Current StatusView additional legislative information at the LPITS web site.Bill Number: 2166 Ratification Number: 203 Act Number 146 Introducing Body: House Subject: Business Cooperation Act, Take-over Bid Disclosure Act
(A146, R203, H2166)
AN ACT TO AMEND CHAPTERS 1 THROUGH 25 OF TITLE 33, CODE OF LAWS OF SOUTH CAROLINA, 1976, AS AMENDED, RELATING TO THE SOUTH CAROLINA BUSINESS CORPORATION ACT, SO AS TO PROVIDE FOR CERTAIN CHANGES IN THE FORMATION, OPERATION AND CONTROL OF DOMESTIC AND FOREIGN BUSINESS CORPORATIONS THAT WILL MAKE THE ACT MORE CLOSELY CONFORM TO THE PROVISIONS OF THE MODEL BUSINESS CORPORATION ACT AND CURRENT BUSINESS OPERATIONS; TO MAKE TECHNICAL CORRECTIONS; TO PROVIDE THAT THE PROVISIONS OF THE ACT RELATING TO BUSINESS CORPORATIONS SHALL ALSO APPLY TO OTHER DOMESTIC OR FOREIGN CORPORATIONS OR ASSOCIATIONS IF THE LAW UNDER WHICH THOSE CORPORATIONS ARE ORGANIZED DOES NOT CONFLICT WITH SUCH PROVISIONS; TO AMEND THE 1976 CODE BY ADDING SECTION 15-9-245 SO AS TO PROVIDE A PROCEDURE FOR THE SERVICE OF PROCESS ON FOREIGN CORPORATIONS NOT AUTHORIZED TO DO BUSINESS IN THIS STATE; TO AMEND SECTIONS 15-9-210, 16-9-240 AND 15-9-430, RELATING TO THE SERVICE OF PROCESS ON DOMESTIC AND FOREIGN CORPORATIONS AUTHORIZED TO DO BUSINESS IN THIS STATE AND ON NONRESIDENT DIRECTORS OF DOMESTIC CORPORATIONS, SO AS TO FURTHER PROVIDE FOR THE MANNER OF SERVING SUCH PROCESSES AND TO FIX A FEE THEREFOR; TO AMEND SECTION 33-29-10, RELATING TO FILING FEES CONCERNING THE BUSINESS CORPORATION ACT, SO AS TO DELETE THREE FEES OTHERWISE PROVIDED FOR; TO AMEND SECTION 34-25-40, RELATING TO VOTING BY SHAREHOLDERS OF SAVINGS AND LOAN OR BUILDING AND LOAN ASSOCIATIONS, SO AS TO PROVIDE FOR VOTING BY PROXY; TO AMEND THE 1976 CODE BY ADDING CHAPTER 2 TO TITLE 35 SO AS TO PROVIDE FOR THE TAKE-OVER BID DISCLOSURE ACT AND TO REPEAL ACT 631 OF 1978 WHICH CREATED THE TENDER OFFER DISCLOSURE ACT.
Be it enacted by the General Assembly of the State of South Carolina:
Citations of "this act"
SECTION 1. Wherever "this Act" appears in Section 2 of this act it shall mean "Chapters 1 through 25 of this Title".
South Carolina Business Corporation Act
SECTION 2. Chapters 1 through 25 of Title 33 of the 1976 Code, as amended, are further amended to read:
"CHAPTER 1
Business Corporations-General Provisions
Section 33-1-10. Short title of Chapters 1 through 25. Chapters 1 through 25 of this Title shall be known and may be cited as the 'South Carolina Business Corporation Act'.
Section 33-1-20. Definitions.
As used in this Act unless the context otherwise requires:
(1) 'Articles of incorporation' or 'articles' means the original or restated articles of incorporation and all amendments thereto. It includes articles of merger, certificate of incorporation, and what has heretofore been designated as a charter or declaration for charter.
(2) 'Assets' means, at any particular time, those properties and rights which are properly entered in the accounts and balance sheets of business enterprises in terms of a monetary value.
(3) 'Authorized shares' means the shares of all classes which the corporation is authorized to issue.
(4) 'Bond' includes bonds, debentures, and notes of the corporation.
(5) To 'cancel' a share means to eliminate it from the authorized shares of the corporation.
(6) 'Capital surplus' means the entire surplus of a corporation other than its earned surplus.
(7) 'Corporation' or 'domestic corporation' means a corporation for profit formed under the laws of this State.
(8) 'Court' means the circuit court or the court in the county having concurrent equity jurisdiction therewith.
(9) 'Creditor' means a person to whom the corporation is indebted, and any other person who has a claim or right against the corporation, liquidated or unliquidated, matured or unmatured, direct or indirect, absolute or contingent, secured or unsecured.
(10) 'Debts' means, at any particular time, all those debts and claims which either are known to impose a fixed obligation of payment or, if contingent, have sufficient possibility of becoming fixed as to require an estimate of their probable amount.
(11 'Earned surplus' means that portion of the surplus of a corporation equal in amount to the balance of its net profits, income, gains, and losses from the date of incorporation, or from the latest date when a deficit was eliminated by application of its capital surplus, after deducting subsequent distributions to shareholders and transfer to stated capital and capital surplus to the extent that such distribution and transfers are made out of earned surplus. Unrealized appreciation of assets shall not be included in earned surplus.
(12) 'Foreign corporation' means a corporation for profit formed under the laws of a jurisdiction other than this State.
(13) 'Fraud', 'deceit' and 'defraud' are not limited to common law deceit.
(14) 'Insolvent' means inability of the corporation to pay its debts as they become overdue in the usual course of its business.
(15) 'National securities exchange' shall mean an exchange registered under the Securities Exchange Act of 1934, as amended or supplemented, or any act adopted by Congress in substitution therefor.
(16) 'Net assets' means the amount by which the total assets of a corporation exceed the total debts of the corporation, as determined in accordance with generally accepted accounting principles.
(17) 'Person' means an individual, a corporation (domestic or foreign), a partnership, an association, a trust or a fiduciary.
(18) 'Preemptive right' means the right to acquire shares, securities, options, and rights as provided by Section 33-11-210.
(19) To 'retire' a share means to restore it to the status of an authorized but unissued share.
(20) 'Secretary of State' means the Secretary of State of South Carolina or such official as designated by the law to perform the function of the Secretary of State under this Act.
(21) 'Shareholder' means one who is a holder of record of fully-paid and nonassessable shares or fractions of shares in a corporation.
(22) 'Shares' means the units into which the proprietary interests in a corporation are divided.
(23) 'State' means the United States, any state, territory, insular possession, or other political subdivision of the United States, including the District of Columbia; any foreign country or nation; and any province, territory, or other political subdivision of such foreign country or nation.
(24) 'Stated capital' means, at any particular time, the sum of (1) the par value of all issued shares of the corporation having a par value, (2) the amount of the consideration received by the corporation for all issued shares of the corporation without par value, except such part of the consideration therefor as may have been allocated to capital surplus in a manner permitted by law, and (3) such amounts not included in clauses (1) and (2) of this sentence as have been transferred to stated capital of the corporation, whether upon issue of shares as a share dividend or otherwise, less all reductions from such sum as have been effected in a manner permitted by law.
(25) 'Subscriber' means one who subscribes for shares in a corporation, whether before or after incorporation.
(26) 'Surplus' means the excess of the net assets of a corporation over its stated capital.
(27) 'Treasury shares' means shares of a corporation which have been issued, have been subsequently acquired by the corporation, and have not, either by reason of the acquisition or otherwise, been canceled or retired. Such shares shall be deemed to be issued, but they shall not be considered as an asset or liability of the corporation, or as outstanding for cash dividend, quorum, voting or other purposes.
(28) 'Vote' includes, without limitation, votes, ballots, waivers, releases, consents, writings signed by shareholders in lieu of taking action at a meeting of shareholders, and objections or dissents to the foregoing.
Section 33-1-30. Application of this Act.
(a) The provisions of this Act shall apply to:
(1) all domestic corporations for profit, including corporations organized under any prior general corporation act of this State, and any corporation created by special act of the General Assembly of South Carolina to the extent that power has been reserved to repeal, amend, or alter such special act,
(2) all foreign corporations which do business in this State whether or not authorized to do so.
(b) The provisions of this Act shall not apply to any class of corporations to the extent that (1) such class is specifically exempted from the operation of this Act or any of its provisions or (2) any provision of any other statute is specifically applicable to such class of corporations and is inconsistent with any provision of this Act, in which case such other provision shall prevail.
(c) The provisions of this Act shall apply to commerce with foreign nations and among the several states, and to corporations formed by or under any act of Congress, only to the extent permitted under the Constitution and laws of the United States.
(d) The enactment of this Act shall not affect the existence of any corporation existing on January 1, 1964, and its shareholders, directors, and officers shall have the same rights and be subject to the same limitations, restrictions, liabilities and penalties as a corporation organized after January 1, 1964.
(e) The enactment of this Act shall not affect any cause of action, liability, penalty, or action which on January 1, 1964, is accrued, existing, incurred or pending, but the same may be asserted, enforced, prosecuted or defended as if this Act had not been enacted.
Section 33-1-40. Execution of documents.
Whenever any provision of this Act specifically requires any document to be executed by the corporation in accordance with this section, or delivered for filing with the Secretary of State or pursuant to Section 33-1-60 (a) (6), unless otherwise specifically stated in this Act, such requirement shall mean that:
(a) There shall be one original executed and one conformed copy of the document.
(b) The original document shall be signed manually in ink:
(1) In the case of articles of incorporation, by the incorporator or incorporators;
(2) In the case of other documents:
(A) By the president or a vice-president, and by the secretary or an assistant secretary, or such other person as the bylaws may designate; or
(B) If there are no such officers, then by a majority of the directors or by such directors as may be designated by a majority of directors then in office; or
(C) If there are no such directors, then by the holders, or such of them as may be designated by the holders, of record of a majority of all outstanding shares entitled to vote thereon; or
(D) By the holders of record of all of the outstanding shares of the corporation.
(c) Any person signing a document shall, either opposite or beneath his signature, clearly and legibly state his name and the capacity in which he signs.
(d) The original document and any copy thereof shall set forth the title of the document at the head thereof.
(e) The original document and any copy thereof shall set forth the current address of the registered office of the corporation, the street or rural route address, post office box (if any), town or city, county, and state.
Section 33-1-50. Verification of documents.
(a) Whenever any provision of this Act specifically requires any document to be verified in accordance with this section, unless otherwise specifically stated in this Act, such requirement shall mean that at the conclusion of the document, there shall be a certificate signed by each person signing the document:
(1) That he has read and understood the meaning and purport of the statements contained in the document;
(2) That such statements are true, or that he is informed or believes that such statements are true;
(3) That he signed the document, and in the case of one signing in a representative capacity, that he had the authority so to sign. Where practicable, all persons signing the document may sign the same certificate.
(b) If the original executed document is verified, the conformed copy may either reproduce the certificate of verification or may state that the original document was duly verified by all persons signing.
(c) Except where it is specifically required by a provision of this Act or by any other statute, no document required by this Act need be acknowledged.
Section 33-1-60. Filing of documents.
(a) Whenever any provision of this Act requires any document to be delivered for filing in accordance with this section, unless otherwise specifically stated in this Act and, subject to any additional provision of this Act, such requirement shall mean that:
(1) The original executed document, together with the conformed copy, shall be delivered to the office of the Secretary of State.
(2) All fees and taxes required for filing the document shall be tendered to the Secretary of State.
(3) Upon delivery of the documents, and upon tender of the required fees and taxes, the Secretary of State shall certify that the original has been filed in his office by endorsing upon the original the word 'filed' and the hour, day, month and year thereof. Such endorsement shall be known as the 'filing date' of the document, and shall be conclusive of the date of filing in the absence of actual fraud. The Secretary of State shall thereafter file and index the original.
(4) The Secretary of State shall immediately compare the conformed copy with the original, and if he finds that they are identical, he shall certify the conformed copy by making upon it the same endorsement which is required to appear upon the original, together with a further endorsement that the conformed copy is a true copy of the original document.
(5) The conformed copy, so certified, shall be returned to the person or persons delivering the documents to the Secretary of State and it shall be retained as a part of the permanent records of the corporation.
(6) Any amendment to the articles of incorporation of any corporation owning real estate in this State which results in the change of the corporate name of such corporation shall be filed in the office of the register of mesne conveyances or, if none, in the office of the clerk of court of the county in which such real estate is situated and shall be duly indexed in the index of deeds, or, in the alternative, the ownership of such property under the new name shall be established of record in such office by a duly recorded deed of conveyance.
No transaction occurring in any county after such an amendment involving real estate owned by such corporation in that county acquired in the former name shall constitute notice unless the provisions of this item are first complied with in such county.
This law is intended to be declaratory of the existing law rather than a modification thereof.
(b) Any document required to be filed shall be fully effective as of the filing date of the document, and the transaction shall be deemed, as of the filing date, to have been completely consummated, unless a subsequent date is set forth in the document, in which case the date set forth shall be the date the transaction is deemed to have been completely consummated. Nothing herein shall affect the authority to abandon any plan, merger, consolidation, or exchange under Section 33-17-80 or sale of assets under Section 33-19-30 prior to the time of effectiveness.
Section 33-1-70. Effect of corporate seal on document.
(a) The seal of the corporation may, but need not, be affixed to any document executed in accordance with Section 33-1-40, and its absence therefrom shall not impair the validity of the document or of any action taken in pursuance thereof or in reliance thereon.
(b) The presence of the corporate seal on a document purporting to be executed by authority of a domestic or foreign corporation shall be prima facie evidence that the document was so executed.
Section 33-1-80. Computation of time for giving notice.
In computing the period of time for the giving of any notice required or permitted under this Act or under the articles, the bylaws of the corporation, or a resolution of its shareholders or directors, the day on which the notice is given shall be excluded, and the day when the act for which notice is given to be done shall be included, unless the instrument calling for the notice otherwise specifically provides.
Section 33-1-90. Reservation of power by General Assembly.
The General Assembly of South Carolina reserves at all times the power and right:
(a) to prescribe, as it may deem advisable, regulations, provisions, limitations, and requirements which shall be binding upon any and all corporations, domestic and foreign, subject to the provisions of this Act,
(b) to amend, repeal, or modify this Act, in whole or in part, at pleasure.
Section 33-1-100. Effect of invalidity of part of this Act.
If any provision of this Act or application of any provision to any person or circumstances is held unconstitutional or otherwise invalid, such invalidity shall not nullify or otherwise impair the remainder of this Act or any other provision or application thereof, but the effect shall be confined to the specific provision or application thereof held invalid, and for this purpose the provisions of this Act are declared to be severable.
