as, or deceptively similar to, the name of
any domestic
corporation,
any domestic limited partnership, domestic limited liability partnership or any
domestic
limited liability company existing under the laws of this state, or the name of
any
foreign
corporation, foreign limited partnership, foreign limited liability partnership
or foreign
limited
liability company authorized to transact business in the state, or any
corporate name filed,
reserved
or registered under this title.
7-1.2-403.
Reserved name. - (a) The exclusive right to the use of a corporate
name may
be
reserved by:
(1)
Any individual intending to organize a corporation under this chapter.
(2)
Any domestic corporation intending to change its name.
(3)
Any foreign corporation intending to make application for a certificate of
authority to
transact
business in this state.
(4)
Any foreign corporation authorized to transact business in this state and
intending to
change
its name.
(5)
Any individual intending to organize a foreign corporation and intending to
have the
corporation
make application for a certificate of authority to transact business in this
state.
(b)
The reservation is made by filing with the secretary of state an application to
reserve a
specified
corporate name, executed by the applicant. If the secretary of state finds that
the name
is
available for corporate use, the secretary of state shall reserve the name for
the exclusive use of
the
applicant for a non-renewable period of one hundred and twenty (120) days.
(c)
The right to the exclusive use of a specified corporate name so reserved may be
transferred
to any other person by filing in the office of the secretary of state a notice
of the
transfer,
executed by the applicant for whom the name was reserved, and specifying the
name and
address
of the transferee.
7-1.2-404.
Registered name. - (a) Any corporation organized and existing under
the laws
of
any state or territory of the United States may register its corporate name
under this chapter,
provided
its corporate name is not the same as, or deceptively similar to, the name of
any
domestic
corporation, limited partnership, limited liability partnership or limited
liability
company
existing under the laws of this state, or the name of any foreign corporation,
limited
partnership,
limited liability partnership or limited liability company authorized to
transact
business
in this state, or any corporate name reserved, filed or registered under this
title.
(b)
The registration is made by:
(1)
Filing with the secretary of state:
(i)
An application for registration executed by an authorized officer of the
corporation,
stating
the name of the corporation, the state or territory under the laws of which it is
incorporated,
the date of its incorporation, a statement that it is carrying on or doing
business, and
a
brief statement of the business in which it is engaged; and
(ii)
A certificate stating that the corporation is in good standing under the laws
of the state
or
territory wherein it is organized, executed by the secretary of state of the
state or territory or by
any
other official that may have custody of the records pertaining to corporations;
and
(2)
Paying to the secretary of state a registration fee.
(c)
The registration is effective for a period of one year from the effective date
of the
application.
(d)
A corporation, which has in effect a registration of its corporate name, may
renew the
registration
from year to year by annually filing an application for renewal stating the
facts
required
to be stated in an original application for registration and a certificate of
good standing
as
required for the original registration. A renewal application must be filed
prior to the
expiration
of the one-year period from the filing of an original application for
registration or its
last
renewal and extends the registration for the following year.
Part
V. Office and Agent.
7-1.2-501.
Registered office and registered agent - Designation of registered
agent
without
authority. - (a) Each corporation shall have and continuously maintain in this
state:
(1)
A registered office, which may be, but need not be, the same as its place of
business.
(2)
A registered agent, who may be (i) an individual resident in this state, (ii) a
domestic
corporation,
a domestic limited partnership, a domestic limited liability partnership, a
domestic
limited
liability company, or (iii) a foreign corporation, a foreign limited
partnership, a foreign
limited
liability partnership or a foreign limited liability company authorized to
transact business
in
this state, in each case, having a business office identical with the office of
such registered
agent
which generally is open during normal business hours to accept service of
process and
otherwise
perform the functions of a registered agent; provided, however, that in the
case where
the
registered agent of a corporation is an attorney, the business address of the
agent need not be
identical
with the registered office, but may be the usual business address of the
attorney.
(b)
Any incorporator, officer, agent, or servant of a corporation, who designates a
registered
agent for that corporation without the registered agent’s authority, is guilty
of a
misdemeanor
and, upon conviction, may be punished by a fine of not more than one thousand
dollars
($1,000) or by imprisonment of not more than one (1) year, or both.
7-1.2-502.
Change of registered office or registered agent. - (a) A corporation
may
change
its registered office or change its registered agent, or both, upon filing in
the office of the
secretary
of state a statement stating:
(1)
The name of the corporation.
(2)
The address of its then registered office.
(3)
If the address of its registered office has changed, the new address of the
registered
office.
(4)
The name of its then registered agent.
(5)
If its registered agent has changed, the name of its successor registered
agent.
(6)
The address of its registered office and the address of the business office of
its
registered
agent, as changed.
(b)
The statement must be executed by the corporation by its authorized representative,
and
delivered to the secretary of state. If the secretary of state finds that the
statement conforms
to
the provisions of this chapter, the secretary of state shall file the statement
in his office, and
upon
that filing or upon a later date not more than thirty (30) days after the
filing, as is set forth in
the
statement, the change of address of the registered office, or the appointment
of a new
registered
agent, or both, as the case may be, becomes effective.
(c)
Any registered agent of a corporation may resign as an agent upon filing a
written
notice
of the resignation with the secretary of state, who shall immediately notify
the corporation
of
the resignation at its registered office. The appointment of the agent
terminates upon the
expiration
of thirty (30) days after receipt of the notice by the secretary of state.
(d)
If a registered agent changes his or its business address to another place
within the
state,
he or it may change the address and the address of the registered office of any
corporations
of
which he or it is a registered agent by filing a statement as required above,
except that it need
be
signed only by the registered agent and need not be responsive to subsection
(a)(5) and must
recite
that a copy of the statement has been mailed to each corporation.
7-1.2-503.
Service of process on corporation. - (a) The registered agent
appointed by a
corporation
is an agent of the corporation upon whom any process, notice, or demand
required or
permitted
by law to be served upon the corporation may be served.
(b)
Whenever a corporation fails to appoint or maintain a registered agent in this
state, or
whenever
its registered agent cannot with reasonable diligence be found at the
registered office,
then
the secretary of state is an agent of the corporation upon whom any process,
notice, or
demand
may be served. Service on the secretary of state of any process, notice, or
demand is
made
by delivering to and leaving with him or with any clerk having charge of the
corporation
department
of his office, duplicate copies of the process, notice, or demand. In the event
any
process,
notice, or demand is served on the secretary of state, the secretary of state
shall
immediately
forward one of the copies by certified mail, addressed to the corporation at
its
registered
office. Any service upon the secretary of state is returnable in not less than
thirty (30)
days.
(c)
The secretary of state shall maintain a record of any such service setting
forth the
name
of the plaintiff and defendant, the title, docket number and nature of the
proceeding in
which
process has been served upon the Secretary of State, the fact that service has
been effected
pursuant
to this subsection, the return date thereof, and the day and hour when the
service was
made.
The secretary of state shall not be required to retain such information for a
period longer
than
five (5) years from receipt of the service of process.
(d)
Nothing contained in these provisions limits or affects the right to serve any
process,
notice,
or demand required or permitted by law to be served upon a corporation in any
other
manner
permitted by law.
Part
VI. Shares Issuance and Distributions.
7-1.2-601.
Right of corporation to acquire and, dispose of and cancel its own shares.
- (a) Unless a
corporation’s articles of incorporation provide otherwise, subject to
subsection (f),
a
corporation may at any time, by resolution of its board of directors, redeem
purchase, take,
receive,
or otherwise acquire, hold, own, pledge, transfer, or dispose of its own
shares.
(b)
In this Section 7-1.2-601, “redeemable shares” means shares issued pursuant to
Section
7-1.2-602(c)(1). When redeemable shares are called for redemption, those shares
are not
outstanding
shares for the purpose of voting or determining the total number of shares
entitled to
vote
on any matter on and after the date on which written notice of redemption has
been sent to
holders
thereof and a sum sufficient to redeem such shares has been set aside to pay
the
redemption
price to the holders of the shares upon surrender of certificates therefor.
(c)
When redeemable shares are redeemed or purchased by the corporation, the
redemption
or purchase effects a cancellation of the shares and a statement of
cancellation must
be
filed pursuant to subsection (e).
(d)
When shares of a corporation other than redeemable shares are purchased, a
corporation
may, at any time, by resolution of its board of directors, cancel all or any
part of the
shares
of the corporation of any class or series reacquired by it by filing a statement
of
cancellation
as provided in subsection (e).
(e)
A statement of cancellation adopted by the board of directors must be delivered
to the
secretary
of state for filing as follows:
(1)
The statement of cancellation shall be executed by an authorized officer of the
corporation,
and must state:
(i)
The name of the corporation.
(ii)
The number of shares canceled through redemption or purchase, itemized by
classes
and
series.
(iii)
The aggregate number of issued shares, itemized by classes and series, after
giving
effect
to the cancellation.
(iv)
If the articles of incorporation provide that the canceled shares are not to be
reissued,
then
the number of shares which the corporation has authority to issue, itemized by
classes and
series,
after giving effect to the cancellation.
(2)
An original statement of cancellation must be delivered to the secretary of
state. If
the
secretary of state finds that the statement of cancellation conforms to law,
the secretary of
state
shall, when all fees and franchise taxes have been paid:
(i)
Endorse on the original the word “Filed”, and the month, day, and year of the
filing.
(ii)
File the original in his office.
(3)
Upon filing of the statement of cancellation, the shares are restored to the
status of
authorized
but unissued shares unless the articles of incorporation provide that the
shares, when
redeemed
or purchased, are not to be reissued, in which case the filing of the statement
of
cancellation
constitutes an amendment to the articles of incorporation and reduces the
number of
shares
of the class canceled which the corporation is authorized to issue by the
number of shares
canceled.
(f)
No redemption or purchase of shares may be made by a corporation if, after
giving it
effect:
(1)
The corporation would be insolvent; or
(2)
The corporation’s total assets would be less than the sum of its total
liabilities plus
(unless
the articles of incorporation permit otherwise) the amount that would be
needed, if the
corporation
were to be dissolved at the time of the redemption, to satisfy the preferential
rights
upon
dissolution of shareholders whose preferential rights are superior to those
redeeming shares
(unless
such preferential rights are waived by a majority of the shareholders entitled
to such
preferential
rights, voting by class).
The
board of directors may base a determination that a redemption is not prohibited
under
subsection
(f) either on financial statements prepared on the basis of accounting
practices and
principles
that are reasonable in the circumstances or on a fair valuation or other method
that is
reasonable
in the circumstances.
(g)
Nothing contained in this section is construed to forbid the cancellation of
shares in
any
other manner permitted by this chapter.
7-1.2-602.
Authorized shares; shares in classes or series; issuance of shares. -
(a)
Every
corporation has the power to create and issue the number of shares stated in
its articles of
incorporation
or any amendment thereto.
(b)
Classes and series. As stated in the articles of incorporation or in any
amendment
thereto,
or in the resolution or resolutions providing for the issue of such shares
adopted by the
board
of directors pursuant to authority expressly vested in it by the provisions of
its articles of
incorporation,
a corporation may issue one or more classes of shares, including one or more
classes
of common shares, or one or more series of shares within any class thereof, any
or all of
which
classes or series of shares may be certificated or uncertificated, with par
value or without
par
value, and which classes or series may have such voting powers, full or
limited, or no voting
powers,
and such designations, preferences and relative, participating, optional or
other special
rights,
and qualifications, limitations or restrictions thereof as are stated and expressed
in the
articles
of incorporation or any amendment thereto, or in the resolution or resolutions
providing
for
the issue of such shares adopted by the board of directors pursuant to the
authority expressly
vested
in it by the provisions of its articles of incorporation.
(c)
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 or
series:
(1)
Redeemable for cash, property, promissory notes or rights, including securities
of any
other
corporation, at the option of either the holder or the corporation or upon the
happening of a
specified
event, at the time or times, at the price or prices, or the rate or rates, and
with the
adjustments
stated and expressed or provided for in the articles of incorporation or any
amendment
thereto, or in the vote or votes providing for the issuance of the shares
adopted by the
board
of directors as previously provided; provided, however, that immediately
following any
such
redemption the corporation must have outstanding one or more shares of one or
more classes
or
series, which share, or shares together, have unlimited voting rights.
(2)
Entitling the holders of the shares to cumulative, noncumulative, or partially
cumulative
dividends.
(3)
Having preference over any other class or classes or series of shares as to the
payment
of
dividends.
(4)
Having preference in the assets of the corporation over any other class or
classes or
series
of shares upon the voluntary or involuntary liquidation of the corporation.
(5)
To the extent not inconsistent with this chapter, having limited or no voting
rights, or
having
special voting rights including the power to elect one or more directors.
(6)
Convertible into, or exchangeable for, at the option of either the holder or
the
corporation
or upon the happening of a specified event, shares of any other class or
classes or any
other
series of shares of the corporation, at such price or prices or at such rate or
rates of
exchange
and with such adjustments as are stated in the articles of incorporation or in
the
resolution
or resolutions providing for the issuance of such shares adopted by the board
of
directors.
(d)
If the articles of incorporation expressly vest authority in the board of
directors, then,
to
the extent that the articles of incorporation have not established series and
fixed and
determined
the variations in the relative rights and preferences as between the series,
the board of
directors
has authority to divide any or all of the classes into series and, within the
limitations, if
any,
stated in the articles of incorporation, to fix and determine the relative
rights and preferences
of
the shares of any series established.
(e)(1)
Open-End Investment Company. Notwithstanding the provisions of subsections
(a)
and (b) of this section, the board of directors of a corporation that is
registered or intends to
register
as an open-end investment 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 or the number of shares of any class
or series
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 or the number of shares of any class or
series that the
corporation
has authority to issue.
(2)
Conditional license of franchise. Any shares of a corporation which holds
(directly or
indirectly)
a license or franchise from a governmental agency to conduct its business or is
a
member
of a national securities exchange, which license, franchise or membership is
conditioned
upon
some or all of the holders of its shares possessing prescribed qualifications
may be made
subject
to redemption by the corporation to the extent necessary to prevent the loss of
such
license,
franchise or membership or to reinstate it.
(f)
Dividends. The holders of preferred or special shares of any class or of any
series of
shares
are entitled to receive dividends at the rates, on the conditions and at the
times that are
stated
and expressed in the articles of incorporation or in the vote or votes
providing for the issue
of
the shares adopted by the board of directors as previously provided, payable in
preference to,
or
in relation to, the dividends, payable on any other class or classes of shares,
or of any other
series
of shares, and cumulative, non-cumulative or partially cumulative as is stated
and
expressed.
When dividends upon the preferred and special shares, if any, to the extent of
the
preferences
to which the shares are entitled, have been paid or declared and set apart for
payment,
a
dividend on the remaining class or classes or series of shares may then be paid
out of the
remaining
assets of the corporation available for dividends.
(g)
Rights upon liquidation. The holders of the preferred or special shares of any
class or
of
any series of shares are entitled to the rights upon the dissolution of, or
upon any distribution
of
the assets or liquidation, voluntary or involuntary, of the corporation as are
stated and
expressed
in the articles of incorporation or in the vote or votes providing for the
issue of the
shares
adopted by the board of directors as previously provided.
(h)
Facts ascertainable outside the articles of incorporation. Any of the voting
powers,
designations,
preferences, rights and qualifications, limitations or restrictions of any
class or
series
of shares may be made dependent upon facts ascertainable outside the articles
of
incorporation
or outside the resolution or resolutions providing for the issue of such shares
adopted
by the board of directors pursuant to authority expressly vested in it by its
articles of
incorporation,
provided that the manner in which such facts operate upon the voting powers,
designations,
preferences, rights and qualifications, limitations or restrictions of such
class or
series
of shares is clearly and expressly set forth in the articles of incorporation
or in the
resolution
or resolutions providing for the issue of such shares adopted by the board of
directors.
The
term “facts,” as used in this subsection, includes, but is not limited to, the
occurrence of any
event,
including a determination or action by any person, including the corporation.
(h)
Amendment of rights and restrictions by board of directors. Subject to
subsection (i),
unless
otherwise provided in the articles of incorporation, if no shares have been
issued of a class
or
series established by resolution of the board of directors, the voting powers,
designations,
preferences,
and relative, participating optional or other rights, if any or the
qualifications,
limitations
or restrictions thereof, may be amended by a resolution or resolutions adopted
by the
board
of directors.
(i)(1)
Issuance. Before any corporation issues any shares of any class or of any
series of
any
class of which the voting powers, designations, preferences, and relative,
participating,
optional,
or other rights, if any, or the qualifications, limitations, or restrictions of
the share, if
any,
have not been stated in the articles of incorporation but are provided for in a
vote or votes
adopted
by the board of directors pursuant to authority expressly vested in it by the
provisions of
the
articles of incorporation, a certificate presenting a copy of the vote or votes
and the number of
shares
of the class or series must be signed by an authorized officer of the
corporation and filed in
accordance
with Section 7-1.2-105. Upon the filing the certificate constitutes an
amendment to
the
articles of incorporation.
(2)
Increase or decrease of shares. Unless otherwise provided in any vote or votes,
the
number
of shares of any class or series as stated in the vote or votes may be
increased or
decreased
(but not below the number of shares then outstanding) by a certificate likewise
made,
signed,
and filed presenting a statement that a specified increase or decrease in the
number of
shares
had been authorized and directed by a vote or votes likewise adopted by the
board of
directors.
If the number of shares is decreased, the number of shares specified in the
certificate
resume
the status which they had before to the adoption of the prior resolution.
7-1.2-603.
Subscription for shares. - (a) A subscription for shares entered
into before
incorporation
is irrevocable for a period of six (6) months unless the subscription agreement
provides
a longer or shorter period or all the subscribers agree to revocation. A
subscription for
shares
is not be enforceable against a subscriber unless in writing and signed by the
subscriber or
by
an agent of the subscriber.
(b)
The board of directors may determine the payment terms of subscriptions for
shares
that
were entered into before incorporation, unless the subscription agreement
specifies them. A
call
for payment by the board of directors must be uniform so far as practicable as
to all shares of
the
same class or series, unless the subscription agreement specifies otherwise.
(c)
Shares issued pursuant to subscriptions entered into before incorporation are
fully
paid
and nonassessable when the corporation receives the consideration specified in
the
subscription
agreement.
(d)
If a subscriber defaults in payment of money or property under a subscription
agreement
entered into before incorporation, the corporation may collect the amount owed
as any
other
debt. Alternatively, unless the subscription agreement provides otherwise, the
corporation
may
rescind the agreement and may sell the shares if the debt remains unpaid more
than 20 days
after
the corporation sends written demand for payment to the subscriber.
(e)
A subscription agreement entered into on or after incorporation is a contract
between
the
subscriber and the corporation subject to Section 7-1.2-604.
7-1.2-604.
Issuance of and consideration for shares. - (a) Shares with par
value may
be
issued for such consideration having a value not less than the par value
thereof, as determined
from
time to time by the board of directors, or by the shareholders if the articles
of incorporation
so
provides.
(b)
Shares without par value may be issued for such consideration as is determined
from
time
to time by the board of directors, or by the shareholders if the articles of
incorporation so
provides.
(c)
The board of directors may authorize shares to be issued for consideration
consisting
of
any tangible or intangible property or benefit to the corporation, including
cash, promissory
notes,
services performed, contracts for services to be performed, or other securities
of the
corporation.
(d)
Before the corporation issues shares, the board of directors must determine
that the
consideration
received or to be received for shares to be issued is adequate. The
determination by
the
board is conclusive insofar as the adequacy of consideration for the issuance
of the shares
relates
to whether the shares are validly issued, fully paid and nonassessable.
(e)
When the corporation receives the consideration for which the board of
directors
authorized
the issuance of shares, the shares issued therefor are fully paid and
nonassessable.
(f)
The corporation may place in escrow shares issued for a contract for future
services or
benefits
or a promissory note, or make other arrangements to restrict the transfer of
the shares,
and
may credit distributions in respect of the shares against their purchase price,
until the services
are
performed, the note is paid, or the benefits received. If the services are not
performed, the
note
is not paid, or the benefits are not received, the shares escrowed or
restricted and the
distributions
credited may be cancelled in whole or part.
7-1.2-605.
Par value per share. -- Solely for the purpose of any
statute or regulation
imposing
any tax or fee based upon the capitalization of a corporation, unless otherwise
stated in
the
articles of incorporation, all authorized shares of a corporation organized
under this chapter
are
deemed to have a nominal or par value of one cent ($0.01) per share. If any
federal or other
statute
or regulation applicable to a particular corporation requires that the shares
of such
corporation
have a par value, such shares have the par value determined by the board of
directors
in
order to satisfy the requirements of such statute or regulation.
7-1.2-606.
Share rights and options. - Subject to any provisions in respect to
rights and
options
stated in its articles of incorporation, a corporation may create and issue,
whether or not
in
connection with the issuance and sale of any of its shares or other securities,
rights or options
entitling
the holders to purchase from the corporation shares of any class or classes.
Those rights
or
options are evidenced, and the recipients thereof designated, in any manner
that the board of
directors
approves and, subject to the provisions of the articles of incorporation, shall
state the
terms
upon which, the time or times within which and the price or prices at which the
shares may
be
purchased from the corporation upon the exercise of any right or option. In the
absence of
fraud
in the transaction, the judgment of the board of directors as to the adequacy
of the
consideration
received for the rights or options is conclusive.
7-1.2-607.
Expenses of organization, reorganization and financing. - The
reasonable
charges
and expenses of organization or reorganization of a corporation, and the
reasonable
expenses
of and compensation for the sale or underwriting of its shares, may be paid or
allowed
by
the corporation out of the consideration received by it in payment for its
shares without
rendering
the shares not fully paid or assessable.
7-1.2-608.
Form and Content of Certificates. -- (a) The shares of a corporation
may but
need
not be represented by certificates as determined by the Board of Directors.
Every holder of
shares
represented by certificates and upon request every holder of uncertificated
shares is
entitled
to have a certificate signed by the officer or officers designated for the
purpose by the
bylaws
of the corporation, and in absence of any designation, by the chairperson or
the vice
chairperson
of the board of directors, or the president or a vice president, and by the
treasurer or
the
assistant treasurer, or the secretary or an assistant secretary of the
corporation, representing
the
number of shares registered in certificate form and may be sealed with the seal
of the
corporation
or a facsimile of the seal. Any or all of the signatures on the certificate may
be a
facsimile.
In case any officer, transfer agent, or registrar who has signed or whose
facsimile
signature
has been placed upon the certificate has ceased to be the officer, transfer
agent, or
registrar
before the certificate is issued, it may be issued by the corporation with the
same effect
as
if he were the officer, transfer agent, or registrar at the date of its issue.
(b)
Every certificate representing shares issued by a corporation which is
authorized to
issue
shares of more than one class must state upon the face or back of the
certificate, or state that
the
corporation will furnish to any shareholder upon request and without charge, a
full statement
of
the designations, preferences, limitations, and relative rights of the shares
of each class
authorized
to be issued and, if the corporation is authorized to issue any preferred or
special class
in
series, the variations in the relative rights and preferences between the
shares of each series so
far
as the series have been fixed and determined and the authority of the board of
directors to fix
and
determine the relative rights and preferences of subsequent series.
