The general assembly has the power to amend or repeal all or part of chapters 11-27 of this title at any time, and all domestic and foreign corporations subject to chapters 11-27 of this title shall be governed by the amendment or repeal.
Chapters 11-27 of this title do not repeal or affect the right or power of eminent domain under other existing laws, and any corporation which shall have the power of eminent domain under existing laws shall have the power to the same extent and in the same manner as if organized under chapters 11-27 of this title, and all statutes of this state granting the power of eminent domain and making compensation shall remain in force and effect and applicable to the appropriate existing corporations and to the appropriate corporations organized under chapters 11-27 of this title.
Chapters 11-27 of this title shall apply to every corporation for profit now existing or hereafter formed, and to the outstanding and future securities thereof; provided, that, if there are other specific statutory provisions which govern the formation of, impose restrictions or requirements on, confer special powers, privileges or authorities on, or fix special procedures or methods for, special categories of corporations, then to the extent such provisions are inconsistent with or different from chapters 11-27 of this title, such provisions shall prevail.
As used in chapters 11-27 of this title, unless the context otherwise requires (or the term is otherwise defined in another chapter of the Tennessee Business Corporation Act, in which event the term shall have such other meaning for that chapter):
(1) “Affiliate” of a specific person means a person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, the person specified;
(2) “Authorized shares” means the shares of all classes a domestic or foreign corporation is authorized to issue;
(3) “Business” means any activity or function;
(4) “Charter” includes amended and restated charters and articles of merger;
(5) “Confirmation of good standing” means confirmation by the commissioner of revenue issued through electronic communication to the secretary of state or a certificate of tax clearance that at the time such confirmation is issued a domestic or foreign corporation is current on all taxes and penalties to the satisfaction of the commissioner;
(6) “Conspicuous” means so written that a reasonable person against whom the writing is to operate should have noticed it. For example, printing in italics or boldface or contrasting color, or typing in capitals or underlined, is conspicuous;
(7) “Corporation,” “domestic corporation” or “domestic business corporation” means a corporation for profit, which is not a foreign corporation, incorporated under or subject to chapters 11-27 of this title;
(8) “Deliver” or “delivery” means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and, if authorized in accordance with § 48-11-202, by electronic transmission;
(9) “Distribution” means a direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness (whether directly or indirectly, including through a guaranty) by a corporation to or for the benefit of its shareholders in respect of any of its shares. A distribution may be in the form of a declaration or payment of a dividend; a purchase, redemption, or other acquisition of shares; a distribution of indebtedness (which includes the incurrence of indebtedness for the benefit of the shareholders); or otherwise;
(10) “Document” means:
(A) Any tangible medium on which information is inscribed, and includes any writing or written instrument; or
(B) An electronic record;
(11) “Effective date of notice,” as defined in § 48-11-202(i);
(12) “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities;
(13) “Electronic record” means information that is stored in an electronic or other medium and is retrievable in paper form through an automated process used in conventional commercial practice, unless otherwise authorized in accordance with § 48-11-202;
(14) “Electronic transmission” or “electronically transmitted” means any form or process of communication not directly involving the physical transfer of paper or another tangible medium, which is:
(A) Suitable for the retention, retrieval, and reproduction of information by the recipient; and
(B) Is retrievable in paper form by the recipient through an automated process used in conventional commercial practice, unless otherwise authorized in accordance with § 48-11-202(j);
(15) “Emergency” exists when a quorum of the corporate directors cannot readily be assembled because of some catastrophic event;
(16) “Employee” includes an officer but not a director. A director may accept duties that make the director also an employee;
(17) “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. The term includes two (2) or more persons having a joint or common economic interest;
(18) “Filing entity” means an unincorporated entity that is of a type that is created by filing a public organic document;
(19) “Foreign corporation” means a corporation for profit incorporated under a law other than the laws of this state;
(20) “Foreign nonprofit corporation” means a corporation incorporated under a law other than the law of this state, which would be a nonprofit corporation if incorporated under the laws of this state;
(21) “Foreign unincorporated entity” means an unincorporated entity whose internal affairs are governed by an organic law of a jurisdiction other than this state;
(22) “Governmental subdivision” includes authority, county, district, and municipality;
(23) “Includes” denotes a partial definition;
(24) “Individual” includes the estate of an incompetent or deceased individual;
(25) “Interest” means either or both of the following rights under the organic law of an unincorporated entity:
(A) The right to receive distributions from the entity either in the ordinary course or upon liquidation; or
(B) The right to receive notice or vote on issues involving its internal affairs, other than as an agent, assignee, proxy, or person responsible for managing its business and affairs;
(26) “Means” denotes an exhaustive definition;
(27) “Month” means the time from any day of any month to the corresponding day of the succeeding month, if any, and if none, the last day of the succeeding month. “A period of two (2) or more months” means the time from any day of the first month in such period to the corresponding day of the last month in such period, if any, and if none, the last day of the last month in such period;
(28) “Nonfiling entity” means an unincorporated entity that is of a type that is not created by filing a public organic document;
(29) “Nonprofit corporation” or “domestic nonprofit corporation” means a corporation incorporated under the laws of this state and subject to the Tennessee Nonprofit Corporation Act, compiled in chapters 51-68 of this title;
(30) “Notice,” as defined in § 48-11-202;
(31) “Organic document” means a public organic document or a private organic document;
(32) “Organic law” means the statute governing the internal affairs of a domestic or foreign business or nonprofit corporation or unincorporated entity;
(33) “Person” includes individual and entity;
(34) “Principal office” means the office (in or out of this state) so designated in the annual report where the principal executive offices of a domestic or foreign corporation are located;
(35) “Private organic document” means any document (other than the public organic document, if any) that determines the internal governance of an unincorporated entity. Where a private organic document has been amended or restated, the term means the private organic document as last amended or restated;
(36) “Proceeding” includes civil suit and criminal, administrative, and investigatory action;
(37) “Public organic document” means the document, if any, that is filed of public record to create an unincorporated entity. Where a public organic document has been amended or restated, the term means the public organic document as last amended or restated;
(38) “Record date” means the date established under chapter 16 or 17 on which a corporation determines the identity of its shareholders for purposes of chapters 11-27 of this title;
(39) “Secretary” means the corporate officer to whom the bylaws or the board of directors has delegated responsibility under § 48-18-401(c) for custody of the minutes of the meetings of the board of directors and of the shareholders and for authenticating records of the corporation;
(40) “Share” means the unit into which the proprietary interests in a corporation are divided;
(41) “Shareholder” means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation;
(42) “Sign” or “signature” means, with present intent to authenticate or adopt a document:
(A) To execute or adopt a tangible symbol to a document, and includes any manual, facsimile, or conformed signature; or
(B) To attach to or logically associate with an electronic transmission an electronic sound, symbol, or process, and includes an electronic signature in an electronic transmission;
(43) “State,” when referring to a part of the United States, includes a state and commonwealth (and their agencies and governmental subdivisions) and a territory and insular possession (and their agencies and governmental subdivisions) of the United States;
(44) “Subscriber” means a person who subscribes for shares in a corporation, whether before or after incorporation;
(45) “Subsidiary” means a corporation more than fifty percent (50%) of whose outstanding voting shares are owned by its parent and/or the parent's other wholly-owned subsidiaries;
(46) “Tax clearance for termination or withdrawal” means confirmation by the commissioner of revenue issued through electronic communication to the secretary of state or a certificate of tax clearance that a domestic or foreign corporation has filed all applicable reports, including, but not limited to, a final report, and has paid all fees, penalties and taxes as required by the revenue laws of this state;
(47) “Unincorporated entity” means an organization or artificial legal person that either has a separate legal existence or has the power to acquire an estate in real property in its own name and that is not any of the following: a domestic or foreign business or nonprofit corporation, an estate, a trust, a state, the United States, or a foreign government. The term includes a general partnership, limited liability company, limited partnership, business trust, joint stock association, and unincorporated nonprofit association;
(48) “United States” includes district, authority, bureau, commission, department, and any other agency of the United States;
(49) “Voting group” means all shares of one (1) or more classes or series that under the charter or chapters 11-27 of this title are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled by the charter or chapters 11-27 of this title to vote generally on the matter are for that purpose a single voting group; and
(50) “Writing” or “written” means any information in the form of a document.
(a) Notice under chapters 11-27 of this title must be in writing unless oral notice is reasonable in the circumstances and not prohibited by the charter or bylaws. Unless otherwise agreed between the sender and the recipient, words in a notice or other communication under chapters 11-27 of this title must be in English.
(b) A notice or other communication may be given or sent by any method of delivery, except that electronic transmissions must be in accordance with this section. If these methods of delivery are impracticable, a notice or other communication may be communicated by a newspaper of general circulation in the area where published, or by radio, television, or other form of public broadcast communication.
(c) Notice or other communication to a domestic or foreign corporation (authorized to transact business in this state) may be delivered to its registered agent at its registered office (or to a designated mailing address such as a post office box if the United States postal service does not deliver to the registered agent's registered office) or to the secretary of the corporation at its principal office shown in its most recent annual report (or to a designated mailing address such as a post office box if the United States postal service does not deliver to the corporation's principal office) or, in the case of a foreign corporation that has not yet delivered an annual report, in its application for a certificate of authority.
(d) Notice or other communications may be delivered by electronic transmission if consented to by the recipient or if authorized by subsection (j).
(e)
(1) Any consent under subsection (d) may be revoked by the person who consented by written or electronic notice to the person to whom the consent was delivered. Any such consent is deemed revoked if:
(A) The corporation is unable to deliver two (2) consecutive electronic transmissions given by the corporation in accordance with such consent; and
(B) 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 or other communication.
(2) The inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
(f) Unless otherwise agreed between the sender and the recipient, an electronic transmission is received when:
(1) It enters an information processing system that the recipient has designated or uses for the purposes of receiving electronic transmissions or information of the type sent, and from which the recipient is able to retrieve the electronic transmission; and
(2) It is in a form capable of being processed by that system.
(g) Receipt of an electronic acknowledgement from an information processing system described in subdivision (f)(1) establishes that an electronic transmission was received but, by itself, does not establish that the content sent corresponds to the content received.
(h) An electronic transmission is received under this section even if no individual is aware of its receipt.
(i) Notice or other communication, if in a comprehensible form or manner, is effective at the earliest of the following:
(1) If in a physical form, the earliest of when it is actually received, or when it is left at:
(A) A shareholder's address shown on the corporation's record of shareholders maintained by the corporation under § 48-26-101(c);
(B) A director's residence or usual place of business; or
(C) The corporation's principal place of business;
(2) If mailed first class postage prepaid and correctly addressed to a shareholder, upon deposit in the United States mail;
(3) If mailed by United States mail postage prepaid and correctly addressed to a recipient other than a shareholder, the earliest of when it is actually received, or:
(A) If sent by registered or certified mail, return receipt requested, the date shown on the return receipt signed by or on behalf of the addressee; or
(B) Five (5) days after it is deposited in the United States mail;
(4) If an electronic transmission, when it is received as provided in subsection (f); or
(5) If oral, when communicated, if communicated in a comprehensible manner.
(j) A notice or other communication may be in the form of an electronic transmission that cannot be directly reproduced in paper form by the recipient through an automated process used in conventional commercial practice only if:
(1) The electronic transmission is otherwise retrievable in perceivable form; and
(2) The sender and the recipient have consented in writing to the use of such form of electronic transmission.
(k) If chapters 11-27 of this title prescribe requirements for notices or other communications in particular circumstances, those requirements govern. If the charter or bylaws prescribe requirements for notices or other communications, not inconsistent with this section or other provisions of chapters 11-27 of this title, those requirements govern. The charter or bylaws may authorize or require delivery of notices of meetings of directors by electronic transmission.
(a) For purposes of chapters 11-27 of this title, the following identified as a shareholder in a corporation's current record of shareholders constitutes one (1) shareholder:
(1) Three (3) or fewer co-owners;
(2) A corporation, partnership, trust, estate, or other entity; and
(3) The trustees, guardians, custodians, or other fiduciaries of a single trust, estate, or account.
(b) For purposes of chapters 11-27 of this title, shareholdings registered in substantially similar names constitute one (1) shareholder if it is reasonable to believe that the names represent the same person.
(a) The form and filing of a document must satisfy the requirements of this section, and of all other applicable sections or rules that add to these requirements, to be entitled to filing by the secretary of state.
(b) Chapters 11-27 of this title must require or permit filing the document in the office of the secretary of state.
(c) The document must contain the information required by chapters 11-27 of this title and other information as may be required by the secretary of state. It may contain other information as well.
(d) The secretary of state may prescribe, and shall furnish upon request, forms for documents required or permitted to be filed by all chapters of this title. If the secretary of state has prescribed a mandatory form for the document, then the document must be in or on the prescribed form or a conformed copy thereof. In the absence of a specific rule, the document must be capable of being printed in ink in a clear and legible fashion on one (1) side of letter size paper.
(e) The document must be in the English language. A corporate name need not be in English if written in English letters, or Arabic or Roman numerals, and the certificate of existence required of foreign corporations need not be in English if accompanied by a reasonably authenticated English translation.
(f) The document must be executed:
(1) By the chair of the board of directors of a domestic or foreign corporation, by its president, or by another of its authorized officers;
(2) If directors have not been selected or the corporation has not been formed, by an incorporator; or
(3) If the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
(g) The person executing the document must sign it and state beneath or opposite the person's signature the person's name and the capacity in which the person signs. The document may, but need not, contain:
(1) The corporate seal;
(2) An attestation by the secretary or an assistant secretary;
(3) An acknowledgement, verification, or proof; or
(4) The date the document is signed, except that the date is required for the annual report for the secretary of state.
(h) If the secretary of state has prescribed a mandatory form and filing method for any filing required or authorized by this chapter, then the document must be in or on the prescribed form.
(i) The document must be delivered to the office of the secretary of state for filing in the manner and form prescribed by the secretary of state and must be accompanied by the correct filing fee, and any corporate tax, license fee, interest, or penalty required by chapters 11-27 of this title.
(j) Whenever this title permits any of the terms of a plan or a filed document to be dependent on facts objectively ascertainable outside the plan or filed document, the following apply:
(1) The manner in which the facts will operate upon the terms of the plan or filed document must be set forth in the plan or filed document;
(2) The facts may include, but are not limited to:
(A) Any of the following that is available in a nationally recognized news or information medium either in print or electronically: statistical or market indices, market prices of any security or group of securities, interest rates, currency exchange rates, or similar economic or financial data;
(B) A determination or action by any person or body, including the corporation or any other party to a plan or filed document; or
(C) The terms of, or actions taken under, an agreement to which the corporation is a party, or any other agreement or document;
(3) As used in this subsection (j):
(A) “Filed document” means a document filed with the secretary of state under chapters 11-27 of this title, except chapter 25 or § 48-26-203; and
(B) “Plan” means a plan of domestication, nonprofit conversion, entity conversion, merger, or share exchange;
(4) None of the following provisions of a plan or filed document are made dependent on facts outside the plan or filed document:
(A) The name and address of any person required in a filed document;
(B) The registered office of any entity required in a filed document;
(C) The registered agent of any entity required in a filed document;
(D) The number of authorized shares and designation of each class or series of shares;
(E) The effective date of a filed document; or
(F) Any required statement in a filed document of the date on which the underlying transaction was approved or the manner in which that approval was given; and
(5) If a provision of a filed document is made dependent on a fact ascertainable outside of the filed document, and that fact is not ascertainable by reference to a source described in subdivision (j)(2)(A) or a document that is a matter of public record, or the affected shareholders have not received notice of the fact from the corporation, then the corporation shall file with the secretary of state articles of amendment setting forth the fact promptly after the time when the fact referred to is first ascertainable or thereafter changes. Articles of amendment under this subdivision (j)(5) are deemed to be authorized by the authorization of the original filed document or plan to which they relate and may be filed by the corporation without further action by the board of directors or the shareholders.
(k) The secretary of state may promulgate appropriate rules establishing acceptable methods for execution of any document to be filed with the secretary of state.
(l) All documents submitted to the secretary of state for filing shall contain a statement that makes it clear that the documents are being filed pursuant to the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title.
(m) The secretary of state may establish procedures for the filing of documents with the secretary of state by means of electronic transmission.
(n) Notwithstanding any other law to the contrary, whenever this title requires that an application or other document submitted to the secretary of state for filing be accompanied by a confirmation of good standing, tax clearance for termination or withdrawal, or other similar communication of taxpayer status by the commissioner of revenue, then that requirement is met, and a paper certificate need not accompany the application or other document, if the commissioner provides to the secretary of state electronic verification of the required information. Upon request of the person seeking certificate information, the commissioner shall provide to the secretary of state electronic verification in lieu of a paper certificate.
(a) The secretary of state shall collect the following fees when the documents described in this subsection (a) are delivered to the secretary of state for filing:
(1) Charter (including designation of initial registered office and agent) $100.00
(2) Application for use of indistinguishable name 20.00
(3) Application for reserved name 20.00
(4) Notice of transfer or cancellation of reserved name 20.00
(5) Application for registered name 20.00
(6) Application for renewal for registered name 20.00
(7) Application for or change, cancellation, or renewal of assumed name 20.00
(8) Corporation's statement of change of registered agent or registered office, or both 20.00
(9) Agent's statement of change of registered office 5.00 per corporation, but not less than 20.00
(10) Agent's statement of resignation 20.00
(11) Charter amendment 20.00
(12) Restatement of charter 20.00
(13) Amended and restated charter 20.00
(14) Articles of entity conversion 100.00
(15) Articles of charter surrender 20.00
(16) Statement of abandonment of merger, conversion or share exchange 20.00
(17) Articles of merger or share exchange 100.00
(18) Articles of dissolution and termination by incorporators or directors 20.00
(19) Articles of dissolution 20.00
(20) Articles of revocation of dissolution 20.00
(21) Articles of termination of corporate existence 20.00
(22) Certificate of administrative dissolution No fee
(23) Application for reinstatement following administrative dissolution 70.00
(24) Articles of termination following administrative dissolution or revocation 100.00
(25) Certificate of reinstatement No fee
(26) Certificate of judicial dissolution No fee
(27) Application for certificate of authority (including designation of initial registered office and agent) 600.00
(28) Application for amended certificate of authority 20.00
(29) Application for certificate of withdrawal 20.00
(30) Certificate of revocation of authority to transact business No fee
(31) Application for certificate of withdrawal following administrative revocation 100.00
(32) Application for reinstatement following administrative revocation 70.00
(33) Annual report 20.00
(34) Articles of correction 20.00
(35) Application for certificate of existence or authorization 20.00
(36) Any other document required or permitted to be filed by chapters 11-27 of this title 20.00
(b) The secretary of state shall collect a fee of twenty dollars ($20.00) each time process is served on the secretary of state under chapters 11-27 of this title. The party to a proceeding causing service of process is entitled to recover this fee as costs if such party prevails in the proceeding.
(c) The secretary of state shall collect a fee of twenty dollars ($20.00) for copying all filed documents relating to a domestic or foreign corporation. All such copies will be certified or validated by the secretary of state.
(d) In addition to the other filing requirements of chapters 11-27 of this title, a copy of all documents specified in subdivisions (a)(1) and (11)-(20) shall also be filed in the office of the register of deeds in the county wherein a corporation has its principal office, if such principal office is in Tennessee, and in the case of a merger, in the county in which the new or surviving corporation shall have its principal office if such principal office is in Tennessee. The register of deeds may charge five dollars ($5.00) plus fifty cents (50¢) per page in excess of five (5) pages for such filing.
(a) Except as provided in subsection (b) and § 48-11-305(c), a document accepted for filing is effective:
(1) At the time of filing on the date it is filed by the secretary of state, as evidenced by the secretary of state's date and time endorsement on the original document; and
(2) At the time specified in the document as its effective time on the date it is filed.
(b) A document may specify a delayed effective time and date, and if it does so the document becomes effective at the time and date specified. If a delayed effective date but not time is specified, the document is effective at the close of business on that date. A delayed effective date for a document may not be later than the ninetieth day after the date it is filed by the secretary of state. Notwithstanding the foregoing, documents specified in § 48-11-303(a)(3)-(7), (15), (16), (20), (21), (25), (31), (33) and (34) may not specify a delayed effective time and date.
(c) The secretary of state shall not file any charter or application for a certificate of authority unless that document designates the registered agent and registered office of such domestic or foreign corporation in accordance with chapters 15 and 25 of this title. The secretary of state shall not file any other document under chapters 11-27 of this title if at the time of filing the domestic or foreign corporation does not have a registered agent or registered office designated at such time, unless at the time such document is received for filing the secretary of state also receives for filing a statement designating such registered agent or registered office, or both.
(a) A domestic or foreign corporation may correct a document filed by the secretary of state if the document:
(1) Contains an incorrect statement; or
(2) Was defectively executed, attested, sealed, verified, or acknowledged.
(b) A document is corrected by:
(1) Preparing articles of correction that:
(A) Describe the document (including its filing date) or attach a copy of it to the articles;
(B) Specify the incorrect statement and the reason it is incorrect or the manner in which the execution was defective; and
(C) Correct the incorrect statement or defective execution; and
(2) Delivering the articles to the secretary of state for filing.
(c) Articles of correction are effective on the effective time and date of the document they correct except as to persons relying on the uncorrected document and adversely affected by the correction. As to those persons, articles of correction are effective when filed.
(a) If the form and filing of a document delivered to the office of the secretary of state for filing satisfies the requirements of this section, and of all other applicable sections or rules that add to these requirements, then the secretary of state must file it.
(b) The secretary of state files a document by stamping or otherwise endorsing “Filed”, together with the secretary of state's name and official title and the date and time of receipt, on the document. After filing a document, except for filings pursuant to §§ 48-15-103, 48-25-109, and 48-26-203, the secretary of state shall deliver the document, with the filing fee receipt (or acknowledgment of receipt if no fee is required) attached, to the domestic or foreign corporation or its representative in due course. A domestic or foreign corporation or its representative may present to the secretary of state an exact or conformed copy of the document presented for filing together with the document, and, in that event, the secretary of state shall stamp or otherwise endorse the exact or conformed copy “Filed”, together with the secretary of state's name and official title and the date and time of receipt, and immediately return the exact or conformed copy to the party filing the original of the document.
(c) If the secretary of state refuses to file a document, then the secretary of state must return it to the domestic or foreign corporation or its representative within a reasonable time after the document was received for filing, together with a brief, written explanation of the reason for the secretary of state's refusal.
(d) The secretary of state's duty to file documents under this section is ministerial. The secretary of state's filing or refusing to file a document does not:
(1) Affect the validity or invalidity of the document in whole or part;
(2) Relate to the correctness or incorrectness of information contained in the document;
(3) Create a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect; or
(4) Establish that a document purporting to be an exact or conformed copy is in fact an exact or conformed copy.
(e) Any corporate document that meets the requirements of chapters 11-27 of this title and any applicable rules for filing and recording must be received, filed, and recorded by the appropriate office, notwithstanding any contrary requirements found in any other laws of this state.
(a) If the secretary of state refuses to file a document delivered to the secretary of state's office for filing, the domestic or foreign corporation may appeal the refusal to the chancery court of Davidson County. The appeal is commenced by petitioning the court to compel filing the document and by attaching to the petition the document and the secretary of state's explanation of the secretary of state's refusal to file.
(b) The court may summarily order the secretary of state to file the document or take other action the court considers appropriate.
(c) The court's final decision may be appealed as in other civil proceedings.
(d) Any judicial review of the secretary of state's refusal to file a document shall be conducted in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
A certificate attached or certification affixed to a copy of a document filed by the secretary of state, bearing the secretary of state’s signature (which may be in facsimile or other electronic format) and the seal of this state, is conclusive evidence that the original document is on file with the secretary of state.
(a) Any person may apply to the secretary of state to furnish a certificate of existence for a domestic corporation or a certificate of authorization for a foreign corporation authorized to transact business in this state.
(b) A certificate of existence or authorization sets forth:
(1) The domestic corporation's corporate name or the foreign corporation's corporate name used in this state;
(2) That:
(A) The domestic corporation is duly incorporated under the laws of this state, the effective date of its incorporation, and the period of its duration if less than perpetual; or
(B) The foreign corporation is authorized to transact business in this state;
(3) That all fees, taxes and penalties owed to this state have been paid, if:
(A) Payment is reflected in the records of the secretary of state or the department of revenue; and
(B) Nonpayment allows:
(i) Administrative dissolution of a domestic corporation; or
(ii) Administrative revocation of the certificate of authority of a foreign corporation;
(4) That its most recent annual report required by § 48-26-203 has been filed with the secretary of state;
(5)
(A) For a domestic corporation:
(i) That articles of termination of existence have not been filed;
(ii) Whether or not articles of dissolution have been filed and remain effective;
(iii) Whether or not a certificate of dissolution has been filed and remains effective; and
(iv) That a decree of judicial dissolution has not been filed;
(B) For a foreign corporation:
(i) That a certificate of withdrawal has not been filed; and
(ii) Whether or not a certificate of revocation of certificate of authority has been filed and remains effective;
(6) That the certificate is effective as of the date of the issuance of the certificate; and
(7) Other facts of record in the office of the secretary of state that may be requested by the applicant.
(c) Subject to any qualification stated in the certificate, a certificate of existence or authorization issued by the secretary of state is effective as of the date on the certificate and may be relied upon as conclusive evidence that the domestic or foreign corporation is in existence or is authorized to transact business in this state and is in good standing.
A person who signs a document, knowing it to be false in any material respect, with intent that the document be delivered to the secretary of state for filing, commits a Class A misdemeanor.
The secretary of state has the power reasonably necessary to perform the duties required of the secretary of state by chapters 11-27 of this title, including, without limitation, the power to promulgate necessary and appropriate rules and regulations consistent with chapters 11-27 of this title, and the power to destroy any records in the secretary of state's office concerning the domestic or foreign corporation ten (10) years after such corporation has dissolved, withdrawn from the state, or has had its certificate of authority revoked.
An act of a duly authorized deputy of the secretary of state in the secretary of state's behalf under chapters 11-27 of this title is the equivalent of the act of the secretary of state; provided, that the name of the secretary of state is signed by such deputy as deputy.
One (1) or more persons may act as the incorporator or incorporators of a corporation by delivering a charter to the secretary of state for filing. If any incorporator dies or is for any reason unable to act, the other incorporators, if any, may act. If there is no incorporator able to act, any person for whom an incorporator was acting as agent may act in the incorporator's stead or, if such other person also dies or is for any reason unable to act, or the incorporator was not acting as agent, the incorporator's legal representative may act.
(1) A corporate name for the corporation that satisfies the requirements of § 48-14-101;
(2) The number of shares the corporation is authorized to issue;
(3) The street address and zip code of the corporation's initial registered office (and a mailing address such as a post office box if the United States postal service does not deliver to the registered agent's registered office), the county in which the office is located, and the name of its initial registered agent at that office;
(4) The name and address and zip code of each incorporator;
(5) The street address and zip code of the initial principal office of the corporation (and a mailing address such as a post office box if the United States postal service does not deliver to the principal office);
(6) Information required by chapter 16 of this title; and
(7) A statement that the corporation is for profit.
(b) The charter may set forth:
(1) The names and addresses of the individuals who are to serve as the initial directors;
(2) Provisions not inconsistent with law:
(A) Stating the purpose or purposes for which the corporation is organized;
(B) Regarding the management of the business and regulating the affairs of the corporation; or
(C) Defining, limiting and regulating the powers and rights of the corporation, its board of directors and shareholders;
(3)
(A) A provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director; provided, that such provision shall not eliminate or limit the liability of a director:
(i) For any breach of the director's duty of loyalty to the corporation or its shareholders;
(ii) For acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or
(iii) Under § 48-18-302;
(B) No such provision shall eliminate or limit the liability of a director for any act or omission occurring prior to the date when such provisions become effective. All references in this subdivision (b)(3) to a “director” are also deemed to refer to a member of the governing body of a corporation which dispenses with or limits the authority of the board of directors pursuant to § 48-18-101(c); and
(4) Any provision that under chapters 11-27 of this title is required or permitted to be set forth in the bylaws.
(c) The charter need not set forth any of the corporate powers enumerated in chapters 11-27 of this title.
(a) Unless a delayed effective date is specified, the corporate existence begins when the charter is filed by the secretary of state.
(b) The secretary of state's filing of the charter is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation.
All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under chapters 11-27 of this title, are jointly and severally liable for all liabilities created while so acting except for any liability to any person who knew or reasonably should have known that there was no incorporation.
(1) If initial directors are named in the charter, 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 carrying on any other business brought before the meeting;
(2) If initial directors are not named in the charter, the incorporator or incorporators shall hold an organizational meeting at the call of a majority of the incorporators and upon at least two (2) days' notice of the date, time, and place of the meeting to:
(A) Elect directors and complete the organization of the corporation; or
(B) Elect a board of directors who shall complete the organization of the corporation.
(b) Action required or permitted by chapters 11-27 of this title to be taken by incorporators at an organizational meeting may be taken without a meeting. If all incorporators consent to taking such action without a meeting, the affirmative vote of the number of incorporators that would be necessary to authorize or take such action at a meeting is the act of the incorporators. The action must be evidenced by one (1) or more written consents describing the action taken, signed by each incorporator in one (1) or more counterparts, indicating each signing incorporator's vote or abstention on the action, and shall be included in the minutes or filed with the corporate records reflecting the action taken.
(c) An organizational meeting may be held in or out of this state.
(d) If the corporate existence of a corporation has begun pursuant to § 48-12-103, no action of such corporation shall be invalid solely as a result of the failure to hold an organizational meeting or otherwise complete the organization of the corporation as contemplated in subsection (a).
(a) The incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.
(b) The bylaws of a corporation may contain any provision for managing the business and regulating the affairs of the corporation that is not inconsistent with law or the charter.
(a) Unless the charter provides otherwise, the board of directors or the incorporators of a corporation may adopt bylaws to be effective only in an emergency. The emergency bylaws, which are subject to amendment or repeal by the shareholders, may make all provisions necessary for managing the corporation during the emergency, including:
(1) Procedures for calling a meeting of the board of directors;
(2) Quorum requirements for the meeting; and
(3) Designation of additional or substitute directors.
(b) All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.
(c) Corporate action taken in good faith in accordance with the emergency bylaws:
(1) Binds the corporation; and
(2) May not be used to impose liability on a corporate director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.
(a) Every corporation incorporated under chapters 11-27 of this title has the purpose of engaging in any lawful business unless a more limited purpose is set forth in the charter.
(b) A corporation engaging in a business that is subject to regulation under another statute of this state may incorporate under chapters 11-27 of this title only if permitted by, and subject to all limitations of, the other statute.