Section 33-1-110. Application of this Act to other corporations.
This Act applies to every domestic corporation or association and to every foreign corporation or association which is authorized or transacts business in this State except as otherwise provided by this Act or by the law regulating the organization, qualification or governance of such corporation or association. This Act also applies to any other domestic or foreign corporation or association of any type or kind but only to the extent, if any, provided under this Act or any law governing such corporation or to serve the public policy of such laws as determined by a court having competent equity jurisdiction.
CHAPTER 3
Business Corporations-Purposes and Powers
Section 33-3-10. Corporate purposes.
(a) A corporation may be formed and do business under the provisions of this Act for any lawful business purpose or purposes.
(b) Notwithstanding the purposes set forth in its articles, the corporation may do any lawful business at the request or direction of governmental authority in time of war or national emergency.
Section 33-3-20. Powers of corporations.
(a) Subject to any limitations contained in any provisions of this Act or in any other law, each corporation shall have power in furtherance of its corporate purpose or purposes:
(1) To exist perpetually.
(2) To sue and be sued in its corporate name, and to participate in any judicial, administrative, arbitrative, or other proceeding.
(3) To adopt and alter a corporate seal and to use the same or a facsimile thereof.
(4) To elect, appoint, or hire officers, agents, and employees of the corporation, and to define their duties and fix their compensation and lend money and use its credit to assist its employees and employees of affiliated or subsidiary companies.
(5) To make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of this State, for the administration and regulation of the affairs of the corporation.
(6) To cease its corporate activities and surrender its corporate franchise.
(7) To make donations to any charitable, scientific, educational or other charitable purpose in an amount not to exceed five percent (5%) of the corporation's income before taxes or the amount the donor is entitled to a current federal income tax deduction under the then applicable provisions of the United States Internal Revenue Code.
(8) To pay pensions and establish and carry out pension plans, pension trusts, profit-sharing plans, stock option plans, stock bonus plans, and other incentive plans for any and all of its present or past directors, officers and employees, and such directors, officers and employees of affiliated, subsidiary, or constituent companies.
(9) With respect to any property of any description or interest therein, wherever situated:
(A) To acquire, by purchase, exchange, lease, gift, will or otherwise;
(B) To own, hold, use, improve, and otherwise deal in and with;
(C) To sell, convey, encumber, lease, or otherwise disclose of such property.
(10) To make contracts and incur liabilities, borrow money, issue its notes and bonds and other obligations and secure any of its obligations by mortgage, pledge, or other encumbrance of its property franchises and income wherever situated.
(11) To enter into contracts of guaranty or suretyship.
(12) To lend money, invest its funds from time to time, and take and hold any property as security for payment of funds so loaned or invested.
(13) To conduct its business, carry on its operations, and have offices and exercise its powers within or without this State.
(14) In any lawful manner to acquire, hold and dispose of and exercise any power or right with respect to:
(A) The share or other interests in, or obligations of, other domestic or foreign corporations, associations, partnerships, or individuals;
(B) The obligations of a domestic or foreign government and instrumentalities thereof.
(15) To form or acquire the control of other corporations.
(16) To be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust or other enterprise.
(17) To provide for its benefit insurance on the life of any of its directors, officers or employees, or on the life of any shareholder for the purpose of reacquiring at his death shares owned by such shareholder, including the retention of any such policies after such relationship to the insured terminates.
(18) To reimburse and indemnify litigation expenses of directors, officers, and employees.
(19) To purchase and otherwise acquire, and to dispose of, its own shares, bonds, and other securities.
(20) To transact any lawful business which the board of directors shall find in aid of a governmental policy.
(21) To have and exercise all powers necessary and proper to effect the purposes for which the corporation is organized.
(b) The articles of incorporation of any corporation subject to this Act may limit the powers conferred by subsection (a) of this section, except to the extent that any such limitation is inconsistent with any other provision of this Act or with any other law of this State.
(c) It shall not be necessary to set forth in the articles of incorporation any of the powers enumerated in this section.
Section 33-3-30. Defense of ultra vires.
No act of a corporation and no conveyance or transfer of real or personal property to or by a corporation shall be invalid solely by reason of the fact that the corporation was without capacity or power to do such act or to make or receive such conveyance or transfer, but such lack of capacity or power may be asserted:
(a) In a proceeding by a shareholder against the corporation to enjoin the doing of any act or acts or the transfer of real or personal property by or to the corporation. If the unauthorized acts or transfer sought to be enjoined are being, or are to be, performed or made pursuant to any contract to which the corporation is a party the court may, if all of the parties to the contract are parties to the proceeding and if it deems the same to be equitable, set aside and enjoin the performance of such contract, and in so doing may allow to the corporation or to the other parties to the contract, as the case may be, compensation for the loss or damage sustained by either of them which may result from the action of the court in setting aside and enjoining the performance of such contract, but anticipated profit to be derived from the performance of the contract shall not be awarded by the court as a loss or damage sustained.
(b) In a proceeding by the corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through shareholders in a representative or derivative suit, against the incumbent or former officers or directors of the corporation.
(c) In a proceeding by the Attorney General, as provided in this Act to dissolve the corporation, or in a proceeding by the Attorney General to enjoin the corporation from the transaction of unauthorized business.
CHAPTER 5
Business Corporations-Name; Registered Office and Agent; Service of Process
Section 33-5-10. Corporate name.
(a) No domestic corporation or foreign corporation authorized to do or in fact doing business in this State shall use a name which:
(1) Contains any word or phrase or abbreviation or derivative thereof which indicates or implies that the corporation is organized for any purpose other than one or more of the purposes stated in its articles of incorporation.
(2) Is the same as or deceptively similar to:
(A) The name of any domestic corporation existing under the laws of this State;
(B) The name of any foreign corporation authorized to transact business in this State;
(C) Any name the exclusive right to which is, at the time, reserved or registered in the manner provided by Section 33-5-20, 33-5-30 or 33-5-35;
(D) Except that the provisions of this subsection (2) shall not apply if the applicant files with the Secretary of State either of the following:
(i) The written consent of such other corporation or holder of a reserved or registered name to use the same or deceptively different similar name and one or more words are added to make such name distinguishable from such other names;
(ii) A certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to the use of such name in this State;
(3) Contains any word or phrase or abbreviation or derivative thereof which implies that the corporation:
(A) Transacts or has power to transact any business, including, without limitation, the business of insurance, banking, or transportation, for which authorization, in whatever form and however nominated, 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.
(4) A corporation involved with another corporation, domestic or foreign, in any merger, acquisition of assets, reorganization, sale, lease, exchange or other disposition of substantially all that corporation's assets, may acquire and use such other corporation's name if that corporation was entitled to use its name in this State.
(b) The name of every domestic corporation except banks, building and loan associations, savings and loan associations, federal savings and loan associations, insurance companies, public utilities and railroads organized on or after January 1, 1964, shall contain the word 'corporation', 'incorporated', or 'limited', or an abbreviation of one o{ these words.
(c) The Secretary of State shall not file any document, required by this Act to be filed in his office, in which a corporation, domestic or foreign, adopts or uses as its corporate name a name inconsistent with subsections (a) or (b) of this section.
(d) If a domestic corporation has been duly incorporated, or a foreign corporation duly authorized to do business in this State, subsequent discovery of violation of this section shall not invalidate its corporate existence or authority, as the case may be, but the courts of this State may, upon application of the State or of any interested or affected person, enjoin such violation and grant any other appropriate relief.
(e) From and after January 1, 1964, no partnership, limited partnership, joint-stock company, or other unincorporated business enterprise shall include in its name the word 'corporation', 'incorporated', or 'limited', or an abbreviation of any such words.
(f) The Secretary of State shall maintain a current list, alphabetically arranged, of the names of the corporations referred to herein.
(g) Nothing in this section shall abrogate or limit the law as to unfair competition or unfair trade practice; nor 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.
Section 33-5-20. Reserved name.
(a) The exclusive right to the use of a corporate name not prohibited by Section 33-5-10 may be reserved by:
(1) Any person intending to organize a corporation under this Act.
(2) Any domestic corporation intending to change its name.
(3) Any foreign corporation intending to apply for a certificate of authority to do business in this State.
(4) Any foreign corporation authorized to do business in this State and intending to change its name.
(5) Any person intending to organize a foreign corporation and intending to have such corporation apply for a certificate of authority to do business in this State.
(b) The reservation shall be made by filing with the Secretary of State an application to reserve a specified corporate name, executed by the applicant. If the Secretary of State finds that the name is available for corporate use, he shall reserve such name for the exclusive use of the applicant for a period expiring at the end of the fourth full calendar month following the month in which the application was filed. Upon application the Secretary of State may extend the reservation of such name for periods of not more than two calendar months each. Not more than two such extensions shall be granted.
(c) The right to the exclusive use of a specified corporate name so reserved may be transferred to any other person or corporation by filing in the office of the Secretary of State a notice of such transfer, executed by the applicant for whom the name was reserved, and specifying the name and address of the transferee.
(d) The Secretary of State may revoke any reservation or any extension thereof if, after hearing, he finds that the application therefor or any transfer thereof was not made in good faith.
(e) The Secretary of State shall maintain a current list, alphabetically arranged, of the names reserved hereunder.
Section 33-5-30. Registered name.
(a) Any corporation organized and existing under the laws of any state or territory of the United States may register its corporate name under this Act, providing its corporate name is not the same as, or deceptively similar to, the name of any domestic corporation existing under the laws of this State, or the name of any foreign corporation authorized to do business in this State, or any corporate name reserved or registered under this Act.
(b) Such registration shall be made by:
(1) Filing with the Secretary of State (A) an application for registration executed by the corporation by an officer thereof, setting forth the name of the corporation, the jurisdiction under whose laws it is incorporated, the date of its incorporation, a statement that it is actually doing business, and a brief statement of the business in which it is engaged; and (B) a certificate setting forth that such corporation is in good standing under the laws of its jurisdiction of incorporation, executed by the Secretary of State of such jurisdiction or by such other official as may have custody of the records pertaining to corporations; or (C) if the foreign corporation rues with the Secretary of State either of the following: (i) the written consent of the holder of a reserved or registered name to use the same name or (ii) a certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to use such name in this State;
(2) Paying to the Secretary of State of South Carolina the required registration fee.
(c) Such registration shall be effective until the close of the calendar year in which the application for registration is filed.
(d) A corporation which has in effect a registration of its corporate name may renew such registration from year to year by annually filing with the Secretary of State the application, certificate and fee required by subsection (b) for an original registration. A renewal application may be filed between October first and December thirty-first in each year, and such filing shall extend the registration for the next succeeding calendar year.
(e) The Secretary of State shall maintain current lists, alphabetically arranged, of the registered names and the foreign corporation registrants hereunder.
Section 33-5-35. Assumed name.
(a) The provisions of Sections 33-5-10 and 33-5-20 shall not apply to a corporation applying for authorization to transact business in this State or organized to transact business under the laws of this State, if the corporation files with the Secretary of State a certificate stating any one of the following:
(1) The corporation and the assumed name under which the business is to be transacted pursuant to a resolution of its board of directors, which assumed name is not deceptively similar to the name of any domestic or foreign corporation authorized to transact business in this State or to any name reserved or registered as provided in Section 33-5-10, Section 33-5-20 or Section 33-5-30;
(2) The certificate required in (1) herein and the written consent of the other corporation or holder of a reserved or registered name to the use of the same or deceptively similar name and one or more words are added to make such name distinguishable from such other name; or
(3) A certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to the use of such name in this State.
(b) Whenever a foreign corporation authorized to transact business in this State shall change its name to one under a certificate of authority which would not be granted to it on application therefor, the certificate of assumed name hereunder shall be suspended and the corporation will not thereafter transact any business in this State until it has changed its name to a name which complies with the provisions of this section or this Act.
(c) Such filing shall be effective, unless sooner terminated by the filing of a certificate of termination or by the dissolution or withdrawal of the corporation, for a period expiring on December thirty-first of the fifth full calendar year following the year in which it was filed it may be extended for additional consecutive periods of five (5) full Calendar years each by the filing of similar certificates or decrees not earlier than ninety (90) days preceding the expiration of any such period The Secretary of State shall notify the corporation of the impending expiration of its assumed name, by first-class mail addressed to the address given on the expiring filing, no later than three (3) calendar months before the initial or subsequent five (5) year period will expire.
(d) The Secretary of State shall maintain current lists, alphabetically arranged, of the corporate registrant and assumed names permitted hereunder.
Section 33-5-40. Registered office and registered agent.
(a) Every domestic corporation and each foreign corporation authorized to transact business in this State shall have and continuously maintain in this State:
(1) A registered office which may be, but need not be, the same as its place of business;
(2) A registered agent, which agent may be either an individual resident in this State whose business office is identical with the corporation's registered office, or a domestic or foreign corporation authorized to do business in this State and having a business office identical with such registered office.
(b) The Secretary of State shall maintain current lists, alphabetically arranged by corporate name, of the location of each corporation's registered office, and of the name and address of each corporation's registered agent.
Section 33-5-50. Change of registered office or registered agent.
(a) A corporation may change its registered office or change its registered agent, or both, by executing and filing in the office of the Secretary of State a statement setting forth:
(1) The name of the corporation.
(2) If it is a foreign corporation, its jurisdiction of incorporation, and the date of its authorization to transact business in this State.
(3) The address of its then registered office.
(4) If the address of its registered office be changed, the address to which the registered office is to be changed.
(5) The name of its then registered agent.
(6) If its registered agent be changed, the name of its successor registered agent.
(7) That the address of its registered office and the address of the business office of its registered agent, as changed, will be identical.
(8) That such change was duly authorized by the board of directors of the corporation.
(b) Any registered agent of one or more corporations may resign as such agent upon filing a written notice thereof with the Secretary of State and with the president or vice-president of the corporation. The corporation shall promptly appoint a successor resident agent. The appointment of such resigning agent shall terminate upon the earlier of: (1) the expiration of thirty (30) days after the receipt of such notice by the Secretary of State or (2) the appointment of a successor agent pursuant to subsection (e) of this section.
(c) If any agent dies, becomes incapacitated, resigns, or otherwise is unable to perform his duties, the corporation shall promptly appoint another agent, and shall execute and file in the office of the Secretary of State a written appointment of such agent.
(d) If the agent changes his or its address from that appearing, upon the record in the office of the Secretary of State, the corporation or its registered agent shall promptly notify the Secretary of State in writing of the new address of such agent, which notice shall also change the address of the registered office of the corporation to such new address of the agent.