(c)
Each certificate representing shares must state upon the face of the
certificate:
(1)
That the corporation is organized under the laws of this state.
(2)
The name of the person to whom issued.
(3)
The number and class of shares, and the designation of the series, if any,
which the
certificate
represents.
(4)
The par value of each of the shares, if any.
(d)
No certificate may be issued for any share until the share is fully paid.
(e)
Within a reasonable time after the issuance or transfer of uncertificated
shares, the
corporation
shall send to the registered owner of the shares a written notice containing
the
information
and statements required to be presented or stated on certificates pursuant to
subsections
(b) and (c) and Section 7-1.2-609(b).
(f)
Except as otherwise expressly provided by law, the rights and obligations of
the
holders
of uncertificated shares and the rights and obligations of the holders of
certificates
representing
shares of the same class and series are identical.
7-1.2-609.
Share transfer and ownership restrictions. - (a) The shares of a
corporation
are
personal property and are transferable in accordance with the provisions of
Section 6A-8-204,
as
amended from time to time, except as may otherwise be provided in this chapter.
(b)
The articles of incorporation, bylaws, an agreement among all or less than all
of the
shareholders,
or an agreement between all or less than all of the shareholders and the
corporation
may
impose restrictions on the transfer or registration of transfer of shares of
the corporation. A
restriction
does not affect shares issued before the restriction was adopted unless the
holders of
the
shares are parties to the restriction agreement or voted in favor of the
restriction.
(c)
A restriction on the transfer or registration of transfer of shares is valid
and
enforceable
against the holder or a transferee of the holder if the restriction is
authorized by this
chapter
and its existence is noted conspicuously on the front or back of the
certificate or is
contained
in the initial transaction statement required by Section 6A-8-204(2). Unless
noted, a
restriction
is not enforceable against a person without knowledge of the restriction.
(d)
A restriction on the transfer, ownership or registration of transfer of shares
is
authorized:
(1)
To maintain the corporation’s status when it is dependent on the number or
identity of
its
shareholders;
(2)
To preserve exemptions under federal or state securities law;
(3)
To permit a corporation to qualify as: (i) 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 (ii) an investment company under the Investment Company
Act
of 1940, as heretofore or hereafter amended, or regulations adopted thereunder;
and
(4)
For any other reasonable purpose.
(e)
A restriction on the transfer or registration of transfer of shares may:
(1)
Obligate the shareholder first to offer the corporation or other persons
(separately,
consecutively,
or simultaneously) an opportunity to acquire the restricted shares;
(2)
Obligate the corporation or other persons (separately, consecutively, or
simultaneously)
to acquire the restricted shares;
(3)
Require the corporation, the holders of any class of its shares, or another
person to
approve
the transfer of the restricted shares, if the requirement is not manifestly
unreasonable;
(4)
Prohibit the transfer of the restricted shares to designated persons or classes
of
persons,
if the prohibition is not manifestly unreasonable.
(f)
For the purposes of this section, “shares” includes a security convertible into
or
carrying
a right to subscribe for or acquire shares.
7-1.2-610.
Fractional shares. - (a) A corporation may: (1) Issue fractions of a
share,
(2)
Arrange for the disposition of fractional interests by those entitled to those
interests,
(3)
Pay in cash the fair value of fractions of a share as of the time when those
entitled to
receive
the fractions are determined, or
(4)
Issue scrip in registered or bearer form which entitles the holder to receive a
certificate
for a full share upon the surrender of the scrip aggregating a full share.
(b)
A certificate for a fractional share, but not scrip, entitles unless it otherwise
provides,
the
holder to exercise voting rights, to receive dividends on that share, and to
participate in any of
the
assets of the corporation in the event of liquidation. The board of directors
may issue scrip
subject
to the condition that it becomes void if not exchanged for certificates
representing full
shares
before a specified date, or subject to the condition that the shares for which
scrip is
exchangeable
may be sold by the corporation and the proceeds from the sale distributed to
the
holders
of scrip, or subject to any other conditions which the board of directors deems
advisable.
7-1.2-611.
Bonds - Facsimile signatures and seals. - The seal of the
corporation and any
or
all signatures of the officers or other agents of the corporation upon a bond
and any coupon
attached
to the bond may be facsimiles if the bond is countersigned by an officer or
other agent of
a
trustee or other certifying or authenticating authority. In case any officer or
other agent who has
signed
or whose facsimile signature has been placed upon the bond or coupon has ceased
to be
the
officer or agent before the bond is issued, it may be issued by the corporation
with the same
effect
as if he were the officer or agent at the date of its issue.
7-1.2-612.
Liability of subscribers and shareholders. - (a) A holder of or
subscriber to
shares
of a corporation is under no obligation to the corporation or its creditors
with respect to the
shares
other than the obligation to pay to the corporation the unpaid portion of the
consideration
for
which the shares were issued or to be issued, which in no event may be less
than the amount
of
the consideration for which the shares could be lawfully issued.
(b)
Any person becoming an assignee or transferee of shares or of a subscription
for
shares
in good faith and without knowledge or notice that the full consideration for
the shares has
not
been paid is not personally liable to the corporation or its creditors for any
unpaid portion of
the
consideration. An executor, administrator, conservator, guardian, trustee,
assignee for the
benefit
of creditors, or receiver is not personally liable to the corporation as a
holder of or
subscriber
to shares of a corporation but the estate and funds in his hands is so liable.
(c)
No pledgee or other holder of shares as collateral security is personally
liable as a
shareholder.
7-1.2-613.
Shareholder’s preemptive rights. -- (a) Except to the extent limited
or
denied
by this section or by the articles of incorporation, shareholders of a
corporation
incorporated
prior to July 1, 2005 have a preemptive right to acquire unissued shares or
securities
convertible
into shares or carrying a right to subscribe to or acquire shares. Unless
otherwise
provided
in the articles of incorporation:
(1)
No preemptive right exists:
(i)
To acquire any shares issued to directors, officers, or employees pursuant to
approval
by
the affirmative vote of the holders of a majority of the shares entitled to
vote on the acquisition
or
when authorized by and consistent with a plan previously approved by a vote of
shareholders;
or
(ii)
To acquire any shares sold other than for money.
(2)
Holders of shares of any class that is preferred or limited as to dividends or
assets are
not
entitled to any preemptive right.
(3)
Holders of shares of any class are not entitled to any preemptive right to
shares of any
class
that is preferred or limited as to dividends or assets or to any obligations,
unless convertible
into
shares of that class or carrying a right to subscribe to or acquire shares of
that class.
(4)
Holders of shares without voting power have no preemptive right to shares with
voting
power.
(5)
The preemptive right is only an opportunity to acquire shares or other
securities under
terms
and conditions that the board of directors may fix for the purpose of providing
a fair and
reasonable
opportunity for the exercise of the right.
(b)
The shareholders of a corporation incorporated on or after January 1, 2005 do
not
have
a preemptive right to acquire a corporation’s unissued shares or securities
convertible into
shares
or carrying a right to subscribe for or acquire shares except to the extent the
articles of
incorporation
so provide. A statement included in the articles of incorporation that “the
corporation
elects to have preemptive rights” (or words of similar import) means that the
following
principles apply except to the extent the articles of incorporation expressly
provide
otherwise:
(1)
The shareholders of the corporation have a preemptive right, granted on uniform
terms
and conditions prescribed by the board of directors, to provide a fair and
reasonable
opportunity
to exercise the right, to acquire proportional amounts of the corporation’s
unissued
shares
upon the decision of the board of directors to issue them.
(2)
A shareholder may waive his preemptive right. A waiver evidenced by a writing
is
irrevocable
even though it is not supported by consideration.
(3)
There is no preemptive right with respect to:
(i)
shares issued as compensation to directors, officers, agents, or employees of
the
corporation,
its subsidiaries or affiliates;
(ii)
shares issued to satisfy conversion or option rights created to provide
compensation to
directors,
officers, agents, or employees of the corporation, its subsidiaries or
affiliates;
(iii)
shares authorized in articles of incorporation that are issued within six
months from
the
effective date of incorporation; or
(iv)
shares sold otherwise than for money.
(4)
Holders of shares of any class without general voting rights but with
preferential
rights
to distributions or assets have no preemptive rights with respect to shares of any
class.
(5)
Holders of shares of any class with general voting rights but without
preferential
rights
to distributions or assets have no preemptive rights with respect to shares of
any class with
preferential
rights to distributions or assets unless the shares with preferential rights
are
convertible
into or carry a right to subscribe for or acquire shares without preferential
rights.
(6)
Shares subject to preemptive rights that are not acquired by shareholders may
be
issued
to any person for a period of one year after being offered to shareholders at a
consideration
set
by the board of directors that is not lower than the consideration set for the
exercise of
preemptive
rights. An offer at a lower consideration or after the expiration of one year
is subject
to
the shareholders’ preemptive rights.
(c)
For purposes of this section, “shares” includes a security convertible into or
carrying a
right
to subscribe for or acquire shares.
7-1.2-614.
Distributions to Shareholders. -- (a) Distributions of other than
shares.
(i)
A board of directors may authorize and the corporation may make distributions
to its
shareholders
subject to restriction the articles of incorporation and the limitation in
subsection
(iii).
(ii)
If the board of directors does not fix the record date for determining
shareholders
entitled
to a distribution (other than one involving a purchase, redemption, or other
acquisition of
the
corporation’s shares), it is the date the board authorizes the distribution.
(iii)
No distribution may be made if, after giving it effect:
(1)
the corporation would be insolvent; or
(2)
the corporation’s total assets would be less than the sum of its total
liabilities plus
(unless
the articles of incorporation permit otherwise) the amount that would be
needed, if the
corporation
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon
dissolution
of shareholders whose preferential rights are superior to those receiving the
distribution
(unless such preferential rights are waived by a majority of the shareholders
entitled
to
such preferential rights, voting by class).
(iv)
The board of directors may base a determination that a distribution is not
prohibited
under
subsection (iii) either on financial statements prepared on the basis of
accounting practices
and
principles that are reasonable in the circumstances or on a fair valuation or
other method that
is
reasonable in the circumstances.
(v)
Except as provided in subsection (vii), the effect of a distribution under
subsection
(iii)
is measured:
(1)
in the case of distribution by purchase, redemption, or other acquisition of
the
corporation’s
shares, as of the earlier of (a) the date money or other property is
transferred or debt
incurred
by the corporation or (b) the date the shareholder ceases to be a shareholder
with respect
to
the acquired shares;
(2)
in the case of any other distribution of indebtedness, as of the date the
indebtedness is
distributed;
and
(3)
in all other cases, as of (a) the date the distribution is authorized if the
payment occurs
within
one hundred twenty (120) days after the date of authorization or (b) the date
the payment
is
made if it occurs more than one hundred twenty (120) days after the date of
authorization.
(vi)
A corporation’s indebtedness to a shareholder incurred by reason of a
distribution
made
in accordance with this section is at parity with the corporation’s
indebtedness to its
general,
unsecured creditors except to the extent subordinated by agreement.
(vii)
Indebtedness of a corporation, including indebtedness issued as a distribution,
is not
considered
a liability for purposes of determinations under subsection (iii) if its terms
of the
indebtedness
provide that payment of principal and interest are made only if and to the
extent that
payment
of a distribution to shareholders could then be made under this section. If the
indebtedness
is issued as a distribution, each payment of principal or interest is treated
as a
distribution,
the effect of which is measured on the date the payment is actually made.
(b)
Distributions of shares.
(i)
Unless the articles of incorporation provide otherwise, shares may be issued
pro rata
and
without consideration to the corporation’s shareholders or to the shareholders
of one or more
classes
or series. An issuance of shares under this subsection is a share distribution.
(ii)
Shares of one class or series may not be issued as a share distribution in
respect to
shares
of another class or series unless (A) the articles of incorporation so
authorize, (B) a
majority
of the votes entitled to be cast by the class or series to be issued approve
the issue, or (C)
there
are not outstanding shares of the class or series to be issued.
(iii)
If the board of directors does not fix the record date for determining
shareholders
entitled
to share distribution, it is the date the board of directors authorizes the
share distribution.
Part
VII. Shareholders.
7-1.2-701.
Meetings of shareholders. - (a) Meetings of shareholders may be held
at any
place,
either within or without this state, that may be stated in or fixed in
accordance with the
bylaws.
If no other place is stated or fixed, all meetings will be held at the
registered office of the
corporation.
An annual meeting of shareholders may be held at any time that is stated or
fixed in
accordance
with the bylaws. Failure to hold the annual meeting at the designated time does
not
work
a forfeiture or dissolution of the corporation. If the annual meeting is not
held within any
thirteen
(13) month period the superior court may, in its discretion, on the application
of any
shareholder,
summarily order a meeting to be held.
(b)
Special meetings of the shareholders may be called by the board of directors,
or by a
person
or persons that may be authorized by the articles of incorporation or by the
bylaws.
(c)
Notice of any meeting of shareholders must be delivered not less than ten (10)
nor
more
than sixty (60) days before the date of the meeting to each shareholder
entitled to vote at the
meeting
in the manner prescribed by Section 7-1.2-702.
(d)
Unless the bylaws require otherwise, if an annual or special shareholders’
meeting is
adjourned
to a different date, time, or place, notice need not be given of the new date,
time, or
place
if the new date, time, or place is announced at the meeting before adjournment.
If a new
record
date for the adjourned meeting is or must be fixed pursuant to the articles of
incorporation,
the
bylaws or otherwise, however, notice of the adjourned meeting must be given
under this
section
to persons who are shareholders as of the new record date.
(e)
A shareholder’s attendance at a meeting:
(i)
waives objection to lack of notice or defective notice of the meeting, unless
the
shareholder
at the beginning of the meeting objects to holding the meeting or transacting
business
at
the meeting; and
(ii)
waives objection to consideration of a particular matter at the meeting that is
not
within
the purpose or purposes described in the meeting notice, unless the shareholder
objects to
considering
the matter when it is presented.
(f)
Upon the application of any shareholder, director, or person aggrieved, the
superior
court
for the county where the principal office of the corporation is located, shall
immediately
hear
and determine the petition of the aggrieved with respect to the following: (i)
the validity of
any
election or appointment of any director or officer of a corporation and the
right of any person
to
hold the office; (ii) if any office is claimed by more than one individual, the
individual entitled
to
the office; (iii) the voting and other rights of persons claiming rights in
respect of the contested
election
or appointment; or (iv) failure of the corporation to hold an annual meeting
within any
thirteen
month period. The superior court may confirm the election or appointment, order
a new
election,
or direct any other relief that may be just and proper.
(g)
If authorized by the board of directors in its sole discretion or by the
bylaws, and
subject
to such guidelines and procedures as the board of directors may adopt or the
bylaws may
prescribe,
shareholders and proxy holders not physically present at a meeting of
shareholders
may,
by means of remote communication:
(i)
participate in a meeting of shareholders; and
(ii)
be deemed present in person and vote at a meeting of shareholders whether such
meeting
is to be held at a designated place or solely by means of remote communication,
provided
that (A) the corporation shall implement reasonable measures to verify that
each person
deemed
present and permitted to vote at the meeting by means of remote communication
is a
shareholder
or proxy holder, (B) the corporation shall implement reasonable measures to
provide
such
shareholders and proxy holders a reasonable opportunity to participate in the
meeting and to
vote
on matters submitted to the shareholders, including an opportunity to read or
hear the
proceedings
of the meeting substantially concurrently with such proceedings, and (C) if any
shareholder
or proxy holder votes or takes other action at the meeting by means of remote
communication,
the corporation shall maintain a record of that vote or other action.
7-1.2-702.
Notice to shareholders. -- (a) Any notice to shareholders given by
the
corporation
under any provision of this chapter, the articles of incorporation, or the
bylaws is
effective
if given in writing, or by facsimile or a form of electronic transmission
consented to by
the
shareholder to whom the notice is given. Any consent to alternative notice is
revocable by the
shareholder
by written notice to the corporation. Any consent to alternative notice is
deemed
revoked
if:
(1)
the corporation is unable to deliver by facsimile or electronic transmission
two (2)
consecutive
notices given by the corporation in accordance with such consent; and
(2)
such inability becomes known to the secretary or an assistant secretary of the
corporation
or to the transfer agent, or other person responsible for the giving of notice;
provided,
however,
the inadvertent failure to treat such inability as a revocation does not
invalidate the
action.
(b)
If mailed, the notice is deemed to be delivered when deposited in the United
States
mail
addressed to the shareholder at his address as it appears on the stock transfer
books of the
corporation,
with prepaid postage on the mail.
(c)
In the case of any corporation which has fifty (50) or more shareholders of
record, if
two
(2) successive notices, reports, or other communications addressed to a
shareholder of the
corporation
at the address of the shareholder appearing on the books of the corporation
have been
returned
to the corporation by the United States postal service marked to indicate that
the United
States
postal service is unable to deliver the notices, reports, or other
communications to the
shareholder
at the address, all future notices, reports, or other communications are deemed
to
have
been given without further mailing if they are available for the shareholder
upon written
demand
of the shareholder at the principal executive office of the corporation for a
period of one
year
from the date of the giving of the notice, report, or other communication to
other
shareholders.
(d)
A shareholder may waive any notice required by this section, the articles of
incorporation,
or bylaws before or after the date and time stated in the notice. The waiver
must
be
in writing, be signed by the shareholder entitled to the notice, and be
delivered to the
corporation
for inclusion in the minutes or filing with the corporate records.
7-1.2-703.
Closing of transfer books and fixing record date. - (a) For the
purpose of
determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any
adjournment
of a meeting of shareholders, or entitled to receive payment of any dividend,
or in
order
to make a determination of shareholders for any other proper purpose, the board
of directors
of
a corporation may provide that stock transfer books are closed for a stated period,
not less than
that
specified in any applicable bylaw and not more than sixty (60) days. In lieu of
closing the
stock
transfer books, the bylaws, or in the absence of an applicable bylaw, the board
of directors
may
fix in advance a date as the record date for any determination of shareholders,
the date in any
case
to be not more than sixty (60) days prior to the date on which the particular
action, requiring
the
determination of shareholders, is to be taken. If the stock transfer books are
not closed and no
record
date is fixed for the determination of shareholders entitled to notice of or to
vote at a
meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on
which
notice of the meeting is mailed or the date on which the resolution of the
board of directors
declaring
the dividend is adopted, as the case may be, is the record date for the
determination of
shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders
has been made as provided in this section, the determination applies to any
adjournment
of the meeting.
(b)
In order that the corporation may determine the shareholders entitled to
consent to
corporate
action in writing without a meeting, the board of directors may fix a record
date, which
record
date may not precede the date upon which the resolution fixing the record date
is adopted
by
the board of directors. If no record date has been fixed by the board of
directors, the record
date
for determining shareholders entitled to consent to corporate action in writing
without a
meeting,
when no prior action by the board of directors is required by this chapter, is
the first date
on
which a signed written consent setting forth the action taken or proposed to be
taken is
delivered
to the corporation by delivery to its registered office in this state, its principal
place of
business,
or an officer or agent of the corporation having custody of the book in which
proceedings
of meetings of shareholders are recorded. Delivery made to a corporation’s
registered
office must be by hand or by certified or registered mail, return receipt
requested. If no
record
date has been fixed by the board of directors and prior action by the board of
directors is
required
by this chapter, the record date for determining shareholders entitled to
consent to
corporate
action in writing without a meeting is the close of business on the day on
which the
board
of directors adopts the resolution taking such prior action.
(c)
A determination of shareholders entitled to notice of or to vote at a
shareholders’
meeting
is effective for any adjournment of the meeting unless the board of directors
fixes a new
record
date.
7-1.2-704.
Voting list. -- (a) After fixing a record date for a meeting, a
corporation shall
prepare
a list of the names of all its shareholders who are entitled to notice of a
shareholders’
meeting.
(b)
The shareholders’ list must be available for inspection by any shareholder, at
least ten
(10)
days before the meeting is given for which the list was prepared and continuing
through the
meeting,
at the corporation’s registered office or principal place of business. A
shareholder, his
agent,
or attorney is entitled on written demand to inspect the list during regular
business hours
during
the period it is available for inspection.
(c)
The corporation shall make the shareholders’ list available to any shareholder
in
attendance,
whether in person or by remote communication, and any shareholder, his agent,
or
attorney
is entitled to inspect the list at any time during the meeting or any
adjournment.
(d)
The persons who appear from the list to be shareholders entitled to vote at the
meeting
may
vote at the meeting.
(e)
If the right to vote at any meeting is challenged, the person presiding at the
meeting,
shall
rely on the list to determine the right of the challenged person to vote.
7-1.2-705.
Quorum of shareholders required for shareholders’ action. -- (a)
Unless
otherwise
provided in the articles of incorporation or bylaws, a majority of the shares
entitled to
vote,
represented in person or by proxy, constitutes a quorum at a meeting of
shareholders, but in
no
event does a quorum consist of less than one-third (1/3) of the shares entitled
to vote at the
meeting.
If a quorum is present, unless the vote of a greater number or voting by
classes is
required
by this chapter or the articles of incorporation or bylaws, in all matters
other than the
election
of directors, the affirmative vote of the majority of shares present in person
or
represented
by proxy at the meeting and entitled to vote on the subject matter is the act
of the
shareholders.
(b)
Directors are elected by a plurality of the votes of the shares present in
person or
represented
by proxy at the meeting and entitled to vote on the election of directors. No
amendment
to the bylaws made by the board of directors pursuant to Section 7-1.2-203 may
require
a greater number or voting by classes.
7-1.2-706.
Greater voting requirements. - Whenever, with respect to any action
to be
taken
by the shareholders of a corporation, the articles of incorporation require the
vote of the
holders
of a greater proportion of the shares, or of any class or series of the shares,
than required
by
this chapter with respect to the action, the provisions of the articles of
incorporation control.
An
amendment of the articles of incorporation which changes or deletes a provision
is authorized
by
the same vote as would be required to take action under the provision.
7-1.2-707.
Action by shareholders without a meeting. - (a) Any action required
or
permitted
to be taken at a meeting of shareholders by this chapter or the articles of
incorporation
or
bylaws of a corporation, may be taken without a meeting if all the shareholders
entitled to vote
on
the action consent to the action in writing.
(b)(1)
Except for actions pursuant to Section 7-1.2-1002 or Section 7-1.2-1102, any
action
required or permitted to be taken at a meeting of shareholders by this chapter
or the
certificate
of incorporation or bylaws of a corporation, may be taken without a meeting
upon the
written
consent of less than all the shareholders entitled to vote on the action, if:
(i)
shareholders who consent would be entitled to cast at least the minimum number
of
votes
that would be required to take the action at a meeting at which all
shareholders entitled to
vote
on the action are present and voting in person or by proxy; and
(ii)
Action pursuant to this section is authorized by the articles of incorporation.