Unless its charter provides otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including, without limitation, power to:
(1) Sue and be sued, complain and defend in its corporate name;
(2) Have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing it or in any other manner reproducing it;
(3) Make and amend bylaws, not inconsistent with its charter or with the laws of this state, for managing the business and regulating the affairs of the corporation;
(4) Purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property, or any legal or equitable interest in property, wherever located;
(5) Sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of, or grant a security interest in, all or any part of its property;
(6) Purchase, receive, subscribe for, or otherwise acquire; own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of, or grant a security interest in; and deal in and with shares or other interests in, or obligations of, any other entity;
(7) Make contracts and guarantees, incur liabilities, borrow money, issue its notes, bonds, and other obligations (which may be convertible into or include the option to purchase other securities of the corporation), and secure any of its obligations or those of any other person by mortgage, pledge of, or security interest in, any of its property, franchises, or income;
(8) Lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment;
(9) Be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust, or other entity;
(10) Conduct its business, locate offices, and exercise the powers granted by chapters 11-27 of this title within or without this state;
(11) Elect directors and appoint officers, employees, and agents of the corporation, define their duties, fix their compensation, and lend them money and credit;
(12) Pay pensions and establish pension plans, pension trusts, profit sharing plans, share bonus plans, share option plans, and benefit or incentive plans for any or all of the current or former directors, officers, employees, and agents of the corporation or any of its subsidiaries;
(13) Make donations for the public welfare or for charitable, scientific, or educational purposes;
(14) Make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation;
(15) Procure for its benefit insurance on the life of any of its directors, officers or employees, to insure the life of any shareholder for the purpose of acquiring at the shareholder's death shares owned by such shareholder and to continue such insurance after the relationship terminates; and
(16) Accept gifts, devises, and bequests subject to any conditions or limitations contained in such gift, devise, or bequest, so long as such conditions or limitations are not contrary to chapters 11-27 of this title or the purposes for which the corporation is organized.
(a) In anticipation of or during an emergency, the board of directors of a corporation may:
(1) Modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and
(2) Relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so.
(b) During an emergency, unless emergency bylaws provide otherwise:
(1) Notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practicable manner, including by publication and radio; and
(2) One (1) or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.
(c) Corporate action taken in good faith during an emergency under this section to further the ordinary business affairs of the corporation:
(1) Binds the corporation; and
(2) May not be used to impose liability on a corporate director, officer, employee, or agent.
(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
(b) A corporation's power to act may be challenged in a proceeding by:
(1) A shareholder against the corporation to enjoin the act;
(2) The corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or
(3) The attorney general and reporter under § 48-24-301.
(c) In a shareholder's proceeding under subdivision (b)(1) to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the corporation or another party because of enjoining the unauthorized act.
(1) Must contain the word “corporation,” “incorporated,” “company,” or the abbreviation “corp.,” “inc.,” “co.,” or words or abbreviations of like import in another language (provided they are written in roman characters or letters); provided, that, if such corporation is formed for the purpose of an insurance or banking business, the name of such corporation need not contain any of the aforementioned words or abbreviations. A corporation using the corporate designations “limited” or “ltd.,” with such having been filed in the secretary of state's office prior to May 29, 1989, may continue to use that corporate designation until such time as it files an amendment which in any way changes its corporate name; and
(2) May not contain language stating or implying that the corporation:
(A) Transacts or has power to transact any business for which authorization in whatever form and however denominated is required under the laws of this state, unless the appropriate commission or officer has granted such authorization and certifies that fact in writing;
(B) Is organized as, affiliated with, or sponsored by, any fraternal, veterans', service, religious, charitable, or professional organization, unless that fact is certified in writing by the organization with which affiliation or sponsorship is claimed;
(C) Is an agency or instrumentality of, affiliated with or sponsored by the United States or the state of Tennessee or a subdivision or agency thereof, unless such fact is certified in writing by the appropriate official of the United States or the state of Tennessee or subdivision or agency thereof; or
(D) Is organized for a purpose other than that permitted by § 48-13-101 and its charter.
(b) Except as authorized by subsection (c), the name of a domestic corporation, and the name of a foreign corporation that is authorized to transact business in this state or is applying for a certificate of authority to transact business in this state, shall be distinguishable upon the records of the secretary of state from the respective names of or for every other entity, whether true, assumed, reserved or registered, to the extent the use or reservation of such names is evidenced by a filing with the secretary of state under applicable law.
(c) A domestic or foreign corporation, or person acting on behalf of a corporation not yet formed, may apply to the secretary of state for authorization to use a name that is not distinguishable upon the secretary of state's records from one (1) or more of the names described in subsection (b). The secretary of state shall authorize use of the indistinguishable name applied for, if:
(1) The person holding the right to use the previously filed name described in subsection (b) consents to the use in writing and submits an undertaking, in a form satisfactory to the secretary of state, to cancel its reservation of such name or change such name to a name that is distinguishable upon the records of the secretary of state from the name of the applicant;
(2) The applicant delivers to the secretary of state a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state; or
(3) The person holding the right to use the previously filed name described in subsection (b) consents in writing to the use of such name by the applicant, and both the other person and the applicant consent in a form satisfactory to the secretary of state to use the same registered agent.
(d)
(1) A domestic corporation or a foreign corporation authorized to transact business or applying for a certificate of authority to transact business may elect to adopt an assumed corporate name that complies with the requirements of subsections (a)-(c), except that such name need not contain the corporate designations contained in subdivision (a)(1).
(2) As used in chapters 11-27 of this title, “assumed corporate name” means any name used by the corporation other than its true corporate name, except that the following shall not constitute the use of an assumed corporate name under chapters 11-27 of this title:
(A) The identification by a corporation of its business with a trademark or service mark of which it is the owner or licensed user; and
(B) The use of a name of a division, not separately incorporated and not containing the word “corporation,” “incorporated,” or “limited” or an abbreviation of one (1) of such words; provided, that the corporation also clearly discloses its corporate name.
(3) Before transacting any business in this state under an assumed corporate name or names, the corporation shall, for each assumed corporate name, pursuant to resolution by its board of directors, execute and file in accordance with chapter 11, part 3 of this title, an application setting forth:
(A) The true corporate name;
(B) The state or country under the laws of which it is organized;
(C) That it intends to transact business under an assumed corporate name; and
(D) The assumed corporate name which it proposes to use.
(4) The right to use an assumed corporate name shall be effective for five (5) years from the date of filing with the secretary of state.
(5) A corporation shall renew the right to use its assumed corporate name or names, if any, within the two (2) months preceding the expiration of such right, for a period of five (5) years, by filing an application to renew each assumed name and paying the renewal fee as prescribed by § 48-11-303(a).
(e) Any domestic or foreign corporation may, pursuant to resolution by its board of directors, change or cancel any or all of its assumed corporate names by executing and filing, in accordance with chapter 11, part 3 of this title, an application setting forth:
(1) The true corporate name;
(2) The state or country under the laws of which it is organized;
(3) That it intends to cease transacting business under an assumed corporate name by changing or cancelling it;
(4) The assumed corporate name to be changed from or cancelled; and
(5) If the assumed corporate name is to be changed, the assumed corporate name which the corporation proposes to use.
(f) Upon the filing of an application to change an assumed corporate name, the corporation shall have the right to use such assumed corporate name for the period authorized by subsection (d).
(g) The right to use an assumed corporate name shall be cancelled by the secretary of state:
(1) If the corporation fails to renew an assumed corporate name;
(2) If the corporation has filed an application to change or cancel an assumed corporate name;
(3) If a domestic corporation has been dissolved; or
(4) If a foreign corporation has had its certificate of authority to transact business in this state revoked.
(h) Nothing in this section, or in § 48-14-102, § 48-14-103 or § 48-25-106, shall abrogate or limit the law as to unfair competition or unfair trade practice, or derogate from the common law, the principles of equity, or the statutes of this state or of the United States with respect to the right to acquire and protect trade names and trademarks.
(a) A person may reserve the exclusive use of a corporate name, including an assumed corporate name, by delivering an application to the secretary of state for filing. The application must set forth the name and address of the applicant and the name proposed to be reserved. If the secretary of state finds that the corporate name applied for meets the requirements of § 48-14-101 and is available, the secretary of state shall reserve the name for the applicant's exclusive use for a four-month period. Upon the expiration of the four-month period, the same or any other party may apply to reserve the same name.
(b) The owner of a reserved corporate name, including an assumed corporate name, may transfer the reservation to another person by delivering to the secretary of state a notice of the transfer signed by the owner that states the name and address of the transferee.
(c) The reservation of a specific name may be cancelled by filing with the secretary of state a notice, executed by the applicant or transferee, specifying the name reservation to be cancelled and the name and address of the applicant or transferee.
(a) A foreign corporation may register its corporate name, or an assumed corporate name under which it transacts business, or its corporate name with any addition pursuant to § 48-25-106, if the name is distinguishable upon the records of the secretary of state from the corporate names that are not available under § 48-14-101(b).
(b) A foreign corporation registers its corporate name, or its assumed corporate name, or its corporate name with any addition pursuant to § 48-25-106, by delivering to the secretary of state for filing an application:
(1) Setting forth its corporate name, its assumed corporate name, or its corporate name with any addition pursuant to § 48-25-106, the state or country and date of its incorporation, and a brief description of the nature of the business in which it is engaged; and
(2) Accompanied by a certificate of existence (or a document of similar import) from the state or country of incorporation, which certificate shall bear a date of not more than one (1) month prior to the date the application is filed in this state.
(c) The name is registered for the applicant's exclusive use upon the effective date of the application and until the end of the calendar year in which such registration occurs.
(d) A foreign corporation whose registration is effective may renew it for successive years by delivering to the secretary of state for filing a renewal application, which complies with the requirements of subsection (b), between October 1 and December 31 of the preceding year. The renewal application renews the registration for the following calendar year.
(e) A foreign corporation whose registration is effective may thereafter qualify as a foreign corporation under that name or consent in writing to the use of that name by a corporation thereafter incorporated under chapters 11-27 of this title or by another foreign corporation thereafter authorized to transact business in this state. The registration terminates when the domestic corporation is incorporated or the foreign corporation qualifies or consents to the qualification of another foreign corporation under the registered name.
(a) Each corporation must continuously maintain in this state:
(1) A registered office that may be the same as any of its places of business; and
(2) A registered agent who maintains an office at the same street address as the registered office, and who may be:
(A) An individual who resides in this state, a domestic corporation, a not-for-profit domestic corporation, a domestic LLC, a domestic general partnership, a domestic limited partnership, or a domestic registered limited liability partnership; or
(B) A foreign corporation, a not-for-profit foreign corporation, a foreign LLC, a foreign general partnership, a foreign limited partnership, or a foreign registered limited liability partnership that is authorized to transact business in this state.
(b) If a registered agent resigns or is unable to perform the registered agent's duties, the designating corporation shall promptly designate another registered agent to the end that it shall at all times have a registered agent in this state.
(a) A corporation may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:
(1) The name of the corporation;
(2) If the current registered office is to be changed, the street address of the new registered office and the zip code for such office (and a mailing address such as a post office box if the United States postal service does not deliver to the registered agent’s registered office), and the county in which the office is located;
(3) If the current registered agent is to be changed, the name of the new registered agent; and
(4) That after the change or changes are made, the street addresses of its registered office and the business office of its registered agent will be identical.
(b) If a registered agent changes the street address of such registered agent's business office, such registered agent may change the street address of the registered office of any corporation for which such registered agent is the registered agent by notifying the corporation in writing of the change and signing (either manually or in facsimile) and delivering to the secretary of state for filing a statement that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.
(a) A registered agent may resign the registered agent's agency appointment by signing and filing with the secretary of state an original statement of resignation accompanied by the registered agent's certification that the registered agent has mailed a copy thereof to the principal office of the corporation by certified mail. The statement may include a statement that the registered office is also discontinued.
(b) The agency appointment is terminated, and the registered office discontinued if so provided, on the date on which the statement is filed by the secretary of state.
(a) A corporation's registered agent is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the corporation.
(b) Whenever a domestic or foreign corporation authorized to do business in this state fails to appoint or maintain a registered agent in this state, whenever its registered agent cannot be found with reasonable diligence, whenever a foreign corporation shall transact business or conduct affairs in this state without first procuring a certificate of authority to do so from the secretary of state, or whenever the certificate of authority of a foreign corporation shall have been withdrawn or revoked, then the secretary of state shall be an agent of such corporation upon whom any such process, notice or demand may be served.
(c) Whenever a domestic or foreign corporation authorized to do business in this state is an employer within the meaning of the Workers' Compensation Law and such corporation is, for the purpose of such Workers' Compensation Law, self insured or a part of a self-insurance pool as provided in title 50, chapter 6, part 4, such corporation shall, for workers' compensation actions only, be required to appoint the commissioner of commerce and insurance and the commissioner's chief deputy, or their successors, as its true and lawful attorneys upon either of whom all lawful process in any such action or legal proceeding against it may be served as is required of insurance companies by § 56-2-103.
(d) This section does not prescribe the only means, or necessarily the required means, of serving a corporation.
(a) Service on the secretary of state, when the secretary of state is an agent for a domestic or foreign corporation as provided in § 48-15-104(b), of any process, notice, or demand shall be made by delivering to the secretary of state the original and one (1) copy of such process, notice, or demand, duly certified by the clerk of the court in which the suit or action is pending or brought, together with the proper fee. A statement which identifies which of the grounds, as listed in § 48-15-104(b), for service on the secretary of state is applicable, must be included. The secretary of state shall endorse the time of receipt upon the original and copy and immediately shall send the copy, along with a written notice that service of the original was also made, by registered or certified mail, with return receipt requested, addressed to such corporation at its registered office (or designated alternative mailing address) or principal office (or designated alternative mailing address) as shown in the records on file in the secretary of state's office or as shown in the official registry of the state or country in which such corporation is incorporated. If none of the previously mentioned addresses are available to the secretary of state, service may be made on any one (1) of the incorporators at the address set forth in the charter. The secretary of state may require the plaintiff (or complainant as the case may be) or the plaintiff's (or complainant's) attorney to furnish the latter address.
(b) The refusal or failure of such corporation to accept delivery of the registered or certified mail provided for in subsection (a), or the refusal or failure to sign the return receipt, shall not affect the validity of such service; and any such corporation refusing or failing to accept delivery of such registered or certified mail shall be charged with knowledge of the contents of any process, notice, or demand contained therein.
(c) When the registered or certified mail return receipt is received by the secretary of state or when a corporation refuses or fails to accept delivery of the registered or certified mail and it is returned to the secretary of state, the secretary of state shall forward the receipt or such refused or undelivered mail to the clerk of the court in which the suit or action is pending, together with the original process, notice, or demand, a copy of the notice the secretary of state sent to the defendant corporation and the secretary of state's affidavit setting forth the secretary of state's compliance with this section. Upon receipt thereof, the clerk shall copy the affidavit on the rule docket of the court and shall mark it, the receipt or refused or undelivered mail, and the copy of notice as of the day received and place them in the file of the suit or action where the process and pleadings are kept, and such receipt or refused or undelivered mail, affidavit, and copy of notice shall be and become a part of the technical record in the suit or action and thereupon service on the defendant shall be complete. Service made under this section shall have the same legal force and validity as if the service had been made personally in this state.
(d) Subsequent pleadings or papers permitted or required to be served on such defendant domestic or foreign corporation may be served on the secretary of state as agent for such defendant corporation in the same manner, at the same cost and with the same effect as process, notice, or demand are served on the secretary of state as agent for such defendant corporation under this section.
(e) No appearance shall be required in the suit or action by the defendant domestic or foreign corporation nor shall any judgment be taken against the defendant domestic or foreign corporation in less than one (1) month after the date service is completed under this section.
(f) The secretary of state shall keep a record of all processes, notices, and demands served upon the secretary of state under this section, which record shall include the time of such service and the secretary of state's action with reference thereto.
(a) The charter must prescribe the number of shares of each class that the corporation is authorized to issue. If more than one (1) class of shares is authorized, the charter must prescribe a distinguishing designation for each class, and prior to the issuance of shares of a class, the preferences, limitations, and relative rights of that class must be described in the charter. All shares of a class must have preferences, limitations, and relative rights identical with those of other shares of the same class except to the extent otherwise permitted by § 48-16-102.
(b) The charter must authorize:
(1) One (1) or more classes of shares that together have unlimited voting rights; and
(2) One (1) or more classes of shares (which may be the same class or classes as those with voting rights) that together are entitled to receive the net assets of the corporation upon dissolution.
(c) The charter may authorize one (1) or more classes of shares that:
(1) Have special, conditional, or limited voting rights, or no right to vote, except to the extent prohibited by chapters 11-27 of this title;
(2) Are redeemable or convertible as specified in the charter:
(A) At the option of the corporation, the shareholder, or another person or upon the occurrence of a designated event;
(B) For cash, indebtedness, securities, or other property;
(C) In a designated amount or in an amount determined in accordance with a designated formula or by reference to extrinsic data or events;
(3) Entitle the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative, or partially cumulative;
(4) Have preference over any other class of shares with respect to distributions, including dividends and distributions upon the dissolution of the corporation; or
(5) Have a par value; provided, that the mere recitation of a par value for shares shall not create a requirement for a minimum consideration for the issuance of any such shares or impose any other restriction on their issuance or create any other right or liability with respect thereto.
(d) The description of the designations, preferences, limitations, and relative rights of share classes in subsection (c) is not exhaustive.
(e) Any of the voting rights, preferences, limitations and relative rights of any class or series of shares authorized under this section may be made dependent upon facts ascertainable outside the charter; provided, that the manner in which such facts shall operate upon the voting powers, preferences, limitations and relative rights is set forth in reasonable detail in the charter.
(a) If the charter so provides, the board of directors may determine, in whole or part, the preferences, limitations, and relative rights (within the limits set forth in § 48-16-101) of:
(1) Any class of shares before the issuance of any shares of that class; or
(2) One (1) or more series within a class before the issuance of any shares of that series.
(b) Each series of a class must be given a distinguishing designation.
(c) All shares of a series must have preferences, limitations, and relative rights identical with those of other shares of the same series and, except to the extent otherwise provided in the description of the series, with those of other series of the same class.
(d) Before issuing any shares of a class or series created under this section, the corporation must deliver to the secretary of state for filing articles of amendment, which are effective without shareholder action, that set forth:
(1) The name of the corporation;
(2) The text of the amendment determining the terms of the class or series of shares;
(3) The date it was adopted; and
(4) A statement that the amendment was duly adopted by the board of directors.
(a) A corporation may issue the number of shares of each class or series authorized by the charter. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted, or cancelled.
(b) The reacquisition, redemption, or conversion of outstanding shares is subject to the limitation of subsection (c) and to § 48-16-401.
(c) At all times that shares of the corporation are outstanding, one (1) or more shares that together have unlimited voting rights and one (1) or more shares that together are entitled to receive the net assets of the corporation upon dissolution must be outstanding.
(1) Issue fractions of a share or pay in money the value of fractions of a share;
(2) Arrange for disposition of fractional shares by the shareholders; and
(3) Issue scrip in registered or bearer form entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.
(b) Each certificate representing scrip must be conspicuously labeled “scrip” and must contain the information required by § 48-16-206(b).
(c) The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them.
(d) The board of directors may authorize the issuance of scrip, subject to any condition considered desirable, including that:
(1) The scrip will become void if not exchanged for full shares before a specified date; and
(2) The shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.
(a) A subscription for shares entered into before incorporation shall be in writing, and any such subscription shall be irrevocable for six (6) months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation.
(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 twenty (20) days after the corporation sends written demand for payment to the subscriber.
(e) A subscription agreement entered into after incorporation shall be in writing and is a contract between the subscriber and the corporation subject to § 48-16-202.
(a) The powers granted in this section to the board of directors may be reserved to the shareholders by the charter.
(b) 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 benefits to be received, or other securities of the corporation.
(c) Before the corporation issues shares, the board of directors shall determine that the consideration received or to be received for shares to be issued is adequate. A decision by the board of directors to accept consideration for shares shall be deemed a determination that the consideration is adequate. A determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid, and nonassessable.
(d) 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. For the purposes of this subsection (d), when and to the extent consideration for the issuance of shares consists of a promissory note or contract for services or other benefits, the corporation has received such consideration at the time such note is issued or contract is entered into.
(e) 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 in part.
(a) A purchaser from a corporation of its own shares is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued (§ 48-16-202) or specified in a preincorporation subscription agreement (§ 48-16-201).
(b) A shareholder of a corporation is not personally liable for the acts or debts of the corporation except that the shareholder may become personally liable by reason of the shareholder's own acts or conduct.
(c) 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 therefor has not been paid shall not be personally liable for any unpaid portion of such consideration, but the transferor shall remain liable therefor, whether such assignment or transfer be voluntary or involuntary.
(d) No person holding shares in any corporation as collateral security shall be personally liable as a shareholder, but the person pledging such shares shall be considered the holder thereof and shall be so liable. No executor, administrator, guardian, trustee, or other fiduciary shall be personally liable as a shareholder, but the estate and funds in the hands of such executor, administrator, guardian, trustee, or other fiduciary shall be liable.
(a) Unless the charter provides otherwise, shares may be issued pro rata and without consideration to the corporation's shareholders or to the shareholders of one (1) or more classes or series. An issuance of shares under this subsection (a) is a share dividend.
(b) Shares of one (1) class or series may not be issued as a share dividend in respect of shares of another class or series unless:
(1) The charter so authorizes;
(2) A majority of the votes entitled to be cast by the class or series to be issued approves the issue; or
(3) There are no outstanding shares of the class or series to be issued.
(c) If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date the board of directors authorizes the share dividend.
(a) Unless the charter otherwise provides, a corporation, by its directors, may grant rights, options or warrants to subscribe for or to purchase shares of any authorized class, at the times and on the terms that are set forth in such rights, options or warrants, or in the contracts, warrants or instruments that evidence such rights, options or warrants, which contracts, warrants or instruments may be transferable or nontransferable and may be separable or inseparable from such rights, options or warrants upon the following conditions:
(1) If the shares are subject to preemptive rights and if the rights, options or warrants are not granted to shareholders in satisfaction of their preemptive rights, the granting of the rights, options or warrants must be authorized by the vote or consent of the shareholders or holders of shares of particular classes that then would be required to waive or release such preemptive rights; the vote or consent shall release the preemptive rights to the shares required to satisfy the rights, options or warrants if and when exercised; and
(2) If at the time of granting the rights, options or warrants the corporation does not have authorized and unissued shares sufficient to satisfy the rights, options or warrants if and when exercised, the granting of the rights, options or warrants must be authorized by the vote of the shareholders or holders of shares of particular classes that then would be required to adopt an amendment to the charter for the purpose of increasing the authorized number of such shares, and the shares required to be issued upon the exercise of the rights, options or warrants shall be provided by an amendment concurrently or thereafter adopted by the shareholders or the directors.
(b)
(1) The securities, contracts, warrants or instruments that evidence the rights, options or warrants may contain any terms not repugnant to law, including, but not limited to, the following:
(A) Restrictions upon the authorization or issuance of additional shares;
(B) Provisions for the adjustment of the exercise price;
(C) Provisions concerning rights in the event of reorganization, merger, share exchange or sale of the entire assets of the corporation;
(D) Provisions for the reservation of authorized but unissued shares to satisfy the rights, options or warrants;
(E) Restrictions upon the declaration of payment of dividends or distributions; or
(F) Conditions on the exercise of the rights, options or warrants, including, subject to the limitation specified in subdivision (b)(2), conditions that preclude a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation, or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising the rights, options or warrants.
(2) The express or implied authority conferred by subdivision (b)(1) or any other section of this chapter for securities, contracts, warrants, or instruments that evidence such rights, options or warrants to contain a condition on the exercise of such rights, options or warrants that precludes a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation, or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising rights, options or warrants, shall apply only to:
(A) A corporation that has issued and has outstanding shares listed on a national securities exchange or is regularly quoted in an over-the-counter market by one (1) or more members of a national or affiliated securities association; or
(B) A corporation that has adopted a shareholder's agreement pursuant to which rights, options or warrants are granted, if the securities, contracts, warrants or instruments that evidence the rights, options or warrants contain a condition that precludes a holder, including, but not limited to, a holder of at least a specified number or percentage of the outstanding common shares of the corporation or a holder offering to purchase at least a specified number or percentage of the outstanding common shares of the corporation, from exercising the rights, options or warrants.
(c) Subject to the conditions set forth in subsection (a), the board of directors may authorize one (1) or more officers to designate the recipients of rights, options, warrants or other equity compensation awards that involve the issuance of shares and determine, within an amount and subject to any other limitations established by the board and, if applicable, the stockholders, the number of such rights, options, warrants or other equity compensation awards and the terms thereof to be received by the recipients; provided, that no officer shall use such authority to designate either such officer or such other persons as the board of directors may specify as a recipient of such rights, options, warrants or other equity compensation awards.
(d) As used in this section, “securities” includes obligations and shares of the corporation.
(e) This section shall apply to any rights, options or warrants, or any contracts, warrants, or instruments that evidence such rights, options or warrants which were issued subsequent to January 1, 1985.
(a) Shares may but need not be represented by certificates. Unless chapters 11-27 of this title or another statute expressly provides otherwise, the rights and obligations of shareholders are identical whether or not their shares are represented by certificates.
(b) At a minimum each share certificate must state on its face:
(1) The name of the issuing corporation and that it is organized under the laws of this state;
(2) The name of the person to whom issued; and
(3) The number and class of shares and the designation of the series, if any, the certificate represents.
(c) If the issuing corporation is authorized to issue different classes of shares or different series within a class, the designations, relative rights, preferences, and limitations applicable to each class and the variations in rights, preferences, and limitations determined for each series (and the authority of the board of directors to determine variations for future series) must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge.
(d) Each share certificate:
(1) Shall be signed (either manually or in facsimile) by two (2) officers designated in the bylaws or by the board of directors; and
(2) May bear the corporate seal or its facsimile.
(e) If the person who signed (either manually or in facsimile) a share certificate no longer holds office when the certificate is issued, the certificate is nevertheless valid.
(a) Unless the charter or bylaws provide otherwise, the board of directors of a corporation may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation.
(b) Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement of the information required on certificates by § 48-16-206(b) and (c), and, if applicable, § 48-16-208, except that no such written statement need be sent by a corporation in respect of shares that are not subject to any restriction on transfer described in § 48-16-208 and that are issued by a corporation subject to the reporting requirements of § 13 of the Securities Exchange Act of 1934 (15 U.S.C. § 78m).
(a) The charter, bylaws, an agreement among shareholders, or an agreement between 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.
(b) 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 section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by § 48-16-207(b). Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.
(c) 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; or
(3) For any other reasonable purpose.
(d) 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; or
(4) Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
(e) For purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.
A corporation may pay the expenses of selling or underwriting its shares, and of organizing or reorganizing the corporation, from the consideration received for shares.
(a) The shareholders of a corporation, solely by virtue of their status as such, do not have a preemptive right to acquire the corporation's unissued shares except to the extent the charter so provides.
(b) A statement included in the charter that “the corporation elects to have preemptive rights” (or words of similar import) means that the following principles apply except to the extent the charter expressly provides 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 this 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:
(A) Shares issued as compensation to directors, officers, agents, or employees of the corporation, its subsidiaries or affiliates;
(B) 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;
(C) Shares authorized in the charter that are issued within six (6) months from the effective date of incorporation; or
(D) Shares sold otherwise than for cash;
(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; and
(6) Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person for a period of one (1) 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 (1) 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.
(d) This section does not limit or otherwise affect the ability of a corporation to grant by contract to one (1) or more of its shareholders the right to acquire shares on a preemptive or other priority basis.
(1) A corporation may acquire its own shares and shares so acquired constitute authorized but unissued shares.
(2) Shares of a class or a series, the preferences, limitations and relative rights of which were determined by the board of directors pursuant to § 48-16-102, that are acquired by the corporation shall constitute authorized but unissued shares having the same preferences, limitations and relative rights as the shares so acquired; provided, that, if the charter so provides, such authorized but unissued shares may instead constitute or be included in a class of shares with respect to which the board may again determine the preferences, limitations and relative rights under § 48-16-102.
(b) If the charter prohibits the reissue of acquired shares, the number of authorized shares is reduced by the number of shares acquired, effective upon amendment of the charter.
(c) The board of directors may adopt articles of amendment that are required by subsection (b) without shareholder action, and deliver them to the secretary of state for filing. The articles must set forth:
(1) The name of the corporation;
(2) The reduction in the number of authorized shares, itemized by class and series; and
(3) The total number of authorized shares, itemized by class and series, remaining after reduction of the shares.
(a) A board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the charter and the limitation in subsection (c).
(b) If the board of directors does not fix the record date for determining shareholders entitled to a distribution (other than one involving a repurchase or reacquisition of shares), it is the date the board of directors authorizes the distribution.
(c) No distribution may be made if, after giving it effect:
(1) The corporation would not be able to pay its debts as they become due in the usual course of business; or
(2) The corporation's total assets would be less than the sum of its total liabilities plus (unless the charter permits 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.
(d) The board of directors may base a determination that a distribution is not prohibited under subsection (c) 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.
(e) Except as provided in subsection (g), the effect of a distribution under subsection (c) 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 or distribution through the incurrence of indebtedness, as of the date the indebtedness is distributed or incurred. In a case in which the incurrence of indebtedness is the granting of a mortgage, security interest, lien, or other encumbrance of the corporation's assets, the indebtedness shall be deemed to be incurred on the date of the execution and delivery of the security instrument granting such mortgage, security interest, lien, or other encumbrance; and
(3) In all other cases, as of:
(A) The date the distribution is authorized if the payment occurs within four (4) months after the date of authorization; or
(B) The date the payment is made if it occurs more than four (4) months after the date of authorization.
(f) 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.
(g) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (c) if its terms provide that payment of principal and interest are to be made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness referred to in the preceding sentence 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.
(a) Unless directors are elected by written consent in lieu of an annual meeting as permitted by § 48-17-104, a corporation shall hold a meeting of shareholders annually at a time stated in, or fixed in accordance with, the bylaws.
(b) Annual shareholders' meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation's principal office.
(c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporate action.
(a) A corporation shall hold a special meeting of shareholders:
(1) On call of its board of directors or the person or persons authorized to do so by the charter or bylaws; or
(2) Unless the charter otherwise provides, if the holders of at least ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date, and deliver to the corporation's secretary one (1) or more written demands for the meeting describing the purpose or purposes for which it is to be held.
(b) If not otherwise fixed under § 48-17-103 or § 48-17-107, the record date for determining shareholders entitled to demand a special meeting is the date the first shareholder signs the demand.
(c) Special shareholders' meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings shall be held at the corporation's principal office.
(d) Only business within the purpose or purposes described in the meeting notice required by § 48-17-105(c) may be conducted at a special shareholders' meeting.
(a) A court of record having equity jurisdiction in the county where a corporation's principal office (or, if none in this state, its registered office) is located may summarily order a meeting to be held on application of:
(1) Any shareholder of the corporation entitled to participate in an annual meeting, if an annual meeting was not held within the earlier of six (6) months after the end of the corporation's fiscal year or fifteen (15) months after its last annual meeting; or
(2) A shareholder who signed a demand for a special meeting valid under § 48-17-102, if:
(A) Notice of the special meeting was not given within one (1) month after the date the demand was delivered to the corporation's secretary; or
(B) The special meeting was not held in accordance with the notice.
(b) The court may fix the time and place of the meeting, determine the shares entitled to participate in the meeting, specify a record date for determining shareholders entitled to notice of and vote at the meeting, prescribe the form and content of the meeting notice, fix the quorum required for specific matters to be considered at the meeting (or direct that the votes represented at the meeting constitute a quorum for action on those matters) and enter other orders necessary to accomplish the purpose or purposes of the meeting.
(a) Action required or permitted by chapters 11-27 of this title to be taken at a shareholders' meeting may be taken without a meeting. If all shareholders entitled to vote on the action consent to taking such action without a meeting, the affirmative vote of the number of shares that would be necessary to authorize or take such action at a meeting is the act of the shareholders. The action must be evidenced by one (1) or more written consents describing the action taken, signed by each shareholder entitled to vote on the action in one (1) or more counterparts, indicating each signing shareholder's vote or abstention on the action, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) The charter may provide that any action required or permitted by chapters 11-27 of this title to be taken at a shareholders' meeting may be taken without a meeting, and without prior notice, if consents in writing setting forth the action so taken are signed by the holders of outstanding shares having not less than the minimum number of votes that would be required to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted. The written consent shall bear the date of signature of the shareholder who signs the consent and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(c) If not otherwise determined under § 48-17-103 or § 48-17-107, the record date for determining shareholders entitled to take action without a meeting is the date the first shareholder signs the consent under subsection (a).