(e) A corporation may revoke the appointment of an agent by filing a notice of the appointment of another agent with the Secretary of State and the former agent. The former agent's authority will be automatically terminated upon such filing unless otherwise provided in the notice of appointment of another agent.
Section 33-5-60. Service of process.
Service of process on domestic corporations, foreign corporation and nonresident directors of domestic corporations shall be in accord with the applicable provisions of Title 15.
CHAPTER 7
Business Corporations-Organization
Section 33-7-10. Organization of corporations; governing statutes
(a) A corporation may be organized under this Act for any lawful business by complying with the requirements of this chapter.
(b) Whenever the organization of any class of corporations is subject to special provisions of any other statute of this State, any corporation of such class shall be organized in compliance with those provisions which shall prevail over any inconsistent requirements of this Act.
Section 33-7-20. Number and qualifications of incorporators.
One or more persons, having capacity to contract, whether or not residents of this State, may organize a corporation under this Act by executing, verifying and delivering for filing articles of incorporation in accordance with Sections 33-1-40 to 33-1-60.
Section 33-7-30. Contents of articles of incorporation.
(a) The articles of incorporation shall concisely set forth:
(1) The name of the corporation, which shall comply with the requirements of Section 33-5-10;
(2) The general nature of the business for which the corporation is organized;
(3) The period of duration, which shall be perpetual unless otherwise specified in the articles;
(4) The address of the initial registered office, and the name of the initial registered agent at such address, in accordance with the requirements of Section 33-5-50;
(5) The number of directors constituting the initial board of directors, and the names and addresses of the persons who are to serve as directors until the first annual meeting of shareholders or until their successor be elected and qualify or those who are responsible for the management of the corporation pursuant to Section 33-11-220.
(6) The relevant information regarding the shares, including classes and series of shares, which the corporation shall be authorized to issue, as provided in subsection (b) of this section;
(7) Any other provisions which the incorporators elect to include in the articles if:
(A) Any section of this Act permits or authorizes the articles to contain such a provision; or
(B) Any section of this Act permits or requires the provision to be set forth in the corporation's bylaws or in an agreement or other instrument; or
(C) Such provision relates to the business or affairs of the corporation, or the rights or powers of its shareholders, directors, or officers and although not specifically authorized by this Act, is not inconsistent with law or contrary to public policy.
(b) (1) If any shares of a corporation, including any class of shares, have a par value, the articles shall state the total number of such shares and the par value of each share. If any shares, including any class of share, shall be without par value, the articles shall state the total number of such shares.
(2) If shares of a corporation are divided into two or more classes the articles of incorporation shall state whether the shares have par value or are without par value and shall designate each class of shares, and specify the relative rights, preferences, and limitations of the shares of each class.
(3) If shares of any preferred or special class are issued in series, the articles of incorporation shall state whether the shares have par value or are without par values and shall either (A) designate each series within any class of shares and specify the relative rights, preferences and limitations as among such series, to the extent that such is to be specified in the articles, or (B) set forth any authority of the board of directors to designate series within any class of shares and to specify the relative rights, preferences and limitations as among such series.
(4) If any preemptive rights are to be granted shareholders pursuant to Section 33-11-210, the articles of incorporation shall contain provision therefor.
(c) The articles of incorporation shall be signed by each incorporator, with his name and address legibly stated beneath or opposite his signature, and shall set forth the current address of the registered office of the corporation, the street or rural route address, post office box (if any), town or city, county, and state.
(d) The articles of incorporation shall be accompanied by a certificate, signed by an attorney licensed to practice in this State, that all of the requirements of this chapter relating to the organization of corporations have been complied with, and that, in the opinion of the attorney, the corporation is organized for a lawful purpose.
(e) The articles of incorporation need not set forth any of the powers enumerated in this Act.
(f) The articles of incorporation may set forth that the provisions of this Act shall not be effective as of the filing thereof, but at a subsequent date pursuant to Section 33-1-60(b).
Section 33-7-40. Determinations required by Secretary of State before filing articles of incorporation.
(a) When the articles of incorporation are delivered for filing by the Secretary of State, as provided by Section 33-1-60 (Filing of documents), he shall, before filing them, determine that the articles:
(1) comply with the requirements of Sections 33-1-40, 33-1-50 and 33-1-60;
(2) set forth the information required by Section 33-7-30 (Contents of articles of incorporation);
(3) do not adopt as the name of the corporation a name which is in violation of Section 33-5-10 (Corporate name);
(4) are accompanied by the attorney's certificate required by subsection (d) of Section 33-7-30 (Contents of Articles of Incorporation);
(5) are accompanied by the initial report and license fee as required by Section 12-19-130. The remittance for the license fee required shall be made payable to the South Carolina Tax Commission. The report and remittance shall be submitted to the Tax Commission by the Secretary of State.
(b) Upon making such determination, the Secretary of State shall file the articles of incorporation.
Section 33-7-50. Beginning of corporate existence, filing as conclusive evidence of incorporation; exceptions.
(a) The existence of the corporation shall begin as of the filing date of the articles of incorporation, that is to say, as of the date endorsed by the Secretary of State upon the original filed copy of the articles or on the effective date specified in such articles of incorporation, as provided by Section 33-1-60.
(b) The fact that the articles of incorporation have been filed with the Secretary of State shall be conclusive evidence that all conditions required by this Act to be performed by the incorporators have been complied with, that the corporation has been incorporated, and that its corporate existence has begun, except when the State shall institute proceedings to:
(1) Cancel or revoke the articles of incorporation;
(2) Enjoin any person from acting as a corporation within this State without being duly incorporated; or
(3) Compel dissolution of the corporation.
Section 33-7-60. Requirements before transacting business; personal liability.
(a) A corporation shall not transact any business or incur any indebtedness except such as shall be incidental to its organization or to obtaining subscriptions or payment for its shares until the articles of incorporation have been filed with the Secretary of State.
(b) If a corporation has transacted any business in violation of this section, any person (whether a promoter, incorporator, shareholder, subscriber, or director) who has participated therein shall be jointly and severally liable for the debts or liabilities of the corporation arising therefrom. No such person shall be personally liable if he (1) dissented from such violation and caused his dissent to be recorded in the records of the corporation, or (2) being absent, recorded and filed his dissent promptly upon learning of the action.
Section 33-7-70. Organizational meeting of directors.
(a) At any time after the effective date of the articles of incorporation, an organizational meeting of the board of directors named in the articles of incorporation shall be held, either within or without this State, to adopt bylaws of the corporation, to elect officers, to do any other or further acts to complete the organization of the corporation, and to transact such other business as may come before the meeting.
(b) Such meeting may be called by the incorporator or by a majority of the incorporators who shall give to each director at least three days' notice thereof by any usual means of communication, and such notice shall state the time and place of the meeting. Notice of the organizational meeting of directors need not be given to any director who signs a waiver of notice, either before or after the meeting. Attendance of a director at the meeting shall of itself constitute a waiver of notice of such meeting, except where a director attends the meeting solely for the purpose of stating his objection, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened, or that notice was not given or was defective.
Chapter 9
Business Corporations-Corporate Finance
Section 33-9-10. Authorized shares.
(a) Each corporation shall have power to create and issue the number of shares stated in its articles of incorporation. Such shares may be divided into one or more classes, any or all of which classes may consist of shares with par value or shales without par value, with such designations, preferences, limitations, and relative rights as shall be stated in the articles of incorporation. The articles of incorporation may grant, limit or deny the voting rights of the shares of any class to the extent not inconsistent with the provisions of this Act.
(b) Without limiting the authority herein contained, a corporation, when so provided in its articles of incorporation, may issue shares of preferred or special classes:
(1) Subject to the rights of the corporation to redeem any of such shares at the price fixed by the articles of incorporation for the redemption thereof.
(2) Entitling the holders thereof to cumulative, noncumulative or partially cumulative dividends.
(3) Having preference over any other class or classes of shares as to the payment of dividends.
(4) Having preference in the assets of the corporation over any other class or classes of shares upon the voluntary or involuntary liquidation of the corporation.
(5) Convertible into shares of any other class or into shares of any series of the same or any other class, except a class having prior or superior rights and preferences as to dividends or distribution of assets upon liquidation.
(c) If shares are divided into two or more classes, the shares of each class shall be so designated as to distinguish them from the shares of all other classes. Shares which are not preferred as to dividends or other distributions, including distributions in liquidation, shall not be designated as preferred shares. Shares which are preferred as to dividends or other distributions, including distributions in liquidation, shall not be designated as common shares.
Section 33-9-20. Authority of directors to issue or dispose of shares.
Except to the extent that the articles of incorporation otherwise provide, the board of directors of a corporation shall have authority to issue from time to time any part or all of the authorized but unissued shares or dispose of the treasury shares of the corporation, and determine the time when, the terms and conditions upon which, and the consideration for which, the corporation shall issue or dispose of such shares.
Section 33-9-30. Shares of preferred or special classes in series. If the articles of incorporation so provide, the shares of any preferred or special class may be divided into and issued in series. If the shares of any such class are to be issued in series, then each series shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. All shares of the same series shall be identical. Any or all of the series of any such class and the variations in the relative rights and preferences as between different series shall be fixed and determined by the articles of incorporation, but all shares of the same class shall be identical except as to the following relative rights and preferences, as to which there may be variations between different series:
(a) The rate of dividend.
(b) Whether shares may be redeemed and, if so, the redemption price and the terms and conditions of redemption.
(c) The amount payable upon shares in the event of voluntary and involuntary liquidation.
(d) Sinking fund provisions, if any, for the redemption or purchase of shares.
(e) The terms and conditions, if any, on which shares may be
converted.
(f) Voting rights, if any.
Section 33-9-40. Authority of directors to issue shares of preferred or special classes in series.
(a) If the articles of incorporation expressly vest such authority in the board of directors, then, to the extent that the articles have not established series and fixed and determined the variations in the relative rights and preferences as between series, the board of directors shall have authority to divide any or all of such classes into series and, within the limitations set forth in Section 33-9-30 and in the articles, to fix and determine the relative rights and preferences of the shares of any series so established.
(b) In order for the board of directors to establish a series, where authority so to do is contained in the articles of incorporation, the board of directors shall adopt a resolution setting forth the designation of the series and fixing and determining the relative rights and preferences thereof, or so much thereof as shall not be fixed and determined by the articles of incorporation.
(c) Prior to the issue of any shares of a series established by resolution adopted by the board of directors, a statement shall be executed, verified, and delivered for filing, as provided by Sections 33-1-40 to 33-1-60, and shall set forth:
(1) The name of the corporation.
(2) A copy of the resolution establishing and designating the series, and fixing and determining the relative rights and preferences thereof.
(3) The date of adoption of such resolution.
(4) That such resolution was duly adopted by the board of directors.
(d) Upon the filing of such statement with the Secretary of State, the resolution establishing and designating the series and fixing and determining the relative rights and preferences thereof shall become effective and shall constitute an amendment of the articles of incorporation.
(e) The board of directors may not be authorized to make any change in the designations, terms, limitations, or relative rights or preferences, although fixed by them as permitted by this section, of any shares after their issuance.
Section 33-9-50. Rules of construction for preferred shares.
Unless otherwise provided by this Act, or by the articles of incorporation as permitted by this Act, or by resolution of the board of directors in the case of shares whose terms may be fixed as provided by Section 33-9-40:
(a) Shares which are preferred as to dividends shall be deemed cumulative preferred shares.
(b) Shares which are preferred as to dividends shall not be entitled to participate in dividends beyond the amount of the stated dividend preference.
(c) Shares which are preferred as to dividends shall be preferred, on liquidation of the corporation, as to the stated capital of the shares.
(d) Shares which are preferred as to liquidation shall not be entitled to participate in liquidation payments beyond the amount of the stated liquidation preference.
(e) If preferred shares cumulative as to dividends are entitled to a preferential payment on liquidation, such payment shall also include the amount of dividends accrued but unpaid as of the date of liquidation.
(f) Shares which are preferred as to dividends or as to payments upon liquidation shall not be entitled to vote.
Section 33-9-60. Subscriptions for unissued shares.
(a) A subscription for authorized but unissued shares of a corporation but unissued shares of a corporation shall be irrevocable for a period of (6) months from its date, unless otherwise provided by the terms of the subscription agreement or unless all of the subscribers consent to the revocation of such subscription.
(b) A subscription, whether made before or after the formation of a corporation, shall not be enforceable unless in writing and signed by the subscriber.
(c) Unless otherwise provided in the subscription agreement, subscription for shares, whether made before or after the organization of a corporation, shall be paid in full at such time, or in such installments and at such times, as the board of directors shall determine. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series, as the case may be.
(d) In case of default in the payment of any installment or call when such payment is due, the corporation may proceed to collect the amount due and all previously unpaid installments or calls in the same manner as any debt due the corporation, and for such amount due the corporation shall have a lien on the subscription shares. The bylaws or the subscription agreement may prescribe other penalties for failure to pay installments or calls that may become due, but no penalty working a forfeiture of a subscription, or of the amounts paid thereon, shall be declared as against any subscriber unless the amount due thereon shall remain unpaid for a period of twenty (20) days after written demand has been made therefor. If mailed, such written demand shall be deemed to be made when deposited in the United States mail in a sealed envelope addressed to the subscriber at his past post office address known to the corporation with postage thereon prepaid.
(e) In the event of the sale of any shares, the delinquent subscriber or his legal representative shall be entitled to be paid the excess of the sale proceeds realized by the corporation over the sum of (1) the amount due and unpaid on the subscription, and (2) the reasonable expenses incurred in selling the shares.
Section 33-9-70. Consideration for shares.
Unless the articles of incorporation reserve to the shareholders the right to fix consideration (in which case reference to the board of directors in this section shall apply to the shareholders):
(a) Shares having a par value may be issued for such consideration expressed in dollars as shall be fixed from time to time by the board of directors, but, except as otherwise permitted in this chapter, such consideration shall not be less than the par value of the shares issued therefor.
(b) Shares without par value may be issued for such consideration expressed in dollars as may be fixed from time to time by the board of directors.
(c) Except as otherwise provided by the articles of incorporation or bylaws, the board of directors of the corporation may dispose of treasury shares of the corporation, upon such terms and conditions as they shall determine, for such consideration expressed in dollars as fixed by the board of directors.
(d) That part of the surplus of a corporation which the board of directors directs to be transferred to stated capital and capital surplus upon the shares issued as a share dividend shall be deemed to be the consideration for the issuance of such shares.