(2)
Prompt notice of the action must be given to all shareholders who would have
been
entitled
to vote upon the action if the meeting were held.
(c)
Whenever action is taken pursuant to this section, the written consents of the
shareholders
consenting to the action must be filed with the minutes of proceedings of
shareholders.
(d)
Any action taken pursuant to this section has the same effect for all purposes
as if the
action
had been taken at a meeting of the shareholders.
(e)
If any other provision of this chapter requires the filing of a certificate
upon the taking
of
an action by shareholders, and action is taken in the manner authorized by this
section, the
certificate
must state that the action was taken without a meeting pursuant to the written
consents
of
the shareholders and must include the number of shares represented by the
consents.
(f)
The record date for determining shareholders entitled to express consent in
writing
without
a meeting, is determined in accordance with Section 7-1.2-703 and if no record
date is
fixed
for the determination of shareholders entitled to vote by written consent, the
date on which
such
request for written consent is delivered, in accordance with Section 7-1.2-702,
to
shareholders
is the record date for the determination of shareholders entitled to express
such
written
consent.
7-1.2-708.
Voting of shares. - (a) Each outstanding share, regardless of series
or class, is
entitled
to one vote on each matter submitted to a vote at a meeting of shareholders,
except to the
extent
that the voting rights of the shares of any class or classes are limited,
enlarged, or denied
by
the articles of incorporation as permitted by this chapter. If the articles of
incorporation
provide
for more or less than one vote for any share, on any matter, every reference in
this
chapter
to a majority or other proportion of shares refers to a majority or other
proportion of votes
entitled
to be cast.
(b)
Shares held, directly or indirectly, by another corporation if a majority of
the shares
entitled
to vote for the election of directors of the other corporation is held by the
corporation,
may
not be voted at any meeting or counted in determining the total number of
outstanding shares
at
any given time. Nothing contained in these provisions is construed as limiting
the right of any
corporation
to vote shares, including, but not limited to, its own shares, held in a
fiduciary
capacity.
(c)
Every shareholder entitled to vote at a meeting of shareholders or to express
consent
without
a meeting may authorize another person or persons to act for him by proxy,
executed, in
writing,
by the shareholder or by his duly authorized attorney in fact. No proxy is
valid after
three
(3) years from the date of its execution, unless otherwise provided in the
proxy.
(1)
Without limiting the manner in which a shareholder may authorize another person
or
persons
to act for him as proxy pursuant to this subsection (c), the following
constitutes a valid
means
by which a shareholder may grant that authority:
(i)
A shareholder may execute a writing authorizing another person or persons to
act for
him
as proxy. Execution may be accomplished by the shareholder or his authorized
officer,
director,
employee or agent signing the writing or causing his signature to be affixed to
the
writing
by any reasonable means including, but not limited to, facsimile signature.
(ii)
A shareholder may authorize another person or persons to act for him as proxy
by
transmitting
or authorizing the transmission of a telegram, cablegram, or other means of
electronic
transmission, including Internet and telephonic transmissions, to the person
who will
be
the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or an
agent
authorized by the person who will be the holder of the proxy to receive the
transmission,
provided
that the telegram, cablegram or other means of electronic transmission must
either state
or
be submitted or communicated with information from which it can be determined
that the
telegram,
cablegram or other electronic transmission, including Internet and telephonic
transmissions,
was authorized by the shareholder. If it is determined that the telegrams,
cablegrams
or other electronic transmissions, including Internet and telephonic
transmissions, are
valid,
the inspectors or, if there are no inspectors, the other persons making that
determination,
shall
specify the information upon which they relied.
(2)
Any reliable reproduction of the writing or transmission created pursuant to
this
section
may be substituted or used in lieu of the original writing or transmission for
any and all
purposes
for which the original writing or transmission could be used, provided that the
copy,
facsimile
telecommunication or other reproduction is a complete reproduction of the
entire
original
writing or transmission.
(3)
The death or incapacity of the shareholder appointing a proxy does not affect
the right
of
the corporation to accept the proxy’s authority unless notice of the death or
incapacity is
received
by the secretary or other officer or agent authorized to tabulate votes before
the proxy
exercises
his authority under the appointment.
(d)
The articles of incorporation may provide that at each election of directors,
or at
elections
held under specified circumstances, every shareholder entitled to vote at the
election has
the
right to vote, in person or by proxy, the number of shares owned by him for as
many persons
as
there are directors to be elected and for whose election he has a right to
vote, or to cumulate his
votes
by giving one candidate as many votes as the number of directors multiplied by
the number
of
his shares equals, or by distributing the votes on the same principle among any
number of the
candidates.
(e)
Shares standing in the name of another corporation, domestic or foreign, may be
voted
by
any officer, agent, or proxy that the bylaws of the corporation may prescribe,
or, in the
absence
of a provision, as the board of directors of the corporation may determine.
(f)
Shares held by an administrator, executor, guardian, custodian under a gift to
minors
act,
conservator or trustee may be voted by him, either in person or by proxy,
without a transfer
of
the shares into his name.
(g)
Shares held by two (2) or more persons as joint tenants or as tenants in common
may
be
voted at any meeting of the shareholders by any one of the persons, unless
another joint tenant
or
tenant in common seeks to vote any of the shares in person or by proxy. In the
latter event, the
written
agreement, if any, which governs the manner in which the shares are voted,
controls if
presented
at the meeting. If there is no agreement presented at the meeting, the majority
in
number
of the joint tenants or tenants in common present control the manner of voting.
If there is
no
majority, or if there are two (2) joint tenants or tenants in common, both of
whom seek to vote
the
shares, the shares, for the purpose of voting, must be divided equally among
the joint tenants
or
tenants in common present.
(h)
Shares standing in the name of a receiver may be voted by the receiver, and
shares
held
by or under the control of a receiver may be voted by the receiver without the
transfer of
those
shares into his name if authority to do so is contained in an appropriate order
of the court by
which
the receiver was appointed.
(i)
A shareholder whose shares are pledged is entitled to vote the shares until the
shares
have
been transferred into the name of the pledgee, and thereafter the pledgee is
entitled to vote
the
shares so transferred.
(j)
On and after the date on which written notice of redemption of redeemable
shares has
been
mailed to the holders of the shares and a sum sufficient to redeem the shares
has been
deposited
with a bank or trust company with irrevocable instruction and authority to pay
the
redemption
price to the holders of the shares upon surrender of certificates for the
shares, the
shares
are not be entitled to vote on any matter and are not be deemed to be
outstanding shares.
(k)(1)
An executed proxy is irrevocable if it specifies that it is irrevocable and if,
and
only
so long as, it is coupled with an interest sufficient in law to support an
irrevocable power
coupled
with it. A proxy may be made irrevocable regardless of whether the interest
with which
it
is coupled is an interest in the shares itself or an interest in the
corporation generally.
(2)
Without limiting the generality of subsection (k)(1) and subject to that
subsection, a
proxy
is coupled with an interest and is irrevocable if it is held by any of the
following or a
nominee
of any of the following:
(i)
A pledgee under a valid pledge;
(ii)
A person who has agreed to purchase the shares under an executory contract of
sale;
(iii)
A creditor or creditors of the corporation who extend or continue credit to the
corporation
in consideration of the proxy if the proxy states that it was given in
consideration of
the
extension or continuation of credit, the amount of the credit, and the name of
the person
extending
or continuing credit; and
(iv)
A person who has contracted to perform services for the corporation if a proxy
is
required
by the contract of employment, as part of the consideration for the contract of
employment,
if the proxy states that it was given in consideration of the contract of
employment,
the
name of the employee, and the period of employment contracted for; provided the
proxies are
respectively
be revocable after the pledge is redeemed, or the executory contract of sale is
performed,
or the debt of the corporation is paid, or the period of employment has
terminated.
(3)
A provision contained in a proxy making it irrevocable is not enforceable
against a
purchaser
for value of the shares subject to the provision without actual knowledge of
the
existence
of the provision, unless notice of the proxy and its irrevocability appears
plainly on the
certificate
or certificates representing the shares; provided that if such shares are
uncertificated, a
provision
contained in a proxy making it irrevocable is enforceable against a purchaser
for value
of
the shares subject to the provision without actual knowledge of the existence
of the provision if
and
only if notice of the proxy and its irrevocability was provided in writing to
such purchaser
prior
to the consummation of the purchase of such shares.
7-1.2-709.
Voting trusts and agreements among shareholders. -- (a) Any number
of
shareholders
of a corporation may create a voting trust for the purpose of conferring upon a
trustee
or trustees the right to vote or otherwise represent their shares, for a period
not to exceed
ten
(10) years, by entering into a written voting trust agreement specifying the
terms and
conditions
of the voting trust, by depositing a counterpart of the agreement with the corporation
at
its
registered office, and by transferring their shares to the trustee or trustees
for the purposes of
the
agreement. The trustee or trustees shall keep a record of the holders of voting
trust
certificates
evidencing a beneficial interest in the voting trust, giving the names and
addresses of
all
the holders and the number and class of the shares in respect of which the
voting trust
certificates
held by each are issued, and shall deposit a copy of the record with the
corporation at
its
registered office. The counterpart of the voting trust agreement and the copy
of the record
deposited
with the corporation are subject to the same right of examination by a
shareholder of
the
corporation, in person or by agent or attorney, as are the books and records of
the corporation,
and
the counterpart and the copy of the record is subject to examination by any
holder of record
of
voting trust certificates, either in person or by agent or attorney, at any
reasonable time for any
proper
purpose. The trust certificates must state that they are issued pursuant to the
voting trust
agreement,
and that fact must be stated in the stock ledger of the corporation.
(b)
Agreements among shareholders regarding the voting of their shares are valid
and
enforceable
in accordance with their terms for a period of not to exceed ten (10) years. An
agreement
is not subject to the provision of this section regarding voting trusts unless
it is stated
in
the agreement that it is a voting trust.
(c)
The provisions of this section are construed as permissive and should not be
interpreted
to invalidate any voting or other agreement among shareholders, or any
irrevocable
proxy
which is otherwise not illegal.
(d)
A voting trust or shareholders agreement may at any time or times be extended
for an
additional
period not in excess of ten (10) years, but the extension is binding only with
respect to
those
shares owned of record or beneficially by parties to the extension.
7-1.2-710.
Voting and inspection rights of bondholders and debenture holders. -
The
articles
of incorporation may, to the extent and in the manner provided in the articles,
confer on
the
holders of bonds or other evidences of indebtedness of the corporation rights
to vote in the
election
of directors and on any other matters on which shareholders may vote and rights
to
inspect
the books and records of the corporation.
7-1.2-711.
Actions by shareholders. – (a) Subchapter Definitions. In this
subchapter:
(1)
“Derivative proceeding” means a civil suit in the right of a domestic
corporation or, to
the
extent provided in subsection (h) of this Section 7-1.2-711, in the right of a
foreign
corporation.
(2)
“Shareholder” includes a beneficial owner whose shares are held in a voting trust
or
held
by a nominee on the beneficial owner’s behalf.
(b)
Standing. A shareholder may not commence or maintain a derivative proceeding
unless
the shareholder: (i) was a shareholder of the corporation at the time of the act
or omission
complained
of or became a shareholder through transfer by operation of law from one who
was a
shareholder
at that time; and (ii) fairly and adequately represents the interests of the
corporation
in
enforcing the right of the corporation.
(c)
Demand. No shareholder may commence a derivative proceeding until:
(1)
a written demand had been made upon the corporation to take suitable action;
and
(2)
90 days have expired from the date the demand was made unless the shareholder
has
earlier
been notified that the demand has been rejected by the corporation or unless
irreparable
injury
to the corporation would result by waiting for the expiration of the 90 day
period.
(d)
Stay of proceedings. If the corporation commences an inquiry into the
allegations
made
in the demand or complaint, the court may stay any derivative proceeding for
such period
as
the court deems appropriate.
(e)
Dismissal.
(1)
On motion by the corporation, the court shall dismiss a derivative proceeding
if one
of
the groups specified in subsections (ii) or (vi) has determined in good faith
after conducting a
reasonable
inquiry upon which its conclusions are based that the maintenance of the
derivate
proceedings
is not in the best interests of the corporation.
(2)
Unless a panel is appointed pursuant to subsection (vi), the determination in
subsection
(i) must be made by:
(i) a majority vote of independent directors present at a meeting of the board
of directors
if
the independent directors constitute a quorum; or
(ii)
a majority vote of a committee consisting of two or more independent directors
appointed
by majority vote of independent directors present at a meeting of the board of
directors,
whether
or not such independent directors constituted a quorum.
(3)
None of the following by itself causes a director to be considered not
independent for
purposes
of this section:
(i)
the nomination or election of the directors or persons who are defendants in
the
derivative
proceedings or against whom action is demanded;
(ii)
the naming of the director as a defendant in the derivative proceeding or as a
person
against
whom action is demanded; or
(iii)
the approval by the director of the act being challenged in the derivative
proceeding
or
demand if the act resulted in no personal benefit to the director.
(4)
If a derivative proceeding is commenced after a determination has been made
rejecting
a demand by a shareholder, the complaint must allege with particularity facts
establishing
either (A) that a majority of the board of directors did not consist of
independent
directors
at the time the determination was made or (B) that the requirements of
subsection (a)
have
not been met.
(5)
If a majority of the board of directors does not consist of independent
directors at the
time
the determination is made, the corporation has the burden of proving that the
requirements of
subsection
(i) have been met. If a majority of the board of directors consists of
independent
directors
at the time the determination is made, the plaintiff has the burden of proving
that the
requirements
of subsection (i) have not been met.
(6)
The court may appoint a panel of one or more independent persons upon motion by
the
corporation to make a determination whether the maintenance of the derivative
proceeding is
in
the best interests of the corporation. In such case, the plaintiff has the
burden of proving that
the
requirements of subsection (i) have not been met.
(f)
Discontinuance or settlement. A derivative proceeding may not be discontinued
or
settled
without the court’s approval. If the court determines that a proposed
discontinuance or
settlement
will substantially affect the interests of the corporation’s shareholders or a
class of
shareholders,
the court shall direct that notice be given to the shareholders affected.
(g)
Payment of expenses. On termination of the derivative proceeding the court may:
(1)
order the corporation to pay the plaintiff’s reasonable expenses (including
counsel
fees)
incurred in the proceeding if it finds that the proceeding has resulted in a substantial
benefit
to
the corporation;
(2)
order the plaintiff to pay any defendant’s reasonable expenses (including
counsel
fees)
incurred in defending the proceeding if it finds that the proceeding was
commenced or
maintained
without reasonable cause or for an improper purpose; or
(3)
order a party to pay an opposing party’s reasonable expenses (including counsel
fees)
incurred
because of the filing of a pleading, motion or other paper, if it finds that
the pleading,
motion
or other paper was not well grounded in fact, after reasonable inquiry, or
warranted by
existing
law or a good faith argument for the extension, modification or reversal of
existing law
and
was interposed for an improper purpose, such as to harass or cause unnecessary
delay or
needless
increase in the cost of litigation.
(h)
Applicability to foreign corporations. In any derivative proceeding in the
right of a
foreign
corporation, the matters covered by this subchapter are governed by the laws of
the
jurisdiction
of incorporation of the foreign corporation except for subsections (d), (f),
and (g) of
this
Section 7-1.2-711.
Part
VIII. Directors and Officers.
7-1.2-801.
Board of directors. - (a) Except as may be otherwise provided in
this chapter
or
in the articles of incorporation, the business and affairs of a corporation are
managed by a
board
of directors. Directors need not be residents of this state or shareholders of
the corporation
unless
the articles of incorporation or bylaws require it. The articles of
incorporation or bylaws
may
prescribe other qualifications for directors. The board of directors has
authority to fix the
compensation
of directors unless otherwise provided in the articles of incorporation.
(b)
A director shall discharge his duties as a director, including his duties as a
member of
a
committee:
(1)
In good faith;
(2)
With the care that a person in a like position would reasonably believe
appropriate
under
similar circumstances; and
(3)
In a manner he reasonably believes to be in the best interests of the
corporation.
(c)
In discharging his duties, a director is entitled to rely on information,
opinions,
reports,
or statements, including financial statements and other financial data, if
prepared or
presented
by:
(1)
One or more officers or employees of the corporation whom the director
reasonably
believes
to be reliable and competent in the matters presented;
(2)
Legal counsel, public accountants, or other persons as to matters the director
reasonably
believes are within the person’s professional or expert competence; or
(3)
A committee of the board of directors of which he is not a member if the
director
reasonably
believes the committee merits confidence.
(d)
A director is not acting in good faith if he has knowledge concerning the
matter in
question
that makes reliance otherwise permitted by subsection (c) unwarranted.
(e)
A director is not liable for any action taken as a director, or any failure to
take any
action,
if he performed the duties of his office in compliance with this section.
(f)
For the purposes of subsections (b) through (e), “corporation” also includes
any
financial
institution, insurance company, public utility or other quasi-public
corporation having
purposes
enumerated as exceptions to this chapter in Section 7-1.2-301 and the
provisions of
subsections
(b) through (e) of this section are applicable to the directors of that
corporation.
7-1.2-802.
Number and election of directors. - The board of directors of a
corporation
consists
of one or more members. The number of directors is fixed by, or in the manner
provided
in,
the articles of incorporation or the bylaws except as to the number
constituting the initial
board
of directors, which number is fixed by the articles of incorporation. The
number of
directors
may be increased or decreased from time to time by amendment to, or in the
manner
provided
in, the articles of incorporation or the bylaws, but no decrease has the effect
of
shortening
the term of any incumbent director. If the articles of incorporation provide
for the
election
of directors in the manner specified in subsection (d) of Section 7-1.2-708,
the number of
directors
may not be decreased unless approved by the shareholders with less than the
number of
shares
previously entitled to elect one director voting against the decrease. In the
absence of a
bylaw
fixing the number of directors, the number is the same as that provided for in
the articles of
incorporation.
The names and addresses of the members of the first board of directors must be
stated
in the articles of incorporation. Those persons hold office until the first
annual meeting of
shareholders,
and until their successors have been elected and qualified. At the first annual
meeting
of shareholders and at each subsequent annual meeting, the shareholders shall
elect
directors
to hold office until the next succeeding annual meeting, except in the case of
the
classification
of directors as permitted by this chapter. Each director holds office for the
term for
which
he is elected and until his successor has been elected and qualified. Any
director may
resign
at any time upon notice given in writing to the corporation.
7-1.2-803.
Classification of directors. - When the board of directors consists
of nine (9)
or
more members, in lieu of electing the whole number of directors annually, the
articles of
incorporation
may provide that the directors be divided into either two (2) or three (3)
classes,
each
class to be as nearly equal in number as possible, the term of office of
directors of the first
class
to expire at the first annual meeting of shareholders after their election,
that of the second
class
to expire at the second annual meeting after their election, and that of the
third class, if any,
to
expire at the third annual meeting after their election. At each annual meeting
after the
classification,
the number of directors equal to the number of the class whose term expires at
the
time
of the meeting will be elected to hold office until the second succeeding
annual meeting, if
there
are two (2) classes, or until the third succeeding annual meeting, if there are
three (3)
classes.
No classification of directors is effective prior to the first annual meeting
of
shareholders.
The articles of incorporation may confer upon holders of any class or series of
shares
the right to elect one or more directors who serve for any term and have any
voting powers
stated
in the articles of incorporation. The terms of office and voting powers of the
directors
elected
in the manner provided in the articles of incorporation may be greater than or
less than
those
of any other director or class of directors.
7-1.2-804.
Vacancies. - Any vacancy occurring in the board of directors may be
filled by
the
affirmative vote of a majority of the remaining directors though less than a
quorum of the
board
of directors. A director elected to fill a vacancy is elected for the unexpired
term of his
predecessor
in office. Any directorship to be filled by reason of an increase in the number
of
directors
may be filled by the board of directors for a term of office continuing only
until the next
election
of directors by the shareholders. If at any time, by reason of death,
resignation or other
cause,
a corporation should have no directors in office, then any officer or any shareholder
or an
executor,
administrator, trustee or guardian of a shareholder, or other fiduciary
entrusted with like
responsibility
for the person or estate of a shareholder, may call a special meeting of
shareholders
in
accordance with the provisions of the articles of incorporation or the bylaws,
or may apply to
the
superior court for a decree summarily ordering a meeting for the purposes of
conducting an
election.
7-1.2-805.
Removal of directors. - (a) Any or all of the directors may be
removed for
cause
by vote of the shareholders. The articles of incorporation or the specific
provisions of a
bylaw
adopted by the shareholders may provide for the removal by action of the board,
except in
the
case of any director elected by cumulative voting, or by the holders of the
shares of any class
or
series, or holders of bonds, voting as a class, when entitled by the provisions
of the articles of
incorporation.
(b)
Unless the articles of incorporation provide that directors may be removed only
for
cause,
any or all of the directors may be removed without cause by vote of the
shareholders.
(c)
The removal of directors, with or without cause, as provided in subsections (a)
and (b)
is
subject to the following:
(1)
In the case of a corporation having cumulative voting, no director may be
removed
when
the votes cast against his removal would be sufficient to elect him if voted
cumulatively at
an
election at which the same total number of votes were cast and the entire
board, or the entire
class
of directors of which he is a member, were then being elected; and
(2)
When by the provisions of the articles of incorporation the holders of the
shares of
any
class or series, or holders of bonds, voting as a class, are entitled to elect
one or more
directors,
any director so elected may be removed only by the applicable vote of the
holders of
the
shares of that class or series or the holders of the bonds, voting as a class.
(d)
An action to procure a judgment removing a director for cause may be brought by
the
attorney
general or by the holders of ten percent (10%) of the outstanding shares,
whether or not
entitled
to vote. The court having jurisdiction may bar from reelection any directors so
removed
for
a period fixed by the court.
7-1.2-806.
Quorum of directors. - A majority of the number of directors fixed
by or in
the
manner provided in the articles of incorporation or the bylaws, or by the
shareholders or in the
absence
of a bylaw or shareholder action fixing the number of directors, then of the number
stated
in
the articles of incorporation, constitutes a quorum for the transaction of
business unless a
greater
number is required by the articles of incorporation or the bylaws. The act of
the majority
of
the directors present at a meeting at which a quorum is present is the act of
the board of
directors,
unless the act of a greater number is required by the articles of incorporation
or the
bylaws.
7-1.2-807.
Director and officer conflicts of interest. - (a) No contract or
transaction
between
a corporation and one or more of its directors or officers, or between a
corporation and
any
other corporation, partnership, association, or other organization in which one
or more of its
directors
or officers are directors or officers or have a financial interest, is void or
voidable nor
are
the directors or officers liable with respect to the contract or transaction
solely for this reason,
or
solely because the director or officer is present at or participates in the
meeting of the board or
committee
of the board which authorizes the contract or transaction, or solely because
his or their
votes
are counted for that purpose, if:
(1)
The material facts as to his or their interest or relationship are disclosed or
are known
to
the board of directors or the committee, and the board of directors or
committee authorizes,
approves,
or ratifies the contract or transaction by the affirmative votes of a majority
of the
disinterested
directors, even though the disinterested directors are less than a quorum; or
(2)
The material facts as to his or their interest or relationship are disclosed or
are known
to
the shareholders entitled to vote on the contract or transaction, and the
contract or transaction is
specifically
authorized, approved, or ratified by vote of the shareholders; or
(3)
The contract or transaction is fair and reasonable as to the corporation.