(d) A consent signed under this section has the effect of a meeting vote and may be described as such in any document. Unless the charter, bylaws or a resolution of the board of directors provides for a reasonable delay to permit tabulation of written consents, the action taken by written consent shall be effective when written consents signed by sufficient shareholders to take the action are delivered to the corporation.
(e) If chapters 11-27 of this title or the charter requires that notice of proposed action be given to nonvoting shareholders and the action is to be taken by consent of the voting shareholders, then the corporation must give its nonvoting shareholders written notice of the proposed action at least ten (10) days before the action is taken. The notice must contain or be accompanied by the same material that under chapters 11-27 of this title would have been required to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action.
(f)
(1) If action is taken by less than unanimous written consent of the voting shareholders, the corporation must give its nonconsenting voting shareholders written notice of the action not more than ten (10) days after:
(A) Written consents sufficient to take the action have been delivered to the corporation; or
(B) Such later date that tabulation of consents is completed pursuant to an authorization under subsection (d).
(2) The notice must reasonably describe the action taken and contain or be accompanied by the same material that chapters 11-27 of this title would require to be sent to voting shareholders in a notice of a meeting at which the action would have been submitted to the shareholders for action.
(g) The notice requirements in subsections (e) and (f) shall not delay the effectiveness of actions taken by written consent, and a failure to comply with such notice requirements shall not invalidate actions taken by written consent; provided, that this subsection (g) shall not be deemed to limit judicial power to fashion any appropriate remedy in favor of a shareholder adversely affected by a failure to give such notice within the required time period.
(h) An electronic transmission may be used to consent to an action, if the electronic transmission contains or is accompanied by information from which the corporation can determine the date on which the electronic transmission was signed and that the electronic transmission was authorized by the shareholder, the shareholder's agent or the shareholder's attorney-in-fact.
(i) Delivery of a written consent to the corporation under this section is delivery to the corporation's registered agent at its registered office (or to a designated mailing address such as a post office box if the United States postal service does not deliver to the registered agent's registered office) or to the secretary of the corporation at its principal office (or to a designated mailing address such as a post office box if the United States postal service does not deliver to the corporation's principal office).
(a) A corporation shall notify shareholders of the date, time, and place of each annual and special shareholders' meeting no fewer than ten (10) days nor more than two (2) months before the meeting date. Unless chapters 11-27 of this title or the charter requires otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting.
(b) Unless chapters 11-27 of this title or the charter requires otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called.
(c) Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called.
(d) If not otherwise fixed under § 48-17-103 or § 48-17-107, the record date for determining shareholders entitled to notice of and to vote at an annual or special shareholders' meeting is the close of business on the day before the first notice is mailed or otherwise dispatched to shareholders.
(e) 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 under § 48-17-107, however, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date.
(f) A certificate of the secretary or other person giving the notice, or of a transfer agent of the corporation, that the notice required by this section has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
(a) A shareholder may waive any notice required by chapters 11-27 of this title, the charter, 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.
(b) A shareholder's attendance at a meeting:
(1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting (or promptly upon the shareholder's arrival) objects to holding the meeting or transacting business at the meeting; and
(2) 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.
(a) The bylaws may fix or provide the manner of fixing the record date for one (1) or more voting groups in order to determine the shareholders entitled to notice of a shareholders' meeting, to demand a special meeting, to vote, or to take any other action. If the bylaws do not fix or provide for fixing a record date, the board of directors of the corporation may fix a future date as the record date.
(b) A record date fixed under this section may not be more than seventy (70) days before the meeting or action requiring a determination of shareholders.
(c) A determination of shareholders entitled to notice of or vote at a shareholders' meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it must do if the meeting is adjourned to a date more than four (4) months after the date fixed for the original meeting.
(d) If a court orders a meeting adjourned to a date more than four (4) months after the date fixed for the original meeting, it may provide that the original record date continues in effect or it may fix a new record date.
Each fiduciary, including such acting as executor, administrator, guardian, committee, agent, or trustee, who is a shareholder of record, whether the corporation issuing such shares is foreign or domestic, may waive notice or lapse of time pursuant to § 48-17-106 and may consent to the taking of any corporate action pursuant to § 48-17-104.
(a) Unless the charter or bylaws provide otherwise, and subject to guidelines and procedures as the corporation may adopt, a corporation may permit any or all shareholders and proxyholders to participate in a regular or special meeting by, and the corporation may conduct the meeting through the use of, any means of remote communication if:
(1) The corporation implements 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 proxyholder;
(2) The corporation implements reasonable measures to provide shareholders and proxyholders 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 the proceedings; and
(3) The corporation maintains a record of any vote or other action taken by a shareholder or proxyholder that is taken by means of remote communication.
(b) A shareholder or proxyholder who participates in a meeting by the means described in this section, whether the meeting is to be held at a designated place or solely by means of remote communication, is deemed to be present in person at the meeting.
(a) At each meeting of shareholders, a chair shall preside. The chair shall be appointed as provided in the bylaws or, in the absence of such provision, by the board.
(b) The chair, unless the charter or bylaws provide otherwise, shall determine the order of business and shall have the authority to establish rules for the conduct of the meeting.
(c) Any rules adopted for, and the conduct of, the meeting shall be fair to shareholders.
(d) The chair of the meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls shall be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes nor any revocations or changes thereto may be accepted.
(a) After fixing a record date for a meeting, a corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of a shareholders' meeting. The list must be arranged by voting group (and within each voting group by class or series of shares) and show the address of and number of shares held by each shareholder, in each case as reflected in the records of the corporation.
(b) The shareholders' list must be available for inspection by any shareholder, beginning two (2) business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder, or the shareholder's agent or attorney, is entitled on written demand to inspect and, subject to the requirements of § 48-26-102(c), to copy the list, during regular business hours and at such shareholder's or agent's expense, during the period it is available for inspection.
(c) The corporation shall make the shareholders' list available at the meeting, and any shareholder, or the shareholder's agent or attorney, is entitled to inspect the list at any time during the meeting or any adjournment. If the right to vote at any meeting is challenged, the person presiding may rely on such list as evidence of the right of the person challenged to vote at such meeting.
(d) If the corporation refuses to allow a shareholder, the shareholder's agent, or attorney to inspect the shareholders' list before or at the meeting (or copy the list as permitted by subsection (b)), a court of record having equity jurisdiction in the county where a corporation's principal office (or, if none in this state, its registered office) is located, on application of the shareholder, may summarily order the inspection or copying at the corporation's expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete.
(e) Refusal or failure to prepare or make available the shareholders' list does not affect the validity of action taken at the meeting.
(a) Except as provided in subsections (b) and (c) or unless the charter provides otherwise, each outstanding share, regardless of class, is entitled to one (1) vote on each matter voted on at a shareholders' meeting. Except as provided in subsection (f), only shares are entitled to vote.
(b) Absent special circumstances, the shares of a corporation are not entitled to vote if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the first corporation owns, directly or indirectly, a majority of the shares entitled to vote for directors of the second corporation, and no such shares shall be counted in determining the total number of outstanding shares of the corporation at any given time.
(c) Subsection (b) does not limit the power of a corporation to vote any shares, including its own shares, held by it in a fiduciary capacity.
(d) Redeemable shares are not entitled to vote after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares, and no such shares shall be counted in determining the total number of outstanding shares of the corporation at any given time.
(e) Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the bylaws of such corporation may prescribe or, in the absence of a bylaw provision, as the board of directors of such corporation may determine. The corporation whose shares are being voted may rely on the representations of such officer, agent, or proxy as to the authority unless such authority is questioned.
(f) A corporation may in its charter confer upon the holders of any bonds, debentures or other debt obligations the power to vote in respect of its corporate affairs and management of the corporation to the extent and in the manner provided in the charter and may confer upon such holders of bonds, debentures or other debt obligations the same right of inspection of its books, accounts and other records, and also any other rights, which the shareholders of the corporation have or may have by reason of chapters 11-27 of this title or of its charter. If and to the extent the charter so provides, such holders shall be deemed to be shareholders, and their bonds, debentures or other debt obligations shall be deemed to be shares of stock, for the purpose of any provision of this title which requires the vote of shareholders as a prerequisite to any corporate action, and the charter may divest the holders of shares of capital stock, in whole or in part, of their right to vote on any corporate matter whatsoever, except as set forth in § 48-20-104.
(a) A shareholder may vote such shareholder's shares in person or by proxy.
(b) Without limiting the manner in which a shareholder may authorize another person or persons to act for the shareholder as proxy pursuant to this section, the following shall constitute a valid means by which a shareholder may grant such authority:
(1) A shareholder may execute a writing authorizing another person or persons to act for the shareholder as proxy. Execution may be accomplished by the shareholder personally signing such writing or by an attorney-in-fact in the case of an individual shareholder or by an authorized officer, director, employee, agent or attorney-in-fact in the case of any other shareholder signing such writing or causing the shareholder's signature to be affixed to such writing by any reasonable means, including, but not limited to, facsimile signature;
(2) A shareholder may authorize another person or persons to act for the shareholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram, or electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission; provided, that any such telegram, cablegram, or electronic transmission shall either set forth or be submitted with information from which it can be determined that the telegram, cablegram, or electronic transmission was authorized by the shareholder. If it is determined that such telegrams, cablegrams, or electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making such determination shall specify the information upon which they relied;
(3) Any copy, electronic transmission or other reliable reproduction of such writing or transmission 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 such copy, electronic transmission or other reproduction shall be a complete reproduction of the entire original writing or transmission.
(c) An appointment of a proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment is valid for eleven (11) months unless another period is expressly provided in the appointment form.
(d) An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include the appointment of:
(1) A pledgee;
(2) A person who purchased or agreed to purchase the shares;
(3) A creditor of the corporation who extended it credit under terms requiring the appointment;
(4) An employee of the corporation whose employment contract requires the appointment; or
(5) A party to a voting agreement created under § 48-17-302.
(e) In the case of a proxy not made irrevocable under subsection (d), 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 the proxy's authority under the appointment.
(f) An appointment made irrevocable under subsection (d) becomes revocable when the interest with which it is coupled is extinguished.
(g) A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if the transferee did not know of its existence when such transferee acquired the shares and the existence of the irrevocable appointment was not noted conspicuously on the certificate representing the shares or on the information statement for shares without certificates.
(h) Subject to § 48-17-205 and to any express limitation on the proxy's authority appearing on the face of the appointment form, a corporation is entitled to accept the proxy's vote or other action as that of the shareholder making the appointment.
(i) Each fiduciary, including such acting as executor, administrator, guardian, committee, agent, or trustee, owning shares registered in such person's name as fiduciary, or in the name of another for the convenience of the fiduciary, whether the corporation issuing such shares is foreign or domestic, may, in addition to exercising the voting rights vested in such fiduciary, execute and deliver, or cause to be executed and delivered, a proxy or proxies in accordance with this section to others for the voting of such shares, but subject always to the following limitations:
(1) If there are two (2) or more fiduciaries acting, the proxy shall be executed by, and voting instructions shall be issued by, agreement of all fiduciaries or a majority of them, and in the event of failure to obtain a majority, each of the fiduciaries shall vote the number of shares held by the fiduciaries divided by the number of fiduciaries; and
(2) In the event the rights, manner or method of voting or the purpose to be accomplished is fixed by the instrument or instruments appointing the fiduciaries, the directions therein shall govern.
(a) A corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder. The extent of this recognition may be determined in the procedure.
(b) The procedure may set forth:
(1) The types of nominees to which it applies;
(2) The rights or privileges that the corporation recognizes in a beneficial owner;
(3) The manner in which the procedure is selected by the nominee;
(4) The information that must be provided when the procedure is selected;
(5) The period for which selection of the procedure is effective; and
(6) Other aspects of the rights and duties created.
(a) If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a shareholder, the corporation if acting in good faith is entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy appointment does not correspond to the name of its shareholder, the corporation if acting in good faith is nevertheless entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder if:
(1) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity;
(2) The name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment;
(3) The name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment;
(4) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder has been presented with respect to the vote, consent, waiver, or proxy appointment; or
(5) Two (2) or more persons are the shareholder as cotenants or fiduciaries and the name signed purports to be the name of at least one (1) of the co-owners and the person signing appears to be acting on behalf of all the co-owners.
(c) The corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder.
(d) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section are not liable in damages to the shareholder for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.
(a) Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the charter or chapters 11-27 of this title provide otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. If a quorum of the shares entitled to vote as a voting group shall fail to be obtained at any meeting, the chair of the meeting or the holders of a majority of the shares of such voting group who are present, in person or by proxy, may adjourn the meeting to another place, date or time and no notice of such place, date or time need be given except as required in § 48-17-105(e).
(b) Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.
(c) If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the charter or chapters 11-27 of this title requires a greater number of affirmative votes.
(d) A charter amendment adding, changing, or deleting a quorum or voting requirement for a voting group greater than specified in subsection (a) or (c) is governed by § 48-17-208.
(e) The election of directors is governed by § 48-17-209.
(a) If the charter or chapters 11-27 of this title provide for voting by a single voting group on a matter, action on that matter is taken when voted upon by the voting group as provided in § 48-17-206.
(b) If the charter or chapters 11-27 of this title provide for voting by two (2) or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately as provided in § 48-17-206. Action may be taken by one (1) voting group on a matter even though no action is taken by another voting group entitled to vote on the matter.
(a) The charter may provide for a greater quorum or voting requirement for shareholders (or voting groups of shareholders) than is provided for by chapters 11-27 of this title.
(b) An amendment to the charter that adds, changes, or deletes a greater quorum or voting requirement shall meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever is greater.
(a) Unless otherwise provided in the charter, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.
(b) Shareholders do not have a right to cumulate their votes for directors unless the charter so provides.
(c) A statement included in the charter that “(all) (a designated voting group of) shareholders are entitled to cumulate their votes for directors” (or words of similar import) means that the shareholders designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two (2) or more candidates.
(d) Shares otherwise entitled to vote cumulatively may not be voted cumulatively at a particular meeting unless:
(1) The meeting notice or proxy statement accompanying the notice states conspicuously that cumulative voting is authorized; or
(2) A shareholder who has the right to cumulate that shareholder's votes gives notice to the corporation no fewer than forty-eight (48) hours before the time set for the meeting of that shareholder's intent to cumulate that shareholder's votes during the meeting, and if one (1) shareholder gives this notice, all other shareholders in the same voting group participating in the election are entitled to cumulate their votes without giving further notice.
(a) One (1) stockholder, or two (2) or more stockholders by agreement, may in writing deposit capital stock of an original issue with or transfer capital stock to any person or entity authorized to act as trustee, for the purpose of vesting in the person or entity, who may be designated voting trustee, or voting trustees, the right to vote thereon for any period of time determined by such agreement, upon the terms and conditions stated in such agreement. The agreement may contain any other lawful provisions not inconsistent with such purpose. After delivery of a copy of the agreement to the registered office of the corporation in this state or the principal place of business of the corporation, which copy must be open to the inspection of any stockholder of the corporation or any beneficiary of the trust under the agreement daily during business hours, certificates of stock or uncertificated stock must be issued to the voting trustee or trustees to represent any stock of an original issue so deposited with such voting trustee or trustees, and any certificates of stock or uncertificated stock so transferred to the voting trustee or trustees must be surrendered and cancelled and new certificates or uncertificated stock must be issued to the voting trustee or trustees. A certificate so issued must state that it is issued pursuant to such agreement, and that fact must also be stated in the stock ledger of the corporation. The voting trustee or trustees may vote the stock so issued or transferred during the period specified in the agreement. Stock standing in the name of the voting trustee or trustees may be voted either in person or by proxy, and in voting the stock, the voting trustee or trustees shall not incur responsibility as stockholder, trustee, or otherwise, except for their own individual malfeasance. In any case where two (2) or more persons or entities are designated as voting trustees, and the right and method of voting any stock standing in their names at any meeting of the corporation are not fixed by the agreement appointing the trustees, the right to vote the stock and the manner of voting it at the meeting shall be determined by a majority of the trustees, or if the trustees are equally divided as to the right and manner of voting the stock in any particular case, the vote of the stock in such case must be divided equally among the trustees.
(b) Any amendment to a voting trust agreement must be made by a written agreement, a copy of which must be delivered to the registered office of the corporation in this state or principal place of business of the corporation.
(c) This section does not invalidate any voting or other agreement among stockholders or any irrevocable proxy that is not otherwise illegal.
(a) An agreement between two (2) or more shareholders, if in writing and signed by the parties thereto, may provide that, in exercising any voting rights, the shares held by them shall be voted as therein provided, or as they may agree, or as determined in accordance with a procedure agreed upon by them. Nothing in this subsection (a) shall impair the right of the corporation to treat the shareholders of record as entitled to vote the shares standing in their names. A voting agreement created under this section is not subject to § 48-17-301 and may be specifically enforced.
(b) No written agreement to which all or less than all the shareholders have actually assented, whether embodied in the charter or bylaws or in any agreement in writing signed by all the parties thereto, which agreement relates to any phase of the affairs of the corporation, whether to the management of its business or to the division of its profits or otherwise, shall be invalid as between the parties thereto on the ground that it is an attempt by the parties thereto to restrict the discretion of the board of directors in its management of the business of the corporation or to treat the corporation as if it were a partnership or to arrange their relationships in a manner that would be appropriate only between partners.
(c) A transferee of shares in a corporation whose shareholders have entered into an agreement authorized by subsection (a) or (b) shall be bound by such agreement if the transferee takes the shares with notice thereof. A transferee shall be deemed to have notice of any such agreement or any such renewal if the existence thereof is noted on the face or back of the certificate or certificates representing such shares.
(d) The effect of any agreement authorized by subsection (b) shall be to relieve the directors and impose upon the shareholders assenting thereto the liability for managerial acts or omissions that is imposed on directors by law, to the extent that and so long as the discretion or powers of the board of directors, in its management of corporate affairs, are controlled by any such agreement.
(a) A person may not commence a proceeding in the right of a domestic or foreign corporation unless the person was a shareholder of the corporation when the transaction complained of occurred or unless the person became a shareholder through transfer by operation of law from one who was a shareholder at that time.
(b) A complaint in a proceeding brought in the right of a corporation must be verified and allege with particularity the demand made, if any, to obtain action by the board of directors and either that the demand was refused or ignored or why the person did not make the demand. Whether or not a demand for action was made, if the corporation commences an investigation of the charges made in the demand or complaint, the court may stay any proceeding until the investigation is completed.
(c) A proceeding commenced under this section 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 interest of the corporation's shareholders or a class of shareholders, the court shall direct that notice be given the shareholders affected. If notice is so directed to be given, the court may determine which one (1) or more parties to the suit shall bear the expense of giving such notice, in such proportions as the court finds to be reasonable in the circumstances, and the amount of such expense shall be awarded as special costs of the suit and recoverable in the same manner as other taxable costs.
(d) On termination of the proceeding, the court may order:
(1) The corporation to pay the plaintiff's reasonable expenses, including counsel fees, incurred in the proceeding, if the court finds that the proceeding has resulted in a substantial benefit to the corporation;
(2) The plaintiff to pay any defendant's reasonable expenses, including counsel fees, incurred in defending the proceeding, if the court finds that the proceeding was commenced or maintained without reasonable cause or for an improper purpose; or
(3) 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 the court 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.
(e) For purposes of this section, “shareholder” includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the beneficial owner's behalf.
(a) Except as provided in subsection (c), each corporation must have a board of directors.
(b) All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its board of directors, subject to any limitation set forth in the charter.
(c) A corporation having fifty (50) or fewer shareholders may dispense with or limit the authority of a board of directors by describing in its charter who will perform some or all of the duties of a board of directors; provided, that any such person or persons shall be subject to the same standards of conduct that this chapter imposes on directors in the performance of their duties.
The charter or bylaws may prescribe qualifications for directors. A director need not be a resident of this state or a shareholder of the corporation unless the charter or bylaws so prescribe.
(a) A board of directors must consist of one (1) or more individuals, with the number specified in or fixed in accordance with the charter or bylaws.
(b) The charter or bylaws may provide that the board of directors has power to fix or change the number of directors, including an increase or decrease in the number of directors. Absent such a provision, only the shareholders may fix or change the number of directors, except as provided in subsection (c).
(c) The charter or bylaws may establish a variable range for the size of the board of directors by fixing a minimum and maximum number of directors. If a variable range is established, the number of directors may be fixed or changed from time to time, within the minimum and maximum, by the shareholders or the board of directors; provided, that unless the charter or bylaws provide otherwise, only the shareholders may change the range for the size of the board or change from a fixed to a variable-range size board or vice versa.
(d) Directors are elected at the first annual shareholders' meeting and at each annual meeting thereafter, unless their terms are staggered under § 48-18-106 or unless their terms are for more than one (1) year as provided by § 48-18-105.
If the charter authorizes dividing the shares into classes or series, the charter may also authorize the election of all or a specified number of directors by the holders of one (1) or more authorized classes or series of shares. Each class (or classes) or series of shares entitled to elect one (1) or more directors is a separate voting group for purposes of the election of directors.
(a) The terms of the initial directors of a corporation expire at the first shareholders' meeting at which directors are elected.
(b) The terms of all other directors expire at the next annual shareholders' meeting following their election unless their terms are staggered under § 48-18-106, or unless the charter provides for terms of more than one (1) year but not more than three (3) years.
(c) A decrease in the number of directors does not shorten an incumbent director's term.
(d) The term of a director elected to fill a vacancy expires at the next shareholders' meeting at which directors are elected.
(e) Despite the expiration of a director's term, the director continues to serve until a successor is elected and qualified or until there is a decrease in the number of directors.
The charter may provide for staggering the terms of directors by dividing the total number of directors into two (2) or three (3) groups, with each group containing one half (½) or one third (⅓) of the total, as near as may be. In that event, the terms of directors in the first group expire at the first annual shareholders' meeting after their election, the terms of the second group expire at the second annual shareholders' meeting after their election, and the terms of the third group, if any, expire at the third annual shareholders' meeting after their election. At each annual shareholders' meeting held thereafter, the directors shall be chosen for a term of two (2) years or three (3) years, as the case may be, to succeed those whose terms expire.
(a) A director may resign at any time by delivering a written resignation to the board of directors, or its chair, or to the secretary of the corporation.
(b) A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. A resignation that is conditioned upon failing to receive a specified vote for election as a director may provide that it is irrevocable.
(a) The shareholders may remove one (1) or more directors with or without cause unless the charter provides that directors may be removed only for cause.
(b) If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove the director without cause.
(c) If cumulative voting is authorized, a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against the director's removal. If cumulative voting is not authorized, a director may be removed only if the number of votes cast to remove the director exceeds the number of votes cast not to remove the director.
(d) If so provided by the charter, any or all of the directors may be removed for cause by a vote of a majority of the entire board of directors.
(e) A director may be removed by the shareholders or directors only at a meeting called for the purpose of removing the director and the meeting notice must state that the purpose, or one (1) of the purposes, of the meeting is removal of directors.
(a) Any court of record having equity jurisdiction in the county where a corporation's principal office (or, if none in this state, its registered office) is located may remove a director of the corporation from office in a proceeding commenced either by the corporation or by its shareholders holding at least ten percent (10%) of the outstanding shares of any class if the court finds that:
(1) The director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation; and
(2) Removal is in the best interest of the corporation.
(b) The court that removes a director may bar the director from reelection for a period prescribed by the court.
(c) If shareholders commence a proceeding under subsection (a), they shall make the corporation a party defendant.
(a) Unless the charter provides otherwise, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors or a vacancy resulting from a removal with or without cause:
(1) The shareholders may fill the vacancy;
(2) The board of directors may fill the vacancy; or
(3) If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
(b) If the vacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders.
(c) A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date under § 48-18-107(b) or otherwise) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.
(a) The board of directors may hold regular or special meetings in or out of this state. Unless the bylaws otherwise provide, special meetings of the board of directors may be called by the chair of the board, the president, or any two (2) directors.
(b) Unless the charter or bylaws provide otherwise, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
(a) Except to the extent that the charter or bylaws require that action by the board of directors be taken at a meeting, action required or permitted by chapters 11-27 of this title to be taken by the board of directors may be taken without a meeting if each director signs a consent describing the action to be taken and delivers it to the corporation. If all directors consent to taking such action without a meeting, the affirmative vote of the number of directors that would be necessary to authorize or take such action at a meeting is the act of the board. The action must be evidenced by one (1) or more written consents describing the action taken, signed by each director in one (1) or more counterparts, indicating each signing director's vote or abstention on the action, and delivered to the corporation, and shall be included in the minutes or filed with the corporate records reflecting the action taken.
(b) Action taken under this section is the act of the board of directors when one (1) or more consents signed by all the directors are delivered to the corporation. The consent may specify the time at which the action taken thereunder is to be effective. A director's consent may be withdrawn by a revocation signed by the director and delivered to the corporation prior to delivery to the corporation of unrevoked written consents signed by all the directors.
(c) A consent signed under this section has the effect of action taken at a meeting of the board of directors and may be described as such in any document.
(a) Unless the charter or bylaws provide otherwise, regular meetings of the board of directors may be held without notice of the date, time, place, or purpose of the meeting.
(b) Unless the charter or bylaws provide for a longer or shorter period, special meetings of the board of directors must be preceded by at least two (2) days' notice of the date, time, and place of the meeting. The notice need not describe the purpose of the special meeting unless required by the charter or bylaws.
(c) Notice of an adjourned meeting need not be given if the time and place to which the meeting is adjourned are fixed at the meeting at which the adjournment is taken, and if the period of adjournment does not exceed one (1) month in any one (1) adjournment.
(a) A director may waive any notice required by chapters 11-27 of this title, the charter, or bylaws before or after the date and time stated in the notice. Except as provided by subsection (b), the waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or corporate records.
(b) A director's attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting (or promptly upon the director's arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.
(a) Unless the charter or bylaws require a greater number, a quorum of a board of directors consists of:
(1) A majority of the fixed number of directors if the corporation has a fixed board size; or
(2) A majority of the number of directors prescribed, or if no number is prescribed, the number in office immediately before the meeting begins, if the corporation has a variable-range size board.
(b) The charter or bylaws may authorize a quorum of a board of directors to consist of no fewer than one third (⅓) of the fixed or prescribed number of directors determined under subsection (a).
(c) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the charter or bylaws require the vote of a greater number of directors.
(d) A director who is present at a meeting of the board of directors when corporate action is taken is deemed to have assented to the action taken unless:
(1) The director objects at the beginning of the meeting (or promptly upon the director's arrival) to holding it or transacting business at the meeting;
(2) The director's dissent or abstention from the action taken is entered in the minutes of the meeting; or
(3) The director delivers written notice of the director's dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.
(a) Unless the charter or bylaws provide otherwise, the board of directors may create one (1) or more committees. A committee may consist of one (1) member. All members of committees of the board of directors which exercise powers of the board of directors must be members of the board of directors and serve at the pleasure of the board of directors.
(b) The creation of a committee and appointment of a member or members to it must be approved by the greater of:
(1) A majority of all the directors in office when the action is taken; or
(2) The number of directors required by the charter or bylaws to take action under § 48-18-205.
(c) Sections 48-18-201 — 48-18-205, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the board of directors, apply to committees and their members as well.
(d) To the extent specified by the board of directors or in the charter or bylaws, each committee may exercise the authority of the board of directors under § 48-18-101.
(e) A committee may not, however:
(1) Authorize distributions, except according to a formula or method prescribed by the board of directors;
(2) Fill vacancies on the board of directors or on any of its committees;
(3) Adopt, amend, or repeal bylaws;
(4) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the board of directors; or
(5) Authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the board of directors may authorize a committee (or senior executive officer of the corporation) to do so within limits specifically prescribed by the board of directors.
(f) The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in § 48-18-301.
(a) A director shall discharge all duties as a director, including 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 the director reasonably believes to be in the best interests of the corporation.
(b) In discharging such 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 (1) or more officers or employees of the corporation (or a subsidiary 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 the director is not a member, if the director reasonably believes the committee merits confidence.
(c) A director is not acting in good faith if the director has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) unwarranted.
(d) A director is not liable for any action taken as a director, or any failure to take any action, if the director performed the duties of the office in compliance with this section.
(a) A director who votes for or assents to a distribution made in violation of § 48-16-401 or the charter is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating such section or the charter if it is established that the director did not perform such director's duties in compliance with § 48-18-301. In any proceeding commenced under this section, a director has all of the defenses ordinarily available to a director.
(b) A director held liable under subsection (a) for an unlawful distribution is entitled to contribution from:
(1) Every other director who could be held liable under subsection (a) for the unlawful distribution; and
(2) Each shareholder for the amount the shareholder accepted knowing the distribution was made in violation of § 48-16-401 or the charter.
(c) A proceeding under this section is barred unless it is commenced within two (2) years after the date on which the effect of the distribution was measured under § 48-16-401.
(a) A corporation has the officers described in its bylaws or designated by its board of directors in accordance with the bylaws. Unless the charter or bylaws provide otherwise, officers shall be elected or appointed by the board of directors.
(b) A duly appointed officer may appoint one (1) or more officers or assistant officers if authorized by the bylaws or the board of directors.
(c) The bylaws or the board of directors shall delegate to one (1) of the officers responsibility for preparing minutes of the directors' and shareholders' meetings and for authenticating records of the corporation.
(d) The same individual may simultaneously hold more than one (1) office in a corporation.
Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent consistent with the bylaws, the duties prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties of other officers.
(a) An officer with discretionary authority shall discharge all duties under that authority:
(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 the officer reasonably believes to be in the best interest of the corporation.
(b) In discharging such duties, an officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
(1) One (1) or more officers or employees of the corporation (or a subsidiary of the corporation) whom the officer reasonably believes to be reliable and competent in the matters presented; or
(2) Legal counsel, public accountants, or other persons as to matters the officer reasonably believes are within the person's professional or expert competence.
(c) An officer is not acting in good faith if the officer has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) unwarranted.
(d) An officer is not liable for any action taken as an officer, or any failure to take any action, if the officer performed the duties of office in compliance with this section.
(a) An officer may resign at any time by delivering notice to the corporation. A resignation is effective when the notice is delivered unless the notice specified a later effective date. If a resignation is made effective at a later date and the corporation accepts the future effective date, its board of directors may fill the pending vacancy before the effective date if the board of directors provides that the successor does not take office until the effective date.
(b) A board of directors may remove any officer at any time with or without cause and any officer or assistant officer, if appointed by another officer, may likewise be removed by such officer.
(a) The appointment of an officer does not itself create contract rights.
(b) An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the corporation's contract rights, if any, with the officer.
When a corporation, organized under the laws of this state, has caused or shall cause to be insured the life of any director, officer, agent, or employee, or when such corporation is named as a beneficiary in or assignee of any policy of life insurance, due authority to effect, assign, release, relinquish, convert, surrender, change the beneficiary, or to take any other action with reference to such insurance shall be sufficiently evidenced to the insurance company by a written statement to that effect, signed by the president or secretary or other corresponding officer of such corporation. Such statement shall be binding upon such corporation, and any act done or suffered to be done by it upon the faith thereof shall protect the insurance company concerned, without further inquiry into the validity of the corporate authority or the regularity of the corporate proceedings. No person shall be disqualified, by reason of interest in the subject matter, from acting as a director or as a member of the executive committee of such corporation, on any corporate procedure touching such insurance.