(c) In the event of the issuance of shares upon the conversion or exchange of liabilities, bonds, or shares, the consideration for the shares so issued shall be:
(1) the principal sum of, and accrued interest on, the liabilities or bonds so exchanged or converted, or the stated capital then represented by the shares so exchanged or converted,
(2) that part of surplus, if any, transferred to stated capital upon the issuance of shares for the shares so exchanged or converted, and
(3) any additional consideration paid to the corporation upon the issuance of shares for the indebtedness or shares so exchanged or converted.
Section 33-9-80. Payment for shares.
(a) Consideration for the issuance of shares shall be paid, in money or in other property, tangible or intangible, actually received, or in labor or services actually performed for the corporation or its benefit, or in any combination thereof.
(b) Neither promissory notes nor future services shall constitute payment or part payment for the issuance of shares of a corporation.
(c) In the absence of fraud in the transaction, the judgment of the board of directors or shareholders, as the case may be, as to the value of the consideration received for shares shall be conclusive.
(d) Every corporation shall keep a record of the consideration for all shares issued by it, the payment of the consideration and the number and the par value, if any, of shares issued by it.
Section 33-9-90. Share rights and options.
(a) Unless this section or the articles of incorporation otherwise provide, a corporation may create and issue, whether or not in connection with the issuance or sale of any of its shares or other securities, rights or options entitling the holders thereof to purchase from the corporation shares of any class or classes, whether authorized but unissued shares, treasury shares, or shares to be purchased or acquired by the corporation. Except to the extent that this section permits otherwise, the consideration for payment for shares to be purchased under any such right or option shall comply with the requirements of Sections 33-9-70 and 33-9-80.
(b) The instrument or instruments evidencing such rights or options shall be approved by the board of directors, but shall set forth or shall incorporate by reference the terms and conditions upon which, the time or times at or within which, the price or prices at which, such shares may be purchased from the corporation upon the exercise of any such rights or options.
(c) Such rights or options may be issued to directors, officers or employees of the corporation or of a subsidiary or affiliate thereof as an incentive to service or continued service, or to a trustee on such person's behalf, if their issuance shall he approved by the affirmative vote of a majority of all shares entitled to vote thereon or shall be authorized by and consistent with a plan approved or ratified by such vote of shareholders.
(d) In the absence of fraud, the judgment of the board of directors or of the shareholders, as the case may be, shall be conclusive as to the adequacy of the consideration received or to be received by the corporation for such rights or options.
Section 33-9-100. When shares are fully paid and nonassessable; allowance of certain organization expenses.
(a) When the full consideration for which shares are to be issued has been paid to and received by the corporation, such shares shall be deemed fully paid and nonassessable.
(b) The reasonable charges and expenses of organization or reorganization of a corporation, and the reasonable expenses of and compensation for the sale or underwriting of its shares, may be paid or allowed by such corporation out of the consideration received by it in payment for its shares without thereby rendering such shares not fully paid or assessable.
Section 33-9-110. Certificates representing shares.
(a) Except as otherwise provided by this section, upon payment in full for his shares, a shareholder shall be entitled to a certificate certifying the number of shares owned by him in such corporation. No certificate shall be issued for any share until such share is fully paid.
(b) Such certificate representing a share or shares in a corporation shall be signed by the president or a vice-president and the secretary or an assistant secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. The signature of the president or vice-president and the secretary or assistant secretary upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or any assistant transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue.
(c) Every certificate representing shares issued by a corporation which is authorized to issue shares of more than one class shall set forth upon the face or back of the certificate, or shall state that the corporation will furnish to any shareholder upon request and without charge, a full statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued and, if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined, and the authority of the board of directors to fix and determine the relative rights and preferences of other series.
(d) Each certificate representing shares shall state upon the face thereof:
(1) That the corporation is organized under the laws of this State.
(2) The name of the person to whom issued.
(3) The number and class of shares, and the designation of the series, if any, which such certificate represents.
(4) The par value of each share represented by such certificate, or a statement that the shares are without par value.
(e) Unless otherwise provided in the articles of incorporation, if the shares of a corporation are listed on a national securities exchange, the corporation may by resolution of the board of directors eliminate certificates representing any such shares and provide for such other methods of recording, noticing ownership, and disclosure as may be provided by the rules of that exchange. If no certificates are issued hereunder, a shareholder will have no obligation to deliver certificates under this Act where such delivery is required and the corporation shall treat such shareholder as having made such delivery upon receipt of written notification by the shareholder of his intention to have his shares treated as though a certificate had been delivered.
(f) This section shall not affect the validity of any share certificate of any corporation issued prior to January 1, 1964.
Section 33-9-120. Issuance of fractional shares or scrip. A corporation may (a) issue fractions of a share, either represented by a certificate or uncertificated, (b) arrange for the disposition of fractional interests by those entitled thereto, (c) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (d) issue scrip in registered or bearer form which shall entitle the holder to receive a certificate or an uncertificated full share upon the surrender of such scrip aggregating a full share. A fractional share shall, but scrip shall not, unless otherwise provided therein, entitle the holder to all rights of a shareholder. The board of directors may cause scrip to be issued subject to the condition that it shall become void if not exchanged for certificates representing full shares or uncertificated full shares before a specified date, or subject to the condition that the shares for which scrip is exchangeable may be sold by the corporation and the proceeds thereof distributed to the holders of scrip, or subject to any other conditions which the board of directors may deem advisable.
Section 33-9-130. Lost or destroyed certificates.
A shareholder whose certificate has been lost or destroyed may replace it in accordance with provisions of the Uniform Commercial Code in effect in this State.
Section 33-9-140. Requirement of stated capital and determination thereof.
(a) Upon issue by a corporation of shares with a par value, the consideration received therefor, expressed in dollars, shall constitute stated capital at least to the extent of the par value of the shares, and the excess, if any, of such consideration shall constitute capital surplus.
(b) Upon issue by a corporation of shares without par value, the entire consideration received therefor shall constitute stated capital unless the board of directors, within a period of sixty (60) days after issue, allocates to capital surplus a portion, but not all, of the consideration received for such shares. No such allocation shall be made by any portion of the consideration received for shares without par value having a preference in the assets of the corporation upon liquidation except that part of such consideration which is in excess of such preference.
(c) The stated capital of a corporation may be increased from time to time by resolution of the board of directors transferring all or part of any surplus of the corporation to stated capital. The board of directors may direct that the amount so transferred shall be stated capital in respect of any designated class or series of shares.
Section 33-9-150. Dividends in cash or property.
The board of directors of a corporation may, from time to time, declare and the corporation may pay dividends on its outstanding shares in cash or property, including the shares of other corporations, except when the corporation is insolvent or when the payment of the dividend would render the corporation insolvent or when the declaration or payment thereof would be contrary to any restrictions contained in the articles of incorporation, subject always to the following limitations:
(1) Dividends may be declared and paid in cash or property only out of the unreserved and unrestricted earned surplus of the corporation.
(2) Except to the extent that the articles of incorporation otherwise provide, a corporation engaged in the exploitation of natural resources or other wasting assets, may declare and pay in cash or property, dividends out of the depletion reserves of the corporation, but each such dividend shall be identified as a distribution of such reserves and the amount per share paid from such reserves shall be disclosed to the shareholders receiving the same concurrently with the distribution thereof.
Section 33-9-160. Share dividends and dividends in treasury shares.
(a) The board of directors of a corporation may, from time to time, declare and the corporation may pay on its outstanding shares dividends in its own shares, except when the corporation is insolvent or when the payment of the dividend would render the corporation insolvent or when the declaration or payment thereof would be contrary to any restrictions contained in the articles of incorporation, subject always to the following limitations:
(1) Dividends may be declared and paid in the corporation's own authorized but unissued shares out of any unreserved and unrestricted surplus of the corporation on the following conditions:
(A) If a dividend is payable in its own shares having a par value, such shares shall be issued at not less than the par value thereof, and there shall be transferred to stated capital at the time the dividend is paid an amount of surplus at least equal to the aggregate par value of the shares to be issued as a dividend.
(B) If a dividend is payable in its own shares without par value, such shares shall be issued at such stated value as shall be fixed by the board of directors by resolution adopted at the time the dividend is declared, and there shall be transferred to stated capital at the time the dividend is paid an amount of surplus equal to the aggregate stated value so fixed in respect of such shares.
(C) If the consideration as determined by the board of directors is in excess of the: (i) aggregate par value of such shares having par value, or (ii) the aggregate stated value of such shares without par value, such excess amounts on dividend shares shall be credited if required by generally accepted accounting principles to one of the capital surplus accounts of the corporation.
(D) Every share dividend shall be accompanied by a written notice which discloses
(i) the amount by which such dividends affect (aa) stated capital, (bb) capital surplus, (cc) earned surplus, and
(ii) the fact that there is no change in the percentage ownership of the corporation as a result of such dividend, or if such amounts cannot be determined at the time of such notice, the estimated effect of such distribution upon (aa) stated capital. (bb) capital surplus, (cc) earned surplus, and (dd) percentage ownership with a statement that such estimates are subject to redetermination.
(E) Dividends under subsection (a) (1) may be declared and paid on treasury shares upon express determination of the board of directors.
(2) Dividends may be declared and paid by the corporation in its own shares out of any treasury shares that have been reacquired out of surplus of the corporation. No transfer from surplus to stated capital need be made by a corporation paying a dividend in treasury shares to holders of any class of its outstanding shares. Every dividend in treasury shares shall be accompanied by a written notice which shall designate the dividend as a distribution of treasury shares and shall state the amount by which the surplus account has been reduced by the acquisition of such treasury shares.
(b) No dividend payable in shares of any class, whether such shares are authorized but unissued shares or treasury shares, shall be paid to the holders of shares of any other class unless the articles of incorporation so provide or unless such payment is authorized by the affirmative vote or written consent of the holders of at least a majority of the outstanding shares of the class in which the payment is to be made.
(c) A split-up or division of the issued shares of any class into a greater number of shares of the same class without increasing the stated capital of the corporation shall not be construed to be a share dividend within the meaning of this section.
Section 33-9-170. Distributions from capital surplus.
(a) The board of directors of a corporation may, from time to time, distribute to its shareholders out of capital surplus of the corporation a portion of its assets, in cash or property, subject to the following provisions:
(1) No such distribution shall be made at a time when the corporation is insolvent or when such distribution would render the corporation insolvent.
(2) No such distribution shall be made unless such distribution is authorized by the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares of each class whether or not entitled to vote thereon by the provisions of the articles of incorporation of the corporation.
(3) No such distribution shall be made to the holders of any class of shares unless all cumulative dividends accrued on all preferred or special classes of shares entitled to preferential dividends shall have been fully paid.
(4) No such distribution shall be made to the holders of any class of shares which would reduce the remaining net assets of the corporation below the aggregate preferential amount payable in the event of involuntary liquidation to the holders of shares having preferential rights to the assets of the corporation.
(5) Each such distribution, when made, shall be identified as a distribution from capital surplus and the amount per share disclosed to the shareholders receiving the same concurrently with the distribution thereof.
(b) The board of directors of a corporation may also from time to time distribute to the holders of its outstanding shares having a cumulative preferential right to receive dividends, in discharge of their cumulative dividend rights, dividends payable in cash out of the capital surplus of the corporation, if at the time the corporation has no earned surplus and is not insolvent and would not thereby be rendered insolvent. Each such distribution shall be accompanied by a written notice which shall state that the distribution is a payment of cumulative dividends out of capital surplus and the amount by which such dividend reduces capital surplus.
(c) The vote of the shareholders required for corporate action under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section.
Section 33-9-180. Corporation's purchase and disposition of its own shares.
(a) A corporation may acquire its own shares (1) by gift, bequest, merger, consolidation, distribution of the assets of another corporation or exchange of its shares, and (2) by purchase, as provided in this section; and it may hold, own, pledge, transfer, or otherwise disclose of such shares.
(b) A corporation shall purchase its own shares only out of unreserved and unrestricted earned surplus available therefor. If authorized by the articles of incorporation, or by the affirmative vote of two-thirds (2/3) of the shares of each class regardless of limitations or restrictions in the articles on the voting rights of such shares, a corporation may also purchase its own shares to the extent of unreserved and unrestricted capital surplus available therefor.
(c) To the extent that earned surplus or capital surplus is used to purchase its own shares, such surplus shall be restricted to the extent of such purchase so long as such shares are held as treasury shares, and upon the disposition or cancellation of any such shares the restriction shall be removed.
(d) Notwithstanding the limitations of subsection (b), the board of directors may authorize the purchase of the corporation's shares for the following purposes:
(1) To eliminate fractional shares or to avoid their issuance;
(2) To collect, release, or compromise in good faith a debt, claim, or controversy;
(3) To satisfy claims of dissenting shareholders who are entitled to payment of the fair cash value of their shares under Section 33-11-270; and
(4) Subject to the other provisions of this Act, to effect the retirement of its redeemable shares by the redemption of purchase at a price not to exceed the redemption price.
(e) A corporation shall in no event purchase its own shares if the corporation is insolvent, or if such purchase or payment would render it insolvent, or would reduce the remaining net assets of the corporation below the aggregate preferential amount payable in the event of involuntary liquidation to the holders of shares having preferential rights to the assets of the corporation.
(f) A corporation which has purchased its own shares out of surplus may defer payment for such shares over a period as may be agreed between it and the selling shareholder. The obligation so created constitutes an ordinary debt of the corporation and the validity of any payment made upon the debt so created is not affected by the absence of surplus at the time of payment.
(g) The vote of the shareholders required for corporate action under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section.
Section 33-9-190. Issue and redemption of redeemable shares.
(a) The articles of incorporation may authorize the corporation to issue one or more classes or series of shares which are redeemable, in whole or in part, at the option of the corporation. The articles shall set forth (1) the price at which, (2) the period within which, and (3) the conditions under which such shares shall be redeemed.
(b) Except in the case of an open-end investment company, as defined by the act of Congress entitled 'Investment Company Act of 1940', as amended or supplemented, or an act adopted in substitution therefor, no corporation shall issue or redeem (1) any common shares, or (2) any redeemable or other shares which by their terms purport to grant to any holder thereof the right to require the corporation to redeem such shares. A shareholder of such an open-end investment company may compel the redemption of such shares in accordance with their terms.
(c) No redemption or purchase of redeemable shares shall be made by a corporation if it is insolvent, or if such redemption or purchase would render it insolvent, or would reduce the remaining net assets of the corporation below the aggregate preferential amount payable in event of voluntary liquidation to the holder of shares having preferential rights to the assets of the corporation. (d) When redeemable shares are purchased by the corporation, the purchase price shall not exceed the redemption prices stated in the articles of incorporation.