(b)
Common or interested directors may be counted in determining the presence of a
quorum
at a meeting of the board of directors or of a committee which authorizes the
contract or
transaction.
7-1.2-808.
Executive and other committees. - Unless otherwise restricted or
limited by
the
articles of incorporation or the bylaws, the board of directors, by resolution
adopted by a
majority
of the full board of directors, may designate from among its members an
executive
committee
and one or more other committees each of which, to the extent provided in the
resolution
or in the articles of incorporation or the bylaws of the corporation, have and
may
exercise
all the authority of the board of directors, but no committee has the authority
of the board
of
directors in reference to amending the articles of incorporation, adopting a
plan of merger,
recommending
to the shareholders the sale, lease, exchange, or other disposition of all or
substantially
all the property and assets of the corporation other than in the usual and
regular
course
of its business, recommending to the shareholders a voluntary dissolution or
revocation of
the
corporation, or amending the bylaws of the corporation. The designation of any
committee
and
the delegation to the committee of authority does not operate to relieve the
board of directors,
or
any member of the board, of any responsibility imposed by law.
7-1.2-809.
Place, notice, and form of notice of directors’ and committee meetings. -
(a)
Meetings of the board of directors, or any committee designated by the board,
regular or
special,
may be held either within or without this state.
(b)
Regular meetings of the board of directors or any committee designated by the
board
may
be held with or without notice as prescribed in the bylaws. Unless the articles
of
incorporation
or the bylaws provide for an alternative period, special meetings of the board
of
directors
or any committee designated by the board must be preceded by at least two (2)
days’
notice
of the date, time, and place of the meeting. Attendance of a director at a
meeting
constitutes
a waiver of notice of the meeting, except where a director attends a meeting
for the
express
purpose of objecting to the transaction of any business because the meeting is
not
lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any
regular
or special meeting of the board of directors or any committee designated by the
board of
directors
need be specified in the notice or waiver of notice of the meeting unless
required by the
bylaws.
Except as may be otherwise restricted by the articles of incorporation or
bylaws,
members
of the board of directors or any committee designated by the board of directors
may
participate
in a meeting of the board or committee by means of a conference telephone or
similar
communications
equipment, by means of which all persons participating in the meeting can hear
each
other at the same time and participation by those means constitutes presence in
person at a
meeting.
7-1.2-810.
Action by directors without a meeting. - Unless otherwise provided
by the
articles
of incorporation or bylaws, any action required by this chapter to be taken at a
meeting of
the
directors of a corporation, or any action which may be taken at a meeting of
the directors or of
a
committee, may be taken without a meeting if all of the directors, or all of
the members of the
committee,
as the case may be, consent thereto in writing or by electronic transmission,
before or
after
the action, and the writing or writings or electronic transmission or
transmissions are filed
with
the minutes of proceedings of the board or committee. The consent has the same
effect as a
unanimous
vote for all purposes, and that may be stated in any certificate or other
document filed
with
the secretary of state.
7-1.2-811.
Liability of directors in certain cases. - (a) In addition to any
other liabilities
imposed
by law upon directors of a corporation:
(1)
Directors of a corporation who vote for or assent to the declaration of any
dividend or
other
distribution of the assets of a corporation to its shareholders contrary to the
provisions of
this
chapter or contrary to any restrictions contained in the articles of
incorporation, are jointly
and
severally liable to the corporation for the amount of the dividend which is
paid or the value of
the
assets which are distributed in excess of the amount of the dividend or
distribution which
could
have been paid or distributed without a violation of the provisions of this
chapter or the
restrictions
in the articles of incorporation.
(2)
Directors of a corporation who vote for or assent to the purchase of its own
shares
contrary
to the provisions of this chapter are jointly and severally liable to the
corporation for the
amount
of consideration paid for the shares which is in excess of the maximum amount
which
could
have been paid for the shares without a violation of the provisions of this
chapter.
(3)
Directors of a corporation who vote for or assent to any distribution of assets
of a
corporation
to its shareholders during the liquidation of the corporation without the
payment and
discharge
of, or making adequate provision for, all known debts, obligations, and
liabilities of the
corporation
are jointly and severally liable to the corporation for the value of the assets
which are
distributed,
to the extent that the debts, obligations, and liabilities of the corporation
are not
subsequently
paid and discharged.
(b)
A director who is present at a meeting of its board of directors at which
action on any
corporate
matter is taken is presumed to have assented to the action taken unless his
dissent is
entered
in the minutes of the meeting or unless he files his written dissent to the
action with the
person
acting as the secretary of the meeting before the meeting’s adjournment or
forwards the
dissent
by registered mail to the secretary of the corporation immediately after the
adjournment of
the
meeting. The right to dissent does not apply to a director who voted in favor
of the action.
(c)
A director is not liable under this section if under the circumstances he acted
with due
care
and in good faith, and without limiting the generality of what has just been
stated, is not
liable
if he relied in good faith upon financial statements of the corporation
represented to him to
be
correct and to be based upon generally accepted accounting principles by the
president or the
officer
of the corporation having charge of its books of account, or stated in a
written report by an
independent
public or certified public accountant or firm of accountants fairly to reflect
the
financial
condition of the corporation.
(d)
Any director against whom a claim is asserted under or pursuant to this section
for the
payment
of a dividend or other distribution of assets of a corporation and who is held
liable on the
claim,
is entitled to contribution from the shareholders who accepted or received any
dividend or
assets,
knowing the dividend or distribution to have been made in violation of this
chapter, in
proportion
to the amounts received by them respectively.
7-1.2-812.
Officers. -- (a) The officers of a corporation consist of a
president, a secretary,
and
a treasurer, and such other officers as are authorized by the bylaws or the
board of directors
each
of whom is elected by the board of directors or by the shareholders at a time
and in a manner
as
prescribed by the bylaws. Any other officers and assistant officers and agents
as that are
necessary
may be elected or appointed by the board of directors or by the shareholders or
chosen
in
another manner prescribed by the bylaws. Any two (2) or more offices may be
held by the
same
person. A failure to elect officers does not dissolve or otherwise affect the
corporation.
(b)
All officers of the corporation, as between themselves and the corporation,
have the
authority
and perform any duties in the management of the corporation that may be
provided in
the
bylaws, or that may be determined by resolution of the board of directors,
subject to any
limitations
on the authority contained in the bylaws.
7-1.2-813.
Resignation and removal of officers. - An officer may resign at any
time by
delivering
notice to the corporation. Any officer may be removed at any time with or
without
cause
by the board of directors or by any other manner permitted by the articles of
incorporation
or
the bylaws. Election, appointment or removal of an officer or agent does not of
itself create
contract
rights.
7-1.2-814. Indemnification. - (a) Definitions. As used in this
section:
(1)
“Director” or “officer” means any individual who is or was a director of the
corporation
and any individual who, while a director or officer of the corporation, is or
was
serving
at the request of the corporation as a director, officer, partner, trustee,
employee, or agent
of
another foreign or domestic corporation, limited liability company,
partnership, joint venture,
trust,
other enterprise, employee benefit plan, or other entity. A director or officer
is considered
to
be serving an employee benefit plan at the corporation’s request if his duties
to the corporation
also
impose duties on, or otherwise involve services by, him to the plan or
participants on or
beneficiaries
of the plan. “Director” or “officer” includes, unless the context requires
otherwise,
the
estate or personal representative of the director or officer.
(2)
“Corporation” includes:
(i)
any domestic or foreign corporation, profit or nonprofit;
(ii)
any domestic or foreign predecessor entity of the corporation in a merger or
other
transaction
in which the predecessor’s existence ceased upon consummation of the
transaction;
and
(iii)
any of the classes of quasi public corporations with purposes enumerated as
exceptions
in Section 7-1.2-301 to the extent that the corporations are not subject to
other
provisions
of the general laws or special acts authorizing indemnification of their
directors and
officers.
(3)
“Expenses” include attorneys’ fees.
(4)
“Liability” means the obligation to pay a judgment, penalties, fines (including
an
excise
tax assessed with respect to an employee benefit plan), settlements, or
reasonable expenses
actually
incurred by the person in connection with the proceeding.
(5)
“Official capacity” means:
(i)
When used with respect to a director, the office of director in the
corporation; and
(ii)
When used with respect to an officer, as contemplated in subsection (i), the
office in a
corporation
held by the officer. “Official capacity” does not include service for a
individual other
than
a director, as contemplated in subsection (a)(1), the elective or appointive
office in the
corporation
held by the officer or the employment or agency relationship undertaken by the
employee
or agent on behalf of the corporation, but in each case does not include
service for any
other
foreign or domestic corporation or any partnership, joint venture, trust, other
enterprise, or
employee
benefit plan.
(6)
“Party” includes a individual who was, is, or is threatened to be made, a named
defendant
or respondent in a proceeding.
(7)
“Proceeding” means any threatened, pending or completed action, suit, or
proceeding,
whether
civil, criminal, administrative, or investigative.
(b)
Permissible indemnification.
(1)
Except as otherwise provided in this section, a corporation has power to
indemnify
any
individual made a party to any proceeding by reason of the fact that he is or
was a director if:
(i)
He conducted himself in good faith; and
(ii)
He reasonably believed,
(A)
In the case of conduct in his official capacity with the corporation, that his
conduct
was
in its best interests, and
(B)
In all other cases, that his conduct was at least not opposed to its best
interests; and
(iii)
In the case of any criminal proceeding, he had no reasonable cause to believe
his
conduct
was unlawful; or
(iv)
He engaged in conduct for which broader indemnification has been made
permissible
or
obligatory under a provision of the articles of incorporation.
(2)
A director’s conduct with respect to an employee benefit plan for a purpose he
reasonably
believed to be in the interests of the participants and beneficiaries of the
plan is
deemed
to be for a purpose which is not opposed to the best interests of the
corporation in
accordance
with (b)(1)(ii)(B).
(3)
The termination of any proceeding by judgment, order, settlement, conviction,
or
upon
a plea of nolo contendere or its equivalent, is not, of itself, be
determinative that the
individual
did not meet the requisite standard of conduct set forth in this subsection.
(4)
Unless ordered by a court under subsection (d), a corporation may not indemnify
a
director:
(i)
in connection with a proceeding by or in the right of the corporation, except
for
reasonable
expenses incurred in connection with the proceeding (if it is determined that
the
director
has met the relevant standard of conduct under (b)(1)(i) and (ii)), or
(ii)
in connection with any proceeding for which the director was adjudged liable to
the
corporation
on the basis that he received an improper personal benefit, whether or not
involving
action
in his official capacity.
(c)
Mandatory Indemnification. Unless limited by the articles of incorporation, a
director
who
has been wholly successful, on the merits or otherwise, in the defense of any
proceeding
referred
to in subsection (b) is indemnified against reasonable expenses incurred by him
in
connection
with the proceeding; and
(d)
Court-ordered indemnification.
(1)
A court of appropriate jurisdiction, upon application of a director and any
notice that
the
court requires, has authority to order indemnification in the following
circumstances:
(i)
If the court determines a director is entitled to reimbursement under
subsection (d), the
court
shall order indemnification, in which case the director is also entitled to
recover the
expenses
of securing the reimbursement; or
(ii)
If the court determines that the director is fairly and reasonably entitled to
indemnification
in view of all the relevant circumstances, whether or not he has met the
standard
of
conduct set forth in subsection (b)(1) or (b)(2) or has been adjudged liable in
the circumstances
described
in subsection (b)(4)(ii), the court may order such indemnification as the court
shall
deem
proper, except that indemnification with respect to any proceeding by or in the
right of the
corporation
or in which liability has been adjudged in the circumstances described in
subsection
(b)(4)(i)
are limited to expenses.
(2)
A court of appropriate jurisdiction may be the same court in which the
proceeding
involving
the director’s liability took place.
(e)
Advance for expenses. Reasonable expenses incurred by a director who is a party
to a
proceeding
may be paid or reimbursed by the corporation in advance of the final
disposition of
the
proceeding upon receipt by the corporation of:
(1)
A written affirmation by the director of his good faith belief that he has met
the
standard
of conduct necessary for indemnification by the corporation as authorized in
this section,
and
(2)
A written undertaking by or on behalf of the director to repay the amount if
the court
determines
that he has not met that standard of conduct, and after a determination that
the facts
then
known to those making the determination would not preclude indemnification
under this
section.
The undertaking required by this subdivision must be an unlimited general
obligation of
the
director but need not be secured and may be accepted without reference to
financial ability to
make
repayment. Determinations and authorizations of payments under this subsection
are made
in
the manner specified in subsection (f).
(f)
Determination and authorization of indemnification.
(1)
No indemnification under subsection (b) may be made by the corporation unless
authorized
in the specific case after a determination has been made that indemnification
of the
director
is permissible in the circumstances because he has met the standard of conduct
set forth
in
subsection (b). The determination must be made:
(i)
By the board of directors by a majority vote of a quorum consisting of
directors not at
the
time parties to the proceeding; or
(ii)
If such a quorum cannot be obtained, then by a majority vote of a committee of
the
board,
duly designated to act in the matter by a majority vote of the full board (in
which
designation
directors who are parties may participate), consisting solely of two (2) or
more
directors
not at the time parties to the proceeding; or
(iii)
By special legal counsel, selected by the board of directors or a committee of
the
board
by vote as set forth in subsection(f)(1)(i) or (f)(1)(ii), or, if the requisite
quorum of the full
board
cannot be obtained for the vote and the committee cannot be established, by a
majority vote
of
the full board (in which selection directors who are parties may participate);
or
(iv)
By the shareholders.
(2)
Authorization of indemnification and determination as to reasonableness of
expenses
are
made in the same manner as the determination that indemnification is
permissible, except that
if
the determination that indemnification is permissible is made by special legal
counsel,
authorization
of indemnification and determination as to reasonableness of expenses must be
made
in a manner specified in subsection (f)(1)(iii) for the selection of the
counsel. Shares held
by
directors who are parties to the proceeding may not be voted on the subject
matter under this
subsection.
(g)
Variation by Corporate Action. The indemnification provided by this section is
not
deemed
exclusive of any other rights to which those seeking indemnification are
entitled under
any
bylaw, agreement, vote of shareholders or disinterested directors or otherwise,
both as to
action
in his official capacity and as to action in another capacity while holding
office, and
continues
as to a individual who has ceased to be a director, officer, partner, trustee,
employee, or
agent
and inures to the benefit of the heirs, executors, and administrators of [a
person][an
individual].
Nothing contained in this section limits the corporation’s power to pay or
reimburse
expenses
incurred by a director in connection with his appearance as a witness in a
proceeding at
a
time when he has not been made a named defendant or respondent in the
proceeding.
(h)
Officers. Unless limited by the articles of incorporation:
(1)
An officer of the corporation is indemnified under this section as and to the
same
extent
provided for a director, and is entitled to the same extent as a director to
seek
indemnification
pursuant to the provisions of this section;
(2)
A corporation has the power to indemnify and to advance expenses to an officer,
employee,
or agent of the corporation to the same extent that it may indemnify and
advance
expenses
to directors pursuant to this section; and
(3)
A corporation, in addition, has the power to indemnify and to advance expenses
to an
officer,
employee, or agent who is not a director to a further extent, consistent with
law, that is
provided
by its articles of incorporation, bylaws, general or specific action of its
board of
directors,
or contract.
(i)
Insurance. A corporation has power to purchase and maintain insurance on behalf
of
any
individual who is or was a director, officer, employee, or agent of the
corporation, or who,
while
a director, officer, employee, or agent of the corporation, is or was serving
at the request of
the
corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or
domestic
corporation, partnership, joint venture, trust, other enterprise, or employee
benefit plan,
against
any liability asserted against him and incurred by him in any corporate
capacity or arising
out
of his status as a director, officer, employee, or agent of the corporation,
whether or not the
corporation
would have the power to indemnify him against the liability under the
provisions of
this
section.
(j)
Shareholder approval. Any indemnification of, or advance of expenses to, a
director
in
accordance with this section, if arising out of a proceeding by or in the right
of the corporation,
must
be reported in writing to the shareholders with or before the notice of the
next shareholders’
meeting.
Part
IX. Amendment of Articles of Incorporation.
7-1.2-901.
Right to amend articles of incorporation. - (a) A corporation may
amend its
articles
of incorporation, from time to time, in any and all respects as is desired, to
the extent that
its
articles of incorporation, as amended, contain only provisions that might be
lawfully contained
in
original articles of incorporation filed as of the time of the filing of the
amendment, and, if a
change
in shares or the rights of shareholders, or an exchange, reclassification,
subdivision,
combination
or cancellation of shares or rights of shareholders is to be made, the
provisions that
may
be necessary to effect the change, exchange, reclassification, subdivision,
combination or
cancellation.
7-1.2-902.
Right to amend legislative charters. -- Any corporation created by
special
act
of the general assembly which is organized under this chapter, whose charter is
subject to
amendment
or repeal at the will of the general assembly may make amendment to its charter
that
corporations
organized under this chapter may make to their articles of incorporation under
Section
7-1.2-901. The proposed amendment is effected and evidenced in the same manner,
by
the
same vote and upon the same terms and conditions as are prescribed in Sections
7-1.2-903
and
7-1.2-904.
7-1.2-903.
Procedure to amend articles of incorporation. - (a) Amendments to
the
articles
of incorporation are made in the following manner: (1) The board of directors
adopts a
resolution
setting forth the proposed amendment and directing that it be submitted to a
vote at a
meeting
of shareholders, which may be either the annual or a special meeting. If no
shares have
been
issued, the amendment is adopted by resolution of the board of directors and
the provisions
subsequently
stated for adoption by shareholders do not apply. The resolution may
incorporate
the
proposed amendment in restated articles of incorporation which contain a
statement that,
except
for the designated amendment, the restated articles of incorporation correctly
state without
change
the corresponding provisions of the articles of incorporation as previously
amended, and
that
the restated articles of incorporation, together with the designated amendment,
supersede the
original
articles of incorporation and all amendments to those articles.
(2)
Written notice stating the proposed amendment or a summary of the changes to be
affected
by the amendment must be given to each shareholder entitled to vote on the
amendment
within
the time and in the manner provided in this chapter for the giving of notice of
meetings of
shareholders.
If the meeting is an annual meeting, the proposed amendment or the summary may
be
included in the notice of the annual meeting.
(3)
At the meeting a vote of the shareholders entitled to vote on the amendment
must be
taken
on the proposed amendment. The proposed amendment is adopted upon receiving the
affirmative
vote of the holders of a majority of the shares entitled to vote on the
amendment
unless
any class of shares is entitled to vote on the amendment as a class, pursuant
to either the
articles
of incorporation or the provisions of Section 7-1.2-904, in which event
approval of the
proposed
amendment also requires the affirmative vote of the holders of a majority of
the shares
of
each class of shares entitled to vote as a class on the amendment.
(b)
Any number of amendments may be submitted to the shareholders, and voted upon
by
them,
at one meeting.
(c)
The resolution authorizing a proposed amendment to the articles of
incorporation may
provide
that at any time prior to the filing of the amendment with the secretary of
state,
notwithstanding
authorization of the proposed amendment by the shareholders of the corporation,
the
board of directors may abandon the proposed amendment without further action by
the
shareholders.
(d)
Whenever the articles of incorporation require for action by the board of
directors, by
the
holders of any class or series of shares or by the holders of any other
securities having voting
power
the vote of a greater number or proportion than is required by any section of
this title, the
provision
of the articles of incorporation requiring such greater vote may not be
altered, amended
or
repealed except by such greater vote.
7-1.2-904.
Class voting on amendments. -- (a) Except as otherwise provided in
this
section,
the holders of the outstanding shares of a class are entitled to vote as a
class upon a
proposed
amendment, whether or not entitled to vote on the amendment by the provisions
of the
articles
of incorporation, if the amendment would:
(1)
Increase or decrease the aggregate number of authorized shares of the class.
(2)
Increase or decrease the par value of the shares of the class.
(3)
Effect an exchange, reclassification, or cancellation of all or part of the
shares of the
class.
(4)
Effect an exchange, or create a right of exchange, of all or any part of the
shares of
another
class into the shares of the class.
(5)
Change the designations, preferences, limitations, or relative rights of the
shares of
the
class.
(6)
Change the shares of the class, whether with or without par value, into the
same or a
different
number of shares, either with or without par value, of the same class or
another class or
classes.
(7)
Create a new class of shares having rights and preferences prior and superior
to the
shares
of the class, or increase the rights and preferences or the number of
authorized shares of
any
class having rights and preferences prior or superior to the shares of the
class.
(8)
In the case of a preferred or special class of shares, divide the shares of the
class into
series
and fix and determine the designation of the series and the variations in the
relative rights
and
preferences between the shares of the series, or authorize the board of
directors to do so.
(9)
Limit or deny any existing preemptive rights of the shares of the class.
(10)
Cancel or otherwise affect dividends on the shares of the class which have
accrued
but
have not been declared.
(b)
If the proposed amendment would affect only the shares of one series of a class
and
not
the entire class, then only the shares of the series so affected is considered
a separate class for
the
purpose of this section. Any class and any series within a class is considered
a separate class
for
purposes of this section if the effect of the proposed amendment upon the class
or series
would
be different than the effect of the amendment upon the other classes or other
series within
the
class. If the proposed amendment would affect two (2) or more classes or series
within a
class
in the same way but would not affect the remaining classes or series within the
class in the
same
way, the two (2) or more classes or series affected in the same way are
together considered
a
separate class for purposes of this section. Except as otherwise provided in
the articles of
incorporation
or the certificate referred to in Section 7-1.2-602, if the proposed amendment
would
have
no effect upon one or more classes or series of a class, the classes or series
are not entitled to
any
vote on the proposed amendment and, for the purposes of this section, are not
counted in
determining
the number of shares constituting the class.
7-1.2-905.
Articles of amendment. -- (a) The corporation may amend its
articles of
incorporation
by filing with the secretary of state articles of amendment which must state:
(1)
The name of the corporation.
(2)
The amendment so adopted.
(3)
The date of the adoption of the amendment by the shareholders or by the board
of
directors
where no shares have been issued.
(b)
No amendment affects any existing cause of action in favor of or against the
corporation,
or any pending suit to which the corporation is a party, or the existing rights
of
persons
other than shareholders; and, in the event the corporate name is changed by
amendment,
no
suit brought by or against the corporation under its former name abates for
that reason.
7-1.2-906.
Restated articles of incorporation. -- (a) The corporation may at
any time
restate
its articles of incorporation as previously amended by filing with the
secretary of state
restated
articles of incorporation. The restated articles of incorporation may include
one or more
amendments
to the articles of incorporation adopted in accordance with the provisions of
Section
7-1.2-901.