(1) “Corporation” includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction;
(2) “Director” means an individual who is or was a director of a corporation, including individuals acting pursuant to § 48-18-101, or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving an employee benefit plan at the corporation's request if the director's duties to the corporation also impose duties on or otherwise involve services by the director to the plan or to participants in or beneficiaries of the plan. “Director” includes, unless the context requires otherwise, the estate or personal representative of a director;
(3) “Expenses” includes counsel fees;
(4) “Liability” means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding;
(5)
(A) “Official capacity” means:
(i) When used with respect to a director, the office of director in a corporation; and
(ii) When used with respect to an individual other than a director, as contemplated in § 48-18-507, the office in a corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation;
(B) “Official capacity” does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise;
(6) “Party” includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding; and
(7) “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.
(a) Except as provided in subsection (d), a corporation may indemnify an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if:
(1) The individual's conduct was in good faith; and
(2) The individual reasonably believed:
(A) In the case of conduct in the individual's official capacity with the corporation, that the individual's conduct was in its best interest; and
(B) In all other cases, that the individual's conduct was at least not opposed to its best interests; and
(3) In the case of any criminal proceeding, the individual had no reasonable cause to believe the individual's conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subdivision (a)(2)(B).
(c) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.
(d) A corporation may not indemnify a director under this section:
(1) In connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or
(2) In connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in the director's official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by the director.
Unless limited by its charter, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director was a party because the director is or was a director of the corporation against reasonable expenses incurred by the director in connection with the proceeding.
(a) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:
(1) The director furnishes the corporation a written affirmation of the director's good faith belief that the director has met the standard of conduct described in § 48-18-502;
(2) The director furnishes the corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that the director is not entitled to indemnification; and
(3) A determination is made that the facts then known to those making the determination would not preclude indemnification under this part.
(b) The undertaking required by subdivision (a)(2) 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.
(c) Determinations and authorizations of payments under this section shall be made in the manner specified in § 48-18-506.
Unless a corporation's charter provides otherwise, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification if it determines the director is:
(1) Entitled to mandatory indemnification under § 48-18-503, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification; or
(2) Fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in § 48-18-502 or was adjudged liable as described in § 48-18-502(d), but if the director was adjudged so liable the director's indemnification is limited to reasonable expenses incurred.
(a) A corporation may not indemnify a director under § 48-18-502 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in § 48-18-502.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under subdivision (b)(1), by majority vote of a committee duly designated by the board of directors (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;
(3) By independent special legal counsel:
(A) Selected by the board of directors or its committee in the manner prescribed in subdivision (b)(1) or (b)(2); or
(B) If a quorum of the board of directors cannot be obtained under subdivision (b)(1) and a committee cannot be designated under subdivision (b)(2), selected by majority vote of the full board of directors (in which selection directors who are parties may participate); or
(4) By the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the proceeding may not be voted on the determination.
(c) Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subdivision (b)(3) to select counsel.
Unless a corporation's charter provides otherwise:
(1) An officer of the corporation who is not a director is entitled to mandatory indemnification under § 48-18-503, and is entitled to apply for court-ordered indemnification under § 48-18-505, in each case to the same extent as a director;
(2) The corporation may indemnify and advance expenses under this part to an officer, employee, or agent of the corporation who is not a director to the same extent as to a director; and
(3) A corporation may also indemnify and advance expenses to an officer, employee, or agent who is not a director to the extent, consistent with public policy, that may be provided by its charter, bylaws, general or specific action of its board of directors, or contract.
A corporation may purchase and maintain insurance on behalf of an 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, employee benefit plan, or other enterprise, against liability asserted against or incurred by the individual in that capacity or arising from the individual's status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify the individual against the same liability under § 48-18-502 or § 48-18-503.
(1) The indemnification and advancement of expenses granted pursuant to, or provided by, chapters 11-27 of this title shall not be deemed exclusive of any other rights to which a director seeking indemnification or advancement of expenses may be entitled, whether contained in chapters 11-27 of this title, the charter, or the bylaws or, when authorized by such charter or bylaws, in a resolution of shareholders, a resolution of directors, or an agreement providing for such indemnification; provided, that no indemnification may be made to or on behalf of any director if a judgment or other final adjudication adverse to the director establishes the director's liability:
(A) For any breach of the duty of loyalty to the corporation or its shareholders;
(B) For acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or
(C) Under § 48-18-302.
(2) Nothing contained in chapters 11-27 of this title shall affect any rights to indemnification to which corporate personnel, other than directors, may be entitled by contract or otherwise under law. If the charter limits indemnification or advance for expenses, indemnification and advance for expenses are valid only to the extent consistent with the charter.
(b) This part does not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with the director's appearance as a witness in a proceeding at a time when the director has not been made a named defendant or respondent to the proceeding.
Any action alleging breach of fiduciary duties by directors or officers, including alleged violations of the standards established in § 48-18-301, § 48-18-403 or part 7 of this chapter, must be brought within one (1) year from the date of such breach or violation; provided, that in the event the alleged breach or violation is not discovered nor reasonably should have been discovered within the one-year period, the period of limitation shall be one (1) year from the date such was discovered or reasonably should have been discovered. In no event shall any such action be brought more than three (3) years after the date on which the breach or violation occurred, except where there is fraudulent concealment on the part of the defendant, in which case the action shall be commenced within one (1) year after the alleged breach or violation is, or should have been, discovered.
(A) Having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing body of an entity, whether through the ownership of voting shares or interests, by contract, or otherwise; or
(B) Being subject to a majority of the risk of loss from the entity's activities or entitled to receive a majority of the entity's residual returns;
(2) “Director's or officer's conflicting interest transaction” means a transaction effected or proposed to be effected by the corporation (or by an entity controlled by the corporation):
(A) To which, at the relevant time, the director or officer is a party; or
(B) Respecting which, at the relevant time, the director or officer had knowledge and a material financial interest known to the director or officer; or
(C) Respecting which, at the relevant time, the director or officer knew that a related person was a party or had a material financial interest;
(3) “Fair to the corporation” means, for purposes of § 48-18-702(b)(3), that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was:
(A) Fair in terms of the director's or officer's dealings with the corporation; and
(B) Comparable to what might have been obtainable in an arm's length transaction, given the consideration paid or received by the corporation;
(4) “Material financial interest” means a financial interest in a transaction that would reasonably be expected to impair the objectivity of the director's or officer's judgment when participating in action on the authorization of the transaction;
(5) “Material relationship” means a familial, financial, professional, employment or other relationship that would reasonably be expected to impair the objectivity of the director's judgment when participating in the action to be taken;
(6)
(A) “Qualified director” means a director who, at the time action is to be taken under § 48-18-703, is not a director:
(i) As to whom the transaction is a director's or officer's conflicting interest transaction; or
(ii) Who has a material relationship with another director as to whom the transaction is a director's or officer's conflicting interest transaction;
(B) The presence of one (1) or more of the following circumstances shall not automatically prevent a director from being a qualified director:
(i) Nomination or election of the director to the current board by any director who is not a qualified director with respect to the matter (or by any person that has a material relationship with that director), acting alone or participating with others; or
(ii) Service as a director of another corporation of which a director who is not a qualified director with respect to the matter (or any individual who has a material relationship with that director), is or was also a director;
(7) “Related person” means:
(A) The director's or officer's spouse;
(B) A child, stepchild, grandchild, parent, step parent, grandparent, sibling, step sibling, half sibling, aunt, uncle, niece or nephew (or spouse of any thereof) of the director or officer or of the director's or officer's spouse;
(C) An individual living in the same home as the director or officer;
(D) An entity (other than the corporation or an entity controlled by the corporation) controlled by the director or officer or any person specified in subdivisions (7)(A)-(C);
(E) A domestic or foreign:
(i) Business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the director or officer is a director but only with respect to a transaction or proposed transaction to which the corporation and the other business or nonprofit corporation are parties or proposed parties and that is a transaction or proposed transaction that is or should be considered by the board of directors of the corporation;
(ii) Unincorporated entity of which the director or officer is a general partner or a member of the governing body; or
(iii) Individual, trust or estate for whom or of which the director or officer is a trustee, guardian, personal representative or like fiduciary; or
(F) A person that is or an entity that is controlled by, an employer of the director or officer;
(8) “Relevant time” means:
(A) The time at which directors' action respecting the transaction is taken in compliance with § 48-18-703; or
(B) If the transaction is not brought before the board of directors of the corporation (or its committee) for action under § 48-18-703, at the time the corporation (or an entity controlled by the corporation) becomes legally obligated to consummate the transaction; and
(9) “Required disclosure” means disclosure of:
(A) The existence and nature of the director's or officer's conflicting interest; and
(B) All facts known to the director or officer respecting the subject matter of the transaction that a director or officer free of such conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.
(a) A transaction effected or proposed to be effected by the corporation (or by an entity controlled by the corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the corporation, in a proceeding by a shareholder or by or in the right of the corporation, on the ground that the director or officer has an interest respecting the transaction, if it is not a director's or officer's conflicting interest transaction.
(b) A director's or officer's conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the corporation, in a proceeding by a shareholder or by or in the right of the corporation, on the ground that the director or officer has an interest respecting the transaction, if:
(1) Directors' action respecting the transaction was taken in compliance with § 48-18-703 at any time;
(2) Shareholders' action respecting the transaction was taken in compliance with § 48-18-704 at any time; or
(3) The transaction, judged according to the circumstances at the relevant time, is established to have been fair to the corporation.
(a) Directors' action respecting a director's or officer's conflicting interest transaction is effective for purposes of § 48-18-702(b)(1) if the transaction has been authorized by the affirmative vote of a majority (but no fewer than two (2)) of the qualified directors who voted on the transaction, after required disclosure by the conflicted director or officer of information not already known by such qualified directors, or after modified disclosure in compliance with subsection (b); provided, that:
(1) The qualified directors have deliberated and voted without the participation by any other director; and
(2) Where the action has been taken by a committee, all members of the committee were qualified directors, and either:
(A) The committee was composed of all the qualified directors on the board of directors; or
(B) The members of the committee were appointed by the affirmative vote of a majority of the qualified directors on the board.
(b) Notwithstanding subsection (a), when a transaction is a director's or officer's conflicting interest transaction only because a related person described in § 48-18-701(7)(E) or (7)(F) is a part to or has a material financial interest in the transaction, the conflicted director or officer is not obligated to make required disclosure to the extent that the director or officer reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule; provided, that the conflicted director or officer discloses to the qualified directors voting on the transaction:
(1) All the information required to be disclosed that is not so violative;
(2) The existence and nature of the director's or officer's conflicting interest; and
(3) The nature of the conflicted director's or officer's duty not to disclose the confidential information.
(c)
(1) A majority (but no fewer than two (2)) of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with this section.
(2) Where directors' action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the charter, the bylaws or a provision of law, independent action to satisfy those authorization requirements must be taken by the board of directors or a committee, in which action directors who are not qualified directors may participate.
(a) Shareholders' action respecting a director's or officer's conflicting interest transaction is effective for purposes of § 48-18-702(b)(2) if a majority of the votes cast by the holders of all qualified shares are in favor of the transaction after:
(1) Notice to shareholders describing the action to be taken respecting the transaction;
(2) Provision to the corporation of the information referred to in subsection (b); and
(3) Communication to the shareholders entitled to vote on the transaction of the information that is the subject of required disclosure, to the extent the information is not known by them.
(b) A director or officer who has conflicting interest respecting the transaction shall, before the shareholders' vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director or officer knows are not qualified shares under subsection (c), and the identity of the holders of those shares.
(c) For purposes of this section:
(1) “Holder” means, and “held by” refers to, shares held by both a record shareholder (as defined in § 48-23-101) and a beneficial shareholder (as defined in § 48-23-101); and
(2) “Qualified shares” means all shares entitled to be voted with respect to the transaction except for shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows, or under subsection (b) is notified, are held by:
(A) A director or officer who has a conflicting interest respecting the transaction; or
(B) A related person of the director or officer (excluding a person described in § 48-18-701(7)(F)).
(d) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to subsection (e), shareholders' action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares.
(e) If a shareholders' vote does not comply with subsection (a) solely because of a director's or officer's failure to comply with subsection (b), and if the director or officer establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take such action respecting the transaction and the director or officer, and may give such effect, if any, to the shareholders' vote, as the court considers appropriate in the circumstances.
(f) Where shareholders' action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the charter, the bylaws or a provision of law, independent action to satisfy those authorization requirements must be taken by the shareholders, in which action shares that are not qualified shares may participate.
(a) A corporation may amend its charter at any time to add or change a provision that is required or permitted in the charter or to delete a provision not required in the charter. Whether a provision is required or permitted in the charter is determined as of the effective date of the amendment.
(b) A shareholder of the corporation does not have a vested property right resulting from any provision in the charter or bylaws, including provisions relating to management, control, capital structure, dividend entitlement, or purpose or duration of the corporation.
Unless the charter provides otherwise, a corporation's board of directors may adopt one (1) or more amendments to the corporation's charter without shareholder action to:
(1) Delete the names and addresses of the initial directors;
(2) Delete the name and address of the initial registered agent or registered office, if a statement of change is on file with the secretary of state;
(3) Designate or change the address of the principal office of the corporation (or a mailing address if the United States postal service does not deliver to the principal office);
(4) Change each issued and unissued authorized share of an outstanding class into a greater number of whole shares if the corporation has only shares of that class outstanding;
(5) Change the corporate name by substituting the word “corporation,” “incorporated,” “company,” or the abbreviation “corp.,” “inc.,” or “co.,” for a similar word or abbreviation in the name, or by adding, deleting or changing a geographical attribution for the name;
(6) Designate the street address and zip code of the corporation's current registered office (or a mailing address if the United States postal service does not deliver to the registered office), the county in which the office is located, and the name of its current registered agent at that office, as required by § 48-27-101(b);
(7) Delete the initial principal office, if an annual report is on file with the secretary of state; or
(8) Make any other change expressly permitted by chapters 11-27 of this title to be made without shareholder action.
(a) A corporation's board of directors may propose one (1) or more amendments to the charter for submission to the shareholders.
(b) For the amendment to be adopted:
(1) The board of directors shall recommend the amendment to the shareholders, unless the board of directors determines that because of conflict of interest or other special circumstances, it should make no recommendation and communicate the basis for its determination to the shareholders with the amendment; and
(2) The shareholders entitled to vote on the amendment shall approve the amendment as provided in subsection (e).
(c) The board of directors may condition its submission of the proposed amendment on any basis.
(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with § 48-17-105. The notice of meeting must also state that the purpose, or one (1) of the purposes, of the meeting is to consider the proposed amendment and contain or be accompanied by a copy or summary of the amendment.
(e) Unless chapters 11-27 of this title, the charter, or the board of directors (acting pursuant to subsection (c)) requires a greater vote or a vote by voting groups, the amendment to be adopted must be approved by:
(1) A majority of the votes entitled to be cast on the amendment by any voting group with respect to which the amendment would create dissenters' rights; and
(2) The votes required by §§ 48-17-206 and 48-17-207 by every other voting group entitled to vote on the amendment.
(a) The holders of the outstanding shares of a class are entitled to vote as a separate voting group (if shareholder voting is otherwise required by chapters 11-27 of this title) on a proposed amendment if the amendment would:
(1) Increase or decrease the aggregate number of authorized shares of the class;
(2) Effect an exchange or reclassification of all or part of the shares of the class into shares of another class;
(3) Effect an exchange or reclassification, or create the right of exchange, of all or part of the shares of another class into shares of the class;
(4) Change the designation, rights, preferences, or limitations of all or part of the shares of the class;
(5) Change the shares of all or part of the class into a different number of shares of the same class;
(6) Create a new class or change a class with subordinate and inferior rights into a class of shares, having rights or preferences with respect to distributions or dissolution that are prior, superior, or substantially equal to the shares of the class, or increase the rights, preferences or number of authorized shares of any class having rights or preferences with respect to distributions or to dissolution that are prior, superior, or substantially equal to the shares of the class;
(7) Limit or deny an existing preemptive right of all or part of the shares of the class;
(8) Authorize the issuance as a share dividend of shares of such class in respect of shares of another class; or
(9) Cancel or otherwise affect rights to distributions or dividends that have accumulated but not yet been declared on all or part of the shares of the class.
(b) If a proposed amendment would affect a series of a class of shares in one (1) or more of the ways described in subsection (a), the shares of that series are entitled to vote as a separate voting group on the proposed amendment.
(c) If a proposed amendment that entitles two (2) or more series of shares to vote as separate voting groups under this section would affect those two (2) or more series in the same or a substantially similar way, the shares of all the series so affected must vote together as a single voting group on the proposed amendment.
(d) A class or series of shares is entitled to the voting rights granted by this section although the charter provides that the shares are nonvoting shares.
If a corporation has not yet issued shares, its board of directors or its incorporators, in the event that there is no board of directors, may adopt one (1) or more amendments to the corporation's charter.
A corporation amending its charter shall deliver to the secretary of state for filing articles of amendment setting forth:
(1) The name of the corporation;
(2) The text of each amendment adopted;
(3) If an amendment provides for an exchange, reclassification or cancellation of issued shares, provisions for implementing such amendment if not contained in the amendment itself;
(4) The date of each amendment's adoption;
(5) If an amendment was duly adopted by the incorporators or board of directors without shareholder action, a statement to that effect and that shareholder action was not required; and
(6) If an amendment was duly adopted by the shareholders, a statement to that effect.
(a) A corporation's board of directors may restate its charter at any time with or without shareholder action.
(b) The restatement may include one (1) or more amendments to the charter. If the restatement includes an amendment requiring shareholder approval, it shall be adopted as provided in § 48-20-103.
(c) If the board of directors submits a restatement for shareholder action, the corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with § 48-17-105. The notice shall also state that the purpose, or one (1) of the purposes, of the meeting is to consider the proposed restatement and contain or be accompanied by a copy of the restatement that identifies any amendment or other change it would make in the charter.
(d) A corporation restating its charter shall deliver to the secretary of state the restated charter, setting forth the name of the corporation and the text of the restated charter, together with a certificate setting forth:
(1) Whether the restatement contains an amendment to the charter requiring shareholder approval and, if it does not, that the board of directors adopted the restatement; or
(2) If the restatement contains an amendment to the charter requiring shareholder approval, the information required by § 48-20-106.
(e) If the restatement contains an amendment to the charter, it shall be designated in the heading as an “Amended and Restated Charter.”
(f) The restated charter must contain all the requirements of a charter as set out in § 48-12-102(a) unless the corporation is exempt from any of those requirements pursuant to § 48-27-101(b).
(g) A duly adopted restated charter supersedes the original charter and all prior amendments thereto.
(h) The secretary of state may certify a restated charter as the charter currently in effect, without including the certificate information required by subsection (d).
(a) A corporation's charter may be amended without action by the board of directors or shareholders to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under federal statute, if the charter after amendment contains only provisions required or permitted by § 48-12-102.
(b) The individual or individuals designated by the court shall deliver to the secretary of state for filing articles of amendment setting forth:
(1) The name of the corporation;
(2) The text of each amendment approved by the court;
(3) The date of the court's order or decree approving the articles of amendment;
(4) The title of the reorganization proceeding in which the order or decree was entered; and
(5) A statement that the court had jurisdiction of the proceeding under federal statute.
(c) Shareholders of a corporation undergoing reorganization do not have dissenters' rights except as and to the extent provided in the reorganization plan.
(d) This section does not apply after entry of a final decree in the reorganization proceedings, even though the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the reorganization plan.
An amendment to the charter does not affect a cause of action existing against or in favor of the corporation, a proceeding to which the corporation is a party, or the existing rights of persons other than shareholders of the corporation. An amendment changing a corporation's name does not abate a proceeding brought by or against the corporation in its former name.
(a) A corporation's board of directors may amend or repeal the corporation's bylaws unless:
(1) The charter or chapters 11-27 of this title reserve this power exclusively to the shareholders in whole or in part; or
(2) The shareholders in amending or repealing a particular bylaw provide expressly that the board of directors may not amend or repeal that bylaw.
(b) A corporation's shareholders may amend or repeal the corporation's bylaws even though the bylaws may also be amended or repealed by its board of directors.
(a) If expressly authorized by the charter, the shareholders may adopt or amend a bylaw that fixes a greater quorum or voting requirement for shareholders (or voting groups of shareholders) than is required by chapters 11-27 of this title. The adoption or amendment of a bylaw that adds, changes, or deletes a greater quorum or voting requirement for shareholders must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.
(b) A bylaw that fixes a greater quorum or voting requirement for shareholders under subsection (a) may not be adopted, amended, or repealed by the board of directors.
(a) A bylaw that fixes a greater quorum or voting requirement for the board of directors may be amended or repealed:
(1) If originally adopted by the shareholders, only by the shareholders;
(2) If originally adopted by the board of directors, either by the shareholders or by the board of directors.
(b) A bylaw adopted or amended by the shareholders that fixes a greater quorum or voting requirement for the board of directors may provide that it may be amended or repealed only by a specified vote of either the shareholders or the board of directors.
(c) Action by the board of directors under subdivision (a)(2) to adopt or amend a bylaw that changes the quorum or voting requirement for the board of directors must meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.
As used in this chapter, unless the context otherwise requires:
(1) “Converted entity” means the domestic business corporation or domestic unincorporated entity that adopts a plan of entity conversion or the foreign unincorporated entity converting to a domestic business corporation;
(2) “Eligible entity” means a domestic or foreign unincorporated entity or a domestic or foreign nonprofit corporation;
(3) “Eligible interests” means interests or memberships;
(4) “Filing entity” means an unincorporated entity that is of a type that is created by filing a public organic document;
(5) “Interest holder” means a person who holds of record an interest;
(6) “Membership” means the rights of a member in a domestic or foreign nonprofit corporation;
(7) “Participating shares” means shares however denominated that entitle their holders to participate in distributions on dissolution after all preferences have been paid;
(8) “Party to a merger or share exchange” means any domestic or foreign corporation, or eligible entity that will:
(A) Merge in a plan of merger;
(B) Acquire shares or eligible interests of another domestic or foreign corporation, or an eligible entity in a share exchange; or
(C) Have all of its shares or eligible interests of one (1) or more classes or series acquired in share exchange;
(9) “Survivor” means the corporation or unincorporated entity that is in existence immediately after consummation of a merger or entity conversion pursuant to this chapter; and
(10) “Voting shares” means shares that entitle their holders to vote unconditionally in the election of directors.
(a) One (1) or more corporations may merge with one (1) or more domestic or foreign business corporations or eligible entities pursuant to a plan of merger, or two (2) or more foreign business corporations or domestic or foreign eligible entities may merge into a new domestic business corporation to be created in the merger in the manner provided in this chapter. The merger shall result in a single survivor.
(b) A foreign business corporation, or a foreign eligible entity, may be a party to a merger with a domestic business corporation, or may be created by the terms of the plan of merger, only if the merger is permitted by the laws under which the foreign business corporation or eligible entity is organized or by which it is governed. If the organic law of a domestic eligible entity does not provide procedures for the approval of a merger, a plan of merger may be adopted and approved, the merger effectuated, and dissenters' rights exercised in accordance with the procedures in this chapter and chapter 23 of this title. For the purposes of applying this chapter and chapter 23 of this title:
(1) The eligible entity, its members or interest holders, eligible interests, and organic documents taken together shall be deemed to be a domestic business corporation, shareholders, shares and charter, respectively and vice versa, as the context may require; and
(2) If the business and affairs of the eligible entity are managed by a group of persons that is not identical to the members or interest holders, that group shall be deemed to be the board of directors.
(c) The plan of merger must set forth:
(1) The name of each domestic or foreign business corporation or eligible entity planning to merge and the name of each domestic or foreign business corporation or eligible entity that shall survive the merger;
(2) The terms and conditions of the merger;
(3) The manner and basis of converting the shares of each merging domestic or foreign business corporation and eligible interest of each merging domestic or foreign eligible entity into shares or other securities, eligible interests, obligations, rights to acquire shares, other securities or eligible interest, cash, other property, or any combination of the foregoing;
(4) The charter of any domestic or foreign business corporation or nonprofit corporation, or the organic documents of any domestic or foreign unincorporated entity, to be created by the merger, or if a new domestic or foreign business or nonprofit corporation or unincorporated is not to be created by the merger, any amendments to the survivor's charter or organic documents; and
(5) Any other provision required by the laws under which any party to the merger is organized or by which it is governed, or by the charter or organic documents of any such party.
(d) The plan of merger may set forth any other provisions relating to the merger.
(e) Terms of a plan of merger may be made dependent on facts objectively ascertainable outside the plan in accordance with § 48-11-301(j).
(f) The plan of merger may also include a provision that the plan may be amended prior to filing articles of merger, but if the shareholders of a domestic corporation that is a party to the merger are required or permitted to vote on the plan, the plan must provide that subsequent to approval of the plan by such shareholders the plan may not be amended to change:
(1) The amount or kind of shares or other securities, eligible interests, obligations, rights to acquire shares, other securities, or eligible interests, cash, or other property to be received under the plan by the shareholders of or owners of eligible interests in any party to the merger;
(2) The charter of any corporation, or the organic documents of any unincorporated entity, that will survive or be created as a result of the merger, except for changes permitted by § 48-20-102 or by comparable provisions of the organic laws of any such foreign corporation or domestic or foreign unincorporated entity; or
(3) Any of the other terms or conditions of the plan if the change would adversely affect such shareholders in any material respect.
(g) Property held in trust or for charitable purposes under the laws of this state by a domestic or foreign eligible entity shall not be diverted by a merger from the objects for which it was donated, granted, or devised, unless and until the eligible entity obtains a court order specifying the disposition of the property to the extent required by and pursuant to § 35-15-413.
(1) A domestic corporation may acquire all of the outstanding shares of one (1) or more classes or series of shares of another domestic or foreign corporation or all of the interests of one (1) or more classes or series of interests of a domestic or foreign other entity, in exchange for shares, other securities, interests, obligations, rights to acquire shares, other securities, or interests, cash, other property, or any combination of the foregoing, pursuant to a plan of share exchange; or
(2) All of the shares of one (1) or more classes or series of shares of a domestic corporation may be acquired by another domestic or foreign corporation or other entity, in exchange for shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property, or any combination of the foregoing, pursuant to a plan of share exchange.
(b) A foreign corporation or eligible entity may be a party to a share exchange only if the share exchange is permitted by the law under which the corporation or other entity is organized or by which it is governed. If the organic law of a domestic other entity does not provide procedures for the approval of a share exchange, a plan of share exchange may be adopted and approved, the share exchange effectuated, and dissenters' rights exercised in accordance with the procedures, if any, for a merger. If the organic law of a domestic other entity does not provide procedures for the approval of either a share exchange or a merger, a plan of share exchange may be adopted and approved, the share exchange effectuated, and dissenters' rights exercised, in accordance with the procedures in this chapter and chapter 23 of this title. For the purposes of applying this chapter and chapter 23 of this title:
(1) The other entity, its interest holders, interests, and organic documents taken together shall be deemed to be a domestic business corporation, shareholders, shares, and charter, respectively and vice versa, as the context may require; and
(2) If the business and affairs of the other entity are managed by a group of persons that is not identical to the interest holders, that group shall be deemed to be the board of directors.
(c) The plan of share exchange must set forth:
(1) The name of each corporation or other entity whose shares or interests will be acquired and the name of the acquiring corporation or other entity;
(2) The terms and conditions of the share exchange;
(3) The manner and basis of exchanging shares of each corporation or interests in an other entity who shares or interests will be acquired under the share exchange into shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property, or any combination of the foregoing; and
(4) Any other provisions required by the laws under which any party to the share exchange is organized or by the charter or organic document of any such party.
(d) The plan of share exchange may set forth other provisions relating to the share exchange.
(e) This section does not limit the power of a domestic corporation to acquire all or part of the shares of one (1) or more classes or series of another corporation or interests of another entity through a voluntary exchange or otherwise.
In the case of a domestic corporation that is a party to a merger or share exchange:
(1) The plan of merger or share exchange shall be adopted by the board of directors of each party to the merger or share exchange and approved by the shareholders;
(2) Except as provided in subdivision (7) and in § 48-21-105, after adopting the plan of merger or share exchange, the board of directors shall submit the plan of merger or share exchange for approval by the shareholders. The board of directors must also transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must also transmit to the shareholders the basis for that determination;
(3) The board of directors may condition its submission of the plan of merger or share exchange to its shareholders on any basis;
(4) If the plan of merger or share exchange is required to be approved by the shareholders, and if the approval is to be given at a meeting, the corporation shall notify each shareholder, whether or not entitled to vote, of the shareholders' meeting at which the plan is to be submitted for approval. The notice shall state that the purpose, or one (1) of the purposes, of the meeting is to consider the plan of merger or share exchange and shall contain or be accompanied by a copy or summary of the plan. If the corporation is to be merged into an existing corporation or other entity, the notice shall also include or be accompanied by a copy or summary of the charter or organic documents of that corporation or other entity. If the corporation is to be merged into a corporation or other entity that is to be created pursuant to the merger, the notice shall include or be accompanied by a copy or a summary of the charter or organizational documents of the new corporation or other entity;
(5) Unless chapters 11-27 of this title, the charter, or the board of directors acting pursuant to subdivision (3) requires a greater vote or a vote by voting groups, the plan of merger or share exchange to be authorized must be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group;
(6) Separate voting by voting groups is required:
(A) On a plan of merger, by each class or series of shares that would be entitled to vote as a separate group on a provision in the plan that, if contained in a proposed amendment to the charter, would require action by separate voting groups under § 48-20-104;
(B) On a plan of share exchange, by each class or series of shares included in the exchange, with each class or series constituting a separate voting group; or
(C) On a plan of merger or share exchange, if the voting group is entitled under the charter or by agreement to vote as a voting group to approve a plan of merger or share exchange;
(7) Unless the charter otherwise provides, approval by the shareholders of a domestic corporation of a plan of merger or share exchange shall not be required if:
(A) The corporation will survive the merger or is the acquiring corporation in a share exchange;
(B) Except for amendments enumerated in § 48-20-102, its charter will not differ from the charter before the merger;
(C) Each shareholder of the corporation whose shares were outstanding immediately before the effective date of the merger or exchange will hold the same number of shares, with identical designations, preferences, limitations and relative rights, immediately after the effective date of the merger or exchange;
(D) The voting power of the shares outstanding immediately after the merger or exchange, plus the voting power of the shares issuable as a result of the merger or exchange (either by the conversion of securities issued pursuant to the merger or exchange or by the exercise of rights and warrants issued pursuant to the merger or exchange), will not exceed by more than twenty percent (20%) the voting power of the total shares of the corporation outstanding immediately before the merger or exchange; and
(E) The number of participating shares outstanding immediately after the merger or exchange, plus the number of participating shares issuable as a result of the merger or exchange (either by the conversion of securities issued pursuant to the merger or exchange by the exercise of rights and warrants issued pursuant to the merger or exchange), will not exceed more than twenty percent (20%) the total number of participating shares outstanding immediately before the merger or exchange; and
(8) If as a result of a merger or share exchange one (1) or more shareholders of a domestic corporation would become subject to owner liability for the debts, obligations, or liabilities of any other person or entity, approval of the plan of merger or share exchange shall require the execution, by each shareholder, of a separate written consent to become subject to such owner liability.