Section 33-9-200. Retirement or cancellation of redeemable shares by redemption or purchase.
(a) The redemption or purchase by a corporation of its redeemable shares shall of itself retire such shares which shall automatically be restored to the status of authorized but unissued shares, unless the articles of incorporation provide that the shares shall be canceled and not reissued.
(b) A statement of retirement or cancellation shall be executed, verified and delivered for filing as provided by Sections 33-1-40 to 33-1-60 and shall set forth:
(1) The name of the corporation.
(2) The number of redeemable shares required by redemption or purchase, itemized by classes and series.
(3) The aggregate number of issued shares, itemized by classes and series, after giving effect to retirement of such shares.
(4) The amount, expressed in dollars of the stated capital of the corporation after giving effect to such retirement.
(5) If the articles of incorporation provide that the shares shall be canceled and not reissued, then the number of shares which the corporation has authority to issue, itemized by classes and series, after giving effect to such cancellation.
(c) The filing of a statement of retirement shall reduce the stated capital of the corporation by that part of the stated capital which was at the time of the retirement of the shares, represented by the retired shares. If the articles of incorporation provide that the shares be canceled and not reissued, the filing of the statement of cancellation shall also amend the articles to reduce the number of authorized shares by the number of canceled shares.
(d) Nothing contained in this section shall be construed to forbid a retirement or cancellation of shares or a reduction of stated capital in any other manner permitted by this Act.
Section 33-9-210. Disposition or retirement or cancellation of other reacquired shares.
(a) Any shares other than redeemable shares redeemed or purchased may be either held as treasury shares or may be retired or canceled by the board of directors at the time of reacquisition or at any time thereafter.
(b) If retired or canceled, a statement of retirement or cancellation shall be executed, verified, and delivered for filing as provided by Sections 33-1-40 and 33-1-60, and shall set forth:
(1) The name of the corporation.
(2) The number of reacquired shares retired or canceled by resolution adopted by the board of directors, itemized by classes and series, and the date of its adoption.
(3) The aggregate number of issued shares, itemized by classes and series, after giving effect to the retirement of the shares.
(4) The amount, expressed in dollars, of the stated capital of the corporation after giving effect to the retirement or cancellation of the shares.
(5) If the articles of incorporation provide that the shares shall be canceled and not reissued, then the number of shares which the corporation has authority to issue, itemized by classes and series, after giving effect to such cancellation.
(c) The filing of a statement of retirement shall reduce the stated capital of the corporation by that part of the stated capital which was at the time of the retirement of the shares represented by the retired shares if the articles of incorporation provide that the shares shall be canceled and not reissued, the filing of the statement of cancellation shall also amend the articles to reduce the number of authorized shares by the number of canceled shares.
(d) Nothing contained in this section shall be construed to forbid retirement or cancellation of shares or a reduction of stated capital in any other manner permitted by this Act.
Section 33-9-220. Reduction of stated capital.
(a) A corporation may, by complying with the following procedure, reduce its stated capital, except that this section is inapplicable when stated capital is reduced by amendment of the articles of incorporation or by retirement or cancellation of shares.
(1) The board of directors shall adopt a resolution setting forth the amount of the proposed reduction and the manner in which the reduction shall be effected and directing that the question of such reduction be submitted to a vote at a meeting of shareholders which may be either an annual or a special meeting.
(2) Written or printed notice, stating that the purpose or one of the purposes of such meeting is to consider the question of reducing the stated capital of the corporation in the amount and manner proposed by the board of directors, shall be given to each shareholder of record entitled to vote thereon within the time and in the manner provided in this Act for the giving of notice of meetings of shareholders.
(3) At such meeting a vote of the shareholders entitled to vote thereon shall be taken on the question of approving the proposed reduction of stated capital, which shall require for its adoption the affirmative vote of the holders of two-thirds (2/3) of the shares entitled to vote thereon.
(4) If the proposed reduction of capital is approved as provided in this section, a statement shall be executed, verified, and delivered for filing as provided by Sections 33-1-40 to 33-1-60 and shall set forth:
(A) The name of the corporation.
(B) A copy of the resolution of the shareholders approving such reduction, and the date of its adoption.
(C) The number of shares outstanding, and the number of shares entitled to vote thereon.
(D) The number of shares voted for and against such reduction, respectively.
(E) The number of shares before and after giving effect to such reduction.
(F) A statement of the manner in which such reduction is effected, and a statement, expressed in dollars, of the amount of stated capital of the corporation after giving effect to such reduction
(5) Upon filing of such statement, the stated capital and number of authorized shares shall be reduced as therein set forth.
(b) No reduction of stated capital shall be made under the provisions of this section (1) if after such reduction the net assets of the corporation are not sufficient to pay any debts of the corporation not otherwise provided for, and (2) if after such reduction the amount of the aggregate stated capital of the corporation would be an amount equal to or less than the aggregate preferential amounts payable in the event of involuntary liquidation to the holders of shares having preferential rights to the assets of the corporation.
(c) The vote of the shareholders required for corporate action under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section.
Section 33-9-230. Earned surplus, capital surplus and reserves.
(a) The earned surplus of a corporation may be determined either from the date of incorporation, or from the latest date when a deficit was eliminated, as permitted in subsection (b) by applying the corporation's capital surplus.
(b) A corporation may, by resolution of its board of directors, apply any part or all of its capital surplus to the reduction or elimination of any deficit arising from losses, however incurred, but only after first eliminating the named surplus, if any, of the corporation by applying such losses against earned surplus and only to the extent such losses exceed the earned surplus, if any. Each such application of capital surplus shall, to the extent thereof, effect a reduction of capital surplus. Each such application of capital surplus shall be disclosed in the next financial statement furnished by the corporation to its shareholders or in the first notice of dividend or share distribution that is furnished to shareholders between the date of such application and the next financial statement, and in any event within six (6) months of the date of such action.
(c) A corporation may, by resolution of its board of directors, create a reserve or reserves of its earned surplus or capital surplus for any proper purpose or purposes, and may increase, decrease or abolish any such reserves in the same manner. Earned surplus of the corporation to the extent so reserved shall not be available for the payment of dividends or other distributions by the corporation except as expressly permitted by this Act.
(d) Upon merger, consolidation, or combination of two or more corporations by purchase or otherwise, the amount of the earned surplus of the surviving, consolidated, or purchasing corporation shall not exceed the aggregate net earned surplus of the constituent corporations, reduced by the distributions to shareholders and transfers of earned surplus to stated capital or capital surplus made in connection with the issue of shares or otherwise at the time of such merger, consolidation, or combination.
(e) The capital surplus of a corporation may be increased from time to time by resolution of the board of directors directing that all or a part of the earned surplus of the corporation be transferred to capital surplus.
(f) The surplus, if any, created by or arising out of a reduction of the stated capital of a corporation shall be capital surplus.
(g) The stated capital of a corporation may be increased in accordance with Section 33-9-140.
Section 33-9-250. Convertible securities.
(a) The period within which and the terms and conditions upon which shares may be made convertible shall be stated in the articles of incorporation, or in a resolution of the board of directors if pursuant to Section 33-9-40 the board of directors has authority to issue in series shares of preferred or special classes. Shares without par value shall not be converted into shares with par value, unless that part of the stated capital of the corporation represented by such shares without par value is, at the time of conversion, at least equal to the aggregate par value of the shares into which the shares without par value are to be converted or the amount of any such deficiency is transferred from surplus to stated capital.
(b) A corporation may issue bonds convertible into other bonds or debentures of the corporation within such period and upon such terms and conditions as shall be fixed by the board of directors.
(c) A corporation may, if authorized by the articles of incorporation, issue bonds convertible into shares within such period and upon such conditions as shall be fixed by the board of directors.
(d) At the time of authorizing any securities convertible into shares, the corporation shall provide for and at all times thereafter retain sufficient authorized but unissued shares of all classes necessary to satisfy the conversion of all issued outstanding securities convertible into shares. The consideration and payment for shares or bonds or debentures issued upon exercise of any conversion privilege shall comply with the requirements of subsection (e) of Section 33-9-70.
(e) When bonds or shares are converted, they shall be canceled. Conversion of shares shall not reduce the aggregate stated capital of the corporation, but the effect, if any, of conversion upon stated capital shall be stated in the next financial statement furnished to shareholders.
CHAPTER 11
Business Corporations-Shareholders
Section 33-11-10. Bylaws generally.
(a) The bylaws of a corporation may contain any provisions, which are not inconsistent with law or with the articles of incorporation, for the regulation and management of the business and affairs of the corporation. Any provision which may properly appear in the bylaws may be included in the articles of incorporation.
(b) Either before or after incorporation, but not later than the organizational meeting of the corporation, the board of directors or shareholders shall adopt the initial bylaws of the corporation. Unless the power to alter, amend, or repeal the bylaws or adopt new bylaws is reserved to the shareholders by the articles of incorporation, the board of directors may alter, amend, repeal bylaws or adopt new bylaws.
(c) The articles of incorporation may exclusively vest in the shareholders the power to alter, amend, repeal bylaws or adopt new bylaws or a particular bylaw or class of bylaws. Even though no such power is reserved to or vested in the shareholders, the holders of shares entitled to vote to elect directors may amend or repeal bylaws adopted by the board of directors. The shareholders may prescribe in the bylaws the extent to which such bylaws may be amended, altered or repealed by the board of directors. The board of directors may otherwise amend or repeal a bylaw adopted by the shareholders.
(d) After incorporation, the holders of shares entitled to vote to elect directors may alter, amend, repeal bylaws or adopt new bylaws and such continuing power of the shareholders shall not be denied, limited or impaired by the articles of incorporation or the bylaws or otherwise.
(e) Unless this Act, the articles or bylaws require a greater number, action with respect to the bylaws shall be taken by a vote of (1) a majority of all the shares entitled to elect directors or (2) a majority of the number of directors determined as provided in Section 33-1330.
(f) Any notice of a meeting of shareholders or of the directors at which bylaws are to be adopted, amended or repealed shall include notice of such proposed action.
Section 33-11-20. Emergency bylaws.
(a) A corporation may adopt emergency bylaws before, during, or after an emergency in the conduct of the business of the corporation resulting from an attack on the United States or any nuclear or atomic disaster. Such bylaws shall become automatically operative upon and remain in force during such emergency. Such bylaws may be adopted by the shareholders or by the board of directors, subject to repeal or change by action of the shareholders. Notwithstanding, any different provision elsewhere in this Act or in the articles of incorporation or bylaws of the corporation, the emergency bylaws may contain any necessary and practical provision or requirement for the emergency operation and management of the business, including, without limitation, provisions which:
(1) Prescribe emergency powers to any of officer of the corporation;
(2) Authorize delegation to any officer or director of the powers of the board of directors;
(3) Designate lines of succession of officers and agents of the corporation in the event that any of them shall for any reason be unable to discharge their duties. Such designation may be made either before or during any emergency, and may from time to time be modified.
(4) Designate those persons who, in such order of priority and for such period of time as may be provided in the emergency bylaws or by resolution, shall be directors.
(5) Relocate the principal place of business, or designate successive or simultaneous principal places of business, or authorize the board of directors or officers to do so during the emergency.
(6) Authorize any officer or director, or designate any other person, to call a meeting of the board of directors or of any committee in such manner and under such conditions as the emergency bylaws prescribe.
(7) Authorize giving notice only to such directors as it may be feasible to contact at the time and by such means as may be most feasible at the time, including publication over radio or by any other available means of communication.
(8) Provide that the director or directors attending the meeting, or any greater number fixed by the emergency bylaws, shall constitute a quorum.
(9) Exonerate from liability, except for wilful misconduct, any director, officer, agent or employee acting in accordance with any emergency bylaw.
(b) To the extent not inconsistent with any emergency bylaws so adopted, the bylaws of the corporation shall remain in effect during any emergency, and upon its termination the emergency bylaws shall cease to be operative.
(c) To the extent required to constitute a quorum at any meeting of the board of directors during any such emergency, the officers of the corporation who are present shall, unless otherwise provided in the emergency bylaws, he deemed, in order of rank and within the same rank in order of seniority, directors for such meeting.
(d) If emergency bylaws have not been adopted by a corporation, action by shareholders, directors, officers, agents, or employees during any emergency as defined in subsection (a) shall be valid if it is substantially in compliance with this section, or if it is otherwise necessary and practical for the emergency operation and management of the business.
Section 33-11-30. Meetings of shareholders.
(a) Meetings of shareholders may be held at such place, either within or without this State, as may be specified in the bylaws. In the absence of any such provision, all meetings shall be held at the registered office of the corporation.
(b) Unless otherwise provided pursuant to Section 33-11-180 or Section 33-11-220, a meeting of the shareholders shall be held annually for the election of directors and the transaction of other business on a date specified by the bylaws. A failure to hold the annual meeting at the designated time or to elect a sufficient number of directors to conduct the business of the corporation shall not affect otherwise valid corporate acts or work a forfeiture or dissolution of the corporation except to the extent provided by subsection (a) (3) of Section 33-21-150.
(c) If there shall be a failure, for whatever reason, to hold the annual meeting for a period of thirty (30) days after the date for such meeting specified in the bylaws, or if no date has been specified, for a period of thirteen (13) months after the organization of the corporation or after its last annual meeting:
(1) A substitute annual meeting may be called by any person or persons entitled to call a special meeting of the shareholders; or
(2) The circuit court of the county in which the registered office of the corporation is located may, upon application of any shareholder, order a substitute annual meeting to be held, and may issue such further orders as may be appropriate, including orders fixing the time and place of such substitute annual meeting, the shareholders entitled to vote on the matter or matters to be presented at such meeting, the record date for determination of shareholders entitled to vote, the form of notice of any such meeting, and providing that at any such meeting the shareholders present in person or by proxy and having voting powers shall constitute a quorum for the transaction of the business designated in the order, but such quorum shall not be less than one-third (1/3) of the shares entitled to vote at such meeting.
(d) Special meetings of the shareholders may be called by any one of the following:
(1) The president;
(2) The chairman of the board of directors;
(3) A majority of the board of directors;
(4) The holders of not less than ten percent (10%) of the shares entitled to vote at the meeting, unless the articles of incorporation or bylaws provide for a smaller percentage or unless any section of this Act otherwise provides; or
(5) Such other officers or persons as may be provided in the articles of incorporation or in the bylaws.
Section 33-11-40. Notice of shareholders' meetings.