(b)
The restated articles of incorporation must state all of the provisions of the
articles of
incorporation
as previously amended, the additional amendments to the articles of
incorporation,
if
any, together with a statement that such additional amendments were adopted in
accordance
with
the provisions of Section 7-1.2-903, and a further statement that, except for
the designated
amendments,
if any, the restated articles of incorporation correctly set forth without
change the
corresponding
provisions of the articles of incorporation as previously amended, and that the
restated
articles of incorporation, together with the designated amendments, if any,
supersede the
original
articles of incorporation and all previous amendments to the articles of
incorporation.
7-1.2-907.
Amendment of articles of incorporation in reorganization proceedings. -
(a)
Whenever a plan of reorganization of a corporation has been confirmed by decree
or order of
a
court of competent jurisdiction in proceedings for the reorganization of the
corporation,
pursuant
to the provisions of any applicable statute of the United States relating to
reorganizations
of
corporations, the articles of incorporation of the corporation may be amended,
in the manner
provided
in this section, in as many respects as are necessary to carry out the plan and
put into
effect,
as long as the articles of incorporation, as amended, contain only provisions
that might be
lawfully
contained in original articles of incorporation at the time of making the
amendment.
(b)
Articles of amendment approved by decree or order of the court must be executed
by
the
trustee or trustees of such corporation appointed in the reorganization
proceedings (or a
majority
thereof), or if none be appointed and acting, by the person or persons that the
court
designates
or appoints for the purpose, and must state the name of the corporation, the
amendments
of the articles of incorporation approved by the court, the date of the decree
or order
approving
the articles of amendment, the title of the proceedings in which the decree or
order was
entered,
and a statement that the decree or order was entered by a court having
jurisdiction of the
proceedings
for the reorganization of the corporation pursuant to the provisions of an
applicable
statute
of the United States.
(c)
This section does not apply to such corporation upon the entry of a final
decree in the
reorganization
proceedings closing the case and discharging the trustee or trustees, if any.
Part
X. Merger.
7-1.2-1001.
Procedure for merger. - (a) Any two (2) or more domestic
corporations
may
merge into one of the corporations, or into a new corporation, pursuant to a
plan of merger
approved
in the manner provided in this chapter.
(b)
The board of directors of each corporation shall, by resolution adopted by each
board,
approve
a plan of merger stating:
(1)
The names of the corporations proposing to merge, and the name of the
corporation
which
will survive or result from the merger, which is hereinafter designated as the
surviving
corporation.
(2)
The terms and conditions of the proposed merger.
(3)
The manner and basis of converting the shares of each merging corporation (other
than
those held by the surviving corporation, if any) into shares or obligations or
other securities
of
the surviving corporation or, in whole or in part, into cash, property, or
shares, obligations, or
other
securities of any other corporation.
(4)
Any amendments to the articles of incorporation of the surviving corporation to
be
effected
by the merger, or if no amendments are desired, a statement that the articles
of
incorporation
of one of the corporations are the articles of incorporation of the surviving
corporation,
or in the case of a new corporation, all of the statements required to be
stated in
articles
of incorporation for corporations organized under this chapter.
(5)
Any other provisions with respect to the proposed merger that are deemed
necessary
or
desirable.
7-1.2-1002.
Approval by shareholders of merger -- (a) The board of directors of
each
corporation,
upon approving the plan of merger, shall, by resolution, direct that the plan
be
submitted
to a vote at a meeting of shareholders, which may be either an annual or a
special
meeting.
Written notice must be given to each shareholder, whether or not entitled to vote
at the
meeting,
not less than twenty (20) days before the meeting, in the manner provided in
this chapter
for
the giving of notice of meetings of shareholders, and, whether the meeting is
an annual or a
special
meeting, must state that the purpose or one of the purposes is to consider the
proposed
plan
of merger. A copy or a summary of the plan of merger, as the case may be,
together with a
statement
of the shareholder’s right to dissent and a copy or a summary of Section
7-1.2-1202,
must
be included in or enclosed with the notice except where no such right is
available.
(b)
At each meeting, shareholders shall vote on the proposed plan of merger. The
plan of
merger
is approved upon receiving the affirmative vote of the holders of a majority of
the shares
entitled
to vote on the plan of merger of each corporation, unless any class of shares
of any
corporation
is entitled to vote as a class on it, in which event, as to the corporation,
approval of
the
plan of merger also requires the affirmative vote of the holders of a majority
of the shares of
each
class of shares entitled to vote as a class on it. Any class of shares of the
surviving
corporation
and the merged corporation in a merger is entitled to vote as a class, whether
or not
the
class is otherwise entitled to vote, if the plan of merger contains any
provision which, if
contained
in a proposed amendment to articles of incorporation, would entitle the class
of shares
to
a class vote.
(c)(1)
Notwithstanding the foregoing provisions of this section, except as may be
required
by the articles of incorporation, no approval of a plan of merger by the
shareholders of
the
surviving corporation in a merger, and no notice to any of the shareholders of
the corporation,
are
required if:
(i)
The plan of merger does not amend the articles of incorporation of the
corporation;
(ii)
The plan of merger does not involve the issuance or transfer by the corporation
(either
directly or through the medium of options or warrants for, or shares or debt
instruments
convertible
within one year into, the shares) of shares possessing more than twenty percent
(20%)
of
the total combined voting power of all classes of shares then entitled to vote
for the election of
directors
which will be outstanding immediately after the merger; and
(iii)
Each shareholder of the corporation whose shares were outstanding immediately
before
the effective date of the merger will hold the same number of shares, with
identical
preferences,
limitations, and relative rights, immediately after the effective date of
change.
(2)
If a plan of merger is adopted by the surviving corporation in a merger without
any
approval
by its shareholders, pursuant to the provisions of this subsection, that fact
must be
certified
in the articles of merger.
(d)
After approval as already stated by each corporation, and at any time prior to
the
filing
of the articles of merger, the merger may be abandoned pursuant to provisions
for
abandonment,
if any, set forth in the plan of merger.
7-1.2-1003.
Articles of merger. - (a) Upon approval, articles of merger must be
executed
by
each corporation by its authorized representative and must state:
(1)
The plan of merger.
(2)
If, pursuant to Section 7-1.2-1005, the merger is to become effective at a time
subsequent
to the issuance of the certificate of merger by the secretary of state, the
date when the
merger
is to become effective.
(b)
The original articles of merger must be delivered to the secretary of state. If
the
secretary
of state finds that the articles conform to law, and, unless the surviving
corporation is a
Rhode
Island corporation, that all fees and franchise taxes have been paid, the
secretary of state
shall:
(1)
Endorse on the original the word “Filed,” and the month, day, and year of the
filing;
(2)
File the original in his office; and
(3)
Issue a certificate of merger;
(c)
The secretary of state shall return the certificate of merger to the surviving
or new
corporation,
as the case may be, or its representative.
7-1.2-1004.
Merger of subsidiary corporation. -- (a) Any corporation owning at
least
ninety
percent (90%) of the outstanding shares of each class of another corporation
may merge
the
other corporation into itself without approval by a vote of the shareholders of
either
corporation.
Its board of directors shall, by resolution, approve a plan of merger stating:
(1)
The name of the subsidiary corporation and the name of the corporation owning
at
least
ninety percent (90%) of its shares, which is subsequently in these provisions
designated as
the
surviving corporation.
(2)
The manner and basis of converting the shares of the subsidiary corporation
(other
than
those held by the surviving corporation) into shares or other securities or
obligations of the
surviving
corporation or of any other corporation, or in whole or in part, into cash or
other
consideration
to be paid upon the surrender of each share of the subsidiary corporation.
(b)
A copy of the plan of merger must be mailed to each shareholder of the
subsidiary
corporation.
(c)
Articles of merger must be executed by the surviving corporation by an
authorized
officer
and must state:
(1)
The plan of merger; and
(2)
If, pursuant to Section 7-1.2-1005, the merger is to become effective at a time
subsequent
to the issuance of the certificate of merger by the secretary of state, the
date when the
merger
is to become effective.
(d)
On and after the thirtieth day after the mailing of a copy of the agreement of
merger to
shareholders
of the subsidiary corporation or upon the waiver of the mailing by the holders
of all
outstanding
shares, original articles of merger must be delivered to the secretary of
state. If the
secretary
of state finds that the articles conform to law, the secretary of state shall,
when all fees
and
franchise taxes have been paid:
(1)
Endorse on the original the word “Filed,” and the month, day, and year of the
filing;
(2)
File the original in his office; and
(3)
Issue a certificate of merger.
(e)
The secretary of state shall return the certificate of merger to the surviving
corporation
or its representative.
7-1.2-1005.
Effect of merger. -- (a) A merger becomes effective upon the
issuance of a
certificate
of merger by the secretary of state or on a later date as is stated in the
plan.
(b)
When a merger becomes effective:
(1)
The several corporations, parties to the plan of merger, are a single
corporation, which
is
that corporation designated in the plan of merger as the surviving or new
corporation.
(2)
The separate existence of all corporations, parties to the plan of merger,
except the
surviving
or new corporation, ceases.
(3)
The surviving or new corporation has all the rights, privileges, immunities,
and
powers
and is subject to all the duties and liabilities of a corporation organized
under this chapter.
(4)
The surviving or new corporation at that time and subsequently possesses all
the
rights,
privileges, immunities, and franchises, as well of a public as of a private
nature, of each of
the
merging corporations; and all property, real, personal, and mixed, all debts
due on whatever
account,
including subscriptions to shares, all other choses in action, and all and
every other
interest
of or belonging to or due to each of the corporations merged, is taken and
deemed to be
transferred
to and vested in the single corporation without further act or deed; and the
title to any
real
estate, or any interest in real estate, vested in any of the corporations does
not revert or is in
any
way impaired because of the merger.
(5)
The surviving or new corporation is subsequently responsible and liable for all
the
liabilities
and obligations of each of the corporations merged or consolidated; and any
claim
existing
or action or proceeding pending by or against any of the corporations may be
prosecuted
as
if the merger had not taken place, or the surviving or new corporation may be
substituted in its
place.
Neither the rights of creditors nor any liens upon the property of any
corporation is
impaired
by the merger.
(6)
The articles of incorporation of the surviving corporation are deemed to be
amended
to
the extent, if any, that changes in its articles of incorporation are stated in
the plan of merger;
or,
in the case of a new corporation, the statements in the articles of merger
which are required or
permitted
to be stated in the articles of incorporation of corporations organized under
this chapter
are
deemed to be the original articles of incorporation of the new corporation.
(7)
The shares of the corporation or corporations party to the plan that are, under
the
terms
of the plan, to be converted or exchanged, cease to exist, and the holders of
the shares are
entitled
only to the shares, obligations, other securities, cash, or other property into
which they
have
been converted or for which they have been exchanged in accordance with the
plan, subject
to
any rights under Section 7-1.2-1201.
7-1.2-1006.
Merger of domestic and foreign corporations. -- (a) One or more
foreign
corporations
and one or more domestic corporations may be merged in the following manner, if
the
merger is permitted by the laws of the state under which each foreign
corporation is
organized:
(1)
Each domestic corporation shall comply with the provisions of this chapter with
respect
to the merger of domestic corporations, and each foreign corporation shall
comply with
the
applicable provisions of the laws of the state under which it is organized.
(2)
If the surviving or new corporation, as the case may be, is to be governed by
the laws
of
any state other than this state, it shall comply with the provisions of this
chapter with respect to
foreign
corporations if it is to transact business in this state, and in every case it
shall file with the
secretary
of state of this state:
(i)
An agreement that it may be served with process in this state in any proceeding
for the
enforcement
of any obligation of any domestic corporation which is a party to the merger
and in
any
proceeding for the enforcement of the rights of a dissenting shareholder of any
domestic
corporation
against the surviving or new corporation;
(ii)
An irrevocable appointment of the secretary of state of this state as its agent
to accept
service
of process in any proceeding; and
(iii)
An agreement that it will promptly pay to the dissenting shareholders of any
domestic
corporation the amount, if any, to which they are entitled under the provisions
of this
chapter
regarding the rights of dissenting shareholders.
(b)
The effect of the merger is the same as in the case of the merger of domestic
corporations,
if the surviving or new corporation is to be governed by the laws of this
state. If the
surviving
or new corporation is to be governed by the laws of any state other than this
state, the
effect
of the merger is the same as in the case of the merger of domestic corporations
except
insofar
as the laws of the other state provide otherwise.
(c)
At any time prior to the filing of the articles of merger, the merger may be
abandoned
pursuant
to provisions for abandonment, if any, stated in the plan of merger.
Part
XI. Dispositions.
7-1.2-1101.
Sale of assets in regular course of business and mortgage or pledge of
assets.
-
The sale, lease, exchange, or other disposition of all, or substantially all,
the property and
assets
of a corporation in the usual and regular course of its business, and the
mortgage or pledge
of
any or all property and assets of a corporation, whether or not in the usual
and regular course
of
business, may be made upon terms and conditions and for any consideration,
which may
consist
in whole or in part of money or property, real or personal, including shares of
any other
corporation,
domestic or foreign, as is authorized by its board of directors; and in any
case no
authorization
or consent of the shareholders is required.
7-1.2-1102.
Sale of assets other than in regular course of business. -- A sale,
lease,
exchange,
or other disposition of all, or substantially all, the property and assets,
with or without
the
good will, of a corporation, if not in the usual and regular course of its
business, may be made
upon
terms and conditions and for any consideration, which may consist in whole or
in part of
money
or property, real or personal, including shares of any other corporation,
domestic or
foreign,
as is authorized in the following manner:
(a)
The board of directors’ adoption of a resolution recommending the sale, lease,
exchange,
or other disposition, and directing the submission of the resolution to a vote
at a
meeting
of shareholders, which may be either an annual or a special meeting.
(b)
Written notice must be given to each shareholder, whether or not entitled to
vote at
the
meeting, not less than twenty (20) days before the meeting, in the manner
provided in this
chapter
for the giving of notice of meeting of shareholders. The notice must state
whether the
meeting
is an annual or a special meeting, and that the purpose, or one of the
purposes, is to
consider
the proposed sale, lease, exchange, or other disposition. A statement of the
shareholder’s
right to dissent and a copy or summary of Section 7-1.2-1202 must be included
in
or
enclosed with the notice.
(c)
At the meeting the shareholders may authorize the sale, lease, exchange, or
other
disposition
and may fix, or may authorize the board of directors to fix, any or all of the
terms and
conditions
of it and the consideration to be received by the corporation for it. The
authorization
requires
the affirmative vote of the holders of a majority of the shares of the
corporation entitled
to
vote on the authorization, unless any class of shares is entitled to vote on it
as a class, pursuant
to
the articles of incorporation, in which event approval of the resolution also
requires the
affirmative
vote of the holders of a majority of the shares of each class of shares
entitled to vote
as
a class on the resolution.
(d)
After the authorization by a vote of shareholders, the board of directors
nevertheless,
in
its discretion, may abandon the sale, lease, exchange, or other disposition of
assets, subject to
the
rights of third parties under any related contracts, without any further action
or approval by
shareholders.
(e)
A transfer of all or substantially all of the property and assets of a corporation
(i) to
one
(1) or more subsidiary corporations in which the transferor corporation owns
shares
possessing
at least two-thirds (2/3) of the total combined voting power of all classes of
shares
entitled
to vote at that time for election of directors, or (ii) for cash, with or
without an
assumption
of liabilities of the transferor corporation is governed by the provisions of
Section 7-
1.2-1101
and not by this section. The sale, lease, exchange, or other disposition of
all, or
substantially
all, the property and assets, with or without the good will, of one or more
subsidiaries
in which the parent corporation owns shares possessing two-thirds (2/3) or more
of
the
total combined voting power of all classes of shares entitled at that time to
vote for the
election
of directors is treated as a disposition of all, or substantially all, the
property and assets of
the
parent corporation within the meaning of this section if the shares of the
subsidiary or
subsidiaries
constitute all or substantially all the property and assets of the parent
corporation.
Part
XII. Dissenters’ Rights.
7-1.2-1201.
Right of shareholders to dissent. - (a) Any shareholder of a
corporation has
the
right to dissent from any of the following corporate actions:
(1)
Any plan of merger to which the corporation is a party, provided articles of
merger
have
been filed in connection with the transaction under Section 7-1.2-1003, unless
the
corporation
is the surviving corporation in a merger and the approval of its shareholders
was not
required
by virtue of the provisions of either Section 7-1.2-1002 or Section 7-1.2-1004;
or
(2)
Any sale or exchange of all or substantially all of the property and assets of
a
corporation
which requires the approval of the shareholders under Section 7-1.2-1102.
(b)
A shareholder may not dissent as to less than all of the shares registered in
his name
which
are owned beneficially by him. A nominee or fiduciary may not dissent on behalf
of any
beneficial
owner as to less than all of the shares of the owner registered in the name of
the
nominee
or fiduciary.
(c)
Unless otherwise provided in the articles of incorporation of the issuing
corporation,
there
is no right to dissent for the holders of the shares of any class or series
which, on the date
fixed
to determine the shareholders entitled to receive notice of the proposed
transaction (or a
copy
of the agreement of merger under Section 7-1.2-1004), were:
(1)
Registered on a national securities exchange or included as national market
securities
in
the national association of securities dealers automated quotations system or
any successor
national
market system; or
(2)
Held of record by not less than two thousand (2,000) shareholders.
(d)
A shareholder entitled to the right to dissent under this section may not
challenge a
completed
corporate action for which the right to dissent is available unless such
corporate action:
(1)
was not effectuated in accordance with the applicable provisions of this
chapter or the
corporation’s
articles of incorporation, bylaws or board of directors’ resolution authorizing
the
corporate
action; or
(2)
was procured as a result of fraud or material misrepresentation.
7-1.2-1202.
Rights of dissenting shareholders. - (a) Any shareholder electing to
exercise
the right of dissent shall file with the corporation, prior to or at the
meeting of
shareholders
at which the proposed corporate action is submitted to a vote, a written
objection to
the
proposed corporate action. If the proposed corporate action is approved by the
required vote
and
the shareholder has not voted in favor of it, the shareholder may, within ten
(10) days after
the
date on which the vote was taken, or if a corporation is to be merged without a
vote of its
shareholders
into another corporation, any of its shareholders may, within fifteen (15) days
after
the
plan of the merger has been mailed to the shareholders, make written demand on
the
corporation,
or, in the case of a merger, on the surviving or new corporation, domestic or
foreign,
for
payment of the fair value of the shareholder’s shares. If the proposed
corporate action is
effected,
the corporation shall pay to the shareholder, upon surrender of the certificate
or
certificates
representing the shares, the fair value of the shares as of the day prior to
the date on
which
the vote was taken approving the proposed corporate action, excluding any
appreciation or
depreciation
in anticipation of the corporate action. Any shareholder failing to make demand
within
the ten (10) day period or the fifteen (15) day period, as the case may be, is
bound by the
terms
of the proposed corporate action. Any shareholder making the demand is
thereafter only
entitled
to payment as provided in this section and is not entitled to vote or to
exercise any other
rights
of a shareholder.
(b)
No demand may be withdrawn unless the corporation consents to it. If, however,
the
demand
is withdrawn upon consent, or if the proposed corporate action is abandoned or
rescinded
or
the shareholders revoke the authority to effect the action, or if, in the case
of a merger, on the
date
of the filing of the articles of merger the surviving corporation is the owner
of all the
outstanding
shares of the other corporations, domestic and foreign, that are parties to the
merger,
or
if no demand or petition for the determination of fair value by a court has
been made or filed
within
the time provided in this section, or if a court of competent jurisdiction
determines that the
shareholder
is not entitled to the relief provided by this section, then the right of the
shareholder
to
be paid the fair value of his shares ceases and his status as a shareholder is
restored, without
prejudice
to any corporate proceedings taken during the interim.
(c)
Within ten (10) days after the corporate action is effected, the corporation,
or, in the
case
of a merger, the surviving or new corporation, domestic or foreign, shall give
written notice
of
the action to each dissenting shareholder who has made demand as provided in
these
provisions,
and shall make a written offer to each dissenting shareholder to pay for the
shares at a
specified
price deemed by the corporation to be the fair value of the shares. The notice
and offer
must
be accompanied by a balance sheet of the corporation the shares of which the
dissenting
shareholder
holds, as of the latest available date and not more than twelve (12) months
prior to
the
making of the offer, and a profit and loss statement of the corporation for the
twelve (12)
month
period ended on the date of the balance sheet.
(d)
If within thirty (30) days after the date on which the corporate action was
effected the
fair
value of the shares is agreed upon between any dissenting shareholder and the
corporation,
payment
for the shares must be made within ninety (90) days after the date on which the
corporate
action was effected, upon surrender of the certificate or certificates
representing the
shares.
Upon payment of the agreed value, the dissenting shareholder ceases to have any
interest
in
the shares.
(e)
If within the period of thirty (30) days a dissenting shareholder and the
corporation do
not
agree on the matter, then the corporation, within thirty (30) days after
receipt of written
request
for the filing from any dissenting shareholder given within sixty (60) days
after the date
on
which the corporate action was effected, shall, or at its election at any time
within the period
of
sixty (60) days may, file a petition in any court of competent jurisdiction in
the county in this
state
where the registered office of the corporation is located praying that the fair
value of the
shares
is found and determined. If, in the case of a merger, the surviving or new
corporation is a
foreign
corporation without a registered office in this state, the petition must be
filed in the
county
where the registered office of the domestic corporation was last located. If
the corporation
fails
to institute the proceeding as provided, any dissenting shareholder may do so
in the name of
the
corporation. All dissenting shareholders, wherever they reside, must be made
parties to the
proceeding
as an action against their shares quasi in rem. A copy of the petition must be
served
on
each dissenting shareholder who is a resident of this state and served by
registered or certified
mail
on each dissenting shareholder who is a nonresident. Service on nonresidents
may also be
made
by publication as provided by law. The jurisdiction of the court is plenary and
exclusive.
All
shareholders who are parties to the proceeding are entitled to judgment against
the
corporation
for the amount of the fair value of their shares. The court may, if it so
elects, appoint
one
or more persons as appraisers to receive evidence and recommend a decision on
the question
of
fair value. The appraisers have the power and authority that is specified in
the order of their
appointment
or an amendment of the order. The judgment is payable only upon and concurrently
with
the surrender to the corporation of the certificate or certificates
representing the shares.
Upon
payment of the judgment, the dissenting shareholder ceases to have any interest
in the
shares.
(f)
The judgment should include an allowance for interest at the rate of interest
on
judgments
in civil actions from the date on which the vote was taken on the proposed
corporate
action
to the date of payment.