(a) A domestic parent corporation owning at least ninety percent (90%) of the outstanding voting shares of each class and series of a domestic or foreign subsidiary corporation or eligible interests of an other entity may either:
(1) Merge the subsidiary corporation or other entity into the parent corporation;
(2) Merge the parent corporation into the subsidiary corporation or other entity; or
(3) Merge two (2) or more such subsidiary corporations or subsidiary other entities with and into each other.
(b) The board of directors of the parent corporation shall adopt a plan of merger that sets forth:
(1) The name of the parent corporation owning at least ninety percent (90%) of the outstanding voting shares of the subsidiary corporation or eligible interests of the other entity and the name of the subsidiary corporation(s) or other entity or entities to be a party to the merger, and the name of the corporation or other entity that is to survive the merger;
(2) The terms and conditions of the merger;
(3) The manner and basis of converting the shares of each corporation or eligible interests of the subsidiary or other entity into shares, eligible interests, obligations or other securities of the survivor or of any other corporation or other entity or into cash or other property or any combination of the foregoing; and
(4) Such other provisions with respect to the proposed merger as the board considers necessary or desirable.
(c) No vote of the shareholders of a subsidiary corporation or approval of interest holders of a subsidiary other entity shall be required with respect to such a merger. If the parent corporation will be the survivor, no vote of its shareholders shall be required. If the subsidiary corporation or other entity will be the survivor, the approval of the shareholders of the parent corporation shall be obtained in the manner provided in § 48-21-104.
(d) If under subsection (c) approval of a merger by the subsidiary's shareholders or interest holders is not required, the parent corporation shall, within ten (10) days after the effective date of the merger, notify each of the subsidiary's shareholders or interest holders that the merger has become effective.
(e) Except as provided in subsections (a)-(d), a merger between a parent and a subsidiary shall be governed by the provisions of this chapter applicable to mergers generally.
(a) After a plan of merger or share exchange has been adopted and approved as required by chapters 11-27 of this title, and at any time before the merger or share exchange has become effective, the merger or share exchange may be abandoned (subject to any contractual rights) by any corporation or other entity that is a party to the merger or share exchange, without action by the shareholders or interest holders of such party, in accordance with the procedures set forth in the plan of merger or share exchange or, if no such procedures are set forth in the plan, in the manner determined by the board of directors of such corporation or the managers of such other entity.
(b) If the merger or share exchange is abandoned after articles of merger or share exchange have been filed with the secretary of state but before the merger or share exchange has become effective, a statement, executed on behalf of each party to the merger or share exchange by an officer or other duly authorized representative, stating that the merger or share exchange has been abandoned in accordance with the plan and this section, shall be filed with the secretary of state prior to the effectiveness of the merger or share exchange.
(c) The secretary of state shall, when all fees have been paid as required by law:
(1) Endorse on the original and each copy the word “filed” and the month, day, and year of the filing thereof;
(2) File the original in the office of the secretary of state; and
(3) Issue a certificate of abandonment to each party to the merger or share exchange.
(d) Upon the filing of such statement by the secretary of state, the merger or share exchange shall be deemed abandoned and shall not become effective.
(a) After a plan of merger or share exchange has been adopted and approved as required by this chapter, articles of merger or share exchange shall be executed on behalf of each party to the merger or share exchange by an officer or other duly authorized representative and shall set forth:
(1) The names of the parties to the merger or share exchange and the date on which the merger or share exchange occurred or is to be effective;
(2) If the charter or organic documents of the survivor of a merger are amended, or if a new corporation is created as a result of a merger, the amendments to the survivor’s charter or organic documents or the charter of the new corporation;
(3) If approval by the shareholders of a domestic corporation that is a party to the merger or exchange is not required by this chapter, a statement to that effect and the date on which the plan was adopted by the board of directors;
(4) If approval by the shareholders of a domestic corporation that is a party to the merger or exchange is required by this chapter, a statement to that effect and a statement that the plan was approved by the affirmative vote of the required percentage of all of:
(A) The votes entitled to be cast if there is no voting by voting groups; or
(B) The votes entitled to be cast by each voting group having the right to vote separately on the plan and the votes cast by the outstanding shares otherwise entitled to vote on the plan; and
(5) As to each foreign corporation and each other entity that was a party to the merger or share exchange, a statement that the plan and performance of its terms were duly authorized by all action required by the laws under which it was organized and by its charter or organic documents.
(b) The original of the articles of merger or share exchange shall be delivered to the secretary of state for filing together with the required filing fee. A merger or share exchange takes effect upon the effective date of the articles of merger or share exchange.
(1) The corporation or eligible entity that is designated in the plan of merger as an entity surviving the merger shall survive, and the separate existence of every other corporation or eligible entity that is a party to the merger shall cease;
(2) All property owned by, and every contract right possessed by, each corporation or eligible entity that is merged into the survivor shall be vested in the survivor without reversion or impairment;
(3) All liabilities of each corporation or eligible entity that is merged into the survivor shall be vested in the survivor;
(4) A proceeding pending against any corporation or eligible entity that is a party to the merger may be continued as if the merger did not occur or the name of the survivor may be substituted in the proceeding for any corporation or eligible entity whose existence ceased in the merger;
(5) The charter or organic document of the survivor shall be amended to the extent provided in the plan of merger;
(6) The charter or organic documents of a survivor created by the plan of merger shall become effective; and
(7) The share of each corporation and the interests of each eligible entity that are to be converted into shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property, or any combination of the foregoing in the merger shall be converted or exchanged, and the former holders of such shares or eligible interests shall be entitled only to the rights provided to them in the plan of merger or to their rights under chapter 23 of this title or the organic law of the eligible entity.
(b) When a share exchange takes effect, the shares of each corporation that are to be exchanged for shares, other securities, interests, obligations, rights to acquire shares, other securities or interests, cash, other property or any combination of the foregoing in the share exchange shall be exchanged, and the former holders of such shares shall be entitled only to the rights provided in the plan of share exchange or to their rights under chapter 23 of this title.
(c) Upon a merger becoming effective, a foreign corporation, or a foreign eligible entity, that is the survivor of the merger is deemed to:
(1) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders of each domestic corporation that is a party to the merger who exercise dissenters' rights; and
(2) Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under chapter 23 of this title.
(d) The effect of a merger or share exchange on the owner liability of a person who had owner liability for some or all of the debts, obligations or liabilities of a party to the merger or share exchange shall be as follows:
(1) The merger or share exchange does not discharge any owner liability under the organic law of the entity in which the person was a shareholder or interest holder to the extent any such owner liability arose before the effective time of the articles of merger or share exchange;
(2) The person shall not have owner liability under the organic law of the entity in which the person was shareholder or interest holder prior to the merger or share exchange for any debt, obligation or liability that arises after the effective time of the articles of merger or share exchange;
(3) The organic law of any entity for which the person had owner liability before the merger or share exchange shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (d)(1), as if the merger or share exchange had not occurred; and
(4) The person shall have whatever rights of contribution from other persons are provided by the organic law of the entity for which the person had owner liability with respect to any owner liability preserved by subdivision (d)(1), as if the merger or share exchange had not occurred.
(e) A merger or share exchange shall take effect upon the date the articles of merger or share exchange are filed as provided in § 48-21-107(b) or on such later date as may be specified in the plan of merger or share exchange.
(a) A domestic business corporation may become a domestic unincorporated entity pursuant to a plan of entity conversion.
(b) A domestic business corporation may become a foreign unincorporated entity if the entity conversion is permitted by the laws of the foreign jurisdiction.
(c) A domestic unincorporated entity may become a domestic business corporation. If the organic law of a domestic unincorporated entity does not provide procedures for the approval of an entity conversion, the conversion shall be adopted and approved, and the entity conversion effectuated, in the same manner as a merger of the unincorporated entity. If the organic law of a domestic unincorporated entity does not provide procedures for the approval of either an entity conversion or a merger, a plan of entity conversion shall be adopted and approved, the entity conversion effectuated, and dissenters' rights exercised, in accordance with the procedures in this chapter and chapter 23 of this title. Without limiting this subsection (c), a domestic unincorporated entity whose organic law does not provide procedures for the approval of an entity conversion shall be subject to subsection (e) and § 48-21-111(7). For purposes of applying this chapter and chapter 23 of this title:
(1) The unincorporated entity, its interest holders, interests, and organic documents taken together, shall be deemed to be a domestic business corporation, shareholders, shares, and charters, respectively, and vice versa, as the context may require; and
(2) If the business and affairs of the unincorporated entity are managed by a group of persons that is not identical to the interest holders, that group shall be deemed to be the board of directors.
(d) A foreign unincorporated entity may become a domestic business corporation if the organic law of the foreign unincorporated entity authorizes it to become a corporation in another jurisdiction.
(e) If any provision of a debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred or executed by a domestic business corporation before January 1, 2013, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, the provision shall be deemed to apply to an entity conversion of the corporation until such time as the provision is amended on or subsequent to January 1, 2013.
(1) A statement of the type of other entity the survivor will be and, if it will be a foreign other entity, its jurisdiction of organization;
(2) The terms and conditions of the conversion;
(3) The manner and basis of converting the shares of the domestic business corporation following its conversion into interests or other securities, obligations, rights to acquire interests or other securities, cash, other property, or any combination of the foregoing; and
(4) The full text, as they will be in effect immediately after consummation of the conversion, of the organic documents of the survivor.
(b) The plan of entity conversion may also include a provision that the plan may be amended prior to filing articles of entity conversion, except that subsequent to approval of the plan by the shareholders, the plan may not be amended to change:
(1) The amount or kind of shares or other securities, interests, obligations, rights to acquire shares, other securities or interests, cash or other property to be received under the plan by the shareholders;
(2) The organic documents that will be in effect immediately following the conversion, except for changes permitted by a provision of the organic law of the survivor comparable to § 48-20-102; or
(3) Any of the other terms or conditions of the plan if the change would adversely affect any of the shareholders in any material respect.
(c) Terms of a plan of entity conversion may be made dependent upon facts objectively ascertainable outside the plan in accordance with § 48-11-301.
In the case of an entity conversion of a domestic business corporation to a domestic or foreign unincorporated entity:
(1) The plan of entity conversion must be adopted by the board of directors;
(2) After adopting the plan of entity conversion, the board of directors must submit the plan to the shareholders for their approval. The board of directors must also transmit the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must transmit to the shareholders the basis for that determination;
(3) The board of directors may condition its submission of the plan of entity conversion to the shareholders on any basis;
(4) If the approval of the shareholders is to be given at a meeting, the corporation must notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the plan of entity conversion is to be submitted for approval. The notice must state that the purpose, or one (1) of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy of the organic documents as they will be in effect immediately after the entity conversion;
(5) Unless chapters 11-27 of this title, the charter, or the board of directors acting pursuant to subdivision (3) requires a greater vote or a vote by voting groups, the plan of conversion to be authorized must be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group;
(6) If any provision of the charter, bylaws or an agreement to which any of the directors or shareholders are parties, adopted or entered into before January 1, 2013, applies to a merger of the corporation and the document does not refer to an entity conversion of the corporation, the provision shall be deemed to apply to an entity conversion of the corporation until such time as the provision is subsequently amended; and
(7) If as a result of the conversion one (1) or more shareholders of the corporation would become subject to owner liability for the debts, obligations, or liabilities of any other person or entity, approval of the plan of conversion shall require the execution, by each such shareholder, of a separate written consent to become subject to such owner liability.
(a) After the conversion of a domestic business corporation to a domestic unincorporated entity has been adopted and approved as required by this chapter, articles of entity conversion shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles shall:
(1) Set forth the name of the corporation immediately before the filing of the articles of entity conversion and the name to which the name of the corporation is to be changed, which shall be a name that satisfies the organic law of the survivor;
(2) State the type of unincorporated entity that the survivor will be;
(3) Set forth a statement that the plan of entity conversion was duly approved by the shareholders in the manner required by this chapter and the charter; and
(4) If the survivor is a filing entity, have attached the applicable public organic document; except that provisions that would not be required to be included in a restated public organic document may be omitted.
(b) After the conversion of a domestic unincorporated entity to a domestic business corporation has been adopted and approved as required by the organic law of the unincorporated entity, articles of entity conversion shall be executed on behalf of the unincorporated entity by any officer or other duly authorized representative. The articles shall:
(1) Set forth the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which shall be a name that satisfies the requirements of § 48-14-101;
(2) Set forth a statement that the plan of entity conversion was duly approved in accordance with the organic law of the unincorporated entity; and
(3) Have attached a charter; except that provisions that would not be required to be included in a restated charter of a domestic business corporation may be omitted.
(c) After the conversion of a foreign unincorporated entity to a domestic business corporation has been authorized as required by the laws of the foreign jurisdiction, articles of entity conversion shall be executed on behalf of the foreign unincorporated entity by any officer or other duly authorized representative. The articles shall:
(1) Set forth the name of the unincorporated entity immediately before the filing of the articles of entity conversion and the name to which the name of the unincorporated entity is to be changed, which shall be a name that satisfies the requirements of § 48-14-101;
(2) Set forth the jurisdiction under the laws of which the unincorporated entity was organized immediately before the filing of the articles of entity conversion and the date on which the unincorporated entity was organized in that jurisdiction;
(3) Set forth a statement that the conversion of the unincorporated entity was duly approved in the manner required by its organic law; and
(4) Have attached a charter; except that provisions that would not be required to be included in a restated charter of a domestic business corporation may be omitted.
(d)
(1) The articles of entity conversion shall be delivered to the secretary of state for filing, together with the required filing fee, and shall take effect at the effective time provided in § 48-11-304.
(2) Articles of entity conversion filed under subsection (a) or (b) may be combined with any required conversion filing under the organic law of the domestic unincorporated entity if the combined filing satisfies the requirements of both this section and the other organic law.
(3) The public organic document required to be attached by subsection (a) shall be delivered to the secretary of state for filing, and shall take effect at the effective time of the articles of entity conversion. A filing fee for the public organic document shall be paid to the secretary of state in the amount specified for such public organic document by the applicable law governing the formation of such domestic unincorporated entity.
(4) The charter required to be attached by subsection (b) or (c) shall be delivered to the secretary of state for filing, and shall take effect at the effective time of the articles of entity conversion. The fee for filing the charter shall be paid in accordance with § 48-11-303.
(e) If the converting entity is a foreign unincorporated entity that is authorized to transact business in this state under a provision of law similar to chapter 25 of this title, its certificate of authority or other type of foreign qualification shall be cancelled automatically on the effective date of its conversion.
(a) Whenever a domestic business corporation has adopted and approved, in the manner required by this chapter, a plan of entity conversion providing for the corporation to be converted to a foreign unincorporated entity, articles of charter surrender shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles of charter surrender shall set forth:
(1) The name of the corporation;
(2) A statement that the articles of charter surrender are being filed in connection with the conversion of the corporation to a foreign unincorporated entity;
(3) A statement that the conversion was duly approved by the shareholders in the manner required by this chapter and the charter;
(4) The jurisdiction under the laws of which the survivor will be organized; and
(5) If the survivor will be a nonfiling entity, the address of its executive office immediately after the conversion.
(b) The articles of charter surrender shall be delivered by the corporation to the secretary of state for filing together with the required filing fee. The articles of charter surrender shall take effect on the effective time provided in § 48-11-304.
(a) When a conversion under § 48-21-111 takes effect:
(1) All title to real and personal property, both tangible and intangible, of the converting entity remains in the survivor without reversion or impairment;
(2) All obligations and liabilities of the converting entity continue as obligations and liabilities of the survivor;
(3) An action or proceeding pending against the converting entity continues against the survivor as if the conversion had not occurred;
(4) In the case of a survivor that is a filing entity, its charter or public organic document and its private organic document become effective;
(5) In the case of a survivor that is a nonfiling entity, its private organic document becomes effective;
(6) The shares or interests of the converting entity are reclassified into shares, interests, other securities, obligations, rights to acquire shares, interests, or other securities, or into cash or other property in accordance with the plan of conversion; and the shareholders or interest holders of the converting entity are entitled only to the rights provided to them under the terms of the conversion and to any dissenters' rights they may have under chapter 23 of this title or under the applicable organic law of the converting entity if it is other than a corporation; and
(7) The survivor is deemed to:
(A) Be incorporated or organized under and subject to the organic law of the converting entity for all purposes;
(B) Be the same corporation or unincorporated entity without interruption as the converting entity; and
(C) Have been incorporated or otherwise organized on the date that the converting entity was originally incorporated or organized.
(b) When a conversion of a domestic business corporation to a foreign other entity becomes effective, the surviving entity is deemed to:
(1) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise dissenters' rights in connection with the conversion; and
(2) Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under chapter 23 of this title.
(c) A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the survivor shall be personally liable only for those debts, obligations, or liabilities of the survivor that arise after the effective time of the articles of entity conversion.
(d) The owner liability of an interest holder in an unincorporated entity that converts to a domestic business corporation shall be as follows:
(1) The conversion does not discharge any owner liability under the organic law of the unincorporated entity to the extent any such owner liability arose before the effective time of the articles of entity conversion;
(2) The interest holder shall not have owner liability under the organic law of the unincorporated entity for any debt, obligation, or liability of the corporation that arises after the effective time of the articles of entity conversion;
(3) The organic law of the unincorporated entity shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (d)(1), as if the conversion had not occurred; and
(4) The interest holder shall have whatever rights of contribution from other interest holders are provided by the organic law of the unincorporated entity with respect to any owner liability preserved by subdivision (d)(1), as if the conversion had not occurred.
(e) The converting entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and such conversion shall not be deemed to constitute a dissolution of such entity.
(f) The interests of the interest holders of the converting entity, unless otherwise agreed, shall be cancelled and become of no effect whatsoever, with respect to the survivor, and the former holders of such interests shall be entitled only to the rights provided in the plan of conversion or the organic documents for the conversion of shares into interests in the survivor.
(g) A conversion shall take effect upon the date the articles of conversion are filed, as provided in § 48-21-112, or on such later date as may be specified in the plan of conversion.
(h) Notwithstanding any other law to the contrary, this section and § 48-21-109 shall have no effect on the application of title 67 and other state and federal tax statutes. Any tax consequences of the conversion as referenced herein shall continue to be controlled by applicable state and federal tax statutes as they may be amended from time to time.
(a) Unless otherwise provided in a plan of entity conversion of a domestic business corporation, after the plan has been adopted and approved as required by § 48-21-111, and at any time before the entity conversion has become effective, it may be abandoned by the board of directors without action by the shareholders.
(b) If an entity conversion is abandoned after articles of entity conversion or articles of charter surrender have been filed with the secretary of state but before the entity conversion has become effective, a statement that the entity conversion has been abandoned in accordance with this section, executed by an officer or other duly authorized representative, shall be delivered to the secretary of state for filing, together with the required filing fee, prior to the effective date of the entity conversion. Upon filing, the statement shall take effect and the entity conversion shall be deemed abandoned and shall not become effective.
(a) A domestic business corporation may become a domestic nonprofit corporation pursuant to a plan of nonprofit conversion.
(b) A domestic business corporation may become a foreign nonprofit corporation if the nonprofit conversion is permitted by the laws of the foreign jurisdiction. Regardless of whether the laws of the foreign jurisdiction require the adoption of a plan of nonprofit conversion, the foreign nonprofit conversion shall be approved by the adoption by the domestic business corporation of a plan of nonprofit conversion in the manner provided in this section.
(c) The plan of nonprofit conversion must include:
(1) The terms and conditions of the conversion;
(2) The manner and basis of reclassifying the shares of the corporation following its conversion into memberships, if any, or securities, obligations, rights to acquire memberships or securities, cash, other property, or any combination of the foregoing;
(3) Any desired amendments to the charter of the corporation following its conversion; and
(4) If the domestic business corporation is to be converted to a foreign nonprofit corporation, a statement of the jurisdiction in which the corporation will be incorporated after the conversion.
(d) The plan of nonprofit conversion may also include a provision that the plan may be amended prior to filing articles of nonprofit conversion, except that subsequent to approval of the plan by the shareholders the plan may not be amended to change:
(1) The amount or kind of memberships or securities, obligations, rights to acquire memberships or securities, cash, or other property to be received by the shareholders under the plan;
(2) The charter as it will be in effect immediately following the conversion, except for changes permitted by § 48-20-102; or
(3) Any of the other terms or conditions of the plan if the change would adversely affect any of the shareholders in any material respect.
(e) Terms of a plan of nonprofit conversion may be made dependent upon facts objectively ascertainable outside the plan in accordance with § 48-11-301.
(f) If any debt security, note or similar evidence of indebtedness for money borrowed, whether secured or unsecured, or a contract of any kind, issued, incurred or executed by a domestic business corporation before January 1, 2013, contains a provision applying to a merger of the corporation and the document does not refer to a nonprofit conversion of the corporation, the provision shall be deemed to apply to a nonprofit conversion of the corporation until such time as the provision is amended on or subsequent to January 1, 2013.
In the case of a conversion of a domestic business corporation to a domestic or foreign nonprofit corporation:
(1) The plan of nonprofit conversion must be adopted by the board of directors;
(2) After adopting the plan of nonprofit conversion, the board of directors must submit the plan to the shareholders for their approval. The board of directors must also transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must transmit to the shareholders the basis for that determination;
(3) The board of directors may condition its submission of the plan of nonprofit conversion to the shareholders on any basis;
(4) If the approval of the shareholders is to be given at a meeting, the corporation must notify each shareholder of the meeting of shareholders at which the plan of nonprofit conversion is to be submitted for approval. The notice must state that the purpose, or one (1) of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. The notice shall include or be accompanied by a copy of the charter as it will be in effect immediately after the nonprofit conversion;
(5) Unless chapters 11-27 of this title, the charter, or the board of directors acting pursuant to subdivision (3) requires a greater vote or a vote by voting groups, the plan of conversion to be authorized must be approved by each voting group entitled to vote separately on the plan by a majority of all the votes entitled to be cast on the plan by that voting group; and
(6) If any provision of the charter, bylaws, or an agreement to which any of the directors or shareholders are parties, adopted or entered into before January 1, 2013, applies to a merger of the corporation and the document does not refer to a nonprofit conversion of the corporation, the provision shall be deemed to apply to a nonprofit conversion of the corporation until such time as the provision is amended on or subsequent to January 1, 2013.
(a) After a plan of nonprofit conversion providing for the conversion of a domestic business corporation to a domestic nonprofit corporation has been adopted and approved as required by this chapter, articles of nonprofit conversion shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles shall set forth:
(1) The name of the corporation immediately before the filing of the articles of nonprofit conversion and if that name does not satisfy the requirements of § 48-54-101, or the corporation desires to change its name in connection with the conversion, a name that satisfies the requirements of § 48-54-101; and
(2) A statement that the plan of nonprofit conversion was duly approved by the shareholders in the manner required by this chapter and the charter.
(b) The articles of nonprofit conversion shall have attached a charter that satisfies the requirements of § 48-52-102. Provisions that would not be required to be included in a charter of a domestic nonprofit corporation may be omitted.
(c) The articles of nonprofit conversion shall be delivered to the secretary of state for filing, together with the required filing fee, and shall take effect at the effective time provided in § 48-11-304. The attached charter shall also be delivered to the secretary of state for filing. The fee for filing the charter shall be paid in accordance with § 48-51-303.
(a) Whenever a domestic business corporation has adopted and approved, in the manner required by this chapter, a plan of nonprofit conversion providing for the corporation to be converted to a foreign nonprofit corporation, articles of charter surrender shall be executed on behalf of the corporation by any officer or other duly authorized representative. The articles of charter surrender shall set forth:
(1) The name of the corporation;
(2) A statement that the articles of charter surrender are being filed in connection with the conversion of the corporation to a foreign nonprofit corporation;
(3) A statement that the foreign nonprofit conversion was duly approved by the shareholders in the manner required by this section and the charter; and
(4) The corporation's new jurisdiction of incorporation.
(b) The articles of charter surrender shall be delivered by the corporation to the secretary of state for filing together with the required filing fee. The articles of charter surrender shall take effect on the effective time provided in § 48-11-304.
(a) When a conversion of a domestic business corporation to a domestic nonprofit corporation becomes effective:
(1) The title to all real and personal property, both tangible and intangible, of the corporation remains in the corporation without reversion or impairment;
(2) The liabilities of the corporation remain the liabilities of the corporation;
(3) An action or proceeding pending against the corporation continues against the corporation as if the conversion had not occurred;
(4) The charter of the domestic nonprofit corporation becomes effective;
(5) The shares of the corporation are reclassified into memberships, securities, obligations, rights to acquire memberships, or securities, or into cash or other property in accordance with the plan of conversion, and the shareholders are entitled only to the rights provided in the plan of nonprofit conversion or to any rights they may have under chapter 23 of this title; and
(6) The corporation is deemed to:
(A) Be a domestic nonprofit corporation for all purposes;
(B) Be the same corporation without interruption as the corporation that existed prior to the conversion; and
(C) Have been incorporated on the date it was originally incorporated as a domestic business corporation.
(b) When a conversion of a domestic business corporation to a foreign nonprofit corporation becomes effective, the foreign nonprofit corporation is deemed to:
(1) Appoint the secretary of state as its agent for service of process in a proceeding to enforce the rights of shareholders who exercise dissenters' rights in connection with the conversion; and
(2) Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under chapter 23 of this title.
(c) The owner liability of a shareholder in a domestic business corporation that converts to a domestic nonprofit corporation shall be as follows:
(1) The conversion does not discharge any owner liability of the shareholder as a shareholder of the business corporation to the extent any such owner liability arose before the effective time of the articles of nonprofit conversion;
(2) The shareholder shall not have owner liability for any debt, obligation, or liability of the nonprofit corporation that arises after the effective time of the articles of nonprofit conversion;
(3) The laws of this state shall continue to apply to the collection or discharge of any owner liability preserved by subdivision (c)(1), as if the conversion had not occurred and the nonprofit corporation was still a business corporation; and
(4) The shareholder shall have whatever rights of contribution from other shareholders are provided by the laws of this state with respect to any owner liability preserved by subdivision (c)(1), as if the conversion had not occurred and the nonprofit corporation was still a business corporation.
(d) A shareholder who becomes subject to owner liability for some or all of the debts, obligations, or liabilities of the nonprofit corporation shall have owner liability only for those debts, obligations, or liabilities of the nonprofit corporation that arise after the effective time of the articles of nonprofit conversion.
(a) Unless otherwise provided in a plan of nonprofit conversion of a domestic business corporation, after the plan has been adopted and approved as required by this section, and at any time before the nonprofit conversion has become effective, it may be abandoned by the board of directors without action by the shareholders.
(b) If a nonprofit conversion is abandoned under subsection (a) after articles of nonprofit conversion or articles of charter surrender have been filed with the secretary of state but before the nonprofit conversion has become effective, a statement that the nonprofit conversion has been abandoned in accordance with this section, executed by an officer or other duly authorized representative, shall be delivered to the secretary of state, together with the required filing fee, for filing prior to the effective date of the nonprofit conversion. The statement shall take effect upon filing, and the nonprofit conversion shall be deemed abandoned and shall not become effective.
(a) A corporation may, on the terms and conditions and for the consideration determined by the board of directors:
(1) Sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property in the usual and regular course of business;
(2) Mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of its property whether or not in the usual and regular course of business; or
(3) Transfer any or all of the corporation's assets to one (1) or more corporations or other entities all of the shares or interests of which are owned by the corporation.
(b) Unless the charter requires it, approval by the shareholders of a transaction described in subsection (a) is not required.
(a) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property (with or without the good will) otherwise than in the usual and regular course of business, on the terms and conditions and for the consideration determined by the corporation's board of directors, if the board of directors proposes and its shareholders approve the proposed transaction. The sale, lease, exchange or other disposition of all, or substantially all, of the properties (with or without the good will) of one (1) or more subsidiaries of a corporation in which such corporation owns shares possessing at least eighty percent (80%) of the total combined voting power of all classes of stock of the subsidiary then entitled to vote for the election of directors, otherwise than in the usual and regular course of business, shall be treated as a disposition within the meaning of this subsection (a) if the subsidiary or subsidiaries constitute all, or substantially all, of the properties of such corporation.
(b) For a transaction to be authorized:
(1) The board of directors must recommend the proposed transaction to the shareholders, unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders with the submission of the proposed transaction; and
(2) The shareholders entitled to vote must approve the transaction.
(c) The board of directors may condition its submission of the proposed transaction on any basis.
(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with § 48-17-105. The notice must also state that the purpose, or one (1) of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, the property of the corporation and contain or be accompanied by a description of the transaction.
(e) Unless the charter or the board of directors (acting pursuant to subsection (c)) requires a greater vote or a vote by voting groups, the transaction to be authorized must be approved by a majority of all the votes entitled to be cast on the transaction.
(f) After a sale, lease, exchange or other disposition of property is authorized, the transaction may be abandoned (subject to any contractual rights) without further shareholder action.
(g) A transaction that constitutes a distribution is governed by § 48-16-401 and not by this section.
As used in this chapter, unless the context otherwise requires:
(1) “Beneficial shareholder” means the person who is a beneficial owner of shares held by a nominee as the record shareholder;
(2) “Corporation” means the issuer of the shares held by a dissenter before the corporate action, and, for purposes of §§ 48-23-203 — 48-23-302, includes the survivor of a merger or conversion or the acquiring entity in a share exchange of that issuer;
(3) “Dissenter” means a shareholder who is entitled to dissent from corporate action under § 48-23-102 and who exercises that right when and in the manner required by part 2 of this chapter;
(4) “Fair value,” with respect to a dissenter's shares, means the value of the shares immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action;
(5) “Interest” means interest from the effective date of the corporate action that gave rise to the shareholder's right to dissent until the date of payment, at the average auction rate paid on United States treasury bills with a maturity of six (6) months (or the closest maturity thereto) as of the auction date for such treasury bills closest to such effective date;
(6) “Record shareholder” means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation; and
(7) “Shareholder” means the record shareholder or the beneficial shareholder.
(a) A shareholder is entitled to dissent from, and obtain payment of the fair value of the shareholder's shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party:
(A) If shareholder approval is required for the merger by § 48-21-104 or the charter and the shareholder is entitled to vote on the merger if the merger is submitted to a vote at a shareholders' meeting or the shareholder is a nonconsenting shareholder under § 48-17-104(b) who would have been entitled to vote on the merger if the merger had been submitted to a vote at a shareholders' meeting; or
(B) If the corporation is a subsidiary that is merged with its parent under § 48-21-105;
(2) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the plan if the plan is submitted to a vote at a shareholders' meeting or the shareholder is a nonconsenting shareholder under § 48-17-104(b) who would have been entitled to vote on the plan if the plan had been submitted to a vote at a shareholders' meeting;
(3) Consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange if the sale or exchange is submitted to a vote at a shareholders' meeting or the shareholder is a nonconsenting shareholder under § 48-17-104(b) who would have been entitled to vote on the sale or exchange if the sale or exchange had been submitted to a vote at a shareholders' meeting, including a sale of all, or substantially all, of the property of the corporation in dissolution, but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one (1) year after the date of sale;
(4) An amendment of the charter that materially and adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption, including a provision respecting a sinking fund for the redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter, or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a fraction of a share, if the fractional share is to be acquired for cash under § 48-16-104;
(5) Any corporate action taken pursuant to a shareholder vote to the extent the charter, bylaws, or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares;
(6) Consummation of a conversion of the corporation to another entity pursuant to chapter 21 of this title; or
(7) In accordance with and to the extent provided in § 48-28-104(b), an amendment to the charter of a corporation as described in § 48-28-104(b)(1), or consummation of a merger or plan of share exchange as described in § 48-28-104(b)(2).
(b) A shareholder entitled to dissent and obtain payment for the shareholder's shares under this chapter may not challenge the corporate action creating the shareholder's entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.