(a) Written or printed notice stating the place, day and hour of the meeting, and, (1) in the case of a special meeting, the purpose or purposes for which the meeting is called, or (2) such other notice as shall be required by this Act, shall be delivered not less than ten (10) or more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the president, chairman of the board of directors, secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed delivered when deposited with postage prepaid in the United States mail, addressed to the shareholder at the address appearing on the stock transfer books of the corporation.
(b) Upon written request transmitted in person or by certified or registered mail to the president or secretary by any person entitled under subsection (d) of Section 33-11-30 to call a meeting of shareholders such officer shall deliver to the shareholders entitled thereto notice, as provided by this section, of a meeting to be held on a date fixed by such officer, which date shall not be less than ten (10) nor more than fifty (50) days after receipt of such request. If notice of the meeting is not given within fifteen (15) days after transmission of the request therefor to the president or secretary, the person or persons calling the meeting may fix the time of meeting and give or cause to be given notice thereof as provided by this section.
(c) When a meeting is adjourned for whatever reason, for thirty (30) days or more, notice of the adjourned meeting shall be given as provided by this section. Notice of a meeting adjourned for less than thirty (30) days need not be given if the time and place of the adjourned meeting are announced at the meeting at which the adjournment is taken, and at the adjourned meeting the corporation may transact any business which might have been transacted at the meeting at which the adjournment was taken.
Section 33-11-50. Waiver of notice.
(a) Notice of a meeting of shareholders need not be given to any shareholder who signs a waiver of notice, in person or by proxy, either before or after the meeting. Unless required by the bylaws, neither the business transacted nor the purpose of the meeting need be specified in the waiver.
(b) Attendance of a shareholder at a meeting, in person or by proxy, shall of itself constitute waiver of notice, except when the shareholder attends a meeting solely for the purpose of stating his objection, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.
Section 33-11-60. Fixing record date for determining shareholders.
(a) For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of a dividend or other distribution, or in order to make a determination of shareholders for any other proper purpose, the board of directors may, in accordance with the bylaws or by resolution in the absence of an applicable bylaw, fix in advance a record date for any such determination of shareholders. Such date shall not in any case be more than fifty (50) days and, in case of a meeting of shareholders, not less than ten (10) full days, prior to the date of which the particular action, requiring such determination of shareholders, is to be taken.
(b) If no record date is fixed for determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend or other distribution, the date on which the resolution of the board of directors declaring such action is adopted, as the case may be, shall be the record date for determination of shareholders.
(c) If a meeting of the shareholders is called by any person entitled to do so pursuant to Section 33-11-30, and if the board of directors fails or refuses to fix a record date for the purpose of determining shareholders entitled to notice of or to vote at such meeting, then the persons calling such meeting may fix a record date in accordance with subsection (a) of this section.
(d) If the bylaws so provide, the board of directors may, in lieu of fixing a record date as provided in subsection (a), close the stock transfer books for a stated period. Such period shall not in any case exceed fifty (50) days and, in case of a meeting of shareholders, the books shall be closed for at least ten (10) full days immediately preceding the date of such meeting.
(e) When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless a new record date is fixed in accordance with subsection (a) of this section.
Section 33-11-70. List of shareholders entitled to vote at meeting.
(a) The officer or agent having charge of the stock transfer books for shares of a corporation shall in advance of each meeting of shareholders, prepare a complete list of the shareholders entitled to vote at any meeting of shareholders or adjournment thereof. Such list shall be arranged in alphabetical order, with the address of and the number of shares held by each shareholder. The requirement of a list shall be satisfied, and no list need be prepared, if the record of shareholders readily shows, in alphabetical order or by alphabetical index, and by classes or series if any, the information required to appear in a list of shareholders. For a period commencing upon the date when notice of the meeting is given, and in no event less than ten (10) days prior to the date of the meeting, such list of shareholders shall be kept on file at the registered office of the corporation or at its principal place of business or at the office of its transfer agent or registrar, and shall be subject to inspection by any shareholder for any purpose germane to the meeting at any time during usual business hours.
(b) The list required by subsection (a) shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting.
(c) Failure to comply with the requirements of subsections (a) and (b) shall not affect the validity of any action taken at any meeting.
(d) The original stock transfer books shall be prima facie evidence as to the shareholders who are entitled to examine the list required by subsection (a) or the transfer books or to vote at any meeting of shareholders.
(e) If the requirements of this section have not been substantially complied with, the meeting shall, on the demand of any shareholder in person or by proxy, be adjourned until the requirements are complied with.
Section 33-11-80. Quorum of shareholders.
(a) A majority of the shares entitled to vote thereat shall constitute a quorum at a meeting of shareholders for the transaction of any business, provided that when a specified item of business is required to be voted on by a class or classes, a majority of the shares of such class or classes shall constitute a quorum for the transaction of such items of business. The articles of incorporation may require a greater or lesser number to constitute a quorum, but not less than one-third (1/3) of such shares.
(b) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by vote of a majority of the shares present.
(c) The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business at the meeting or at any adjournment thereof notwithstanding the withdrawal of enough shareholders to leave less than a quorum.
(d) Shares shall not be counted toward a quorum for a meeting of shareholders if voting of such shares has been enjoined or if for any reason they may not lawfully be voted at such meeting.
Section 33-11-90. Determination of shareholders entitled to vote.
The principles applicable to determination of shareholders entitled to vote shall apply, so far as possible to (1) ascertaining the presence of a quorum at a meeting of shareholders, and (2) determining the shareholders entitled to give a proxy to vote.
Section 33-11-100. Required vote of shareholders.
Except to the extent that the vote of a greater number of shares or voting by classes of shares is required by this Act, the articles or bylaws at any meeting of shareholders which has been duly called and at which a quorum is present,
(a) In elections of directors, those candidates who receive the greatest number of votes cast at the meeting by the holders of shares entitled to vote to elect directors, even though not receiving a majority of the votes cast, shall be deemed elected;
(b) Any other corporate action shall be authorized by a majority of the votes cast at the meeting by the holders of shares entitled to vote on the subject matter.
Section 33-11-110. Qualification of voters.
(a) Unless otherwise provided by this Act or the articles of incorporation, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote of the shareholders. If the articles of incorporation provide for more or less than one vote for any share on any matter, every reference in this Act to a majority or other proportion of shares shall refer to such majority or other proportion of votes thereby entitled to be cast.
(b) The articles of incorporation may, either absolutely or conditionally, deny, limit, or otherwise define the voting powers of any designated preferred or special class or classes of shares.
(c) The articles of incorporation may specify that any class or classes of shares or any series thereof shall vote as a class or series in connection with the transaction of any business or of any specified item of business at a meeting of shareholders, including amendments to the articles of incorporation.
(d) The articles of incorporation may:
(1) authorize the board of directors to grant, either absolutely or conditionally, to the holders of bonds issued or to be issued by the corporation, the power to vote in respect to the corporate affairs and management of the corporation to the extent and in the manner provided therein.
(2) Such articles may confer on such bondholders any rights of shareholders of the corporation pursuant to provisions of this Act or the articles of incorporation. Such right shall not be terminated except upon written assent of the holders of a majority of the aggregate outstanding face amount of the bonds, unless a greater assent is required in the articles of the incorporation.
(3) Only if the articles of incorporation so provide shall bonds with the power to vote issued hereunder be deemed to be shares of stock for the purpose of any provision of this Act which requires the vote of shareholders as a prerequisite to any corporate action.
(e) The vote of the shareholders required under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section.
Section 33-11-120. Voting by corporations, fiduciaries, and others.
(a) No corporation shall directly or indirectly vote any shares or bonds issued by it, including treasury shares, nor shall any shares so disqualified from voting be counted in determining the total number of outstanding shares at any given time.
(b) Shares standing in the name of a domestic or foreign corporation of any type or kind (referred to in this subsection as the 'shareholder-corporation') may be voted by the officer, agent, or proxy designated by the bylaws of the shareholder-corporation; or, in the absence of any applicable bylaw, by such person as the board of directors of the shareholder-corporation may designate. In the absence of any such designation, the chairman of the board of directors, president, any vice-president, secretary, and treasurer of the shareholder corporation shall be presumed to possess, in that order, authority to vote such shares, unless prior to such vote it appears by a certified copy of the bylaws or other instrument of the shareholder-corporation that such authority does not exist or is vested in some other officer or person. In case of conflicting representation of the shareholder corporation, the shares shall be voted by the senior officer, in the order stated.
(c) Any fiduciary may vote shares which stand of record in his name.
(d) Shares held by any executor, administrator, guardian, or committee, may be voted by him, upon proof of his appointment, without transfer of such shares into his name. Any other fiduciary, upon proof satisfactory to the corporation of his authority to vote, may vote shares which stand of record in the name of the person for whom he is such fiduciary.
(e) A minor may vote shares which stand of record in his name, and may not thereafter disaffirm or avoid such vote.
(f) Shares held by a person as custodian for a minor under the South Carolina Uniform Gifts to Minors Act, may be voted by the custodian subject to applicable provisions of that Act.
(g) Shares held by or under the control of a trustee in bankruptcy, or receiver or liquidator, may be voted by him without the transfer thereof into his name if authority to do so is conferred by statute or is authorized by the court which appointed such receiver or trustee. An assignee for the benefit of creditors may vote shares standing in the name of the assignor, unless otherwise provided in the instrument of assignment.
(h) A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred on the records of the corporation into the name of the pledgee or a nominee of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so long as they stand of record in the pledgee's name.
(i) Shares standing in the name of a partnership may be voted by any partner, and shares standing in the name of a limited partnership may be voted by any general partner.
(j) Shares standing in the name of a person as life tenant may be voted by him.
(k) Redeemable shares which have been called for redemption shall not be entitled to vote on any matter nor be deemed outstanding shares on and after the date on which written notice of redemption has been sent to holders thereof and a such sufficient to redeem such shares has been deposited with a bank or trust company with irrevocable instructions and authority to pay the redemption price to the holders of the shares upon surrender of certificates therefor.
Section 33-11-130. Voting, execution of proxies and other action as to shares owned jointly.
If two or more persons take or are required to take action with respect to the same shares, including, but not limited to:
(a) fiduciaries who have the same fiduciary relationship to the same shares;
(b) holders of record of the same shares, including but not limited to joint tenants and tenants in common;
(c) shareholders who execute or are to execute proxies as to the same shares; then, whenever shares are voted, proxies are executed, or other action is taken:
(1) by one of such persons, such act shall bind all;
(2) by more than one of such persons, the act of a majority of those acting shall bind all;
(3) by more than one of such persons but there is an even division among those acting, each faction shall be entitled to vote or otherwise act proportionally, unless an agreement, order of court, or other instrument presented at the time such voting or action is taken shall provide otherwise.
Section 33-11-140. Proxies and irrevocable proxies.
(a) A shareholder shall not sell his vote to any person, nor shall he issue a proxy to vote for any sum of money or anything of value, except so far as subsection (f) of this section authorizes irrevocable proxies.
(b) Every shareholder entitled to vote may appoint one or more agents to vote on his behalf. Such appointment shall be by a printed or written proxy executed by the shareholder or by his duly appointed attorney in fact, or by a telegram or cablegram appearing to have been transmitted by a shareholder.
(c) Except as otherwise provided by this section, no proxy shall confer authority to vote at any meeting of the shareholders other than the next meeting, or any adjournment thereof, to be held after the date on which the proxy was first sent or given. Every proxy shall be dated as of its execution and no proxy shall be undated or postdated. Every proxy, except as otherwise provided in this section, shall be revocable at the pleasure of the shareholder executing it, and a proxy may be revoked by an instrument which in its terms revokes the proxy, or by a duly executed proxy bearing a later date. The authority of a proxy-holder shall not be revoked by death or supervening incapacity of the shareholder executing the proxy unless, before such authority is exercised, written notice of such detail or incapacity is filed with the corporate officer responsible for maintaining the list of shareholders. The presence at a shareholders' meeting of the shareholder appointing a proxy shall not of itself revoke the proxy, but such shareholder may revoke the appointment by giving notice to the corporate officer responsible for maintaining the list of shareholders, or by giving notice in open meeting of the shareholders.
(d) Unless a proxy otherwise specifically provides, any proxy-holder shall have the power to appoint in writing a substitute to act in his place.
(e) No proxy shall be solicited on the basis of any proxy statement or other communication, written or oral, containing any statement which was, at the time and in light of the circumstances under which it was made, false or misleading will respect to any material fact or which omits to state any material fact necessary in order to make the statements therein not false or misleading.
(f) Irrevocable proxies:
(1) A proxy which is entitled 'irrevocable proxy' and which specifically states that it is irrevocable, shall be irrevocable only when it is held by any of the following or by a nominee of any of the follow:
(A) a pledgee of the shares which are the subject of the proxy;
(B) a person who has contracted to purchase the shares which are the subject of the proxy;
(C) A creditor or creditors of the corporation who extend or continue credit to the corporation in consideration of the proxy if such proxy specifically states that it was given in consideration of such extension or continuation of credit, and sets forth the amount of and the name of the person extending or continuing credit;
(D) an officer of the corporation under an employment contract which required a proxy, if the proxy states that it was given in consideration of the contract, the name of the employee, and the period of employment contracted for;
(E) a person, including an arbitrator, designated by or under a shareholders' agreement as provided by Section 33-11-150.
(2) Any such proxy shall become revocable after the pledge is redeemed, or the contract of purchase has been performed and the purchaser has become a shareholder of record, or the debt of the corporation is paid, or the period of employment stipulated in the contract of employment has been terminated, or the agreement under Section 33-11-150 has been terminated.
(g) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a purchaser of shares without knowledge of the existence of such provision, unless notice of the proxy and of its irrevocability plainly appears on the face or back of the certificate representing such shares.
(h) The foregoing provisions shall be applicable to proxies given by the holders of a corporation's bonds, where a right to vote is conferred upon such holders by the articles of incorporation as permitted by Section 33-11-110(d).
(i) The provisions of Section 33-11-120 shall be applicable in determining persons entitled to give a proxy under this section.
Section 33-11-150. Agreements by shareholders respecting voting of shares.
An agreement between two or more shareholders, if in writing and signed by the parties thereto, may provide that in exercising and voting rights of shares held by the parties, including any vote with respect to directors, such shares shall be voted as provided by the agreement, or as the parties may agree, or as determined in accordance with a procedure agreed upon by the parties. Such agreement shall be valid and enforceable as between the parties thereto, for a period not to exceed ten (10) years from the date of its execution. Such agreement may be extended or renewed in like manner as a voting trust may be extended or renewed as provided by Section 33-11-160.