(g)
The court shall determine and assess the costs and expenses of any proceeding
against
the
corporation, but all or any part of the costs and expenses may be apportioned
and assessed as
the
court deems equitable against any or all of the dissenting shareholders who are
parties to the
proceeding
to whom the corporation has made an offer to pay for the shares if the court
finds that
the
action of the shareholders in failing to accept the offer was arbitrary or
vexatious or not in
good
faith. The expenses include reasonable compensation for and reasonable expenses
of the
appraisers,
but exclude the fees and expenses of counsel for and experts employed by any
party;
but
if the fair value of the shares as determined materially exceeds the amount
which the
corporation
offered to pay for the shares, or if no offer was made, the court in its
discretion may
award
to any shareholder who is a party to the proceeding a sum that the court
determines to be
reasonable
compensation to any expert or experts employed by the shareholder in the
proceeding.
(h)
Within twenty (20) days after demanding payment for his shares, each
shareholder
demanding
payment shall submit the certificate or certificates representing his shares to
the
corporation
for notation on the certificate that the demand has been made. His failure to
do so
may,
at the option of the corporation, terminate his rights under this section
unless a court of
competent
jurisdiction, for good and sufficient cause shown, directs otherwise. If shares
represented
by a certificate on which notation has been made are transferred, each new
certificate
issued
for the shares must bear similar notation, together with the name of the
original dissenting
holder
of the shares, and a transferee of the shares acquires by the transfer no
rights in the
corporation
other than those which the original dissenting shareholder had after making
demand
for
payment of the fair value of the shares.
(i)
Shares acquired by a corporation pursuant to payment of the agreed value for
the
shares
or to payment of the judgment entered for the shares, as provided in this
section, may be
held
and disposed of by the corporation. However, in the case of a merger, they may
be held and
disposed
of as the plan of merger otherwise provides.
Part
XIII. Dissolution and Revocation.
7-1.2-1301.
Voluntary dissolution by incorporators. -- (a) A corporation which
has not
commenced
business and which has not issued any shares, may be voluntarily dissolved by
its
incorporators
at any time in the following manner:
(1)
Articles of dissolution are executed by a majority of the incorporators, and
verified by
them,
and state:
(i)
The name of the corporation.
(ii)
The date of issuance of its certificate of incorporation.
(iii)
That none of its shares has been issued.
(iv)
That the corporation has not commenced business.
(v)
That the amount, if any, actually paid in on subscriptions for its shares, less
any part
of
the amount disbursed for necessary expenses, has been returned to those
entitled to it.
(vi)
That no debts of the corporation remain unpaid.
(vii)
That a majority of the incorporators elect that the corporation be dissolved.
(2)
The original articles of dissolution are delivered to the secretary of state.
If the
secretary
of state finds that the articles of dissolution conform to law, the secretary
of state shall,
when
all fees and franchise taxes have been paid:
(i)
Endorse on the original the word “Filed,” and the month, day, and year of the
filing.
(ii)
File the original in his office.
(iii)
Issue a certificate of dissolution.
(b)
The certificate of dissolution is delivered to the incorporators or their
representative.
Upon
the issuance of the certificate of dissolution by the secretary of state, the
existence of the
corporation
ceases.
7-1.2-1302.
Voluntary dissolution by consent of shareholders. -- (a) A
corporation
may
be voluntarily dissolved by the written consent of all of its shareholders
entitled to vote
thereon.
(b)
Upon the adoption of the resolution:
(1)
The corporation shall execute and file articles of dissolution in accordance
with
Sections
7-1.2-1308 and 7-1.2-1309.
(2)
The corporation immediately delivers notice of the filing to each known
creditor of
the
corporation.
(3)
The corporation shall proceed to collect its assets, sell or otherwise dispose
of those of
its
properties that are not to be distributed in kind to its shareholders, pay,
satisfy, and discharge
its
liabilities and obligations and do all other acts required to liquidate its
business and affairs.
After
paying or adequately providing for the payment of all its obligations, the
corporation
distributes
the remainder of its assets, either in cash or in kind, among its shareholders
according
to
their respective rights and interests.
(4)
The corporation, at any time during the liquidation of its business and
affairs, may
apply
to a court of competent jurisdiction within the state and county in which the
registered
office
or principal place of business of the corporation is situated, to have the
liquidation
continued
under the supervision of the court as provided in this chapter.
7-1.2-1303.
Voluntary dissolution by act of corporation. - A corporation may be
dissolved
by the act of the corporation, when authorized in the following manner:
(1)
The board of directors adopts a resolution recommending that the corporation be
dissolved,
and directing that the question of the dissolution be submitted to a vote at a
meeting of
the
shareholders, which may be either an annual or a special meeting.
(2)
Written notice is given to each shareholder entitled to vote at the meeting
within the
time
and in the manner provided in this chapter for the giving of notice of meetings
of
shareholders,
and, whether the meeting is an annual or special meeting, states that the
purpose, or
one
of the purposes, of the meeting is to consider the advisability of dissolving the
corporation.
(3)
At the meeting a vote of shareholders entitled to vote at the meeting is taken
on a
resolution
to dissolve the corporation. The resolution is adopted upon receiving the
affirmative
vote
of the holders of a majority of the shares of the corporation entitled to vote
on the resolution,
unless
any class of shares is entitled to vote on the resolution as a class, in which
event approval
of
the resolution also requires the affirmative vote of the holders of a majority
of the shares of
each
class of shares entitled to vote as a class and of the total shares entitled to
vote on the
resolution.
(4)
Upon the adoption of the resolution, the corporation shall execute and file
articles of
dissolution
in accordance with Sections 7-1.2-1308 and 7-1.2-1309.
(5)
The corporation immediately delivers notice of the filing to each known
creditor of
the
corporation.
(6)
The corporation shall proceed to collect its assets, sell or otherwise dispose
of those of
its
properties that are not to be distributed in kind to its shareholders, pay,
satisfy, and discharge
its
liabilities and obligations and do all other acts required to liquidate its
business and affairs.
After
paying or adequately providing for the payment of all its obligations, the
corporation
distributes
the remainder of its assets, either in cash or in kind, among its shareholders
according
to
their respective rights and interests.
(7)
The corporation, at any time during the liquidation of its business and
affairs, may
apply
to a court of competent jurisdiction within the state and county in which the
registered
office
or principal place of business of the corporation is situated, to have the
liquidation
continued
under the supervision of the court as provided in this chapter.
7-1.2-1304.
Revocation of voluntary dissolution proceedings by consent of
shareholders.
-
(a) By the written consent of all of its shareholders entitled to vote thereon,
a
corporation
may, within 120 days of its effective date of the articles of dissolution,
revoke
voluntary
dissolution proceedings previously taken, in the following manner:
(b)
Upon the execution of the written consent, a statement of revocation of
voluntary
dissolution
proceedings is executed by the corporation by its authorized representative.
The
statement
proclaims:
(1)
The name of the corporation.
(2)
The names and respective addresses of its officers.
(3)
The names and respective addresses of its directors.
(4)
A copy of the written consent signed by all shareholders of the corporation
revoking
the
voluntary dissolution proceedings.
(5)
That the written consent has been signed by all shareholders entitled to vote
thereon
of
the corporation or signed in their names by their authorized attorneys.
7-1.2-1305.
Revocation of voluntary dissolution proceedings by act of corporation. -
By
the act of the corporation, a corporation may, at any time within one hundred
twenty (120)
days
of its effective date of the articles of dissolution, revoke voluntary
dissolution proceedings
previously
taken, in the following manner:
(a)
The board of directors adopts a resolution recommending that the voluntary
dissolution
proceedings be revoked, and directing that the question of the revocation be
submitted
to
a vote at a special meeting of shareholders.
(b)
Written notice, stating that the purpose, or one of the purposes, of the
meeting is to
consider
the advisability of revoking the voluntary dissolution proceedings, is given to
each
shareholder
entitled to vote at the meeting within the time and in the manner provided in
this
chapter
for the giving of notice of special meetings of shareholders.
(c)
At the meeting, a vote of the shareholders entitled to vote at the meeting is
taken on a
resolution
to revoke the voluntary dissolution proceedings, which requires for its
adoption the
affirmative
vote of the holders of a majority of the shares entitled to vote on the
resolution.
(d)
Upon the adoption of the resolution, a statement of revocation of voluntary
dissolution
proceedings is executed by the corporation by its authorized representative.
The
statement
proclaims:
(1)
The name of the corporation.
(2)
The names and respective addresses of its officers.
(3)
The names and respective addresses of its directors.
(4)
A copy of the resolution adopted by the shareholders revoking the voluntary
dissolution
proceedings.
(5)
The number of shares outstanding.
(6)
The number of shares voted for and against the resolution, respectively.
7-1.2-1306.
Filing of statement of revocation of voluntary dissolution proceedings. -
The
statement of revocation of voluntary dissolution proceedings, whether by
consent of
shareholders
or by act of the corporation, is delivered to the secretary of state. If the
secretary of
state
finds that the statement conforms to law, the secretary of state shall, when
all fees and
franchise
taxes have been paid:
(a)
Endorse on the original the word “Filed,” and the month, day, and year of the
filing.
(b)
File the original in his office.
7-1.2-1307.
Effect of statement of revocation of voluntary dissolution proceedings. -
(a)
Upon the filing by the secretary of state of a statement of revocation of voluntary
dissolution
proceedings,
whether by consent of shareholders or by act of the corporation, the revocation
of
the
voluntary dissolution proceedings becomes effective and the corporation may
again carry on
its
business.
(b)
Revocation of dissolution is effective upon the effective date of the statement
of
revocation
of voluntary dissolution.
(c)
When the revocation of dissolution is effective, it relates back to and takes
effect as of
the
effective date of the dissolution and the corporation resumes carrying on its
business as if
dissolution
had never occurred, except as subsequently provided.
(d)
If, as permitted by the provisions of this title, another corporation, whether
business
or
nonprofit, limited partnership, limited liability partnership or limited
liability company,
domestic
or foreign, qualified to transact business in this state, bears or has filed a
fictitious
business
name statement with respect to or reserved or registered a name which is not
the same
as,
or deceptively similar to, the name of a corporation with respect to which the
certificate of
revocation
is proposed to be withdrawn, then the secretary of state shall condition
effectiveness of
the
statement of revocation of voluntary dissolution upon the amendment by the
corporation
revoking
voluntary dissolution proceedings of its articles of incorporation or otherwise
complying
with
the provisions of this chapter with respect to the use of a name available to
it under the laws
of
this state so as to designate a name which is the same as, or deceptively
similar to, its former
name.
7-1.2-1308.
Articles of dissolution. -- The corporation shall execute articles
of
dissolution
by its authorized officer. The statement proclaims:
(a)
The name of the corporation.
(b)
That all debts, obligations, and liabilities of the corporation have been paid
and
discharged
or that adequate provision has been made for the payment.
(c)
That all the remaining property and assets of the corporation have been
distributed
among
its shareholders in accordance with their respective rights and interests.
(d)
That there are not suits pending against the corporation in any court, or that
adequate
provision
has been made for the satisfaction of any judgment, order, or decree which may
be
entered
against it in any pending suit.
7-1.2-1309.
Filing of articles of dissolution. -- (a) The articles of
dissolution are
delivered
to the secretary of state. If the secretary of state finds that the articles of
dissolution
conform
to law, the secretary of state shall, when all fees and franchise taxes have
been paid:
(1)
Endorse on the original the word “Filed,” and the month, day, and year of the
filing.
(2)
File the original in his office.
(3)
Issue a certificate of dissolution.
(b)
The certificate of dissolution is delivered to the representative of the
dissolved
corporation.
Upon the issuance of the certificate of dissolution the existence of the
corporation
ceases,
except for the purpose of suits, other proceedings, and appropriate corporate
action by
shareholders,
directors, and officers as provided in this chapter.
7-1.2-1310.
Revocation of articles of incorporation. -- (a) The articles of
incorporation
of
a corporation may be revoked by the secretary of state upon the conditions
prescribed in this
section
when it is established that:
(1)
The corporation procured its articles of incorporation through fraud; or
(2)
The corporation has continued to exceed or abuse the authority conferred upon
it by
law;
or
(3)
The corporation has failed to file its annual report within the time required
by this
chapter,
or has failed to pay any fees, when they have become due and payable; or
(4)
The corporation has failed for thirty (30) days to appoint and maintain a
registered
agent
in this state as required by this chapter; or
(5)
The corporation has failed, after change of its registered office or registered
agent, to
file
in the office of the secretary of state a statement of the change as required
by this chapter; or
(6)
The corporation has failed to file in the office of the secretary of state any
amendment
to
its articles of incorporation or any articles of merger within the time
prescribed by this chapter;
or
(7)
A misrepresentation has been made of any material matter in any application,
report,
affidavit,
or other document submitted by the corporation pursuant to this chapter.
(b)
No articles of incorporation of a corporation may be revoked by the secretary
of state
unless:
(1)
The secretary of state gives the corporation not less than sixty (60) days
notice thereof
by
regular mail addressed to the registered office of the corporation in this
state on file with the
secretary
of state’s office; provided, however, that if a prior mailing addressed to the
registered
office
of the corporation in this state currently on file with the secretary of
state’s office has been
returned
to the secretary of state as undeliverable by the United States Postal Service
for any
reason,
or if the revocation notice is returned as undeliverable to the secretary of
state’s office by
the
United States Postal Service for any reason, the secretary of state gives
notice as follows:
(i)
To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice is required; or
(ii)
In the case of a domestic corporation which has not yet filed an annual report,
then to
any
one of the incorporators listed on the articles of incorporation, and no
further notice is
required;
and
(2)
The corporation fails prior to revocation to file the annual report or pay the
fees, or
file
the required statement of change of registered agent or registered office, or
file the articles of
amendment
or articles of merger, or correct the misrepresentation.
7-1.2-1311.
Issuance of certificates of revocation. - (a) Upon revoking any
certificate of
incorporation,
the secretary of state shall:
(1)
Issue a certificate of revocation;
(2)
File the certificate in his office; and
(3)
Send to the corporation by regular mail a copy of the certificate of
revocation,
addressed
to the registered office of the corporation in this state on file with the
secretary of
state’s
office; provided, however, that if a prior mailing addressed to the registered
office of the
corporation
in this state currently on file with the secretary of state’s office has been
returned to
the
secretary of state as undeliverable by the United States Postal Service for any
reason, or if the
revocation
certificate is returned as undeliverable to the secretary of state’s office by
the United
States
Postal Service for any reason, the secretary of state shall give notice as
follows:
(i)
To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice is required; or
(ii)
In the case of a domestic corporation which has not yet filed an annual report,
then to
any
one of the incorporators listed on the articles of incorporation, and no
further notice is
required.
(b)
Upon the issuance of the certificate of revocation, the authority of the
corporation to
transact
business in this state ceases.
(c)
Notwithstanding anything to the contrary, the issuance of a certificate of
revocation of
a
corporation does not terminate the authority of its registered agent.
7-1.2-1312.
Withdrawal of certificate of revocation. -- (a) Within ten (10)
years after
issuing
a certificate of revocation as provided in Section 7-1.2-1311, the secretary of
state may
withdraw
the certificate of revocation and retroactively reinstate the corporation in
good standing
as
if its articles of incorporation had not been revoked, except as subsequently
provided:
(1)
Upon the filing by the corporation of the documents it had previously failed to
file as
set
forth in subdivisions (3) through (6) inclusive, of Section 7-1.2-1310(a); and
(2)
Upon the payment by the corporation of a penalty for each year or part of a
year that
has
elapsed since the issuance of the certificate of revocation.
(b)
If, as permitted by the provisions of this title, another corporation, whether
business
or
nonprofit, limited partnership, limited liability partnership or limited
liability company, or
domestic
or foreign, qualified to transact business in this state, bears or has filed a
fictitious
business
name statement with respect to or reserved or registered a name which is not the
same
as,
or deceptively similar to, the name of a corporation with respect to which the
certificate of
revocation
is proposed to be withdrawn, then the secretary of state shall condition the
withdrawal
of
the certificate of revocation upon the reinstated corporation’s amending its
articles of
incorporation
or otherwise complying with the provisions of this chapter with respect to the
use
of
a name available to it under the laws of this state so as to designate a name
which is not be the
same
as, or deceptively similar to, its former name.
(c)
Upon the withdrawal of the certificate of revocation and reinstatement of the
corporation
in good standing as provided in subsection (a), title to any real estate, or
any interest
in
real estate, held by the corporation at the time of the issuance of the
certificate of revocation
and
not conveyed subsequent to the revocation of its articles of incorporation is
deemed to be
revested
in the corporation without further act or deed.
7-1.2-1313.
Appeal from revocation of articles of incorporation. - Any
corporation
aggrieved
by the action of the secretary of state in revoking its articles of
incorporation may
appeal
the action in the manner provided in Section 7-1.2-1601.
7-1.2-1314. Jurisdiction of court to liquidate assets and business of
corporation. - (a)
The
superior court has full power to liquidate the assets and business of a
corporation:
(1)
In an action by a shareholder when it is established that, whether or not the
corporate
business
has been or could be operated at a profit, dissolution would be beneficial to
the
shareholders
because:
(i)
The directors or those other individuals that may be responsible for management
pursuant
to Section 7-1.2-1701(a) are deadlocked in the management of the corporate
affairs and
the
shareholders are unable to break the deadlock; or
(ii)
The acts of the directors or those in control of the corporation are illegal,
oppressive,
or
fraudulent; or
(iii)
The shareholders are deadlocked in voting power, and have failed, for a period
which
includes
at least two (2) consecutive annual meeting dates, to elect successors to
directors whose
terms
have expired or would have expired upon the election and qualification of their
successors;
or
(iv)
The corporate assets are being misapplied or are in danger of being wasted or
lost; or
(v)
Two (2) or more factions of shareholders are divided and there is such internal
dissension
that serious harm to the business and affairs of the corporation is threatened;
or
(vi)
The holders of one-half (1/2) or more of all the outstanding shares of the
corporation
have
voted to dissolve the corporation;
(2)(i)
In an action by a creditor:
(A)
When it is established that the corporation is insolvent; or
(B)
When it is established that the corporate assets are being misapplied or are in
danger
of
being wasted or lost.
(ii)
If it is established that the claim of a creditor has been reduced to judgment
and an
execution
on the judgment returned unsatisfied or that a corporation has admitted, in
writing, that
the
claim of a creditor is due and owing, the establishment of the facts are prima
facie evidence of
insolvency.
(iii)
Every petition filed by a creditor for the liquidation of the assets and
business of a
corporation
must contain a statement as to whether the creditor is or is not an officer,
director, or
shareholder
of the corporation. Every petition for the liquidation of the assets and
business of a
corporation
filed by an officer, director, or shareholder of a corporation or by a creditor
who is an
officer,
director or shareholder, must contain, to the best of petitioner’s knowledge,
information,
and
belief, the names and addresses of all known creditors of any class of the
corporation.
(3)
When an action has been filed by the attorney general to dissolve a corporation
and it
is
established that liquidation of its business and affairs should precede the
entry of a decree of
dissolution.
(b)
Proceedings under subsections (a)(1) or (a)(2) should be brought in the county
in
which
the registered or principal office of the corporation is situated.
(c)
It is not necessary to make shareholders parties to any action or proceeding
unless
relief
is sought against them personally.
7-1.2-1315.
Avoidance of dissolution by share buyout. -- Whenever a petition for
dissolution
of a corporation is filed by one or more shareholders (subsequently in this
section
referred
to as the “petitioner”) pursuant to either Section 7-1.2-1314 or a right to
compel
dissolution
which is authorized under Section 7-1.2-1701 or is otherwise valid, one or more
of its
other
shareholders may avoid the dissolution by filing with the court prior to the
commencement
of
the hearing, or, in the discretion of the court, at any time prior to a sale or
other disposition of
the
assets of the corporation, an election to purchase the shares owned by the
petitioner at a price
equal
to their fair value. If the shares are to be purchased by other shareholders,
notice must be
sent
to all shareholders of the corporation other than the petitioner, giving them
an opportunity to
join
in the election to purchase the shares. If the parties are unable to reach an
agreement as to
the
fair value of the shares, the court shall, upon the giving of a bond or other
security sufficient
to
assure to the petitioner payment of the value of the shares, stay the
proceeding and determine
the
value of the shares, in accordance with the procedure set forth in Section
7-1.2-1202, as of the
close
of business on the day on which the petition for dissolution was filed. Upon
determining
the
fair value of the shares, the court shall state in its order directing that the
shares be purchased,
the
purchase price and the time within which the payment is to be made, and may
decree any
other
terms and conditions of sale that it determines to be appropriate, including
payment of the
purchase
price in installments extending over a period of time, and, if the shares are
to be
purchased
by shareholders, the allocation of shares among shareholders electing to
purchase
them,
which, so far as practicable, are to be proportional to the number of shares
previously
owned.
The petitioner is entitled to interest, at the rate on judgments in civil
actions, on the
purchase
price of the shares from the date of the filing of the election to purchase the
shares, and
all
other rights of the petitioner as owner of the shares terminate on that date.
The costs of the
proceeding,
which include reasonable compensation and expenses of appraisers but not fees
and
expenses
of counsel or of experts retained by a party, will be allocated between or
among the
parties
as the court determines. Upon full payment of the purchase price, under the
terms and
conditions
specified by the court, or at any other time that is ordered by the court, the
petitioner
shall
transfer the shares to the purchaser.
7-1.2-1316.
Procedure in liquidation of corporation by court. - (a) In
proceedings to
liquidate
the assets and business of a corporation the court has general equity
jurisdiction and
power
to issue any orders, injunctions, and decrees that justice and equity require,
to appoint a
receiver
or receivers pendente lite, with any powers and duties that the court, from
time to time,
directs,
and to take any other proceedings that are requisite to preserve the corporate
assets
wherever
situated, and carry on the business of the corporation until a full hearing can
be had.
(b)
After a hearing had upon any notice that the court directs to be given to all
parties to
the
proceedings and to any other parties in interest designated by the court, the
court may appoint
a
liquidating receiver or receivers with authority to take charge of any of the
corporation’s estate
and
effects of which he has been appointed receiver and to collect the assets of
the corporation,
including
all amounts owing to the corporation whether by shareholders on account of any
unpaid
portion
of the consideration for the issuance of shares or otherwise.
(c)
The hearing date for the appointment of a permanent receiver is not to be more
than
twenty-one
(21) days after commencement of the action, unless the hearing date is extended
by
the
court for good cause shown.
(d)
The liquidating receiver or receivers has authority subject to court order, to
sue and
defend
in all courts in his own name as receiver of the corporation, or in its name,
to intervene in
any
action or proceeding relating to its assets or business, to compromise any
dispute or
controversy,
to preserve the assets of the corporation, to carry on its business, to sell,
convey, and
dispose
of all or any part of the assets of the corporation wherever situated, either
at public or
private
sale, to redeem any mortgages, security interests, pledges, or liens of or upon
any of its
assets,
and generally to do all other acts which might be done by the corporation or
that is
necessary
for the administration of his trust according to the course of equity. The
assets of the
corporation
or the proceeds resulting from a sale, conveyance, or other disposition of the
assets
will
be applied to the expenses of the liquidation and to the payment of the liabilities
and
obligations
of the corporation, and any remaining assets or proceeds will distributed under
the
direction
of the court among its shareholders according to their respective rights and
interests.