(c) Notwithstanding subsection (a), no shareholder may dissent as to any shares of a security which, as of the date of the effectuation of the transaction which would otherwise give rise to dissenters' rights, is listed on an exchange registered under § 6 of the Securities Exchange Act of 1934 (15 U.S.C. § 78f), as amended, or is a “national market system security,” as defined in rules promulgated pursuant to the Securities Exchange Act of 1934 (15 U.S.C. § 78a), as amended.
(a) A record shareholder may assert dissenters' rights as to fewer than all the shares registered in the record shareholder's name only if the record shareholder dissents with respect to all shares beneficially owned by any one (1) person and notifies the corporation in writing of the name and address of each person on whose behalf the record shareholder asserts dissenters' rights. The rights of a partial dissenter under this subsection (a) are determined as if the shares as to which the partial dissenter dissents and the partial dissenter's other shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares of any one (1) or more classes held on the beneficial shareholder's behalf only if the beneficial shareholder:
(1) Submits to the corporation the record shareholder's written consent to the dissent not later than the time the beneficial shareholder asserts dissenters' rights; and
(2) Does so with respect to all shares of the same class of which the person is the beneficial shareholder or over which the person has power to direct the vote.
(a) Where any corporate action specified in § 48-23-102(a) is to be submitted to a vote at a shareholders' meeting, the meeting notice (including any meeting notice required under chapters 11-27 to be provided to nonvoting shareholders) must state that the corporation has concluded that the shareholders are, are not, or may be entitled to assert dissenters' rights under this chapter. If the corporation concludes that dissenters' rights are or may be available, a copy of this chapter must accompany the meeting notice sent to those record shareholders entitled to exercise dissenters' rights.
(b) In a merger pursuant to § 48-21-105, the parent corporation must notify in writing all record shareholders of the subsidiary who are entitled to assert dissenters rights that the corporate action became effective. Such notice must be sent within ten (10) days after the corporate action became effective and include the materials described in § 48-23-203.
(c) Where any corporate action specified in § 48-23-102(a) is to be approved by written consent of the shareholders pursuant to § 48-17-104(a) or § 48-17-104(b):
(1) Written notice that dissenters' rights are, are not, or may be available must be sent to each record shareholder from whom a consent is solicited at the time consent of such shareholder is first solicited and, if the corporation has concluded that dissenters' rights are or may be available, must be accompanied by a copy of this chapter; and
(2) Written notice that dissenters' rights are, are not, or may be available must be delivered together with the notice to nonconsenting and nonvoting shareholders required by § 48-17-104(e) and (f), may include the materials described in § 48-23-203 and, if the corporation has concluded that dissenters' rights are or may be available, must be accompanied by a copy of this chapter.
(d) A corporation's failure to give notice pursuant to this section will not invalidate the corporate action.
(a) If a corporate action specified in § 48-23-102(a) is submitted to a vote at a shareholders' meeting, a shareholder who wishes to assert dissenters' rights with respect to shares for which dissenters' rights may be asserted under this chapter:
(1) Must deliver to the corporation, before the vote is taken, written notice of the shareholder's intent to demand payment if the proposed action is effectuated; and
(2) Must not vote, or cause or permit to be voted, any such shares in favor of the proposed action.
(b) If a corporate action specified in § 48-23-102(a) is to be approved by less than unanimous written consent, a shareholder who wishes to assert dissenters' rights with respect to shares for which dissenters' rights may be asserted under this chapter must not sign a consent in favor of the proposed action with respect to such shares.
(c) A shareholder who fails to satisfy the requirements of subsection (a) or subsection (b) is not entitled to payment under this chapter.
(a) If a corporate action requiring dissenters' rights under § 48-23-102(a) becomes effective, the corporation must send a written dissenters' notice and form required by subdivision (b)(1) to all shareholders who satisfy the requirements of § 48-23-202(a) or § 48-23-202(b). In the case of a merger under § 48-21-105, the parent must deliver a dissenters' notice and form to all record shareholders who may be entitled to assert dissenters' rights.
(b) The dissenters' notice must be delivered no earlier than the date the corporate action specified in § 48-23-102(a) became effective, and no later than (10) days after such date, and must:
(1) Supply a form that:
(A) Specifies the first date of any announcement to shareholders made prior to the date the corporate action became effective of the principal terms of the proposed corporate action;
(B) If such announcement was made, requires the shareholder asserting dissenters' rights to certify whether beneficial ownership of those shares for which dissenters' rights are asserted was acquired before that date; and
(C) Requires the shareholder asserting dissenters' rights to certify that such shareholder did not vote for or consent to the transaction;
(2) State:
(A) Where the form must be sent and where certificates for certificated shares must be deposited and the date by which those certificates must be deposited, which date may not be earlier than the date for receiving the required form under subdivision (b)(2)(B);
(B) A date by which the corporation must receive the form, which date may not be fewer than forty (40) nor more than sixty (60) days after the date the subsection (a) dissenters' notice is sent, and state that the shareholder shall have waived the right to demand payment with respect to the shares unless the form is received by the corporation by such specified date;
(C) The corporation's estimate of the fair value of shares; and
(D) That, if requested in writing, the corporation will provide, to the shareholder so requesting, within ten (10) days after the date specified in subdivision (b)(2)(B) the number of shareholders who return the forms by the specified date and the total number of shares owned by them; and
(3) Be accompanied by a copy of this chapter if the corporation has not previously sent a copy of this chapter to the shareholder pursuant to § 48-23-201.
(a) A shareholder sent a dissenters' notice described in § 48-23-203 must demand payment, certify whether the shareholder acquired beneficial ownership of the shares before the date required to be set forth in the dissenters' notice pursuant to § 48-23-203(b)(2), and deposit the shareholder's certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits the shareholder's share certificates under subsection (a) retains all other rights of a shareholder until these rights are cancelled or modified by the effectuation of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit the shareholder's share certificates where required, each by the date set in the dissenters' notice, is not entitled to payment for the shareholder's shares under this chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn unless the corporation with which it was filed, or the surviving corporation, consents thereto.
(a) The corporation may restrict the transfer of uncertificated shares from the date the demand for their payment is received until the proposed corporate action is effectuated or the restrictions released under § 48-23-207.
(b) The person for whom dissenters' rights are asserted as to uncertificated shares retains all other rights of a shareholder until these rights are cancelled or modified by the effectuation of the proposed corporate action.
(a) Except as provided in § 48-23-208, as soon as the proposed corporate action is effectuated, or upon receipt of a payment demand, whichever is later, the corporation shall pay each dissenter who complied with § 48-23-204 the amount the corporation estimates to be the fair value of each dissenter's shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year ending not more than sixteen (16) months before the date of payment, an income statement for that year, a statement of changes in shareholders' equity for that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the shares, which estimate shall equal or exceed the corporation's estimate given pursuant to § 48-23-203(b)(2)(C);
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under § 48-23-209; and
(5) A copy of this chapter if the corporation has not previously sent a copy of this chapter to the shareholder pursuant to § 48-23-201 or § 48-23-203.
(a) If the corporation does not effectuate the proposed action that gave rise to the dissenters' rights within two (2) months after the date set for demanding payment and depositing share certificates, the corporation shall return the deposited certificates and release the transfer restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer restrictions, the corporation effectuates the proposed action, it must send a new dissenters' notice under § 48-23-203 and repeat the payment demand procedure.
(a) A corporation may elect to withhold payment required by § 48-23-206 from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenters' notice as the date of the first announcement to news media or to shareholders of the principal terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under subsection (a), after effectuating the proposed corporate action, it shall estimate the fair value of the shares, plus accrued interest, and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of the dissenter's demand. The corporation shall send with its offer a statement of its estimate of the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenter's right to demand payment under § 48-23-209.
(a) A dissenter may notify the corporation in writing of the dissenter's own estimate of the fair value of the dissenter's shares and amount of interest due, and demand payment of the dissenter's estimate (less any payment under § 48-23-206), or reject the corporation's offer under § 48-23-208 and demand payment of the fair value of the dissenter's shares and interest due, if:
(1) The dissenter believes that the amount paid under § 48-23-206 or offered under § 48-23-208 is less than the fair value of the dissenter's shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under § 48-23-206 within two (2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action, does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within two (2) months after the date set for demanding payment.
(b) A dissenter waives the dissenter's right to demand payment under this section unless the dissenter notifies the corporation of the dissenter's demand in writing under subsection (a) within one (1) month after the corporation made or offered payment for the dissenter's shares.
(a) If a demand for payment under § 48-23-209 remains unsettled, the corporation shall commence a proceeding within two (2) months after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the two-month period, it shall pay each dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in a court of record having equity jurisdiction in the county where the corporation's principal office (or, if none in this state, its registered office) is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with or whose shares were acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of this state) whose demands remain unsettled, parties to the proceeding as in an action against their shares and all parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. The court may appoint one (1) or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of the dissenter's shares, plus accrued interest, exceeds the amount paid by the corporation; or
(2) For the fair value, plus accrued interest, of the dissenter's after-acquired shares for which the corporation elected to withhold payment under § 48-23-208.
(a) The court in an appraisal proceeding commenced under § 48-23-301 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under § 48-23-209.
(b) The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable against:
(1) The corporation and in favor of any or all dissenters if the court finds the corporation did not substantially comply with the requirements of part 2 of this chapter; or
(2) Either the corporation or a dissenter, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to these counsel reasonable fees to be paid out of the amounts awarded to the dissenters who were benefited.
(a) A majority of the incorporators or initial directors of a corporation that has not issued shares or has not commenced business may dissolve the corporation by delivering to the secretary of state for filing articles of dissolution and termination that set forth:
(1) The name of the corporation;
(2) The date of its incorporation;
(3) Either that:
(A) None of the corporation's shares has been issued; or
(B) The corporation has not commenced business;
(4) That no debt of the corporation remains unpaid;
(5) That the net assets of the corporation remaining after winding up have been distributed to the shareholders, if shares were issued; and
(6) That a majority of the incorporators or initial directors authorized the dissolution and the date dissolution was thus authorized.
(b) If the secretary of state finds that the articles of dissolution and termination of corporate existence comply with the requirements of subsection (a) and are accompanied by a tax clearance for termination or withdrawal relative to such corporation, then the secretary of state shall file the articles of dissolution and termination of corporate existence. Upon such filing, the existence of the corporation shall cease, except that the termination of corporate existence shall not take away or impair any remedy to or against the corporation, its directors, officers or shareholders, for any right or claim existing or any liability incurred, prior to such termination. Any such 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 the power to take such corporate or other action as may be appropriate to protect such remedy, right, or claim.
(a) A corporation may be voluntarily dissolved by the written consent of its shareholders in accordance with § 48-17-104.
(b) A corporation's board of directors may propose dissolution for submission to the shareholders.
(c) For a proposal to dissolve to be adopted:
(1) The board of directors shall recommend dissolution to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances, it should make no recommendation and communicates the basis for its determination to the shareholders; and
(2) The shareholders entitled to vote shall approve the proposal to dissolve as provided in subsection (f).
(d) The board of directors may condition its submission of the proposal for dissolution on any basis.
(e) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' meeting in accordance with § 48-17-105. The notice must also state that the purpose, or one (1) of the purposes, of the meeting is to consider dissolving the corporation.
(f) Unless the charter or the board of directors (acting pursuant to subsection (d)) requires a greater vote or a vote by voting groups, the proposal to dissolve to be adopted shall be approved by a majority of all the votes entitled to be cast on that proposal.
(a) At any time after dissolution is authorized, the corporation may dissolve by delivering to the secretary of state for filing articles of dissolution setting forth:
(1) The name of the corporation;
(2) The date dissolution was authorized;
(3) That the resolution was duly adopted by the shareholders; and
(4) A copy of the resolution or the written consent authorizing the dissolution.
(b) Unless a delayed effective date is specified in the articles of dissolution, a corporation is dissolved when the articles of dissolution are filed.
(a) A corporation may revoke its dissolution at any time prior to filing the articles of termination of corporate existence by the secretary of state.
(b) Revocation of dissolution shall be authorized by shareholders in any manner that dissolution may be authorized under § 48-24-102, unless the authorization for dissolution permitted revocation by action by the board of directors alone, in which event the board of directors may revoke the dissolution without shareholder action.
(c) After the revocation of dissolution is authorized, the corporation may revoke the dissolution by delivering to the secretary of state for filing articles of revocation of dissolution that set forth:
(1) The name of the corporation;
(2) The effective date of the dissolution that was revoked;
(3) The date that the revocation of dissolution was authorized;
(4) If the corporation's board of directors (or incorporators) revoked the dissolution, a statement to that effect;
(5) If the corporation's board of directors revoked a dissolution authorized by the shareholders, a statement that revocation was permitted by action by the board of directors alone pursuant to that authorization; and
(6) If shareholder action was required to revoke the dissolution, the information required by § 48-24-103(a)(3) and (4).
(d) Revocation of dissolution is effective when the articles of revocation of dissolution are filed.
(e) 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.
(a) A dissolved corporation continues its corporate existence but may not carry on any business, except that appropriate to wind up and liquidate its business and affairs, including:
(1) Collecting its assets;
(2) Conveying and disposing of its properties that will not be distributed in kind to its shareholders;
(3) Discharging or making provision for discharging its liabilities;
(4) Distributing its remaining property among its shareholders according to their interests; and
(5) Doing every other act necessary to wind up and liquidate its business and affairs.
(b) Dissolution of a corporation does not:
(1) Transfer title to the corporation's property;
(2) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation's share transfer records;
(3) Subject its directors or officers to standards of conduct different from those prescribed in chapter 18 of this title;
(4) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;
(5) Prevent commencement of a proceeding by or against the corporation in its corporate name;
(6) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
(7) Terminate the authority of the registered agent of the corporation.
(a) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section.
(b) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date. The written notice must:
(1) Describe information that must be included in a claim;
(2) State whether the claim is admitted, or not admitted, and if admitted:
(A) The amount that is admitted, which may be as of a given date; and
(B) Any interest obligation if fixed by an instrument of indebtedness;
(3) Provide a mailing address where a claim may be sent;
(4) State the deadline, which may not be fewer than four (4) months from the effective date of the written notice, by which the dissolved corporation must receive the claim; and
(5) State that, except to the extent that any claim is admitted, the claim will be barred if written notice of the claim is not received by the deadline.
(c) A claim against the dissolved corporation is barred to the extent that it is not admitted:
(1) If the dissolved corporation delivered written notice to the claimant in accordance with subsection (b) and the claimant does not deliver a written notice of the claim to the dissolved corporation by the deadline; or
(2) If the dissolved corporation delivered written notice to the claimant that the claimant's claim is rejected, in whole or in part, and the claimant does not commence a proceeding to enforce the claim within three (3) months from the effective date of the rejection notice.
(d) For purposes of this section, “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.
(a) A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice.
(b) The notice must:
(1) Be published one (1) time in a newspaper of general circulation in the county where the dissolved corporation's principal office (or, if none in this state, its registered office) is or was last located;
(2) Describe the information that must be included in a claim and provide a mailing address where the claim may be sent; and
(3) State that a claim against the corporation will be barred unless a proceeding to enforce the claim is commenced within two (2) years after the publication of the notice.
(c) If the dissolved corporation publishes a newspaper notice in accordance with subsection (b), the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within two (2) years after the publication date of the newspaper notice:
(1) A claimant who did not receive written notice under § 48-24-106;
(2) A claimant whose claim was timely sent to the dissolved corporation but not acted on; or
(3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.
(d) A claim may be enforced under this section:
(1) Against the dissolved corporation, to the extent of its undistributed assets; or
(2) If the assets have been distributed in liquidation, against a shareholder of the dissolved corporation to the extent of the shareholder's pro rata share of the claim or the corporate assets distributed to the shareholder in liquidation, whichever is less, but a shareholder's total liability for all claims under this section may not exceed the total amount of assets distributed to the shareholder.
(a) When a corporation has distributed all its assets to its creditors and shareholders and voluntary dissolution proceedings have not been revoked, it shall deliver to the secretary of state for filing articles of termination of corporate existence. The articles shall set forth:
(1) The name of the corporation;
(2) That all the assets of the corporation have been distributed to its creditors and shareholders; and
(3) That the dissolution of the corporation has not been revoked.
(b) If the secretary of state finds that the articles of termination of corporate existence comply with the requirements of subsection (a) and are accompanied by a tax clearance for termination or withdrawal relative to such corporation, then the secretary of state shall file the articles of termination of corporate existence. Upon such filing, the existence of the corporation shall cease, except that the termination of corporate existence shall not take away or impair any remedy to or against the corporation, its directors, officers or shareholders, for any right or claim existing or any liability incurred, prior to such termination. Any such 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 the power to take such corporate or other action as may be appropriate to protect such remedy, right, or claim.
(a) Directors shall cause a dissolved corporation to discharge or make reasonable provision for the payment of claims and make distributions of assets to shareholders after payment or provision for claims.
(b) Directors of a dissolved corporation that has disposed of claims under § 48-24-106 or § 48-24-107 shall not be liable for breach of subsection (a) with respect to claims against the dissolved corporation that are barred or satisfied under § 48-24-106 or § 48-24-107.
The secretary of state may commence a proceeding under § 48-24-202 to administratively dissolve a corporation if the:
(1) Corporation does not deliver its properly completed annual report to the secretary of state within two (2) months after it is due;
(2) Corporation is without a registered agent or registered office in this state for two (2) months or more;
(3) Name of a corporation contained in a document filed after January 1, 1988, fails to comply with § 48-14-101;
(4) Corporation does not notify the secretary of state within two (2) months that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued;
(5) Corporation's period of duration stated in its charter expires; or
(6) Corporation submits to the secretary of state's office a check, bank draft, money order or other such instrument, for payment of any fee and it is dishonored upon presentation for payment.
(a) If the secretary of state determines that one (1) or more grounds exist under § 48-24-201 for dissolving a corporation, the secretary of state shall serve the corporation with notice of the secretary of state's determination under §§ 48-15-104 and 48-15-105, except that such determination may be sent by first class mail.
(b) If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the secretary of state that each ground determined by the secretary of state does not exist within two (2) months after service of the communication is perfected under §§ 48-15-104 and 48-15-105, the secretary of state shall administratively dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. The secretary of state shall file the original of the certificate and serve a copy on the corporation under §§ 48-15-104 and 48-15-105, except that the certificate may be sent by first class mail.
(c) A corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under § 48-24-105 and notify claimants under §§ 48-24-106 and 48-24-107.
(d) The administrative dissolution of a corporation does not terminate the authority of its registered agent.
(e) Nothing herein shall be deemed to repeal or modify § 67-4-2116 or any other provisions of law relating to the revocation of the charter of a corporation for failure to comply with the provisions thereof.
(a) A corporation administratively dissolved under § 48-24-202 may apply to the secretary of state for reinstatement. The application must:
(1) Contain a confirmation of good standing relative to such foreign corporation;
(2) Recite the name of the corporation at its date of dissolution;
(3) State that the ground or grounds for dissolution either did not exist or have been eliminated; and
(4) State a corporate name that satisfies the requirements of § 48-14-101.
(b)
(1) If the secretary of state determines that the application contains the confirmation of good standing and information required by subsection (a), and that such information is correct, then the secretary of state shall cancel the certificate of dissolution and prepare a certificate of reinstatement that recites the secretary of state's determination and the effective date of reinstatement, file the original of the certificate, and serve a copy on the corporation under § 48-15-104.
(2) If the corporate name in subdivision (a)(4) is different than the corporate name in subdivision (a)(2), the application for reinstatement shall constitute an amendment to the charter insofar as it pertains to the corporate name.
(c) When the reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution, and the corporation resumes carrying on its business as if the administrative dissolution had never occurred.
(a) If the secretary of state denies a corporation's application for reinstatement following administrative dissolution, the secretary of state shall serve the corporation under §§ 48-15-104 and 48-15-105 with a written notice that explains the reason or reasons for denial.
(b) The corporation may appeal the denial of reinstatement to the chancery court of Davidson County within thirty (30) days after service of the notice of denial is perfected. The corporation appeals by petitioning the court to set aside the dissolution and attaching to the petition copies of the secretary of state's certificate of dissolution, the corporation's application for reinstatement, and the secretary of state's notice of denial.
(c) The court may summarily order the secretary of state to reinstate the dissolved corporation or may take other action the court considers appropriate.
(d) The court's final decision may be appealed as in other civil proceedings.
(a) When a corporation, which has been administratively dissolved or has had its charter revoked, wishes to terminate its corporate existence, it may do so without first being reinstated by delivering to the secretary of state for filing articles of termination following administrative dissolution or revocation setting forth:
(1) The name of the corporation;
(2) The date that termination of corporate existence was authorized;
(3) That the resolution authorizing termination was duly adopted by the shareholders;
(4) A copy of the resolution or the written consent authorizing the termination; and
(5) That all the assets of the corporation have been distributed to its creditors and shareholders.
(b) If the secretary of state finds that the articles of termination following administrative dissolution or revocation comply with the requirements of subsection (a) and are accompanied by a tax clearance for termination or withdrawal relative to the corporation, then the secretary of state shall file the articles of termination of corporate existence following administrative dissolution or revocation. Upon such filing, the existence of the corporation shall cease, except that the termination of corporate existence shall not take away or impair any remedy to or against the corporation, its directors, officers or shareholders, for any right or claim existing or any liability incurred, prior to such termination. Any such 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 the power to take such corporate or other action as may be appropriate to protect such remedy, right, or claim.
A corporation that has been administratively dissolved by the expiration of its period of duration may reinstate within one (1) year of the expiration of the period of duration by:
(1) Amending its charter to extend its period of duration or set the period of duration to perpetual; and
(2) Filing an application for reinstatement following administrative dissolution pursuant to § 48-24-203.
Any court of record with proper venue in accordance with § 48-24-302 may dissolve a corporation:
(1) In a proceeding by the attorney general and reporter if it is established that the corporation:
(A) Obtained its charter through fraud;
(B) Has exceeded or abused the authority conferred upon it by law;
(C) Has violated any provision of law resulting in the forfeiture of its charter; or
(D) Has carried on, conducted, or transacted its business or affairs in a persistently fraudulent or illegal manner;
provided, that the enumeration of these grounds for dissolution shall not exclude actions or special proceedings by the attorney general and reporter or other state officials for the dissolution of a corporation for other causes as provided in this chapter or in any other statute of this state;
(2) In a proceeding by a shareholder if it is established that:
(A) The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally, because of the deadlock;
(B) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;
(C) The shareholders are deadlocked in voting power and have failed, for a period that includes at least two (2) consecutive annual meeting dates, to elect directors; or
(D) The corporate assets are being misapplied or wasted;
(3) In a proceeding by a creditor if it is established that:
(A) The creditor's claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or
(B) The corporation has admitted in writing that the creditor's claim is due and owing and the corporation is insolvent; or
(4) In a proceeding by the corporation to have its voluntary dissolution continued under court supervision.
(a) Venue for a proceeding by the attorney general and reporter to dissolve a corporation lies in Davidson County. Venue for a proceeding brought by any other party named in § 48-24-301 lies in the county where the corporation's principal office (or, if none in this state, its registered office) is or was last located.
(b) It is not necessary to make shareholders parties to a proceeding to dissolve a corporation unless relief is sought against them individually.
(c) A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.
(d) In a proceeding for dissolution under § 48-24-301(2), the petitioner shall execute and file in the proceeding a bond, with sufficient surety, to cover the defendant's probable costs, including reasonable attorney fees, in defending the petition. The court shall determine the amount of the bond and may award to any party its reasonable costs, including attorney fees, if it finds for such party in a proceeding brought under § 48-24-301.
(a) A court of record having equity jurisdiction in a judicial proceeding brought to dissolve a corporation may appoint one (1) or more receivers to wind up and liquidate, or one (1) or more custodians to manage the business and affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property wherever located.
(b) The court may appoint an individual or a domestic or foreign corporation (authorized to transact business in this state) as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.
(c) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:
(1) The receiver may:
(A) Dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court; and
(B) Sue and defend in the receiver's own name as receiver of the corporation in all courts of this state;
(2) The custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its shareholders and creditors.
(d) The court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation and its shareholders and creditors.
(e) The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and the receiver's or custodian's counsel from the assets of the corporation or proceeds from the sale of the assets.
(a) If after a hearing the court determines that one (1) or more grounds for judicial dissolution described in § 48-24-301 exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the secretary of state, who shall file it.
(b) After entering the decree of dissolution, the court shall direct the winding up and liquidation of the corporation's business and affairs in accordance with § 48-24-105 and the notification of claimants in accordance with §§ 48-24-106 and 48-24-107.
(a) A foreign corporation, except a foreign insurance corporation subject to title 56, may not transact business in this state until it obtains a certificate of authority from the secretary of state.
(b) The following activities, among others, do not constitute transacting business within the meaning of subsection (a):
(1) Maintaining, defending, or settling any proceeding, claim, or dispute;
(2) Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
(3) Maintaining bank accounts;
(4) Maintaining offices or agencies for the transfer, exchange, and registration of the corporation's own securities or appointing and maintaining trustees or depositories with respect to those securities;
(5) Selling through independent contractors;
(6) Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
(7) Creating or acquiring indebtedness, deeds of trusts, mortgages, and security interests in real or personal property;
(8) Securing or collecting debts or enforcing mortgages, deeds of trust, and security interests in property securing the debts;
(9) Owning, without more, real or personal property; provided, that for a reasonable time the management and rental of real property acquired in connection with enforcing a mortgage or deed of trust shall also not be considered transacting business if the owner is attempting to liquidate the owner's investment and if no office or other agency therefor, other than an independent agency, is maintained in this state;
(10) Conducting an isolated transaction that is completed within one (1) month and that is not one in the course of repeated transactions of a like nature; or
(11) Transacting business in interstate commerce.
(c) The list of activities in subsection (b) is not exhaustive, and is applicable solely to determine whether a foreign corporation must procure a certificate of authority and for no other purpose.
(a) A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.
(b) The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.
(c) A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.
(d) A foreign corporation which transacts business or conducts affairs in this state without a certificate of authority shall be liable to this state, for the years or parts thereof during which it transacted business or conducted affairs in this state without a certificate of authority, in an amount equal to treble the amount of all fees, penalties and taxes, plus interest, which would have been imposed by the laws of this state upon such corporation had it duly applied for and received a certificate of authority as required by this chapter, and thereafter had failed to file all reports required.
(e) An application for a certificate of authority by a foreign corporation which has transacted business in this state without a certificate of authority shall not be filed by the secretary of state until all amounts due under subsection (d) shall have been paid.
(f) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.
(a) A foreign corporation may apply for a certificate of authority to transact business in this state by delivering an application to the secretary of state for filing. The application must set forth:
(1) The name of the foreign corporation and, if different, the name under which the certificate of authority is to be obtained pursuant to § 48-25-106;
(2) The name of the state or country under whose law it is incorporated;
(3) Its date of incorporation and period of duration, if other than perpetual;
(4) The street address, including the zip code, of its principal office (and a mailing address such as a post office box if the United States postal service does not deliver to the principal office);
(5) The street address, including the zip code, of its registered office in this state (and a mailing address such as a post office box if the United States postal service does not deliver to the registered office), the county in which the office is located, and the name of its registered agent at that office;
(6) The names and business addresses, including the zip code, of its current directors and officers; and
(7) A statement that it is a corporation for profit.
(b) The foreign corporation shall deliver with the completed application a certificate of existence (or a document of similar import) duly authenticated by the secretary of state or other official having custody of corporate records in the state or country under whose law it is incorporated. The certificate shall not bear a date of more than two (2) months prior to the date the application is filed in this state.
(c) If the secretary of state determines upon application that a foreign corporation has been transacting business in this state without a certificate of authority for a period of one (1) year or more, then the secretary of state shall not file the application until the foreign corporation submits a confirmation of good standing.
(a) A foreign corporation authorized to transact business in this state must obtain an amended certificate of authority from the secretary of state if it changes:
(1) Its corporate name;
(2) The period of its duration; or
(3) The state or country of its incorporation.
(b) The requirements of § 48-25-103 for obtaining an original certificate of authority apply to obtaining an amended certificate under this section.
(a) A certificate of authority authorizes the foreign corporation to which it is issued to transact business in this state subject, however, to the right of the state to revoke the certificate as provided in chapters 11-27 of this title.
(b) A foreign corporation with a valid certificate of authority has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by chapters 11-27 of this title, is subject to the same duties, restrictions, penalties, and liabilities now or later imposed on, a domestic corporation of like character.
(c) Chapters 11-27 of this title do not authorize this state to regulate the organization or internal affairs of a foreign corporation authorized to transact business in this state.
(d) This state does hereby release its right of escheat by virtue of the alien origin of such foreign corporation, or the alienage or nonresidence of the shareholders of such foreign corporation, or any of them, in accordance with the Uniform Unclaimed Property Act, compiled in title 66, chapter 29.
(a) A foreign corporation may obtain or maintain a certificate of authority to transact business in this state under any of the following names:
(1) The corporate name of the foreign corporation; provided, that such name complies with § 48-14-101;
(2) An assumed corporate name which meets the requirements of § 48-14-101; or
(3) The corporate name of the foreign corporation with the word “corporation,” “incorporated” or “company,” or the abbreviation “corp.,” “inc.” or “co.” added.
(b) Except as authorized by subsections (c) and (d), the corporate name (including an assumed corporate name) of a foreign corporation must be distinguishable upon the records of the secretary of state from:
(1) The corporate name or assumed corporate name of a corporation incorporated or authorized to transact business in this state;
(2) A corporate name or assumed corporate name reserved or registered under § 48-14-102 or § 48-14-103;
(3) The corporate name of a not for profit corporation incorporated or authorized to transact business in this state; and
(4) A limited partnership name reserved or organized under the laws of the state of Tennessee or registered as a foreign limited partnership in Tennessee.
(c) A foreign corporation may apply to the secretary of state for authorization to use in this state the name of another corporation (incorporated or authorized to transact business in this state) that is not distinguishable upon the secretary of state's records from the name applied for. The secretary of state shall authorize use of the name applied for if:
(1) The other corporation or limited partnership consents to the use in writing and submits an undertaking in a form satisfactory to the secretary of state to change its name to a name that is distinguishable upon the records of the secretary of state from the name of the applying corporation; or
(2) The applicant delivers to the secretary of state a certified copy of a final judgment of a court of record having competent jurisdiction, establishing the applicant's right to use the name applied for in this state.
(d) A foreign corporation may use in this state the name (including the assumed corporate name) of another domestic or foreign corporation that is used in this state, if the other corporation is incorporated or authorized to transact business in this state and the foreign corporation has:
(1) Merged with the other corporation;
(2) Been formed by reorganization of the other corporation; or
(3) Acquired all or substantially all of the assets, including the corporate name, of the other corporation.
(e) If a foreign corporation authorized to transact business in this state changes its corporate name to one that does not satisfy the requirements of § 48-14-101, it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of § 48-14-101 and obtains an amended certificate of authority under § 48-25-104.
Each foreign corporation authorized to transact business in this state shall continuously maintain in this state:
(1) A registered office that may be the same as any of its places of business; and
(2) A registered agent who maintains an office at the same street address as the registered office, and who may be:
(A) An individual who resides in this state, a domestic corporation, a not-for-profit domestic corporation, a domestic LLC, a domestic general partnership, a domestic limited partnership, or a domestic registered limited liability partnership; or
(B) A foreign corporation, a not-for-profit foreign corporation, a foreign LLC, a foreign general partnership, a foreign limited partnership, or a foreign registered limited liability partnership that is authorized to transact business in this state.