Section 33-11-160. Voting trusts.
(a) Any shareholder or shareholders may create a voting trust, revocable or irrevocable, for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period not exceeding ten (10) years, by executing a written agreement specifying the terms and conditions of the voting trust, and by transferring the shares to such trustee or trustees for the purposes stated in the agreement. The certificates or shares so transferred may be surrendered by the trustee to the corporation which shall thereupon cancel the shares and issue new certificates therefor to the trustee or trustees stating that they are issued under the voting trust agreement. The corporation shall specifically enter into its records the fact that such shares are subject to the voting trust agreement. In any case, trust certificates shall be issued by the trustees to the shareholders who transfer their shares in trust.
(b) A fully conformed copy of the voting trust agreement (including any amendments to or changes in the agreement) shall be on file both at the corporation's registered office, and with the voting trustee or trustees. Such conformed copies shall be subject at any reasonable time to examination by any shareholder of the corporation, or by any holder of a voting trust certificate, in person or by attorney or other agent.
(c) The trustee or trustees shall keep a complete and current list of the names and addresses of all persons who are holders of voting trust certificates and the number and class of shares represented by the certificates held by them and the dates when they became the owners thereof. Such list shall be kept on file at the office of the trustee or trustees and at the registered office of the corporation, and shall be subject at any reasonable time to examination by any shareholder of the corporation or by any holder of a voting trust certificate, in person or by attorney or other agent.
(d) At any time within one (1) year before the expiration of a voting trust agreement as originally created or as extended under this subsection, one or more holders of voting trust certificates may, by agreement in writing, extend the duration of such agreement, nominating the same or substitute trustee or trustees, for an additional period not to exceed ten (10) years from the date of such extension. Such extension agreement shall not affect the rights or obligations of persons not parties to the agreement, and such persons shall be entitled to remove their shares from the trust and promptly to have their share certificates reissued to them. The extension agreement shall comply with all provisions of this section applicable to the original voting trust agreement.
(e) The validity of a voting trust agreement, otherwise lawful, shall not be affected during a period of ten (10) years from the date of its creation or extension, by the fact that by its terms it will or may last beyond such ten-year period; but it shall, after the expiration of such ten-year period, be inoperative.
(f) Unless otherwise provided by the voting trust agreement, the trustee or trustees shall be entitled to vote without the consent of the voting trust certificate holders upon all amendments of charter, and upon any merger, consolidation, dissolution, sale of assets, reduction of stated capital of the corporation or other matter on which a record owner of shares is entitled to vote. Except to the extent that the voting trust agreement provides otherwise, whenever any provision of this Act grants a shareholder the right to dissent to proposed corporate action and to be paid the fair value of his shares if such action is effected, the holder of a voting trust certificate shall, to the extent of the shares represented thereby, have such right as if he had not transferred his shares in trust.
(h) Where two or more persons are designated as voting trustees, and the right and method of voting shares in their names at a meeting of shareholders are not fixed by the agreement appointing the trustees, the right to vote and the manner of voting the shares at the meeting shall be determined by a majority of the trustees. If the trustees are equally divided as to how the shares shall be voted, the vote shall be divided equally among the trustees.
(i) A trustee who votes shares subject to a voting trust incurs no responsibility as a shareholder, trustee or otherwise, except for his malfeasance.
Section 33-11-170. Voting inspectors.
(a) Unless otherwise provided in the bylaws, the board of directors, in advance of any shareholder's meeting, may appoint any odd number of inspectors to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at a shareholders' meeting may, and upon the request of any shareholder entitled to vote thereat, appoint inspectors. Any vacancy, whether from refusal to act or otherwise, may be filled by appointment made by the board of directors in advance of the meeting, or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his duties, shall take an oath to execute his duties impartially and to the best of his ability.
(b) The inspectors shall determine the number of shares outstanding, and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies; they shall receive votes, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, determine and announce the result, and otherwise see that the vote or election is conducted with fairness to all shareholders.
(c) Upon request of the person presiding at the meeting or of any shareholder entitled to vote thereat, the inspectors shall make a report in writing of any challenge, question, or matter determined by the and execute a certificate of any fact found by them.
(d) Any report or certificate made by the inspectors shall be prima facie evidence of the facts stated therein and of the vote as certified by them.
Section 33-11-180. Action taken by shareholders without a meeting.
(a) Action taken at any meeting of shareholders, however called and with whatever notice, if any, shall be deemed action of the shareholders taken at a meeting duly called and held on proper notice, if:
(1) All shareholders entitled to vote at the meeting are present in person or by proxy, and no shareholder objects to holding the meeting; or
(2) If a quorum is present either in person or by proxy, no one present objects to holding the meeting, and each absent person entitled to vote at the meeting signs, either before or after the meeting, a written waiver of notice, or consent to the holding of the meeting, or approval of the action taken as shown by the minutes thereof. All such waivers, consents, or approval shall be filed with the corporate records or made a part of the minutes of the meeting. The absence from the minutes of any indication that a shareholder objected to holding the meeting shall prima facie establish that no such objection was made.
(b) Action required or permitted under this Act to be taken by shareholders may be taken without a meeting if a written consent, setting forth the action so taken, is signed by the holders of all outstanding shares entitled to vote on such action, or their attorneys-in-fact or a proxy-holder thereof, and is filed with the secretary of the corporation as part of the corporate records. Such written consent shall have the same effect as a unanimous vote of the shareholders and may be stated as such in any certificate or document required to be filed with the Secretary of State.
Section 33-11-190. Judicial review of election of directors and appointment of officers.
(a) Any person entitled to vote thereon at a corporate election or any director of a domestic corporation may initiate a proceeding, including an action for declaratory judgment, to determine any controversy with respect to an election or appointment of a director or officer of the corporation. The proceeding must be brought within thirty (30) days after the contested election or appointment in the court of the county in which the registered office of the corporation is located in this State.
(b) In any such proceeding, copies of the petition shall be served upon (1) the corporation, (2) the person whose title to office is contested, and (3) the person, if any, claiming the contested office. The court may make such additional orders, as it may deem proper, to insure prompt and adequate notice, including service by publication.
(c) In any such proceeding, the court may compel the production of books, papers, and records of the corporation relevant to the issue or issues presented. The court may, upon application, issue an interlocutory order restraining the directors or officers whose election or appointment is contested from acting, and may make such other order as the court may deem proper pending the determination of the matter in controversy.
(d) The petition shall be heard as expeditiously as possible, upon affidavits or oral testimony, as the court shall direct. Upon completion of the hearing, the court may:
(1) Declare the result of the contested election or appointment;
(2) Direct a new election or appointment, including in such order, if the court finds it appropriate:
(A) Provisions relating to the director or officer who shall hold the challenged office until a new election is held or appointment is made;
(B) A provision appointing a special master to conduct any election ordered by the court;
(3) Determine the voting rights of shareholders and of persons claiming to own shares or otherwise entitled to vote;
(4) Direct such other relief as may be just and proper.
Section 33-11-200. Cumulative voting.
(a) Unless the articles of incorporation otherwise provide, each holder of shares entitled to vote at an election of directors shall have the right to cumulate his votes either (1) by giving to one candidate as many votes as shall equal the number of directors who are to be elected and for whose election he has a right to vote, multiplied by the number of shares owned by such holder, or (2) by distributing his votes on the same principle among any number of candidates.
(b) A shareholder who intends to vote his shares as provided in subsection (a) shall either (1) give written notice of such intention to the president or other officer of the corporation not less than forty-eight (48) hours before the time fixed for the meeting, which notice shall be announced in such meeting before the voting, or (2) announce his intention in such meeting before the voting for directors shall commence; and all shareholders entitled to vote at such meeting shall without further notice be entitled to cumulate their votes. If a shareholder intending to cumulate his votes gives notice at the meeting, the person presiding may, or if requested by any shareholder shall, recess the meeting not to exceed two hours.
(c) The articles of a corporation may not be amended under this Act to remove cumulative voting if the votes cast against such amendment would be sufficient to elect a director to the board of directors if cumulatively voted at an election of the entire board of directors, or, if there are classes of directors, at an election of a director of any class of directors.
Section 33-11-210. Preemptive rights.
(a) Unless the articles of incorporation otherwise provide, the holders of shares of any class, other than shares of a preferred or special class, shall, in the event of:
(1) the proposed sale by the corporation for cash of additional shares of the same class; or
(2) the grant by the corporation of any options or rights to purchase shares of the same class; or
(3) the proposed sale by the corporation for cash of any securities convertible into or carrying an option to purchase shares of the same class; have the right to acquire such securities, as nearly as practicable, in proportion to their holding of shares of such class. The preemptive right shall exist whether or not the shares which are to be sold or which are subject to any options or rights arc authorized but unissued shares, treasury shares, or other shares. The price to each holder shall be no less favorable than the price at which such shares, securities, options, or rights are to be offered to other holders. The holders of shares entitled to the preemptive right, and the number of shares for which they have a preemptive right, shall be determined by fixing a record date in accordance with Section 33-11-60.
(b) Except as otherwise provided in the articles of incorporation, the holders of common stock without voting power, preferred stock or shares of any special class shall have no preemptive rights to shares of common stock with voting power.
(c) Except as otherwise provided in the articles of incorporation, there shall be no preemptive right with respect to:
(1) Shares issued as a share dividend;
(2) Shares issued for consideration other than cash;
(3) Shares issued to effect a merger or consolidation or purchase of assets;
(4) Shares authorized in the corporation's original articles of incorporation, and issued, sold, or optioned within two (2) years of the date of filing the articles of incorporation, as the case may be;
(5) Shares issued under a plan of reorganization approved in a proceeding under any applicable act of Congress relating to the reorganization of corporations;
(6) Shares issued to satisfy conversion or option rights previously granted by the corporation;
(7) Shares issued or optioned to directors, officers, or employees as provided in Section 33-9-90;
(8) Shares released by waiver from their preemptive rights;
(9) Shares which have been offered to shareholders to satisfy their preemptive rights but not purchased by them within the prescribed time, and which are thereafter issued, sold, or optioned to any other person or persons at a price not less than the price at which they were offered to such shareholders;
(10) Treasury shares.
(d) Except as otherwise provided in the articles of incorporation and this section, no holder of shares of any class shall have any preemptive right with respect to shares or securities of any other class which may be issued, sold, or optioned by the corporation.
(e) The sale or other disposition by the corporation of shares or securities not subject to the preemptive right under this section or under the articles of incorporation as permitted by this section, shall not impair any remedy which any shareholder may have for a breach of duty by the board of directors.
(f) The holders of shares entitled to the preemptive right shall be given prompt notice setting forth the time within which and the terms and conditions upon which such shareholders may exercise their preemptive right. Such notice shall be given personally or by mail at least thirty (30) days prior to the expiration of the period during which the right may be exercised.
Section 33-11-220. Agreements among shareholders respecting management of corporation and relations of shareholders.
(a) No agreement among shareholders respecting the management and affairs of their corporation or the relations of shareholders among themselves shall be deemed invalid solely because the agreement purports to treat the affairs of the corporation as if it were a partnership and the shareholders as if they were partners.
(b) No written agreement, whether contained in the articles of incorporation or bylaws or in a written side agreement, and which relates to any phase of the affairs of the corporation, shall be deemed invalid solely because the agreement limits or restricts the powers or discretion of the board of directors of the corporation, if the following conclusions are satisfied:
(1) The agreement is set forth, or its existence is clearly referred to, in the articles of incorporation;
(2) The agreement has been authorized by all shareholders of the corporation, whether or not entitled to vote to elect directors;
(3) The term of the agreement does not exceed ten (10) years from the date thereof. Any such agreement shall be renewable at any time within one (1) year before the expiration of such ten (10) year period by agreement of all the shareholders bound thereby at the date of renewal.
(c) An agreement authorized by subsection (b) shall be valid only so long as the shares of the corporation are not traded on any national securities exchange or regularly traded in any over-the-counter market maintained by one or more brokers or dealers in securities.
(d) The text or a summary of any agreement authorized by this section shall be conspicuously on the face of every certificate for shares issued by the corporation, and a holder of such certificate is thereby conclusively deemed to have taken delivery with notice thereof.
(e) The effect of an agreement authorized by subsection (b) shall be to relieve the director or directors of, and to impose upon the shareholders consenting to the agreement, the liability for managerial acts or omissions that is imposed by law upon the board of directors to the extent that and so long as the discretion or powers of the board of directors in their management of corporate affairs is controlled by any such provision.
(f) So long as any agreement authorized by this section shall be in effect, no meeting of stockholders need be called to elect directors and the stockholders shall be deemed directors.
Section 33-11-230. Liability of subscribers and shareholders.
(a) A holder of or subscriber to shares of a corporation shall be liable with respect to such shares or subscription only to pay the full amount remaining due to the corporation upon such shares or subscription. Such liability shall inure to and may be enforced by the corporation or by any shareholder suing derivatively on behalf of the corporation, and by a receiver, liquidator or trustee in bankruptcy of the corporation.
(b) No 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 be personally liable under subsection (a) for any unpaid portion of such consideration, but the assignor or transferor shall remain liable therefor.
(c) No pledgee or other holder of shares as collateral security shall be personally liable under subsection (a) with respect to such shares, but the person pledging such shares or transferring them as collateral shall be considered the holder thereof and shall be liable under subsection (a).
(d) No trustee, executor, administrator, guardian, committee, custodian, liquidator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, or other fiduciary shall be personally liable under subsection (a) as a holder of or subscriber to shares of a corporation, but the estate or funds in his hands or under his control shall be so liable.
Section 33-11-240. Liability of shareholders receiving improper distributions.
(a) Any shareholder who receives any distribution or payment from a corporation, whether by dividend, purchase or redemption of shares, by distribution in liquidation or reduction of capital, or otherwise, either at a time when the corporation is or will thereby be rendered insolvent, or when the shareholder knows or has reason to know that such distribution or payment is contrary to this Act or to the articles of incorporation, shall be liable for the amount of such payment or value of such distribution which is in excess of the amount or value which could have been paid or distributed without violation of this Act or of the articles. Such liability shall inure to and may be enforced by the corporation, and by a receiver, liquidator, or trustee in bankruptcy of the corporation.
(b) An action under this section shall be commenced within two (2) years after such payment to the shareholder by the corporation.
Section 33-11-250. Books and records required to be kept by corporation; financial statements.
(a) Each corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders, board of directors, and committees of the board of directors to which authority has been delegated. Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time. The corporation shall convert into written form any such records not in such form, upon written request of the person entitled to inspection hereunder.