The
order appointing the receiver or receivers sets forth their powers and duties.
The powers and
duties
may be increased or diminished at any time during the proceeding.
(e)
The court has power to allow from time to time as expenses of the liquidation
compensation
to the receiver or receivers and to attorneys in the proceeding, and to direct
the
payment
of the compensation out of the assets of the corporation or the proceeds of any
sale or
disposition
of the assets.
(f)
The court appointing the receiver has exclusive jurisdiction of the corporation
and its
property,
wherever situated, and of all questions arising in the proceedings concerning
the
property.
7-1.2-1317.
Bond of receivers. - A receiver shall in all cases give any bond
that the court
directs
with any sureties that the court requires.
7-1.2-1318.
Filing of claims in liquidation proceedings. -- In proceedings to
liquidate
the
assets and business of a corporation, the court may require all creditors of
the corporation to
file
with the receiver, in any form that the court prescribes, proofs under oath of
their respective
claims.
If the court requires the filing of claims it shall fix a date, which is not to
be less than four
(4)
months from the date of the order, as the last day for the filing of claims,
and shall prescribe
the
notice that is to be given to creditors and claimants of the fixed date. Prior
to the fixed date,
the
court may extend the time for the filing of claims. Creditors and claimants
failing to file
proofs
of claim on or before the fixed date may be barred, by court order, from
participating in
the
distribution of the assets of the corporation.
7-1.2-1319.
Discontinuance of liquidation proceedings. - The liquidation of the
assets
and
business of a corporation may be discontinued at any time during the
liquidation proceedings
when
it is established that cause for liquidation no longer exists. In that event
the court dismisses
the
proceedings, direct the receiver to redeliver to the corporation all its
remaining property and
assets,
and order any notice to creditors that the court deems proper under the
circumstances.
7-1.2-1320.
Decree of involuntary dissolution. - In proceedings to liquidate the
assets
and
business of a corporation, when the costs and expenses of the proceedings and
all debts,
obligations,
and liabilities of the corporation have been paid and discharged and all of its
remaining
property and assets distributed to its shareholders, or in case its property
and assets are
not
sufficient to satisfy and discharge the costs, expenses, debts, and
obligations, all the property
and
assets have been applied as far as they will go to their payment, the court
shall enter a decree
dissolving
the corporation, at which time the existence of the corporation ceases.
7-1.2-1321.
Filing of decree of dissolution. - In case the court enters a decree
dissolving
a
corporation, it is the duty of the clerk of the court to file a certified copy
of the decree with the
secretary
of state. There is no fee charged by the secretary of state for that filing.
7-1.2-1322.
Deposit with state treasury of amount due certain shareholders. -
Upon
the
voluntary or involuntary dissolution of a corporation, the portion of the
assets distributable to
a
creditor or shareholder who is unknown or cannot be found, or who is under
disability and there
is
no person legally competent to receive the distributive portion, will be
reduced to cash and
deposited
with the general treasury and paid over to the creditor or shareholder or to
his legal
representative
upon satisfactory proof to the general treasury of his right to the payment.
7-1.2-1323.
Jurisdiction of court to appoint a receiver. -- Upon the
establishment of
any
of the grounds for liquidation of the assets and business of (1) a domestic
corporation or (2) a
foreign
corporation, to the extent the foreign corporation has assets within the state,
stated in
Section
7-1.2-1314, and upon the establishment that the liquidation would not be
appropriate, the
superior
court has full power to appoint a receiver, with any powers and duties that the
court,
from
time to time, directs, and to take any other proceedings that the court deems
advisable under
the
circumstances. The provisions of Sections 7-1.2-1314 through 7-1.2-1322,
insofar as they are
consistent
with the nature of the proceeding, apply to the proceeding, and in the
proceeding the
court
has the full powers of a court of equity to make or enter any orders,
injunctions, and decrees
and
grant any other relief in the proceeding that justice and equity require.
7-1.2-1324.
Survival of remedy after dissolution. - The dissolution of a
corporation
either:
(a)
by the issuance of a certificate of dissolution by the secretary of state; or
(b)
by a decree of court when the court has not liquidated the assets and business
of the
corporation
as provided in this chapter; or
(c)
by expiration of its period of duration; does not take away or impair any
remedy
available
to or against the corporation, its directors, officers, or shareholders, for
any right or
claim
existing, or any liability incurred, prior to the dissolution if action or
other proceeding on
the
right, claim, or liability is commenced within two (2) years after the date of
the dissolution.
Any
action or proceeding by or against the corporation may be prosecuted or
defended by the
corporation
in its corporate name. The shareholders, directors, and officers have power to
take
any
corporate or other action that is appropriate to protect the remedy, right, or
claim. If the
corporation
was dissolved by the expiration of its period of duration, the corporation may
amend
its
articles of incorporation at any time during the period of two (2) years so as
to extend its
period
of duration.
7-1.2-1325.
Continuation of certain corporate powers. -- Any corporation
dissolved in
any
manner under this chapter or any corporation whose existence is terminated
under Section
44-12-8
or any corporation whose articles of incorporation are revoked by the secretary
of state
under
Section 7-1.2-1310 nevertheless continues for five (5) years after the date of
the
dissolution,
termination, or revocation for the purpose of enabling it to settle and close
its affairs,
to
dispose of and convey its property, to discharge its liabilities, and to
distribute its assets, but
not
for the purpose of continuing the business for which it was organized. The
shareholders,
directors,
and officers have power to take any corporate or other action that is
appropriate to carry
out
the purposes of this section.
Part
XIV. Foreign Corporations.
7-1.2-1401.
Admission of foreign corporation and other entities. - (a) No
foreign
corporation
has the right to transact business in this state until it has procured a
certificate of
authority
to do so from the secretary of state. No foreign corporation is entitled to
procure a
certificate
of authority under this chapter to transact any business in this state which a
corporation
organized
under this chapter is not permitted to transact. A foreign corporation may not
be
denied
a certificate of authority because the laws of the state or country under which
the
corporation
is organized governing its organization and internal affairs differ from the
laws of this
state,
and nothing contained in this chapter authorizes this state to regulate the
organization or the
internal
affairs of the corporation.
(b)
Without excluding other activities which may not constitute transacting
business in
this
state, a foreign corporation is not considered to be transacting business in
this state, for the
purposes
of this chapter, because of carrying on in this state any one or more of the
following
activities:
(1)
Maintaining or defending any action or suit or any administrative or
arbitration
proceeding,
or effecting the settlement of the suit or the settlement of claims or
disputes.
(2)
Holding meetings of its directors or shareholders or carrying on other
activities
concerning
its internal affairs.
(3)
Maintaining bank accounts.
(4)
Maintaining offices or agencies for the transfer, exchange, and registration of
its
securities,
or appointing and maintaining trustees or depositaries with relation to its
securities.
(5)
Effecting sales through independent contractors.
(6)
Soliciting or procuring orders, whether by mail or through employees or agents
or
otherwise,
where the orders require acceptance outside of this state before becoming
binding
contracts.
(7)
Creating as borrower or lender, or acquiring indebtedness or mortgages or other
security
interests in real or personal property.
(8)
Securing or collecting debts or enforcing any rights in property securing the
debts.
(9)
Transacting any business in interstate commerce.
(10)
Conducting an isolated transaction completed within a period of thirty (30)
days and
not
in the course of a number of repeated transactions of like nature.
(11)
Acting as a general partner of a limited partnership which has filed a
certificate of
limited
partnership as provided in Section 7-13-8 or has registered with the secretary
of state as
provided
in Section 7-13-49.
(12)
Acting as a member of a limited liability company which has registered with the
secretary
of state as provided in Section 7-16-49.
(c)
Any “other entity”, as defined in Section 7-16-5.1(a), Massachusetts trust or
business
trust
established by law of any other state, desiring to do business in this state,
is deemed to be a
foreign
corporation and is required to register under, and comply with the provisions
of, this
chapter.
7-1.2-1402.
Powers of foreign corporation. - A foreign corporation which has
received
a
certificate of authority under this chapter, until a certificate of revocation
or of withdrawal has
been
issued as provided in this chapter, enjoys the same, but no greater, rights and
privileges as a
domestic
corporation organized for the purposes stated in the application pursuant to
which the
certificate
of authority is issued; and, except as otherwise provided in this chapter, is
subject to
the
same duties, restrictions, penalties, and liabilities now or subsequently
imposed upon a
domestic
corporation of like character.
7-1.2-1403.
Corporate name of foreign corporation. --The secretary of state
shall not
issue
a certificate of authority or amended certificate of authority to a foreign
corporation unless
the
corporate name of the corporation:
(a)
Contains the word “corporation,” “company,” “incorporated,” or “limited,” or
contains
an abbreviation of one of these words, or the corporation, for use in this
state, adds at the
end
of its name one of the words or an abbreviation of the word.
(b)
Does not contain any word or phrase which indicates or implies that it is
organized for
any
purpose other than one or more of the purposes contained in its articles or
certificate of
incorporation
or that it is authorized or empowered to conduct the business of any types
prohibited
by Section 7-1.2-301.
(c)
Is not be the same as, or deceptively similar to, the name of any entity on
file with the
secretary
of state or a name the exclusive right to which is, at the time, filed,
reserved or
registered
in the manner provided in this title, subject to the following:
(1)
This provision does not apply if the foreign corporation applying for a
certificate of
authority
files with the secretary of state any one of the following:
(i)
A fictitious business name statement pursuant to Section 7-1.2-402; or
(ii)
A certified copy of a final decree of a court of competent jurisdiction
establishing the
prior
right of the foreign corporation to the use of the name in this state; and
(2)
The name may be the same as the name of a corporation or other association, the
articles
of incorporation or organization of which has been revoked by the secretary of
state and
the
revocation has not been withdrawn within one year from the date of the
revocation.
7-1.2-1404.
Change of name by foreign corporation. -- Whenever a foreign
corporation
which is authorized to transact business in this state changes its name to one
that does
not
satisfy the requirements of Section 7-1.2-1403, it may not transact business in
this state under
the
changed name until it adopts a name satisfying the requirements of section
7-1.2-1403 and
obtains
an amended certificate of authority under section 7-1.2-1406.
7-1.2-1405.
Application for certificate of authority. - In order to procure a
certificate of
authority
to transact business in this state, a foreign corporation must make application
for the
certificate
of authority to the secretary of state, which application includes:
(a)
The name of the corporation and the state or country under the laws of which it
is
incorporated.
(b)
The name which the corporation elects to use in this state in accordance with
7-1.2-
1403.
(c)
The date of incorporation and the period of duration of the corporation.
(d)
The address of the principal office of the corporation in the state or country
under the
laws
of which it is incorporated.
(e)
The name and address of its proposed registered agent in this state at the
address.
(f)
The purpose or purposes of the corporation which it proposes to pursue in the
transaction
of business in this state.
(g)
The names and respective addresses of the directors of the corporation if the
state or
country
under the laws of which it was incorporated requires that it have directors and
if it does
and
need not, then the names and respective addresses of its principal officers.
(h)
A statement of the aggregate number of shares which the corporation has
authority to
issue,
itemized by classes, par value of shares, shares without par value, and series,
if any, within
a
class.
(i)
An estimate, expressed as a percentage, of the proportion that the estimated
value of
the
property of the corporation to be located within this state during the
following year bears to
the
value of all property of the corporation to be owned during the following year,
wherever
located,
and an estimate, expressed as a percentage, of the proportion that the gross
amount of
business
to be transacted by the corporation at or from places of business in this state
during the
following
year bears to the gross amount which will be transacted by the corporation
during the
following
year.
7-1.2-1406.
Filing of application for certificate of authority. - (a) A foreign
corporation
must deliver the application for a certificate of authority to the secretary of
state,
together
with a certificate of good standing issued by the proper officer of the state
or country
under
the laws of which it is incorporated.
(b)
If the secretary of state finds that the application conforms to law, the
secretary of
state
shall, when all fees have been paid:
(1)
Endorse on the original of the application the word “Filed,” and the month,
day, and
year
of the filing.
(2)
File in his office the original of the application and a certificate of good
standing
issued
by the proper officer of the state or country under the laws of which it is
incorporated.
(3)
Issue a certificate of authority to transact business in this state.
(c)
The secretary of state shall deliver the certificate of authority to the
corporation or its
representative.
7-1.2-1407.
Effect of certificate of authority. -- Upon the issuance of a certificate
of
authority
by the secretary of state, the corporation is authorized to transact business
in this state
for
the purposes stated in its application, subject, however, to the right of this
state to suspend or
to
revoke the authority as provided in this chapter.
7-1.2-1408.
Registered office and registered agent of foreign corporation. - (a)
Each
foreign
corporation authorized to transact business in this state must have and
continuously
maintain
in this state a registered agent, who is either:
(1)
An individual resident in this state; or
(2)
Corporation, limited partnership, limited liability company, and in each case
either
domestic
or one authorized to transact business in this state.
(b)
Foreign corporations who are the holders of mortgages on real estate located
within
this
state which do not maintain the loan documentation and records within the state
shall
authorize
the registered agent to accept mortgage discharge payment and to issue a
discharge of
the
mortgages upon the payment.
7-1.2-1409.
Change of registered office or registered agent of foreign corporation. -
(a)
A foreign corporation authorized to transact business in this state may change
its registered
office
or change its registered agent, or both, upon filing in the office of the
secretary of state a
statement
stating:
(1)
The name of the corporation.
(2)
The address of its then registered office.
(3)
If the address of its registered office is changed, the address to which the
registered
office
is to be changed.
(4)
The name of its then registered agent.
(5)
If its registered agent is changed, the name of its successor registered agent.
(6)
The address of its registered office and the address of the business office of
its
registered
agent, as changed.
(b)
The statement must be executed by an authorized representative of the
corporation
and
delivered to the secretary of state. If the secretary of state finds that the
statement conforms
to
the provisions of this chapter, the secretary of state shall file the statement
in his office, and
upon
the filing, the change of address of the registered office, or the appointment
of a new
registered
agent, or both, becomes effective.
(c)
Any registered agent of a foreign corporation may resign as the agent upon
filing a
written
notice of resignation with the secretary of state, who shall immediately mail a
copy of the
notice
to the corporation at its principal office in the state or country under the
laws of which it is
incorporated.
The appointment of the agent terminates upon the expiration of thirty (30) days
after
receipt of the notice by the secretary of state.
(d)
If a registered agent changes his or its business address to another place
within the
state,
he or it may change the address and the address of the registered office of any
corporations
of
which he or it is registered agent by filing a statement as required above
except that it must be
signed
only by the registered agent, need not be responsive to subsection (a)(5), and
must recite
that
a copy of the statement has been mailed to each corporation.
7-1.2-1410.
Service of process on foreign corporation. - (a) The registered
agent
appointed
by a foreign corporation authorized to transact business in this state is an
agent of the
corporation
upon whom any process, notice, or demand required or permitted by law to be
served
upon
the corporation may be served.
(b)
Whenever a foreign corporation authorized to transact business in this state
fails to
appoint
or maintain a registered agent in this state, or whenever any registered agent
cannot with
reasonable
diligence be found at the registered office, or whenever the certificate of
authority of a
foreign
corporation is suspended or revoked, the secretary of state is an agent of the
corporation
upon
whom any process, notice, or demand may be served. Service on the secretary of
state of
any
process, notice, or demand must be made by delivering to and leaving with him,
or with any
clerk
having charge of the corporation department of his office, duplicate copies of
the process,
notice,
or demand. In the event any process, notice, or demand is served on the
secretary of state,
the
secretary of state shall immediately forward one of the copies by registered
mail, addressed to
the
corporation at its principal office if known to him, in the state or country
under the laws of
which
it is incorporated. Any service had in this manner on the secretary of state is
returnable in
not
less than thirty (30) days.
(c)
Every foreign corporation as a condition precedent to carrying on business in
this state
must,
and by so carrying on business in this state does, consent that any process,
including the
process
of garnishment, may be served upon the secretary of state in the manner
provided by this
section,
except that notice of the service must be given by the plaintiff or his
attorney in the
manner
as the court in which the action is commenced or pending orders as affording
the
corporation
reasonable opportunity to defend the action or to learn of the garnishment.
Notwithstanding
the preceding requirements, however, once service has been made on the
secretary
of state as provided, the court has the authority in the event of failure to
comply with the
requirement
of notice to the foreign corporation to order notice that is sufficient to
apprise it of
the
pendency of the action against it, and additionally, may extend the time for
answering by the
foreign
corporation.
(d)
The secretary of state shall keep a record of all processes, notices, and
demands
served
upon him under this section, and record in the record the time of the service
and his action
on
it.
(e)
Nothing contained in these provisions limits or affects the right to serve any
process,
notice,
or demand, required or permitted by law to be served upon a corporation in any
manner
now
or subsequently permitted by law.
7-1.2-1411.
Amended certificate of authority. -- (a) A foreign corporation
authorized to
transact
business in this state shall make application for and procure an amended
certificate of
authority
if it changes its corporate name, increases its number of authorized shares, or
desires to
pursue
in this state other or additional purposes than those stated in its prior
application for a
certificate
of authority.
(b)
The requirements in respect to the form and contents of the application, the
manner of
its
execution, the filing of the application with the secretary of state, the
issuance of an amended
certificate
of authority, and the effect of it, is the same as in the case of an original
application for
a
certificate of authority.
7-1.2-1412.
Withdrawal of foreign corporation. - (a) A foreign corporation
authorized
to
transact business in this state may withdraw from this state upon procuring
from the secretary
of
state a certificate of withdrawal. To procure a certificate of withdrawal, the
foreign corporation
must
deliver to the secretary of state an application for withdrawal, stating:
(1)
The name of the corporation and the state or country under the laws of which it
is
incorporated.
(2)
That the corporation is not transacting business in this state.
(3)
That the corporation surrenders its authority to transact business in this
state.
(4)
That the corporation revokes the authority of its registered agent in this
state to accept
service
of process and consents that service of process in any action, suit, or
proceeding based
upon
any cause of action arising in this state during the time the corporation was
authorized to
transact
business in this state may subsequently be made on the corporation by service
on the
secretary
of state.
(5)
The post office address to which the secretary of state may mail a copy of any
process
against
the corporation that is served on the secretary of state.
(b)
If the corporation is in the hands of a receiver or trustee, the application
for
withdrawal
must be executed on behalf of the corporation by the receiver or trustee.
7-1.2-1413.
Filing of application for withdrawal. - (a) An original application
for
withdrawal
must be delivered to the secretary of state. If the secretary of state finds
that the
application
conforms to the provisions of this chapter, the secretary of state shall, when
all fees
and
taxes have been paid:
(1)
Endorse on the original the word “Filed,” and the month, day, and year of the
filing.
(2)
File the original in his office.
(3)
Issue a certificate of withdrawal.
(b)
The secretary of state shall deliver the certificate of withdrawal to the
corporation or
its
representative. Upon the issuance of the certificate of withdrawal, the
authority of the
corporation
to transact business in this state ceases.
7-1.2-1414.
Revocation of certificate of authority. -- (a) The certificate of
authority of a
foreign
corporation to transact business in this state may be revoked by the secretary
of state
under
the conditions prescribed in this section when:
(1)
The corporation fails to file its annual report within the time required by
this chapter,
or
fails to pay any fees, when they become due and payable; or
(2)
The corporation fails to appoint and maintain a registered agent in this state
as
required
by this chapter; or
(3)
The corporation fails, after changing its registered office or registered
agent, to file in
the
office of the secretary of state a statement of the change as required by this
chapter; or
(4)
The corporation fails to file in the office of the secretary of state any
amendment to its
articles
of incorporation or any articles of merger within the time prescribed by this
chapter; or
(5)
A misrepresentation has been made of any material matter in any application,
report,
affidavit,
or other document submitted by the corporation pursuant to this chapter.
(b)
No certificate of authority of a foreign corporation may be revoked by the
secretary of
state
unless the secretary of state has given the corporation not less than sixty
(60) days notice
thereof
by regular mail addressed to the registered agent of the corporation in this
state on file
with
the secretary of state’s office; provided, however, that if a prior mailing
addressed to the
registered
office of the corporation in this state currently on file with the secretary of
state’s office
has
been returned to the secretary of state as undeliverable by the United States
Postal Service for
any
reason, or if the revocation notice is returned as undeliverable to the
secretary of state’s office
by
the United States Postal Service for any reason, the secretary of state shall
give notice as
follows:
(1)
To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice is required; or
(2)
In the case of a foreign corporation which has not yet filed an annual report,
then to
the
corporation at its principal office shown in its application for certificate of
authority, and no
further
notice is required.
7-1.2-1415.
Issuance of certificate of revocation. -- (a) Upon revoking any
certificate of
authority,
the secretary of state shall:
(1)
Issue a certificate of revocation.
(2)
File the certificate in his office.
(3)
Send to the corporation by regular mail the certificate of revocation,
addressed to the
registered
office of the corporation in this state on file with the secretary of state’s
office;
provided,
however, that if a prior mailing addressed to the registered agent of the
corporation in
this
state currently on file with the secretary of state’s office has been returned
to the secretary of
state
as undeliverable by the United States Postal Service for any reason, or if the
revocation
certificate
is returned as undeliverable to the secretary of state’s office by the United
States Postal
Service
for any reason, the secretary of state shall give notice as follows:
(i)
To the corporation at its principal office of record as shown in its most
recent annual
report,
and no further notice is required; or
(ii)
In the case of a foreign corporation that has not yet filed an annual report
then to the
corporation
at its principal office shown in its application for certificate of authority,
and no
further
notice is required.
(b)
Upon the issuance of the certificate of revocation, the authority of the
corporation to
transact
business in this state ceases.
7-1.2-1416.
Withdrawal of certificate of revocation. -- (a) Within ten (10)
years after
issuing
a certificate of revocation as provided in Section 7-1.2-1415, the secretary of
state may
withdraw
the certificate of revocation and retroactively reinstate the corporation in
good standing
as
if its certificate of incorporation had not been revoked, except as
subsequently provided:
(1) Upon
the filing by the corporation of the documents it had previously failed to file
as
set
forth in subsections (1) through (4) of section 7-1-2-1414.
(2) Upon
the payment by the corporation of a penalty for each year or part of a year
that
has
elapsed since the issuance of the certificate of revocation; and
(3) Upon
the filing by the corporation of a certificate of good standing from the Rhode
Island
Division of Taxation.
(b) If,
as permitted by the provisions of this title, another corporation, whether
business
or
nonprofit limited partnership, limited liability partnership or limited
liability company, or
domestic
or foreign, qualified to transact business in this state, bears or has filed a
fictitious
business
name statement with respect to or reserved or registered a name which is not
the same
as,
or deceptively similar to, the name of a corporation with respect to which the
certificate of
revocation
is proposed to be withdrawn, then the secretary of state shall condition the
withdrawal
of
the certificate of revocation upon the reinstated corporation's amending its
articles of
incorporation
or otherwise complying with the provisions of this chapter with respect to the
use
of
a name available to it under the laws of this state so as to designate a name
which is not the
same
as, or deceptively similar to, its former name.