(a) A foreign corporation authorized to transact business in this state may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:
(1) Its name;
(2) If the current registered office is to be changed, the street address, including the zip code, of its new registered office (and a mailing address such as a post office box if the United States postal service does not deliver to the new registered office), and the county in which the office is located;
(3) If the current registered agent is to be changed, the name of its new registered agent; and
(4) That after the change or changes are made, the street addresses of its registered office and the business office of its registered agent will be identical.
(b) If a registered agent changes the street address of such registered agent's business office, such registered agent may change the street address of the registered office of any foreign corporation for which such registered agent is the registered agent by notifying the corporation in writing of the change and signing (either manually or in facsimile), and delivering to the secretary of state for filing, a statement of change that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.
(c) Each foreign corporation authorized to transact business in this state shall comply with § 48-15-101(b).
(a) The registered agent of a foreign corporation may resign the agency appointment by signing and filing with the secretary of state, an original statement of resignation accompanied by the agent's certification that the agent has mailed a copy thereof to the principal office of the corporation by certified mail. The statement of resignation may include a statement that the registered office is also discontinued.
(b) The agency appointment is terminated, and the registered office discontinued if so provided, on the date on which the statement is filed by the secretary of state.
(a) The registered agent of a foreign corporation authorized to transact business in this state is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the foreign corporation.
(b) Service on a foreign corporation when the secretary of state is its agent for service of process may be obtained pursuant to § 48-15-105.
(c) This section does not prescribe the only means, or necessarily the required means, of serving a foreign corporation.
(a) A foreign corporation authorized to transact business in this state may not withdraw from this state until it obtains a certificate of withdrawal from the secretary of state.
(b) A foreign corporation authorized to transact business in this state may apply for a certificate of withdrawal by delivering an application to the secretary of state for filing. The application shall set forth:
(1) The name of the foreign corporation and the name of the state or country under whose law it is incorporated;
(2) That it is not transacting business in this state and that it surrenders its authority to transact business in this state;
(3) That it either continues its registered agent in this state or revokes the authority of its registered agent to accept service on its behalf and appoints the secretary of state as its agent for service of process in any proceeding based on a cause of action arising during the time it was authorized to transact business in this state;
(4) A mailing address to which the secretary of state may mail a copy of any process served on the secretary of state under subdivision (b)(3); and
(5) A commitment to notify the secretary of state in the future of any change in its mailing address.
(c) The foreign corporation shall provide any additional information in its application requested by the commissioner of revenue or the secretary of state in order to determine and assess any unpaid taxes and fees payable under the laws of this state.
(d) The secretary of state shall not file an application for a certificate of withdrawal unless it is accompanied by a tax clearance for termination or withdrawal relative to such foreign corporation.
(e) After the withdrawal of the corporation is effective, service of process on the secretary of state or the continued registered agent under this section is service on the foreign corporation. Upon receipt of process, the secretary of state shall mail a copy of the process to the foreign corporation at the mailing address set forth under subsection (b).
The secretary of state may commence a proceeding under § 48-25-302 to revoke the certificate of authority of a foreign corporation authorized to transact business in this state if:
(1) The foreign corporation does not deliver its properly completed annual report to the secretary of state within two (2) months after it is due;
(2) The foreign corporation is without a registered agent or registered office in this state for two (2) months or more;
(3) The foreign corporation does not inform the secretary of state under § 48-25-108 or § 48-25-109 that its registered agent or registered office has changed, that its registered agent has resigned, or that its registered office has been discontinued within two (2) months of the change, resignation, or discontinuance;
(4) The name of the foreign corporation contained in a document filed pursuant to chapters 11-27 of this title fails to comply with § 48-25-106;
(5) An incorporator, director, officer, or agent of the foreign corporation signed a document knowing it was false in any material respect with intent that the document be delivered to the secretary of state for filing;
(6) The secretary of state receives a duly authenticated certificate from the secretary of state or other official having custody of corporate records in the state or country under whose law the foreign corporation is incorporated, stating that it has been dissolved or has disappeared as the result of a merger;
(7) The foreign corporation is exceeding the authority conferred upon it by this chapter; or
(8) The foreign corporation submits to the secretary of state's office a check, bank draft, money order or other such instrument for payment of any fee and it is dishonored upon presentation for payment.
(a) If the secretary of state determines that one (1) or more grounds exist under § 48-25-301 for revocation of a certificate of authority, the secretary of state shall serve the foreign corporation with notice of the secretary of state's determination under § 48-25-110, except that such determination may be sent by first class mail. Notice need not be sent if the grounds for revocation are pursuant to § 48-25-301(6) and a certificate of revocation may be sent without the two-month waiting period required by subsection (b).
(b) If the foreign corporation does not correct each ground for revocation or demonstrate to the reasonable satisfaction of the secretary of state that each ground determined by the secretary of state does not exist within two (2) months after service of the communication is perfected under § 48-25-110, the secretary of state may revoke the foreign corporation's certificate of authority by signing a certificate of revocation that recites the ground or grounds for revocation and its effective date. The secretary of state shall file the original of the certificate and serve a copy on the foreign corporation under § 48-25-110, except that the certificate may be sent by first class mail.
(c) The authority of a foreign corporation to transact business in this state ceases on the date shown on the certificate revoking its certificate of authority.
(d) The secretary of state's revocation of a foreign corporation's certificate of authority appoints the secretary of state the foreign corporation's agent for service of process in any proceeding based on a cause of action which arose during the time the foreign corporation was authorized to transact business in this state. Service of process on the secretary of state under this subsection (d) is service on the foreign corporation. Upon receipt of process, the secretary of state shall comply with § 48-15-105.
(e) Revocation of a foreign corporation's certificate of authority does not terminate the authority of the registered agent of the corporation.
(f) Nothing herein shall be deemed to repeal or modify § 67-4-2116 or any other provisions of law relating to the suspension of the certificate of authority of foreign corporations for failure to comply with the provisions thereof.
(a) A foreign corporation whose certificate of authority is administratively revoked under § 48-25-302 may apply to the secretary of state for reinstatement. The application must:
(1) Contain a confirmation of good standing relative to such foreign corporation;
(2) Recite the name of the corporation at its date of revocation;
(3) State that the ground or grounds for revocation either did not exist or have been eliminated; and
(4) State a corporate name that satisfies the requirements of § 48-14-101.
(b)
(1) If the secretary of state determines that the application contains the confirmation of good standing and information required by subsection (a), and that such information is correct, then the secretary of state shall reinstate the certificate of authority, prepare a certificate that recites the secretary of state's determination and the effective date of reinstatement, file the original of the certificate, and serve a copy on the corporation under § 48-15-104.
(2) If the corporate name in subdivision (a)(4) is different than the corporate name in subdivision (a)(2), the application for reinstatement shall constitute an amendment to its certificate of authority insofar as it pertains to the corporate name.
(c) When the reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative revocation and the corporation resumes carrying on its business as if the administrative revocation had never occurred.
(a) If the secretary of state denies a foreign corporation's application for reinstatement following administrative revocation, the secretary of state shall serve the corporation under §§ 48-15-104 and 48-15-105 with a notice that explains the reason or reasons for denial.
(b) The corporation may appeal the denial of reinstatement to the chancery court of Davidson County within one (1) month after service of the communication of denial is perfected. The corporation appeals by petitioning the court to set aside the revocation and attaching to the petition copies of the secretary of state's communication of denial.
(c) The court may summarily order the secretary of state to reinstate the revoked corporation or may take other action the court considers appropriate.
(d) The court's final decision may be appealed as in other civil proceedings.
(a) When a foreign corporation, which has had its certificate of authority revoked, wishes to withdraw from the state, it may do so without first being reinstated by delivering to the secretary of state for filing an application for a certificate of withdrawal following administrative revocation of the certificate of authority. The application shall set forth:
(1) The name of the foreign corporation and the name of the state or country under whose law it is incorporated;
(2) That it is not transacting business in this state and that it surrenders its authority to transact business in this state;
(3) That it either continues its registered agent in this state or revokes the authority of its registered agent to accept service on its behalf and appoints the secretary of state as its agent for service of process in any proceeding based on a cause of action arising during the time it was authorized to transact business in this state;
(4) A mailing address to which the secretary of state may mail a copy of any process served on the secretary of state under subdivision (a)(3); and
(5) A commitment to notify the secretary of state in the future of any change in its mailing address.
(b) The foreign corporation shall provide any additional information in its application requested by the commissioner or the secretary of state in order to determine and assess any unpaid taxes and fees payable under the laws of this state.
(c) The secretary of state shall not file an application for a certificate of withdrawal following administrative revocation unless it is accompanied by a tax clearance for termination or withdrawal relative to such foreign corporation.
(d) After the withdrawal of the corporation is effective, service of process on the secretary of state or the continued registered agent under this section is service on the foreign corporation. Upon receipt of process, the secretary of state shall mail a copy of the process to the foreign corporation at the mailing address set forth under subsection (a).
(a) A corporation shall keep as permanent records minutes of all meetings of its shareholders and board of directors, a record of all actions taken by the shareholders or board of directors without a meeting, and a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the corporation.
(b) A corporation shall maintain appropriate accounting records.
(c) A corporation or its agent shall maintain a record of its shareholders, in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order by class and series, if any, of shares showing the number, class, and series, if any, of shares held by each shareholder.
(d) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.
(e) A corporation shall keep a copy of the following records at its principal office:
(1) Its charter or restated charter and all amendments thereto currently in effect;
(2) Its bylaws or restated bylaws and all amendments to them currently in effect;
(3) Resolutions adopted by its board of directors creating one (1) or more classes or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding;
(4) The minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three (3) years;
(5) All written communications to shareholders generally within the past three (3) years, including any financial statements prepared for the past three (3) years under § 48-26-201;
(6) A list of the names and business addresses of its current directors and officers; and
(7) Its most recent annual report delivered to the secretary of state under § 48-26-203.
(a) A shareholder of a corporation is entitled to inspect and copy, during regular business hours at the corporation's principal office, any of the records of the corporation described in § 48-26-101(e), if the shareholder gives the corporation written notice of the shareholder's demand at least five (5) business days before the date on which the shareholder wishes to inspect and copy.
(b) A shareholder of a corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation, if the shareholder meets the requirements of subsection (c) and gives the corporation written notice of the shareholder's demand at least five (5) business days before the date on which the shareholder wishes to inspect and copy:
(1) Excerpts from minutes of any meeting of the board of directors, records of any action of a committee of the board of directors while acting in place of the board of directors on behalf of the corporation, minutes of any meeting of the shareholders, and records of action taken by the shareholders or board of directors without a meeting, to the extent not subject to inspection under subsection (a);
(2) Accounting records of the corporation; and
(3) The record of shareholders.
(c) A shareholder may inspect and copy the records described in subsection (b) only if:
(1) The shareholder's demand is made in good faith and for a proper purpose;
(2) The shareholder describes with reasonable particularity the shareholder's purpose and the records the shareholder desires to inspect; and
(3) The records are directly connected with the shareholder's purpose.
(d) The right of inspection granted by this section may not be abolished or limited by a corporation's charter or bylaws.
(e) This section does not affect:
(1) The right of a shareholder to inspect records under § 48-17-201 or, if the shareholder is in litigation with the corporation, to the same extent as any other litigant; or
(2) The power of a court, independently of chapters 11-27 of this title, to compel the production of corporate records for examination.
(f) For purposes of this section, “shareholder” includes a beneficial owner whose shares are held in a voting trust or by a nominee on the shareholder's behalf.
(a) A shareholder's agent or attorney has the same inspection and copying rights as the shareholder the agent or attorney represents.
(b) The right to copy records under § 48-26-102 includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means.
(c) The corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the shareholder. The charge may not exceed the estimated cost of production or reproduction of the records.
(d) The corporation may comply with a shareholder's demand to inspect the record of shareholders under § 48-26-102(b)(3) by providing the shareholder with a list of its shareholders that was compiled no earlier than the date of the shareholder's demand.
(a) If a corporation does not allow a shareholder who complies with § 48-26-102(a) to inspect and copy any records required by that subsection to be available for inspection, a court of record having equity jurisdiction in the county where the corporation's principal office (or, if none in this state, its registered office) is located may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the shareholder.
(b) If a corporation does not within a reasonable time allow a shareholder to inspect and copy any other record, the shareholder who complies with § 48-26-102(b) and (c) may apply to the court of record having equity jurisdiction in the county where the corporation's principal office (or, if none in this state, its registered office) is located for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection (b) on an expedited basis.
(c) If the court orders inspection and copying of the records demanded, it shall also order the corporation to pay the shareholder's costs (including reasonable counsel fees) incurred to obtain the order if the shareholder proves that the corporation refused inspection without a reasonable basis for doubt about the right of the shareholder to inspect the records demanded.
(d) If the court orders inspection and copying of the records demanded, it may impose reasonable restrictions on the use or distribution of the records by the demanding shareholder.
(a) A director of a corporation is entitled to inspect and copy the books, records and documents of the corporation at any reasonable time to the extent reasonably related to the performance of the director's duties as a director, including duties as a member of a committee, but not for any other purpose or in any manner that would violate any duty to the corporation.
(b) The chancery court of the county where the corporation's principal office (or if none in this state, its registered officer) is located may order inspection and copying of the books, records and documents at the corporation's expense, upon application of a director who has been refused such inspection rights, unless the corporation establishes that the director is not entitled to such inspection rights. The court shall dispose of an application under this subsection (b) on an expedited basis.
(c) If an order is issued, the court may include provisions protecting the corporation from undue burden or expense, and prohibiting the director from using information obtained upon exercise of the inspection rights in a manner that would violate a duty to the corporation, and may also order the corporation to reimburse the director for the director's expenses incurred in connection with the application.
(a) Whenever notice would otherwise be required to be given under chapters 11-27 of this title to a shareholder, such notice need not be given if:
(1) Notices to shareholders of two (2) consecutive annual meetings, and all notices of meetings during the period between such two (2) consecutive annual meetings, have been sent to such shareholder at such shareholder's address as shown on the records of the corporation and have been returned undeliverable and could not be delivered; or
(2) All, but not less than two (2), payments of dividends on securities during a twelve-month period, or two (2) consecutive payments of dividends on securities during a period of more than twelve (12) months, have been sent to such shareholder at such shareholder's address as shown on the records of the corporation and have been returned undeliverable or could not be delivered.
(b) If any such shareholder delivers to the corporation a written notice setting forth such shareholder's then current address, the requirement that notice be given to such shareholder shall be reinstated.
(a) A corporation shall prepare annual financial statements, which may be consolidated or combined statements of the corporation and one (1) or more of its subsidiaries, as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of changes in shareholders' equity for the year unless that information appears elsewhere in the financial statements. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. If requested in writing by any shareholder, the corporation shall furnish such statements to the shareholder as set out in subsection (c).
(b) If the annual financial statements are reported upon by a public accountant, the public accountant's report must accompany them. If not, the statements must be accompanied by a statement of the president or the person responsible for the corporation's accounting records:
(1) Stating the president's or other person's reasonable belief whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation; and
(2) Describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.
(c) A corporation shall mail the annual financial statements to each requesting shareholder within one (1) month after notice of the request; provided, that with respect to the financial statements for the most recently completed fiscal year, the statements shall be mailed to the shareholder within four (4) months after the close of the fiscal year.
(a) If a corporation indemnifies or advances expenses to a director under § 48-18-502, § 48-18-503, § 48-18-504 or § 48-18-505 in connection with a proceeding by or in the right of the corporation, the corporation shall report the indemnification or advance in writing to the shareholders with or before the notice of the next shareholders' meeting.
(b) If a corporation issues or authorizes the issuance of shares for promissory notes or for promises to render services in the future, the corporation shall report in writing to the shareholders the number of shares authorized or issued, and the consideration received by the corporation, with or before the notice of the next shareholders' meeting.
(a) Each domestic corporation, and each foreign corporation authorized to transact business in this state, shall deliver to the secretary of state for filing an annual report that sets forth:
(1) The name of the corporation and the state or country under whose law it is incorporated;
(2) The street address, including the zip code, of its registered office (and a mailing address such as a post office box if the United States postal service does not deliver to the registered office), the county in which the office is located, and the name of its registered agent at that office in this state;
(3) The street address, including the zip code, of its principal office (and a mailing address such as a post office box if the United States postal service does not deliver to the principal office);
(4) The names and business addresses, including the zip code, of its directors and principal officers; and
(5) The federal employer identification number (FEIN) of the corporation, or its corporation control number as assigned by the secretary of state.
(b) Information in the annual report shall be current as of the date the annual report is executed on behalf of the corporation. An annual report of a domestic corporation that sets forth a change of the principal office of the domestic corporation shall be deemed to be an amendment to the charter of the domestic corporation, and the domestic corporation shall not be required to take any further action to amend the charter of the domestic corporation under chapter 20 of this title with respect to such amendment. An annual report of a foreign corporation that sets forth a change of the principal executive office of the foreign corporation shall be deemed to be an amendment to the certificate of authority of the foreign corporation, and the foreign corporation shall not be required to take any further action to amend the certificate of authority of the foreign corporation under § 48-25-104 with respect to such amendment. An annual report of a domestic or foreign corporation that sets forth a change of the registered office or registered agent of the domestic or foreign corporation shall be deemed to be a statement of change for purposes of §§ 48-15-102 and 48-25-108, respectively, and the domestic or foreign corporation shall not be required to take any further action under §§ 48-15-102 and 48-25-108, respectively, with respect to such change.
(c) Every corporation shall file the annual report with the secretary of state on or before the first day of the fourth month following the close of the corporation's fiscal year, or upon a date set by rule by the secretary of state, if a domestic corporation or a foreign corporation.
(d) State and national banks shall not be required to file annual reports pursuant to this section.
(e) The secretary of state shall make a report to the commissioner of revenue, by the fifteenth day of each month, of any and all new corporations that have been licensed or authorized to operate in the state during the preceding month, giving the name and address of each new corporation, foreign or domestic.
(f) The secretary of state shall furnish the commissioner of revenue, by the fifteenth day of each month, a list of all corporations that have surrendered their charters, have had their charters revoked, or have ceased to do business in the state during the preceding month.
(a) Chapters 11-27 of this title apply to all domestic corporations for profit in existence on January 1, 1988, that were incorporated under any general statute of this state providing for incorporation of corporations for profit. Chapters 11-27 shall, however, not apply to corporations, the charters of which were granted by special legislative act prior to the adoption of the Constitution of 1870. Such corporations may amend their charters for any purposes consistent with chapters 11-27 of this title and in the manner set out in chapters 11-27 of this title. Such amendments and the particular rights, obligations, duties, and privileges conferred or imposed by the amendments shall be subject to § 48-11-102.
(b) Section 48-12-102(a) does not apply to the charter of any corporation existing on January 1, 1988, unless and until a charter amendment is filed. The first charter amendment filed by a corporation following January 1, 1988, shall include any information required by § 48-12-102(a) not otherwise on file in the office of the secretary of state, except that the name and address of each incorporator may be excluded, and the information required by § 48-12-102(a)(3) shall be provided for the current registered agent and registered office. Until such a charter amendment is filed, a corporation's registered agent shall be that agent specified in the office of the secretary of state on January 1, 1988, and such corporation's registered office shall be deemed to be that office specified as the address of its registered agent unless such agent or office is changed thereafter pursuant to chapter 15 or 25 of this title.
(c) Acts 1968, ch. 523, § 1 (11.01 — 11.11), as amended, in effect on January 1, 1988, shall govern the rights and obligations of any shareholder who exercises the shareholder's right to dissent thereunder if the corporate action creating the right to dissent shall have been approved, by the shareholders (or by the board of directors, if no shareholder approval is required) before January 1, 1988.
(d) Acts 1968, ch. 523, § 1 (3.06 — 3.11), as amended, in effect on January 1, 1988, shall apply to any claims, applications, or proceedings for indemnification, or any corporate action authorizing indemnification, made or begun before January 1, 1988.
(e) Acts 1968, ch. 523, § 1 (12.01 — 12.12, 12.14) and Acts 1969, ch. 66, §§ 1 and 2, in effect on January 1, 1988, shall apply to any dissolution as to which a statement of intent to dissolve has been filed or a court proceeding filed before January 1, 1988.
(f) Any domestic corporation for-profit in existence on January 1, 1988, that was incorporated under any general statute of this state providing for the incorporation of corporations for-profit may convert to a nonprofit public benefit corporation if such corporation filed a restated charter with the secretary of state on or before January 1, 1996, reciting that the corporation is a nonprofit public benefit corporation.
A foreign corporation authorized to transact business in this state on January 1, 1988, is subject to chapters 11-27 of this title, but is not required to obtain a new certificate of authority to transact business under chapters 11-27 of this title.
(a) Except as provided in subsection (b), the repeal of a statute by chapters 11-27 of this title does not affect:
(1) The operation of the statute or any action taken under it before its repeal and if any certificate or document is required to be filed in any public office of this state relating to such action, it may be filed after January 1, 1988, in accordance with the prior statute; provided, that such certificate or document is received by the secretary of state or other recording official on or before April 30, 1988. Any certificate or document recorded or filed pursuant to this subdivision (a)(1) shall pay the fee required by § 48-11-303 for such recording or filing;
(2) Any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or incurred under the statute before its repeal;
(3) Any violation of the statute, or any penalty, forfeiture, or punishment incurred because of the violation, before its repeal; or
(4) Any proceeding commenced, or reorganization or dissolution authorized by the board of directors, under the statute before its repeal, and the proceeding, reorganization, or dissolution may be completed in accordance with the statute as if it had not been repealed.
(b) If a penalty or punishment imposed for violation of a statute repealed by chapters 11-27 of this title is reduced by chapters 11-27 of this title, the penalty or punishment if not already imposed shall be imposed in accordance with chapters 11-27 of this title.
This chapter applies to all for-profit benefit corporations. If a corporation, organized under the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title, elects to become a for-profit benefit corporation under this chapter in the manner prescribed in this chapter, the corporation shall continue to be subject in all respects to the Tennessee Business Corporation Act, except to the extent that this chapter imposes additional or different requirements, in which case the requirements of this chapter shall apply.
(1) “For-profit benefit corporation” means a domestic business corporation organized under and subject to the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title that intends to pursue a public benefit or public benefits;
(2) “Foreign for-profit benefit corporation” means a for-profit corporation incorporated under a law other than the laws of this state that intends, as stated in its charter or similar governing instrument, to pursue a public benefit or public benefits and has, under that law, the status of a for-profit benefit corporation or its substantial equivalent;
(3) “Public benefit” means a positive effect or reduction of negative effects on one (1) or more categories of persons, entities, communities, or interests, other than shareholders in their capacities as shareholders, including, but not limited to, an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological effect; and
(4) “Public benefit provisions” means the provisions of a charter as described in § 48-28-104(d).
(1) Notwithstanding the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title, a domestic for-profit corporation that is not a for-profit benefit corporation shall not, without the approval of two-thirds (⅔) of the outstanding shares of each class of the stock of the corporation of which there are outstanding shares, whether voting or nonvoting:
(A) Amend its charter to include a provision authorized by subsection (e); or
(B) Merge with or into, or consummate a plan of share exchange under § 48-21-103 with, a for-profit benefit corporation or foreign for-profit benefit corporation if, as a result of the merger or share exchange, the shares in the domestic for-profit corporation would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a for-profit benefit corporation or foreign for-profit benefit corporation.
(2) The restrictions of this subsection (a) shall not apply prior to the time that the corporation has received payment for any of its capital stock.
(b) Any shareholder of a domestic for-profit corporation that holds shares of stock of the domestic for-profit corporation immediately prior to the effective time of the following actions shall be entitled to dissent and obtain payment for the shareholder's shares under chapter 23 of this title; provided, that such shareholder has neither voted in favor of the amendment or the merger or plan of share exchange nor consented to in writing pursuant to § 48-17-104:
(1) An amendment to the corporation's charter to include a provision authorized by subsection (e); or
(2) A merger or consummation of a plan of share exchange under § 48-21-103 that would result in the conversion of the domestic for-profit corporation's stock into or the exchange of the corporation's stock for the right to receive shares or other equity interests in a foreign for-profit benefit corporation.
(c) Notwithstanding the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title, a corporation that is a for-profit benefit corporation shall not, without the approval of two-thirds (⅔) of the outstanding shares of each class of the stock of the corporation of which there are outstanding shares, whether voting or nonvoting:
(1) Amend its charter to delete or amend a public benefit provision authorized by subsection (e);
(2) Merge with or into another entity if the surviving entity of the merger is not a for-profit benefit corporation or foreign for-profit benefit corporation;
(3) Merge with or into another entity that is a for-profit benefit corporation or foreign for-profit benefit corporation unless the charter or similar governing instrument of the surviving entity states that one (1) or more of its public benefit purposes is the same or substantially the same as the public benefit purpose or purposes of the for-profit benefit corporation merging with or into such other entity as of immediately prior to the merger;
(4) Consummate a plan of share exchange under § 48-21-103 with another entity that is not a for-profit benefit corporation or foreign for-profit benefit corporation; or
(5) Convert under § 48-21-109 to another form of entity.
(d) A for-profit benefit corporation shall be managed in a manner that considers the best interests of those materially affected by the corporation's conduct, including the pecuniary interests of shareholders, and the public benefit or public benefits identified in its charter.
(e) The charter of a for-profit benefit corporation shall:
(1) Notwithstanding § 48-12-102(b)(2)(A), include a statement regarding the purpose or purposes for which the corporation is organized including one (1) or more public benefits to be pursued by the corporation; and
(2) State within its heading that it is a for-profit benefit corporation.
(a) Any stock certificate issued by a for-profit benefit corporation shall conspicuously note that the corporation is a for-profit benefit corporation subject to this chapter.
(b) Any notice sent by a for-profit benefit corporation pursuant to § 48-11-202, shall conspicuously state that the corporation is a for-profit benefit corporation subject to this chapter.
(a) In discharging the duties of the position of director of a for-profit benefit corporation, a director shall consider the effects of any contemplated, proposed, or actual transaction or other conduct on the interests of those materially affected by the corporation's conduct, including the pecuniary interests of shareholders, and the public benefit or public benefits identified in its charter and shall not give regular, presumptive, or permanent priority to the interests of any individual constituency or limited group of constituencies materially affected by the corporation's conduct, including the pecuniary interests of shareholders.
(b) A director of a for-profit benefit corporation shall not, by virtue of the public benefit provisions authorized by § 48-28-104(d), have any duty to any person on account of any interest of such person in the public benefit or public benefits identified in the charter. A director who performs the duties of a director stated in subsection (a) is not liable by reason of being or having been a director of a for-profit benefit corporation under § 48-18-301.
(c) The charter of a for-profit benefit corporation may include a provision that any disinterested failure to satisfy this section shall not, for the purposes of §§ 48-18-301 and 48-18-302 or §§ 48-18-501 – 48-18-509, constitute an act or omission not in good faith, or a breach of the duty of loyalty.
(a) A for-profit benefit corporation shall include in every notice of a meeting of shareholders a statement to the effect that it is a for-profit benefit corporation subject to this chapter.
(b) No later than four (4) months after the close of a for-profit benefit corporation's fiscal year, the for-profit benefit corporation shall deliver to its shareholders an annual benefit report covering the immediately preceding fiscal year. The annual benefit report shall state the name of the for-profit benefit corporation and contain, with regard to the period covered by the report, a narrative description of:
(1) The ways in which the corporation pursued the public benefit or public benefits stated in its charter;
(2) The extent to which that public benefit purpose or purposes were pursued and achieved; and
(3) Any material circumstances that hindered efforts to pursue or achieve the public benefit or public benefits.
(c) A for-profit benefit corporation is not required to have its annual benefit report audited, certified, or otherwise evaluated by a third party.
(d) A for-profit benefit corporation shall post its annual benefit reports on the public portion of its website, if any; provided, the compensation paid to directors and financial or proprietary information may be omitted from the posted annual benefit reports.
(e) If a for-profit benefit corporation does not have a website, the for-profit benefit corporation shall provide a copy of its most recent annual benefit report, without charge, to any person who requests a copy; provided, the compensation paid to directors and financial or proprietary information may be omitted from the provided annual benefit reports.
(f) The charter or bylaws of a for-profit benefit corporation may require that the corporation use a third-party standard in connection with or attain a periodic third-party certification addressing the corporation's promotion of the public benefit or public benefits identified in the charter or the best interests of those materially affected by the corporation's conduct.
Shareholders of a for-profit benefit corporation owning individually or collectively, as of the date of instituting the derivative suit, at least two percent (2%) of the corporation's outstanding shares or, in the case of a corporation with shares listed on a national securities exchange, the lesser of that percentage or shares having at least two million dollars ($2,000,000) in aggregate market value, may maintain a derivative lawsuit to enforce a director's duties set forth in § 48-28-106(a). For purposes of this section, “aggregate market value” means the average of the high and low trading values multiplied by the number of shares issued and outstanding determined as of the last trading day immediately preceding the date of filing the derivative suit.
This chapter shall not affect a statute or other rule of law applicable to a domestic business corporation that is not a for-profit benefit corporation, except as provided in § 48-28-104. Specifically, no implication is made by, and no inference may be drawn from, the enactment of this chapter as to whether, in exercising their duties, the officers or directors of a domestic business corporation that is not a for-profit benefit corporation may consider the impact of the corporation's transactions or other conduct on:
(1) The interests of those materially affected by the corporation's conduct, including the pecuniary interests of shareholders; or
(2) Any public benefit or public benefits identified in its charter.
The general assembly has the power to amend or repeal all or part of chapters 201-248 of this title at any time and all domestic and foreign LLCs subject to chapters 201-248 of this title shall be governed by the amendment or repeal.
Chapters 201-248 of this title apply to every LLC for profit now existing or hereafter formed, and to the outstanding and future interests in such LLCs; provided, that if there are other specific statutory provisions which govern the formation of, impose restrictions or requirements on, confer special powers, privileges or authorities on, or fix special procedures or methods for, special categories of LLCs, then to the extent such provisions are inconsistent with or different from chapters 201-248 of this title, such provisions shall prevail.
As used in chapters 201-248 of this title, unless the context otherwise requires:
(1) “Affiliate” of a specific person means a person that directly, or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, the person specified;
(2) “Articles” or “articles of organization” means in the case of an LLC organized under chapters 201-248 of this title, articles of organization, articles of amendment, articles of correction, certificates of merger, and all similar documents required to be filed with any of the foregoing as part of the formation and continuation of an LLC. In the case of a foreign limited liability company, “articles” or “articles of incorporation” includes all documents serving a similar function required to be filed with the secretary of state or other state office of the LLC's jurisdiction of organization;
(3) “Articles of conversion” means the form of articles provided for in chapter 204 of this title creating a new LLC and evidencing the conversion of an existing partnership or corporation to the new LLC which shall have all of the assets and liabilities of the former partnership;
(4) “Board” or “board of governors” means the board of governors of an LLC electing to be board-managed or, in the case of a foreign limited liability company, its equivalent;
(5) “Board-managed” means an LLC organized pursuant to this title that elected pursuant to § 48-205-101(5), to be governed by a board of governors;
(6) “Business” includes every trade, occupation, profession, investment activity and other lawful purpose for gain or the preservation of assets whether or not carried on for profits;
(7) “Class,” when used with reference to membership interests, means a category of membership interests that differs in one (1) or more rights or preferences from another category of membership interests of the LLC;
(8) “Confirmation of good standing” means confirmation by the commissioner of revenue issued through electronic communication to the secretary of state or a certificate of tax clearance that at the time such confirmation is issued an LLC or a foreign LLC is current on all taxes and penalties to the satisfaction of the commissioner;
(9) “Contribution agreement” means a binding agreement between a person and an LLC under which:
(A) The person has an obligation to make a contribution to the LLC in the future; and
(B) The LLC agrees that, if the person makes the specified contribution at the time and in the manner specified for the contribution in the future, the LLC will accept the contribution, and reflect the contribution in the required records;
(10) “Contribution allowance agreement” means an agreement between a person and an LLC, under which:
(A) The person has the right, but not the obligation, to make a contribution to the LLC in the future; and
(B) The LLC agrees that, if the person makes the specified contribution at the time and in the manner specified for the contribution in the future, the LLC will accept the contribution, and reflect the contribution in the required records;
(11) “Corporation” or “domestic corporation” means a corporation for profit, which is not a foreign corporation, incorporated under or subject to the Tennessee Business Corporation Act, compiled in chapters 11-27 of this title, as amended;
(12) “Court” includes every court and judge having jurisdiction in the case;
(13) “Dissolution” means that the LLC has incurred an event under § 48-245-101;
(14) “Dissolution avoidance consent” means the consent to continue the existence and business of the LLC without dissolution, which consent is given as provided in § 48-245-101(b) by the members whose membership has not terminated or as otherwise allowed by this chapter and which consent is given after the occurrence of any event that otherwise dissolves the LLC;
(15) “Distribution” means a direct or indirect transfer of money or other property (except its own membership interests) with or without consideration, or an incurrence or issuance of indebtedness, (whether directly or indirectly, including through a guaranty) by an LLC to or for the benefit of any of its members in respect of membership interests. A distribution may be in the form of an interim distribution or a liquidation distribution; a purchase, redemption, or other acquisition of its membership interests; a distribution of indebtedness (which includes the incurrence of indebtedness, whether directly or indirectly, including through a guaranty, for the benefit of the members) or otherwise;
(16) “Entity” includes the following, whether foreign or domestic: LLCs; corporations; not-for-profit corporations; profit and not-for-profit unincorporated associations; business trusts; estates; general partnerships, limited partnerships, registered or unregistered limited liability partnerships or similar organizations; trusts; joint ventures; and two (2) or more persons having a joint or common economic interest; and also includes local, municipal, state, United States, and foreign governments;
(17) “Financial rights” means a member's rights to:
(A) Share in profits and losses as provided in § 48-220-101;
(B) Share in distributions as provided in § 48-236-101;
(C) Receive interim distributions as provided in § 48-236-102; and
(D) Receive liquidation distributions as provided in § 48-245-1101;
(18) “Foreign corporation” means a corporation for profit incorporated under a law other than the laws of this state;
(19) “Foreign LLC” means an entity that is:
(A) Not incorporated;
(B) Organized under laws of a jurisdiction other than the laws of this jurisdiction, or under the laws of any foreign country;
(C) Organized under a statute which affords to each of its members limited liability with respect to some or all of the obligations and liabilities of the entity; and
(D) Is not required to be registered or organized under any statute of this state other than chapters 201-248 of this title;
(20) “Governance rights” means a right to vote on one (1) or more matters and all a member's rights as a member in the LLC other than financial rights and the right to assign financial rights;
(21) “Governing body” means the board of governors in the case of a board-managed LLC, the members in the case of a member-managed LLC, and the board of directors in the case of a corporation;
(22) “Governor” means a natural person or entity serving on the board of governors of a board-managed LLC;
(23) “Limited liability company” or “LLC” means a limited liability company, organized under chapters 201-248 of this title;
(24) “Majority vote” means with respect to a vote of the members, if voting on a per capita basis, a majority in number of the members entitled to vote on a specific matter, or if the voting is determined otherwise, a majority of the voting interest (which may be expressed as a percentage) entitled to vote on a specific matter, and with respect to a vote of the governors, a majority in number of the governors entitled to vote on a specific matter;
(25) “Manager” means a person elected, appointed, or otherwise designated as a manager by the governing body, and any other person considered elected as a manager pursuant to § 48-241-106;
(26) “Member” means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. With respect to a foreign LLC, “member” means an individual or entity recognized under the laws of the jurisdiction of organization of the foreign LLC as an owner of a governance interest (or its equivalence) in the foreign LLC;
(27) “Member-managed” means an LLC organized pursuant to this title that has elected pursuant to § 48-205-101(5) to be governed by its members, without a board of governors;
(28) “Membership interest” means a member's interest in an LLC consisting of a member's financial rights, a member's right to assign financial rights as provided in § 48-218-101, a member's governance rights, and a member's right to assign governance rights as provided in § 48-218-102. If a member has assigned some or all of its financial rights, then, with respect to that member, “membership interest” means the member's governance rights, the member's right to assign governance rights, any remaining financial rights of the member, and the member's right to assign any remaining financial rights;
(29) “Notice” under this title has the meaning given it in § 48-202-102;
(30) “Operating agreement” means a written agreement described in § 48-206-101 among the members concerning the LLC;
(31) “Owners” means members in the case of an LLC, shareholders in the case of a corporation, partners in the case of general or limited partnerships and the equivalent with respect to other entities;
(32) “Ownership interests” means membership interests in the case of an LLC, shares in the case of a corporation, partnership interests in the case of general or limited partnerships and the equivalent with respect to other entities;
(33) “Person” includes individual and entity;
(34) “Principal executive office” means an office, in or out of this state, where the principal office of the chief manager of the LLC or foreign LLC is located. If the LLC has no chief manager, “principal executive office” means the registered office of the LLC;
(35) “Proceeding” includes civil suit and criminal, administrative, and investigatory action;
(36) “Professional limited liability company” or “professional LLC” or “PLLC” has the meaning given in § 48-248-102(6);
(37) “Registered office” means the place in this state designated in the articles as the registered office of the LLC;
(38) “Representative” means a governor, manager, employee or other agent of a foreign LLC;
(39) “Required records” are those records required to be maintained under § 48-228-101;
(40) “Secretary of state” means the person who holds the office of secretary of state of Tennessee. A filing with the secretary of state occurs by a proper filing with the office of the secretary of state. An action required by the secretary of state may be performed by employees or agents of the office of the secretary of state;
(41) “Series” means a category of membership interests, within a class of membership interests, that have some of the same rights and preferences as other membership interests within the same class, but that differ in one (1) or more rights and preferences from another category of membership interests within that class;
(42) “Surviving entity” or “resulting entity” means the entity resulting from a merger;
(43) “Tax clearance for termination or withdrawal” means confirmation by the commissioner of revenue issued through electronic communication to the secretary of state or a certificate of tax clearance that an LLC or a foreign LLC has filed all applicable reports, including, but not limited to, a final report, and has paid all fees, penalties and taxes as required by the revenue laws of this state;
(44) “Termination” means the end of an LLC's existence as a legal entity and occurs when the articles of termination are filed with the secretary of state under § 48-245-701 or is considered filed with the secretary of state under § 48-244-103 or § 48-244-104(b); and
(45) “Written action” means a written document signed by those persons required to take the action described.
(a) General. Notice under chapters 201-248 of this title shall be in writing except that oral notice is effective if it is reasonable under the circumstances and not prohibited by the articles or operating agreement.
(b) Methods of Notice. Notice may be communicated in person; by telephone, telegraph, teletype, or other form of wire or wireless communication; or by mail or private carrier. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communication.
(c) Effectiveness of Notice to Members by Mail. Written notice by a domestic LLC to its members, if in a comprehensible form, is effective when mailed, if mailed postpaid and correctly addressed to the member's address shown in the LLC's current record of members.
(d) Notice to LLC. Written notice to a domestic or foreign LLC (authorized to transact business in this state) may be addressed to its registered agent at its registered office or to the LLC or its secretary at its principal office (or to a designated mailing address such as a post office box if the United States postal service does not deliver to the principal office) shown in its most recent annual report or, in the case of a foreign LLC that has not yet delivered an annual report, in its application for a certificate of authority.
(e) General Effectiveness of Notice. Except as provided in subsection (c), written notice, if in a comprehensible form, is effective at the earliest of the following:
(1) When received;
(2) Five (5) days after its deposit in the United States mail, if mailed correctly addressed and with first class postage affixed thereon;
(3) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee; or
(4) Twenty (20) days after its deposit in the United States mail, as evidenced by the postmark if mailed correctly addressed, and with other than first class, registered or certified postage affixed.
(f) Oral notice is effective when communicated if communicated in a comprehensible manner.
(g) If chapters 201-248 of this title prescribe notice requirements for particular circumstances, those requirements govern. If the articles or operating agreement prescribe notice requirements, not inconsistent with this section or other provisions of chapters 201-248 of this title, those requirements govern.
(a) Any Lawful Purpose. Every LLC organized under chapters 201-248 of this title has the purpose of engaging in any lawful business unless a more limited purpose is set forth in its articles.
(b) Regulation by Another Statute. An LLC engaging in a business that is subject to regulation under another statute of this state may organize under chapters 201-248 of this title only if permitted by, and subject to all limitations of, the other statute.
(a) One (1) or more individuals may, acting as organizers, form an LLC, by filing with the secretary of state articles for the LLC which contain the information required by § 48-205-101 and admitting the initial members. Unless a delayed effective date is specified in the articles, the LLC is formed and its existence begins when the articles are filed with the secretary of state. Subject to subsection (c), if a delayed effective date is specified in the manner permitted by § 48-205-101(8), the LLC is formed and its existence begins at a future specific date or on the occurrence of a future specific event, neither one of which shall be or occur more than ninety (90) days from the initial filing of the articles.
(b) Immediate Effective Date. If the date of formation is the date of filing of the articles, the secretary of state's acceptance for filing of the articles is conclusive proof that the organizers satisfied all conditions precedent to formation except in a proceeding by the state to cancel or revoke the formation or existence of the LLC or to dissolve the LLC involuntarily.
(c) Deferred Effective Date. If the date of formation of the LLC is later than the date of filing of the initial articles with the secretary of state, the organizers or any member may, within thirty (30) days after the date of actual formation, file a certificate of formation which states that the LLC was formed and the date of formation. If a certificate of formation is not filed within one hundred twenty (120) days from the date of initial filing of the articles, the presumed effective date of the formation shall be on the ninetieth day following the date of filing of the articles. The presumption, however, can be rebutted.
(d) If the date of formation of the LLC is later than the date of filing of the initial articles with the secretary of state, the secretary of state's acceptance for filing of the certificate of formation is conclusive proof that the organizers satisfied all conditions precedent to formation except in a proceeding by the state to cancel or revoke the formation or existence of the LLC or to dissolve the LLC involuntarily.
(a) Conversion. A general or limited partnership organized in this state may be converted to an LLC pursuant to this section.
(b) Terms and Conditions. The terms and conditions of a conversion of a general or limited partnership to an LLC must, in the case of a general partnership, be approved by all the partners or by a number or percentage specified for conversion in the partnership agreement or, in the case of a limited partnership, by all of the partners, notwithstanding any provision to the contrary in the limited partnership agreement, unless such limited partnership was formed after December 31, 1993, and the original agreement of limited partnership provided for a conversion or a procedure of conversion of the limited partnership to an LLC without the consent of all partners, in which case the approval or procedure under the original limited partnership agreement shall be sufficient.
(c) Filing. After the conversion is approved under subsection (b), the general or limited partnership shall file articles of conversion with the office of the secretary of state which satisfy the requirements of § 48-205-101 and also shall include:
(1) A statement that the general or limited partnership was converted to a limited liability company from a general or limited partnership, as the case may be;
(2) The name and principal business address of the former general or limited partnership;
(3) In the case of a general partnership, the name of each of the partners, and in the case of a limited partnership, the name of each of the limited partnership's general partners;
(4) In the case of a general or limited partnership, a statement that the terms and conditions of the conversion have been approved by the unanimous vote of the partners or by the number or percentage specified for conversion in the partnership agreement;
(5) In the case of a limited partnership formed under Tennessee law prior to January 1, 1989, that has not elected to be governed by title 61, chapter 2, as amended, a statement indicating in which county register of deeds office the certificate of limited partnership and all amendments thereto were filed, including the date of the filings and the books and pages or other file reference numbers; and
(6) The number of members of the LLC at the date of conversion.
(d) Effective Date. In the case of a general partnership, the conversion takes effect when the articles of conversion are filed with the secretary of state or at any later date on or before ninety (90) days from filing of the articles of conversion if specified in such articles. The same presumptions that apply to the filing of the articles under chapter 203 of this title apply to the filing of the articles of conversion. In the case of a limited partnership, the filing of the articles of conversion with the office of the secretary of state, in compliance with this section, shall constitute and, for purposes of title 61, chapter 2, be deemed to be a certificate of cancellation of the limited partnership. In the case of a limited partnership formed under Tennessee law prior to January 1, 1989, that has not elected to be governed by title 61, chapter 2, as amended, a copy of the articles of conversion shall be filed in the register of deeds office in the county in which the certificate of limited partnership of the limited partnership was filed; provided, that the failure to make such filing shall not prevent the conversion from becoming effective as provided in this subsection (d). The register of deeds may charge five dollars ($5.00) plus fifty cents (50¢) per page in excess of five (5) pages for such filing.
(e) Continuing Liability for Pre-LLC Liabilities. In the case of a general partnership, a partner, or in the case of a limited partnership, a general partner who becomes a member of an LLC as a result of the conversion, remains liable as a general partner for all obligations and liabilities incurred by the general partnership or limited partnership before the conversion takes effect. The former general partner's liability for all other obligations and liabilities of the LLC incurred after the conversion takes effect is that of a member as provided in chapters 201-248 of this title.
(f) Amendment of Articles of Conversion. Articles of conversion shall be amended in the same manner as articles of organization.
(a) A general or limited partnership that has been converted pursuant to § 48-204-101 shall be deemed for all purposes the same entity that existed before the conversion.
(b) When a conversion takes effect:
(1) All property owned by the converting general or limited partnership remains vested in the converted entity;
(2) All obligations of the converting general or limited partnership continue as obligations of the converted entity; and
(3) An action or proceeding pending against the converting general or limited partnership may be continued as if the conversion had not occurred.
(c) The converting general or limited partnership shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and such conversion shall not be deemed to constitute a dissolution of such general or limited partnership.
(d) The partnership interests of the partners in the converting partnership, including interests in capital accounts, profits, losses and distributions, unless otherwise agreed to by the unanimous consent of all partners or such other number or percentage as provided in the partnership agreement, shall become the membership interests of the members in the converted entity, unless the articles of conversion or the operating agreement otherwise provide.
A partnership which converts into a domestic LLC under this chapter may, if the membership and other requirements of chapter 248 of this title are met, be a PLLC.
(1) A name for the LLC that satisfies the requirements of § 48-207-101;
(2) The street address and zip code of the initial registered office of the LLC, the county in which the office is located and the name of its initial registered agent at that office;
(3) The name and address of each organizer;
(4) If, pursuant to § 48-217-101(f), one (1) or more members are personally liable for all of the debts, obligations and liabilities of the LLC, the articles must set forth the information required in § 48-217-101(f);
(5) A statement as to whether the LLC will be board-managed or whether the LLC will be member-managed;
(6) The number of members at the date of the filing of the articles;
(7) If the LLC is board-managed, and dissolution events may be triggered by an action approved by the governors or a subset of the governors and/or that transfers of governance rights may be permitted only by consent of the governors or a subset of the governors, either of such provisions must be set forth in the articles or the articles must contain a statement that the operating agreement may so provide;
(8) If the existence of the LLC is to begin upon a future date or the happening of a specific event, the articles must state the future date or describe the happening of the specific event. In no event can the future date or the actual occurrence of the specific event be more than ninety (90) days from the proper filing of the articles in compliance with § 48-203-102;
(9) The street address and zip code of the principal executive office of the LLC and the county in which the office is located;
(10) If the LLC has the power to expel a member, a statement that such power exists;
(11) If the duration of the LLC is to be limited to a specific period of time or term of years, such limitation and the future date on which dissolution is to occur or the term of years shall be stated in the articles;
(12) The articles may contain provisions not inconsistent with law relating to the management of the business or the regulation of the affairs of the LLC;
(13) It is not necessary to set forth in the articles any of the LLC powers granted by chapters 201-248 of this title;
(14) If the members or parties (other than the LLC) to a contribution agreement or a contribution allowance agreement have preemptive rights, a statement that such rights exist;
(15) The articles may contain a grant of authority to one (1) or more members, managers or governors to execute instruments for the transfer of real property, and any restrictions and conditions with respect to such authority. In the event the articles name one (1) or more persons who are granted authority to execute instruments for the transfer of real property with any restrictions and conditions with respect to such authority so listed, such grant shall be conclusive in favor of a person who gives value without knowledge to the contrary. However, such designation, unless it expressly states that it is exclusive, shall not override § 48-238-103 or § 48-238-104; and
(16) If the LLC, while being formed under Tennessee law, is not to engage in business in Tennessee, a statement that the LLC is prohibited from engaging in business in Tennessee.
(a) Generally. Each board-managed LLC shall have an operating agreement. A member-managed LLC may, but need not, have an operating agreement. If an LLC has an operating agreement, the operating agreement must be in writing. Except for those matters required to be provided for in the articles under chapters 201-248 of this title, an operating agreement may contain any rules, regulations, or provisions regarding the management of the business of the LLC, the regulation of the affairs of the LLC, the governance of the LLC, the conduct of its business, and the rights and privileges of members (financial rights, governance rights and membership rights of members), to the extent that such provisions are not inconsistent with the laws of this state or the articles. The operating agreement shall contain a statement of all membership interests in the LLC, which shall include, but not be limited to, the following:
(1) The identity of all of the members and their membership interests and the identity of all persons or entities bound by a contribution agreement or the owner of a contribution allowance agreement and the membership interest that will be acquired upon the satisfaction of the terms of such agreement;
(2) The amount of cash and a description and statement of the agreed value of any other property or services contributed for each membership interest;
(3) The amount and value of any contributions which any member or potential member has agreed pursuant to a contribution agreement to contribute and the time or times at which or events on the happening of which any additional contributions agreed to be made by any member are to be made;
(4) The amount and value of any contributions which any member or potential member has the right pursuant to a contribution allowance agreement to contribute and the time or times at which or events on the happening of which such contribution must be made or the right lapses;
(5) Any right of a member to receive, or of the LLC to make, distributions to a member;
(6) The time or times at which or events on the happening of which the LLC shall be dissolved, to the extent that any such matters are not set forth in the articles and are not identical to the statutory events of § 48-245-101;
(7) Any other provisions that are required by the terms of chapters 201-248 of this title to be included in an operating agreement and any provisions which the members wish to state in the operating agreement.
(b) Writing Constituting Operating Agreement. The operating agreement may consist of one (1) or more written agreements or counterparts that are, by express statements, intended to constitute and be a part of the operating agreement.
(c) Binding Effect. Unless otherwise provided in the articles or in an operating agreement adopted or agreed to by all members and holders of binding contribution agreements, an operating agreement that has been adopted or agreed to by the required vote of the members and person or entity bound by a contribution agreement shall be binding on the LLC and its members, and any person or entity becoming a member or entering into a contribution agreement or a contribution allowance agreement and such person shall be deemed to have adopted and agreed to it.
(a) Adoption of Operating Agreement. Except as otherwise provided in the articles, an operating agreement must initially be agreed to by all members or the organizer or organizers. Any person becoming a member after an operating agreement has been adopted by the organizers or the members will be deemed to have agreed to the operating agreement.
(b) Amendment of Operating Agreement. Unless otherwise provided in the articles or the operating agreement, the amendment of the operating agreement shall require the vote of members necessary to amend the articles.
(c) Enforcement of Operating Agreement.
(1) A court of equity may enforce an operating agreement by injunction or by such other equitable relief as the court in its discretion determines to be fair and appropriate in the circumstances.
(2) As an alternative to injunctive or other equitable relief, when § 48-245-801 is applicable, a court of equity may conduct or continue the dissolution and winding up of the LLC.
(3) Notwithstanding anything to the contrary, any agreement to give dissolution avoidance consent, whether or not contained in the articles, the operating agreement or other agreement entered into before the event of dissolution, is not specifically enforceable.
(1) Must contain the words “limited liability company,” or the abbreviation “L.L.C.” or “LLC,” or words or abbreviations of like import in another language; provided, that they are written in roman characters or letters; and provided further, that, in the case of a foreign LLC, the name may contain, in lieu of the foregoing, the designations allowed by the jurisdiction in which the foreign LLC was formed or organized. An organization formed pursuant to chapter 248 of this title must contain the words or the abbreviation as required by § 48-248-301. Notwithstanding the foregoing, the name of an LLC or foreign LLC must not contain the word “corporation” or “incorporated” or an abbreviation of either or both these words; and
(2) May not contain language stating or implying that the LLC:
(A) Transacts or has the power to transact any business for which authorization in whatever form and however denominated is required under the laws of this state, unless the appropriate commission or officer has granted such authorization and certifies that fact in writing;
(B) Is organized as, affiliated with, or sponsored by, any fraternal, veterans', service, religious, charitable, or professional organization, unless that fact is certified in writing by the organization with which affiliation or sponsorship is claimed;
(C) Is an agency or instrumentality of, affiliated with or sponsored by the United States or any state thereof or a subdivision or agency thereof, unless such fact is certified in writing by the appropriate official of the United States or the state or subdivision or agency thereof; or
(D) Is organized for a purpose other than that permitted by § 48-203-101 and the LLC's articles.
(b) Name Must Be Distinguishable. Except as authorized by subsection (c), the name of a domestic LLC, and the name of a foreign LLC that is authorized to transact business in this state or is applying for a certificate of authority to transact business in this state, shall be distinguishable upon the records of the secretary of state from the respective names of or for every other entity, whether true, assumed, reserved or registered, to the extent the use or reservation of such names is evidenced by a filing with the secretary of state under applicable law.
(c) Nondistinguishable Name of Entity Under Common Control. A domestic or foreign LLC, or person acting on behalf of an LLC not yet formed, may apply to the secretary of state for authorization to use a name that is not distinguishable upon the secretary of state's records from one (1) or more of the names described in subsection (b). The secretary of state shall authorize use of the indistinguishable name applied for, if:
(1) The person holding the right to use the previously filed name described in subsection (b) consents to the use in writing and submits an undertaking, in a form satisfactory to the secretary of state, to cancel its reservation of such name or change such name to a name that is distinguishable upon the records of the secretary of state from the name of the applicant;
(2) The applicant delivers to the secretary of state a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state; or
(3) The person holding the right to use the previously filed name described in subsection (b) consents in writing to the use of such name by the applicant, and both the other person and the applicant consent in a form satisfactory to the secretary of state to use the same registered agent.
(d) Assumed Name.
(1) An LLC or a foreign LLC authorized to transact business or applying for a certificate of authority to transact business may elect to adopt an assumed name that complies with the requirements of subsections (a)-(c), except that such name need not contain the designations contained in subdivision (a)(1).
(2) As used in chapters 201-248 of this title, “assumed name” means any name used by the LLC, other than the LLC's true name, except that the following shall not constitute the use of an assumed name:
(A) The identification by an LLC of its business with a trademark or service mark of which it is the owner or licensed user; and
(B) The use of a name of a division, not separately organized and not containing the words “limited liability company” or an abbreviation of such words; provided, that the LLC also clearly discloses its name.
(3) Before transacting any business in this state under an assumed name or names, the LLC shall, for each assumed name, pursuant to resolution by its governing body, execute and file in accordance with §§ 48-247-101 and 48-247-103, an application setting forth:
(A) The true LLC name;
(B) The state or country under the laws of which it is organized;
(C) That it intends to transact business under an assumed name; and
(D) The assumed name which it proposes to use.
(4) The right to use an assumed name shall be effective for five (5) years from the date of filing by the secretary of state.
(5) An LLC shall renew the right to use its assumed name or names, if any, within the two (2) months preceding the expiration of such right, for a period of five (5) years, by filing an application to renew each assumed name and paying the renewal fee as prescribed by § 48-247-103(a).
(e) Cancellation of Assumed Name. Any LLC or foreign LLC may, pursuant to resolution by its governing body, change or cancel any or all of its assumed names by executing and filing, in accordance with §§ 48-247-101 and 48-247-103, an application setting forth:
(1) The true LLC name;
(2) The state or country under the laws of which it is organized;
(3) That it intends to cease transacting business under an assumed name by changing or cancelling it;
(4) The assumed name to be changed from or cancelled; and
(5) If the assumed name is to be changed, the assumed LLC name which the LLC proposes to use.
(f) Upon the filing of an application to change an assumed name, the LLC shall have the right to use such assumed name for the period authorized by subsection (d).
(g) Cancellation of Assumed Name by Secretary of State. The right of a foreign or domestic LLC to use an assumed name shall be cancelled by the secretary of state if:
(1) The LLC fails to renew an assumed name;
(2) The LLC has filed an application to change or cancel an assumed name;
(3) A domestic LLC has been dissolved; or
(4) A foreign LLC has had its certificate of authority to transact business in this state revoked.
(h) Unfair Competition. Nothing in this section, or in § 48-207-102 or § 48-207-103 shall abrogate or limit the law as to unfair competition or unfair trade practice, or derogate from the common law, the principles of equity, or the statutes of this state or of the United States with respect to the right to acquire and protect trade names and trademarks.
(a) Reserving a Name. A person may reserve the exclusive use of an LLC name, including an assumed name, by delivering an application to the secretary of state for filing. The application must set forth the name and address of the applicant and the name proposed to be reserved. If the secretary of state finds that the LLC name applied for meets the requirements of § 48-207-101 and is available, the secretary of state shall reserve the name for the applicant's exclusive use for a four-month period. Upon the expiration of the four-month period, the same or any other party may apply to reserve the same name.
(b) Transfer of Reserved Name. The owner of a reserved LLC name, including an assumed name, may transfer the reservation to another person by delivering to the secretary of state a notice of the transfer signed by the owner that states the name and address of the transferee.
(c) Cancellation of Reserved Name. The reservation of a specific name may be cancelled by filing with the secretary of state a notice, executed by the applicant or transferee, specifying the name reservation to be cancelled and the name and address of the applicant or transferee.
(a) Registration of Name. A foreign LLC may register its name, or an assumed name under which it transacts business, or its name with any addition pursuant to § 48-207-101(a), if the name is distinguishable upon the records of the secretary of state as required by § 48-207-101(b).
(b) Process for Registration. A foreign LLC registers its name, or its assumed name, or its name with any addition pursuant to § 48-207-101(a), by delivering to the office of the secretary of state for filing an application:
(1) Setting forth its name, its assumed name, or its name with any addition pursuant to § 48-207-101(a), the state or country and date of its organization, and a brief description of the nature of the business in which it is engaged; and
(2) Accompanied by a certificate copy of existence (or a document of similar import) from the state or country of organization, which certificate shall bear a date of not more than one (1) month prior to the date the application is filed in this state.
(c) Effective Date of Registration. The name is registered for the applicant's exclusive use upon the effective date of the application and until the end of the calendar year in which such registration occurs.
(d) Renewal of Registered Name. A foreign LLC whose registration is effective may renew it for successive years by delivering to the office of the secretary of state for filing a renewal application, which complies with the requirements of subsection (b), between October 1 and December 31 of the preceding year. The renewal application renews the registration for the following calendar year.
(e) Use of Registered Name. A foreign LLC whose registration is effective may thereafter qualify as a foreign LLC under that name or consent in writing to the use of that name by an LLC thereafter organized under this title or by another foreign LLC thereafter authorized to transact business in this state. The registration terminates when the domestic LLC is organized or the foreign LLC qualifies or consents to the qualification of another foreign LLC under the registered name.
(a) Registered Office and Agent. Each foreign and domestic LLC must continuously maintain in this state:
(1) A registered office that may be the same as any of its places of business; and
(2) A registered agent who maintains an office at the same street address as the registered office, and who may be:
(A) An individual who resides in this state, a domestic corporation, a not-for-profit domestic corporation, a domestic LLC, a domestic general partnership, a domestic limited partnership, or a domestic registered limited liability partnership; or
(B) A foreign corporation, a not-for-profit foreign corporation, a foreign LLC, a foreign general partnership, a foreign limited partnership, or a foreign registered limited liability partnership that is authorized to transact business in this state.
(b) New Registered Agent Required. If a registered agent resigns or is unable to perform such agent's duties, the foreign or domestic designating LLC shall promptly designate another registered agent to the end that it shall at all times have a registered agent in this state.
(a) Change in Registered Office and/or Agent by LLC. A foreign or domestic LLC may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:
(1) The name of the LLC;
(2) If the current registered office is to be changed, the street address of the new registered office and the zip code for such office and the county in which the office is located;
(3) If its current registered agent is to be changed, the name of its new registered agent; and
(4) That after the change or changes are made, the street addresses of its registered office and the business office of its registered agent will be identical.
(b) Change in Registered Office by Registered Agent. If a registered agent changes the street address of such registered agent's business office, such registered agent may change the street address of the registered office of any LLC for which such registered agent is the registered agent by notifying the LLC in writing of the change and signing (either manually or in facsimile) and delivering to the secretary of state for filing a statement that complies with the requirements of subsection (a) and recites that the LLC has been notified of the change.
(a) Resignation of Registered Agent. A registered agent of a foreign or domestic LLC may resign such agent's agency appointment by signing and filing with the secretary of state an original statement of resignation accompanied by such agent's certification that such agent has mailed a copy thereof to the principal office of the LLC by certified mail. The statement may include a statement that the registered office is also discontinued.
(b) Effective Date of Resignation. The agency appointment is terminated, and the registered office discontinued if so provided, on the date on which the statement is filed by the secretary of state.
(a) Agent for Service of Process. A foreign or domestic LLC's registered agent is the LLC's agent for service of process, notice, or demand required or permitted by law to be served on the LLC.
(b) Secretary of State Is Default Agent. Whenever a domestic or foreign LLC authorized to do business in this state fails to appoint or maintain a registered agent in this state, whenever its registered agent cannot be found with reasonable diligence, whenever a foreign LLC shall transact business or conduct affairs in this state without first obtaining a certificate of authority from the secretary of state, or whenever the certificate of authority of a foreign LLC shall have been cancelled or revoked, then the secretary of state shall be an agent of such LLC upon whom any such process, notice or demand may be served.
(c) Special Agent for Workers' Compensation. Whenever a domestic or foreign LLC authorized to do business in this state is an employer within the meaning of the Workers' Compensation Law and such LLC is, for the purpose of such Workers' Compensation Law, self-insured or a part of a self-insurance pool as provided in title 50, chapter 6, part 4, such LLC shall, for workers' compensation actions only, be required to appoint the commissioner of commerce and insurance and such commissioner's chief deputy, or their successors, as its true and lawful attorneys upon either of whom all lawful process in any such action or legal proceeding against it may be served as is required of insurance companies by § 56-2-103.
(d) Not Exclusive Means of Service. This section does not prescribe the only means, or necessarily the required means, of service on a domestic or foreign LLC.
(a) Service on the secretary of state, when the secretary of state is an agent for a domestic or foreign LLC as provided in § 48-208-104(b), of any process, notice, or demand shall be made by delivering to the office of the secretary of state the original and one (1) copy of such process, notice, or demand, duly certified by the clerk of the court in which the suit or action is pending or brought, together with the proper fee. A statement which identifies which of the grounds, as listed in § 48-208-104(b), for service on the secretary of state is applicable, must be included. The office of the secretary of state shall endorse the time of receipt upon the original and copy and immediately shall send the copy, along with a written notice that service of the original was also made, by registered or certified mail, with return receipt requested, addressed to such LLC at its registered office or principal office (or designated alternative mailing address) as shown in the records on file in the secret