(c) Upon
the withdrawal of the certificate of revocation and reinstatement of the
corporation
in good standing as provided in subsection (a), title to any real estate, or
any interest
in
real estate, held by the corporation at the time of the issuance of the
certificate of revocation
and
not conveyed subsequent to the revocation of its certificate of incorporation
shall be deemed
to
be revested in the corporation without further act or deed.
7-1.2-1417.
Application to corporations previously authorized to transact business in
this
state. -
Foreign corporations which are authorized to transact business in this state as
of May
14,
1969, for a purpose or purposes for which a corporation might secure authority
under this
chapter,
are, subject to the limitations stated in their certificates of authority,
entitled to all the
rights
and privileges applicable to foreign corporations procuring certificates of
authority to
transact
business in this state under this chapter, and as of May 14, 1969 the
corporations are
subject
to all the limitations, restrictions, liabilities, and duties prescribed in
these provisions for
foreign
corporations procuring certificates of authority to transact business in this
state under this
chapter.
7-1.2-1418.
Transacting business without certificate of authority. - (a) No
foreign
corporation
transacting business in this state without a certificate of authority is
permitted to
maintain
any action, suit, or proceeding in any court of this state, until the
corporation has
obtained
a certificate of authority. Nor may any action, suit, or proceeding be
maintained in any
court
of this state by any successor or assignee of the corporation on any right,
claim, or demand
arising
out of the transaction of business by the corporation in this state, until a
certificate of
authority
has been obtained by the corporation or by its successor.
(b)
The failure of a foreign corporation to obtain a certificate of authority to
transact
business
in this state does not impair the validity of any contract or act of the
corporation, and
does
not prevent the corporation from defending any action, suit, or proceeding in
any court of
this
state.
(c)
A foreign corporation which transacts business in this state without a
certificate of
authority
is liable to this state, for the years or parts of years during which it
transacted business
in
this state without a certificate of authority, in an amount equal to all fees
and franchise taxes
which
would have been imposed upon the corporation had it duly applied for and
received a
certificate
of authority to transact business in this state as required by this chapter and
subsequently
filed all reports required by this chapter, plus all penalties imposed by this
chapter
for
failure to pay the fees and franchise taxes. The attorney general may bring
proceedings to
recover
all amounts due this state under the provisions of this section.
(d)
The Superior Court has jurisdiction to enjoin any foreign corporation, or any
agent of
a
foreign corporation, from transacting any business in this state if the
corporation fails to comply
with
any section of this chapter applicable to it or if the corporation secured a
certificate of the
secretary
of state under Sections 7-1.2-1405 and 7-1.2-1406 on the basis of false or
misleading
representations.
The attorney general may, upon motion or upon the relation of proper parties,
proceed
for this purpose by complaint in any county in which the corporation is doing
business.
Part
XV. Reports and Records.
7-1.2-1501.
Annual reports of domestic and foreign corporations. -- (a) Each
domestic
corporation, and each foreign corporation authorized to transact business in
this state,
shall
file, within the time prescribed by this chapter, an annual report stating:
(1)
The name of the corporation and the state or country under the laws of which it
is
incorporated;
(2)
A brief statement of the character of the business in which the corporation is
actually
engaged
in this state;
(3)
The names and respective addresses of the directors and officers of the
corporation;
(4)
A statement of the aggregate number of shares which the corporation has
authority to
issue,
itemized by classes, par value of shares, if any, and series, if any, within a
class;
(5)
A statement of the aggregate number of issued shares, itemized by classes, par
value
of
shares, if any, and series, if any, within a class;
(6)
Any additional information that is required by the secretary of state.
(b)
The annual report must be made on forms prescribed and furnished by the
secretary of
state,
and the information contained therein must be given as of the date of the
execution of the
report.
It must be executed on behalf of the corporation by its authorized
representative, or, if the
corporation
is in the hands of a receiver or trustee, it must be executed on behalf of the
corporation
by the receiver or trustee.
(c)
The annual report of a domestic or foreign corporation must be delivered to the
secretary
of state between January 1 and the March 1 of each year, except that the first
annual
report
of a domestic or foreign corporation must be filed between January 1 and March
1 of the
year
following the calendar year in which its articles of incorporation were filed
with or its
certificate
of authority was issued by the secretary of state. Proof to the satisfaction of
the
secretary
of state that prior to March 1 the report was deposited in the United States
mail in a
sealed
envelope, properly addressed, with postage prepaid, is deemed to be a
compliance with
this
requirement.
(d)
If the secretary of state finds that the annual report conforms to the
requirements of
this
chapter, the secretary of state shall file the report. If the secretary of
state finds that it does
not
conform, the secretary of state shall promptly return the report to the
corporation for any
necessary
corrections, in which event the penalties subsequently prescribed for failure
to file the
report
within the time previously provided do not apply if the report is corrected to
conform to the
requirements
of this chapter and returned to the secretary of state within thirty (30) days
from the
date
on which it was mailed to the corporation by the secretary of state.
(e)
Each corporation, domestic or foreign, that fails or refuses to file its annual
report for
any
year within thirty days after the time prescribed by this chapter is subject to
a penalty of
twenty-five
dollars ($25) per year.
7-1.2-1502.
Books and records. - (a) Each corporation shall keep correct and
complete
books
and records of account, keep minutes of the proceedings of its shareholders and
of the
board
of directors and committees of the board, and shall also keep at its registered
office or
principal
place of business, legal counsel’s office, or at the office of its transfer
agent or registrar,
a
record of its shareholders giving the names and addresses of all shareholders
and the number
and
class of the shares held by each. Any books, records, and minutes may be in
written form or
any
other form capable of being converted into written form within a reasonable
time.
(b)
Any director, shareholder or holder of voting trust certificates for shares of
a
corporation,
upon written demand stating the purpose for the demand, has the right to
examine, in
person,
or by agent or attorney, at any reasonable time or times, for any proper
purpose, its
relevant
books and records of account, minutes, and record of shareholders and to make
extracts
from
those books and records of account, minutes, and record of shareholders.
(c)
Any officer or agent who, or a corporation which, refuses to allow any
shareholder or
holder
of voting trust certificates, or his agent or attorney, to examine and make
extracts from its
books
and records of account, minutes, and record of shareholders, for any proper
purpose, is
liable
to the shareholder or holder of voting trust certificates in a penalty of ten
percent (10%) of
the
value of the shares owned by the shareholder, or in respect of which the voting
trust
certificates
are issued, in addition to any other damages or remedy afforded him by law. It
is a
defense
to any action for penalties under this section that the person bringing the
suit has within
two
(2) years sold or offered for sale any list of shareholders or of holders of
voting trust
certificates
for shares of the corporation or any other corporation or has aided or abetted
any
person
in procuring any list of shareholders or of holders of voting trust
certificates for that
purpose,
or has improperly used any information secured through any prior examination of
the
books
and records of account, or minutes, or record of shareholders, or of holders of
voting trust
certificates
for shares of the corporation or any other corporation, or was not acting in
good faith
or
for a proper purpose in making his demand.
(d)
Nothing contained in these provisions impairs the power of any court of
competent
jurisdiction,
upon proof by a director, shareholder or holder of voting trust certificates of
proper
purpose,
to compel the production for examination by the director, shareholder or holder
of
voting
trust certificates of the books and records of account, minutes, and record of
shareholders
of
a corporation.
(e)
Upon the written request of any director, shareholder or holder of voting trust
certificates
for shares of a corporation, the corporation shall mail to the director,
shareholder or
holder
of voting trust certificates its most recent financial statements showing in
reasonable detail
its
assets and liabilities and the results of its operations.
Part
XVI. The Secretary of State and Fees.
7-1.2-1601.
The secretary of state. - (a) The secretary of state has the
reasonably
necessary
power and authority to enable him to administer this chapter efficiently and to
perform
the
duties imposed upon the secretary by this chapter.
(b)
The secretary of state shall charge and collect in accordance with the
provisions of
this
chapter:
(1)
Fees for filing documents and issuing certificates.
(2)
Miscellaneous charges.
(3)
License fees.
(c)
The secretary of state shall, between the first and fifteenth day of each
month, make
an
itemized return, in writing, to the state controller of the amount of all fees
and charges
collected
by him in the prior month, and pay to the general treasurer all of the state
moneys in his
hands.
(d)
All reports required by this chapter to be filed in the office of the secretary
of state
must
be made on forms which are prescribed and furnished by the secretary of state.
Forms for
all
other documents to be filed in the office of the secretary of state may be
furnished by the
secretary
of state on request for the forms, but the use of the forms, unless otherwise
specifically
prescribed
in this chapter, is not mandatory.
(e)(1)
If the secretary of state fails to approve any articles of incorporation,
amendment,
merger,
or dissolution, or any other document required by this chapter to be approved
by the
secretary
of state before the document is filed in his office, the secretary of state
shall, within ten
(10)
days after the delivery of the document to the secretary of state, give written
notice of
disapproval
to the person or corporation, domestic or foreign, delivering the document,
specifying
the
reasons for the disapproval. From the disapproval the person or corporation may
appeal to
the
superior court of the county in which the registered office of the corporation
is, or is proposed
to
be, situated by filing with the clerk of the court a petition setting forth a
copy of the articles or
other
document sought to be filed and a copy of the written disapproval of the
document by the
secretary
of state; at which time the matter may be tried de novo by the court, and the
court shall
either
sustain the action of the secretary of state or direct the secretary to take
any action that the
court
deems proper.
(2)
If the secretary of state revokes the certificate of authority to transact
business in this
state
of any foreign corporation pursuant to the provisions of Sections 7-1.2-1414
and 7-1.2-1415,
in
addition to the remedy provided in Section 7-1.2-1416, the foreign corporation
may likewise
appeal
to the superior court of the county where the registered office of the
corporation in this
state
is situated, by filing with the clerk of the court a petition setting forth a
copy of its certificate
of
authority to transact business in this state and a copy of the notice of
revocation given by the
secretary
of state; at that time the matter may be tried de novo by the court, and the
court shall
either
sustain the action of the secretary of state or direct the secretary to take
any action that the
court
deems proper.
(3)
Appeals from all final orders and judgments entered by the superior court under
this
section
in review of any ruling or decision of the secretary of state may be taken as
in other civil
actions.
7-1.2-1602.
Fees and charges payable to the secretary of state upon filing, certifying
or
copying of papers. - (a) The secretary of state shall charge and collect for
filing:
(1) Articles
of incorporation and issuing a certificate of incorporation, seventy dollars
($70.00).
(2) Articles
of amendment and issuing a certificate of amendment, fifty dollars ($50.00).
(3) Restated
articles of incorporation, seventy dollars ($70.00)
(4) Articles
of merger or consolidation and issuing a certificate of merger or
consolidation,
one
hundred dollars ($100).
(5) An
application to reserve a corporate name, fifty dollars ($50.00)
.(6) A
notice of transfer of a reserved corporate name, fifty dollars ($50.00).
(7)
(i) Filing a statement of change of registered agent and registered office
or filing a
statement
of change of registered agent, twenty dollars ($20.00).
(ii) Filing
a statement of change of registered office only, without fee.
(8) A
statement of the establishment of a series of shares, ten dollars ($10.00).
(9) A
statement of cancellation of shares, ten dollars ($10.00).
(10) A
statement of reduction of stated capital, ten dollars ($10.00).
(11) A
statement of intent to dissolve, without fee.(12) A statement of
revocation of
voluntary
dissolution proceedings, ten dollars ($10.00).
(13) Articles
of dissolution, fifty dollars ($50.00).
(14) An
application of a foreign corporation for a certificate of authority to transact
business
in this state and issuing a certificate of authority, one hundred fifty dollars
($150).
(15) An
application of a foreign corporation for an amended certificate of authority to
transact
business in this state and issuing an amended certificate of authority,
seventy-five dollars
($75.00).
(16) A
copy of an amendment to the articles of incorporation of a foreign corporation
holding
a certificate of authority to transact business in this state, fifty dollars
($50.00).
(17) A
copy of articles of merger of a foreign corporation holding a certificate of
authority
to
(18) An
application for withdrawal of a foreign corporation and issuing a certificate
of
withdrawal,
fifty dollars ($50.00).
(19) An
annual report, fifty dollars ($50).
(20)
Registered name application, fifty dollars ($50).
(21)
Certificate of good standing/letter of status, twenty dollars ($20).
(22)
Certificate of fact, thirty dollars ($30).
(23) Any
other statement or report, except an annual report, of a domestic or foreign
corporation,
ten dollars ($10.00).
(b) The secretary of state shall charge and collect:
(1)
To withdraw the certificate of revocation or a corporation, whether domestic or
foreign,
a penalty in the amount of $50.00 for each year or part of a year that has
elapsed since
the
issuance of the certificate of revocation.
(2)
For furnishing a certified copy of any document, instrument, or paper relating
to a
corporation,
fifteen cents $.15/page and $10.00 for the certificate and affixing the seal to
it.
(3)
At the time of any service of process on him as resident agent of a
corporation,
$15.00,
which amount may be recovered as taxable costs by the party to the suit or
action making
the
service if the party prevails in the suit or action.
(c)(1)
The secretary of state shall charge and collect from each domestic corporation
license
fees, based on the number of shares which it has authority to issue or the
increase in the
number
of shares which it has authority to issue, at the time of:
(i)
Filing articles of incorporation;
(ii)
Filing articles of amendment increasing the number of authorized shares; and
(iii)
Filing articles of merger increasing the number of authorized shares which the
surviving
or new corporation, if a domestic corporation, has the authority to issue above
the
aggregate
number of shares which the constituent domestic corporations and constituent
foreign
corporations
authorized to transact business in this state had authority to issue.
(2)
The license fees charged to a domestic corporation are as follows: (i) one
hundred
sixty
dollars ($160) for less than seventy-five million (75,000,000) authorized
shares and (ii) one-
fifth
(1/5) cent per share of each authorized share for 75,000,000 shares or greater.
(3)
The above license fee calculations also apply when a corporation files an
amendment
or
merger showing an increase in authorized shares.
(d)(1)
The secretary of state shall charge and collect from each foreign corporation
license
fees at the time of:
(i)
Filing an application for a certificate of authority to transact business in
this state;
(ii)
Filing articles of amendment which increased the number of authorized shares;
and
(iii)
Filing articles of merger which increased the number of authorized shares which
the
surviving
or new corporation, if a foreign corporation, has authority to issue above the
aggregate
number
of shares which the constituent domestic corporations and constituent foreign
corporations
authorized to transact business in this state had authority to issue.
(2)
The license fees charged to a foreign corporation are as follows: (i) $160 for
less than
seventy-five
million (75,000,000) authorized shares represented in the State of Rhode Island
and
(ii)
one-fifth (1/5) cent per share of each authorized share for 75,000,000 shares
or greater.
(3)
The above license fee calculations also apply when a corporation files an
amendment
or
merger showing an increase in authorized shares.
(4)
The number of authorized shares represented in this state is that proportion of
its total
authorized
shares which the sum of the value of its property located in this state and the
gross
amount
of business transacted by it at or from places of business in this state bears
to the sum of
the
value of all of its property, wherever located, and the gross amount of its
business, wherever
transacted.
The proportion is determined from information contained in the application for
a
certificate
of authority to transact business in this state or in the application for an
amended
certificate
of authority to transact business in this state.
7-1.2-1603.
Penalties imposed upon officers and directors. - Any individual who
signs
any
articles, statement, report, application, or other document intended to be
filed with the
secretary
of state that is known to the individual to be false in any material respect,
is guilty of a
misdemeanor,
and upon conviction of it may be fined in any amount not exceeding five hundred
dollars
($500). For purposes of this chapter, a document is signed whether by any
manual,
facsimile
or electronic signature.
7-1.2-1604.
Interrogatories. -- (a) The secretary of state may propound to any
domestic
or
foreign corporation subject to the provisions of this chapter, and to any of
its officers or
directors,
any interrogatories that may be reasonably necessary and proper to enable the
secretary
of
state to ascertain whether the corporation has complied with all the applicable
provisions of
this
chapter. The interrogatories must be answered within thirty (30) days after
their mailing, or
within
any additional time that is fixed by the secretary of state, and the answers to
the
interrogatories
must be full and complete and made in writing and under oath. If the
interrogatories
are directed to an individual they must be answered by him, and if directed to
a
corporation
they must be answered by the president, vice president, secretary, or assistant
secretary
of the corporation. The secretary of state need not file any document to which
the
interrogatories
relate until the interrogatories are answered as provided in these provisions,
and
not
then if the interrogatory answers disclose that the document is not in
conformity with the
provisions
of this chapter. The secretary of state shall certify to the attorney general,
for any
action
that the attorney general deems appropriate, all interrogatories and their
answers which
disclose
a violation of any of the provisions of this chapter.
(b)
Each corporation, domestic or foreign, that fails or refuses to answer
truthfully and
fully
within the time prescribed by this chapter interrogatories propounded by the
secretary of
state,
in accordance with the provisions of this chapter, is guilty of a misdemeanor
and upon
conviction
of it may be fined in any amount not exceeding five hundred dollars ($500).
(c)
Interrogatories propounded by the secretary of state and the answers to the
interrogatories
are not open to public inspection nor may the secretary of state disclose any
facts
or
information obtained from them except insofar as the secretary’s official duty
requires the facts
or
information to be made public or in the event the interrogatories or their
answers are required
for
evidence in any criminal proceedings or in any other action by this state.
7-1.2-1605.
Certificates and certain copies to be received in evidence. -- All
certificates
issued by the secretary of state in accordance with the provisions of this
chapter, and
all
copies of documents filed in his office in accordance with the provisions of
this chapter when
certified
by the secretary, is prima facie evidence of the facts stated in them. A
certificate by the
secretary
of state under the great seal of this state, as to the existence or
nonexistence of the facts
relating
to corporations is prima facie evidence of the existence or nonexistence of the
facts stated
in
them.
Part
XVII. Close corporations.
7‑1.2‑1701.
Close corporations. -- (a) Provisions of the articles of
incorporation or
bylaws
of a corporation organized under this chapter, or provisions of an agreement
relating to a
corporation,
which would otherwise be invalid because they:
(1)
Restrict, or assign to one or more shareholders or other individuals, any or
all of the
powers
normally vested in the board of directors or provide that there is no board of
directors; or
(2)
Grant the right to one or more shareholders to dissolve the corporation at will
or on
the
occurrence of a specified contingency; or
(3)
Impose too great a restraint on the transfer of shares of the corporation; are
nevertheless
valid if the provisions have been approved by all the shareholders of the
corporation
and
if the corporation’s original or amended articles of incorporation contain a
heading
immediately
after the name of the corporation stating that it is a close corporation
pursuant to
Section
7‑1.2‑1701. This subsection does not invalidate any provision in
articles of incorporation,
bylaws,
or agreements that would otherwse be valid.
(b)
The provisions of Section 7‑1.2‑709 limiting the duration of a
voting trust or
shareholders’
agreement to ten (10) years is not be applicable to a close corporation that
complies
with
subsection (a). If close corporation status is terminated pursuant to
subsection (d), the
effective
term of voting trust or shareholders’ agreement is ten (10) years from the
termination or
the
term provided therein, whichever is shorter.
(c)
The effect of any provision authorized by subsection (a)(1) is to relieve the
directors
and
to impose on the individual or individuals undertaking to exercise
responsibility the liability
for
managerial acts or omissions that would otherwise be imposed on directors to
the extent that
and
so long as the discretion or powers of the board in its management of corporate
affairs is
controlled
by any such provision. Action which is valid pursuant to subsection (a)(1) is
deemed to
be
action by the board of directors for purposes of compliance with any provision
of this chapter
providing
for action by the board of directors.
(d)
If a close corporation’s original or amended articles of incorporation so
provide, the
corporation
need not hold an annual meeting of shareholders unless one or more shareholders
deliver
written notice to the corporation requesting a meeting at least thirty (30)
days before the
meeting
date stated or fixed in accordance with the bylaws of the corporation.
(e)(1)
The articles of incorporation must be amended to terminate close corporation
status
pursuant
to this section if:
(i)
All of the shareholders, or such lessor number as may be specified in the
articles of
incorporation,
the bylaws, or an agreement relating to the corporation, approve the
termination; or
(ii)
There are more than thirty (30) shareholders of record and any shareholder,
after
thirty
(30) days’ notice to the corporation of his intention to do so during which
time the number
is
not reduced to thirty (30) or less, demands termination; or
(iii)
Any individual who acquires of record shares of the corporation without notice
or
knowledge
of its close corporation status demands termination; provided, that notice
shall be
conclusively
presumed if certificates representing the shares so acquired state on their
face, under
the
name of the corporation, that it is a close corporation pursuant to this
section.
(2)
If the directors and shareholders fail to effect the amendment promptly, the
superior
court
shall have jurisdiction to enter whatever order is necessary to effect the
amendment. The
termination
shall not affect the validity of any provision relating to the corporation or
its
management
which would be valid, notwithstanding the provisions of this section.
Part
XVIII. Miscellaneous.
7-1.2-1801. Unauthorized
assumption of corporate powers. -- All individuals who
assume
to act as a corporation without authority so to do are jointly and severally
liable for all
debts
and liabilities incurred or arising as a result of that action.
7-1.2-1802. Application
to existing corporations organized under general acts. -- The
provisions
of this chapter apply to all existing corporations organized under any general
act of
this
state providing for the organization of corporations for a purpose or purposes
for which a
corporation
might be organized under this chapter, where the power has been reserved to
amend,
repeal,
or modify the act under which the corporation was organized and where the act
is repealed
by
this chapter.
7-1.2-1803. Application
to foreign and interstate commerce. -- The provisions of this
chapter
apply to commerce with foreign nations and among the several states only
insofar as the
provisions
are permitted under the constitution of the United States.
7-1.2-1804. Applicability
to corporations created by special acts. -- The provisions of
this
chapter apply to all existing corporations previously or subsequently created
by any special
act
of the general assembly of a kind that could be organized under this chapter,
except insofar as
the
provisions are inconsistent with the provisions of any applicable special act
passed after May
5,
1920 or with the provisions of any applicable special act passed that are not
subject to
amendment
or repeal at the will of the general assembly. A corporation created by special
act of
the
kind that could be organized under this chapter but whose charter is not
subject to
amendment,
repeal, or modification by the general assembly, may at a called meeting for
the
purpose,
by a unanimous vote of its shareholders or members, adopt the provisions of
this chapter
upon
the filing in the office of the secretary of state of a certified copy of the
vote, attested by its
president
or vice president and its secretary or assistant secretary under its corporate
seal, and the
payment
to the secretary of state of the fee prescribed by Section 7-1.2-1602. The
corporation is
subsequently
governed in all respects by the provisions of this chapter and its charter
shall
subsequently
be subject to amendment or repeal at the will of the general assembly.
SECTION
3. This act shall take effect on July 1, 2005.
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LC02505/SUB
B
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