(b) Each corporation shall keep at its registered office or principal place of business or at the office of its transfer agent or registrar a record of its shareholders, giving the name and address of each shareholder, the number, and class and series of the shares held by each, and the date or dates when each respectively became the owner of records of such shares.
(c) Not later than five (5) months after the close of each fiscal year, each corporation shall prepare a balance sheet showing in reasonable detail the financial condition of the corporation as of the close of its fiscal year and profit and loss statement respecting its operation for the immediately preceding twelve (12) months. Upon written request, the corporation shall mail to any shareholder of record a copy of such statements. Balance sheets and profit and loss statements shall be filed at the principal place of business of the corporation, shall be kept for at least ten (10) years, and shall bc subject to inspection during business hours by any shareholder of record, in person or by agent.
(d) Each corporation shall keep in this State at its principal place of business or registered office a current copy of its bylaws, and a conformed copy of every document required or permitted by this Act to be filed with the Secretary of State, and such documents shall be subject to inspection during business hours by any shareholder of record, in person or by agent.
(e) Each corporation which refuses, when requested by any shareholder, to furnish a current balance sheet and profit and loss statement, or to permit any shareholder to make inspection as provided by subsections (c) and (d) of this section shall be liable to the shareholders in a penalty of fifty ($50) dollars for each violation.
(f) Holders of voting trust certificates representing shares of the corporation shall be regarded as shareholders for the purpose of this section.
(g) In any proceeding to which a domestic corporation is a party, the court may, upon notice fixed by the court and after hearing and proper cause shown, and upon such terms and conditions as the court in its discretion may prescribe, order books, documents and records of such corporation, pertinent extracts therefrom, or duly authenticated copies thereof, to be brought within this State and kept in such place in this State and for such time and purposes as the order may prescribe.
(h) Nothing herein contained shall impair the power of any court of competent jurisdiction, upon proof of proper purpose by a shareholder, irrespective of the period of time during which he has been a shareholder of record, and irrespective of the number of shares held by him, to compel the production of any of the corporation's books and records, wherever located, as the court in its discretion shall determine to be appropriate for inspection.
Section 33-11-260. Right of shareholders to inspect corporate records.
(a) A 'shareholder' entitled to inspect the books of and records of a corporation, as provided by this section, shall mean:
(1) Any person who shall have been a holder of record of shares of any class for at least six (6) months immediately preceding his demand for inspection;
(2) Any person who shall be the holder of record of, or any persons whose aggregate holdings of record shall equal, at least five percent (5%) of the outstanding shares of any class;
(3) Holders of voting trust certificates representing shares of the corporation shall be regarded as holders of record for the purpose of this section;
(4) Any attorney, accountant or other agent of any of the foregoing persons.
(b) Any such shareholder, upon at least five (5) days written demand under oath stating the purpose therefor and containing any other reasonable assurances that the information so obtained shall he misused, shall have the right to examine at any reasonable time or times, for any proper purpose, the corporation's books and records of account, minutes of meetings of the shareholders, and record of shareholders, and to copy them or make extracts therefrom. A proper purpose hereunder shall mean a purpose reasonably related to such person's interest as a stockholder in the corporation.
(c) A corporation, its transfer agent or registrar may deny the inspection authorized by subsection (b).
(d) If the corporation, or any officer or agent of the corporation, refuses to permit the inspection authorized by subsection (b) the shareholder demanding inspection may apply to the court of the county in which the corporation's registered office is located, upon such notice as the court may require, for an order directing the corporation, its officers or agent to show cause why an order should not be granted permitting such inspection by the applicant. The court shall hear the parties summarily, and if the applicant establishes that he is qualified and entitled to such inspection, the court shall grant an order permitting such inspection, subject to any limitation which the court may prescribe, and grant such other relief as to the court may seem just and proper. The court may deny or restrict inspection if it finds that the shareholder has improperly used information secured through any prior examination of the books and records of account, or minutes or record of shareholders of such eorporation or of any other corporation, or that he was not acting in good faith or for a proper purpose in making his demand.
Section 33-11-270. Right of dissenting shareholders to dissent and payment for shares.
(a) A shareholder having a right under (1) Section 33-17-90; (2) Section 33-19-50; (3) Section 33-15-10(d); or (4) as provided in the articles of incorporation, to dissent to proposed corporate action and to receive the fair value of his shares shall, by complying with the procedure in this section, be paid the fair value of his shares it the corporate action to which he dissented is effected. The fair value of shares shall be determined as of the day prior to the date on which the vote was taken approving the proposed corporate action, excluding any appreciation or depreciation of shares in anticipation of such corporate action.
(b) The shareholders shall file with the corporation, prior to or at the meeting of shareholders at which the proposed corporate action is submitted to a vote, a written objection to the proposed action. No such objection shall be required from any shareholder to whom the corporation did not give notice of such meeting in accordance with this Act.
(c) If the proposed corporate action is approved by the requisite vote and the shareholder did not vote, either in person or by proxy, in favor thereof, he shall file a written demand for payment of the fair value of his shares. Such demand shall be filed with the corporation, or in the case of a merger or consolidation, with the surviving or new corporation (both hereinafter the 'corporation') within a period of twenty (20) days (referred to in this section as the 'demand period') after the date on which the vote was taken, or in case of a merger of a subsidiary into its parent corporation, after the plan of such merger shall have been mailed to the shareholders of the subsidiary corporation. A demand shall state: (1) the shareholder's name and residence address; (2) the number and class of shares as to which he dissents; (3) a statement that the shareholder has elected to dissent and has objected to the corporate action to be taken; and (4) a demand for payment of the fair value of the shares. A demand filed by a shareholder may not be withdrawn unless the corporation shall consent thereto.
(d) If any shareholder shall fail to comply with the requirements of subsections (b) and (c), he shall be bound by the terms of the
proposed corporate action. Any shareholder filing such demand shall be a general creditor of the corporation after the date of such demand and shall be entitled to payment of the fair value of his shares and shall not be entitled thereafter to vote or to exercise any other rights of a shareholder, except as provided in this section.
(e) As of the date of such occurrence the right of a shareholder otherwise entitled to be paid the fair value of his shares shall cease and he shall be reinstated to all his rights as a shareholder as of the date of filing of this notice of election, including any intervening dividend or other distribution or, any such right has expired or any such dividend or distribution other than in cash has been completed, in lieu thereof, at the election of the corporation, such shareholder shall be entitled to receive the fair value thereof in cash as determined by the board of directors as of the time of the expiration or completion, but without prejudice otherwise to any corporate proceedings that may have been taken by the interim:
(1) If the demand filed by the shareholder shall be withdrawn upon consent of the corporation;
(2) if the proposed corporate action shall be abandoned and rescinded, or the shareholders shall revoke the authority to effect such action;
(3) if no petition for the determination of fair value by a court shall have been made or filed within the time provided in this section;
(4) if a court of competent jurisdiction shall determine that such shareholder is not entitled to the relief provided by this section;
(5) if the shareholder failed to submit his certificate(s) as required by subsection (f); or
(6) if the shareholder for any reason shall lose his right as a dissenter hereunder.
(f) At the time of filing a demand, or within twenty (20) days thereafter, each shareholder demanding payment shall submit the certificate(s) representing his shares to the corporation or to its transfer agent which shall note such dissent thereupon and promptly return the certificate(s) to the shareholder. A shareholder's failure to submit his certificate(s) shall, at the option of the corporation, terminate his rights as a dissenting shareholder under this section unless a court of competent jurisdiction for good and sufficient cause shown shall otherwise direct. If shares represented by a certificate on which such notation has been made shall be transferred, each new certificate issued therefor shall bear a similar notation, together with the name of the original dissenting holder of such shares, and a transferee of such shares shall acquire by such transfer no rights in the corporation other than those which the original dissenting shareholder had after making demand for payment of the fair value thereof.
(g) Within the time prescribed by this subsection, the corporation, or, in the case of a merger or consolidation, the surviving or new corporation, domestic or foreign, shall make to each dissenting shareholder who filed a demand a written offer to pay for such shares at a specified price deemed by such corporation to be the fair value thereof. Such offer shall be made at the same price per share to all dissenting shareholders of the same class, of which the dissenting shareholder holds and shall be accompanied by a balance sheet of the corporation, as of the latest available date and not more than twelve months prior to the making of such offer, and a profit and loss statement of such corporation for the twelve months' period ended on the date of such balance sheet. Such offer shall be made within the later of (1) ten (10) days after the expiration of the demand period, or (2) ten (10) days after the corporate action is effected, and corporate action shall be deemed effected on the effective date of such action as set forth in any documents filed under this Act or as specified in the notice to shareholders.
(h) If within thirty (30) days after the corporate action is effected or within thirty (30) days after the demand period has expired, whichever is later, the fair value of such shares is agreed upon between any dissenting shareholder and the corporation, payment therefor shall be made within ninety (90) days after the date on which such corporate action was effected, upon surrender of the certificate or certificates representing such shares. Upon payment of the agreed value the dissenting shareholder shall cease to have any interest in such shares and the corporation may treat the certificate(s) and shares as provided in subsection (j).
(i) If within the thirty (30) day period prescribed by subsection (h), a dissenting shareholder and the corporation do not agree as to the fair value of the shares:
(1) The corporation shall, within thirty (30) days thereafter, institute an action in the court of the county in which its registered office is located for a determination of the fair value of the shares. If, in the case of a merger or consolidation, the surviving or new corporation is a foreign corporation without a registered office in this State, such petition shall be filed in the court of the county where the registered office of the participating domestic corporation was last located.
(2) If the corporation fails to institute such proceedings within the thirty (30) day period specified in subsection (i) (1), any dissenting shareholder, may, within the next succeeding thirty (30) days, bring a suit for the fair value of his shares.
(3) In any such proceeding, whether by the corporation or by a dissenting shareholder, all dissenting shareholders, except those who have agreed with the corporation upon the price to be paid for their shares, shall be made parties to the proceeding as an action against their shares quasi in rem. The corporation shall serve a copy of the petition or summons upon each dissenting shareholder who is a resident of this State, and by registered or certified mail on each dissenting shareholder who is a nonresident. Service on nonresidents shall also be made by publication as provided by law. The jurisdiction of the court shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as to whom the corporation requests the court to make such determination, is entitled to receive payment for his shares. The court shall then proceed to fix the fair value of the shares. The court may, if it so elects, appoint one or more persons as appraisers to receive evidence and recommend to the court a decision on the question of fair value, interest recovery, and recovery of costs and expenses, including attorney's and expert's fees and expenses. The appraisers shall have such power and authority as shall be specified in the order of their appointment or any amendment thereof.
(5) All shareholders who are parties to the proceeding shall be entitled to judgment against the corporation for the amount of the fair value of their shares except any shareholder whom the court shall have determined not to be entitled to receive payment for his shares. The judgement shall be payable only upon and concurrently with the surrender to the corporation of the certificate or certificates representing such shares. Upon payment of the judgment, the dissenting shareholder shall cease to have any interest in such shares.
(6) The judgment shall include an allowance for interest committed on the fair value as determined above at a rate set as the court may find to be fair and equitable in all the circumstances, from the date on which the vote was taken on the proposed corporate action to the date of payment. However, if the court finds that the refusal of any shareholder to accept the corporate offer of payment for his shares was arbitrary, vexatious, or otherwise not in good faith, it may in its discretion refuse to allow interest to him.
(7) The costs and expenses of any such proceeding, including reasonable compensation for and reasonable expenses of the appraisers, shall be determined by the court and shall be assessed against the corporation, except that all or any part of such costs and expenses may be apportioned and assessed as the court may deem equitable against any or all of the dissenting shareholders who are parties to the proceeding to whom the corporation shall have made an offer to pay for the shares if the court shall find that the action of such shareholders in failing to accept such offer was arbitrary, vexatious or otherwise not in good faith. Such expenses shall not include the fees and expenses of attorneys and experts employed by any party unless the court, in its discretion, awards such fees and expenses. In exercising discretion as to payment of the experts and attorney fees and expenses of dissenting shareholders, the court may consider any of the following: (A) that the fair value of the shares as determined materially exceeds the amount which the corporation offered to pay, (B) that no offer was made by the corporation, and (C) that the corporation failed to institute the special proceeding within the period specified therefor.
(j) Shares acquired by a corporation pursuant to payment of the agreed value therefor or payment of the judgment entered therefor, may be held and disposed of by such corporation as in the case of other treasury shares but in the case of a merger, exchange or consolidation, they may be held and disposed of as otherwise provided.
(k) No action by a shareholder in the right of the corporation shall abate or be barred by the fact that the shareholder has filed a demand for payment of the fair value of his shares pursuant to the provisions of this section.
(l) A shareholder may not dissent as to less than all of the shares owned beneficially by him as to which a right of dissent exists. A nominee or fiduciary may not dissent on behalf of a beneficial owner as to less than all of the shares of the owner as to which a right of dissent exists.
Section 33-11-280. Shares owned jointly with right of survivorship.
A corporation may treat as absolute owner of shares or other securities the survivor or survivors of persons to whom the same have been or may be issued with the words 'as joint tenants with right of survivorship' or 'as joint tenants with right of survivorship and not as tenants in common' following their names, upon the death of one or more of such persons.
Section 33-11-290. Provisions relating to actions by shareholders.
(a) No action shall be brought in this State by a shareholder in the right of a domestic or foreign corporation unless the plaintiff was a holder of record of shares or of voting trust certificates therefor at the time of the transaction of which he complains, or his shares or voting trust certificates thereafter devolved upon him by operation of law from a person who was a holder of record at such time.
(b) In such an action, the complaint shall allege with particularity the effort of such shareholder to secure the initiation of the action by the board of directors or the reasons for not making such effort.
(c) In any action hereafter instituted in the right of any domestic or foreign corporation by the holder or holders of record of shares of such corporation or of voting trust certificates therefor, the court having jurisdiction, upon final judgment and a finding that the action was brought without reasonable cause, may require the plaintiff or plaintiffs to pay to the parties named as defendant the reasonable expenses, including fees of attorneys, incurred by them in the defense of such action.
(d) An action authorized by this section shall not be discontinued, compromised or settled without approval by the court having jurisdiction of the action. If the court determines that the interest of the shareholders or of any class thereof will be substantially affected by the discontinuance, compromise or settlement, the court may direct that notice, by publication or otherwise, be given to the shareholders or any class thereof whose interests it determines will be so affected. If notice is so directed to be given, the court may determine which one or more of the parties to the action shall bear the expense of giving notice, in such amount as the court determines and finds to be reasonable in the circumstances. The amount of such expense shall be awarded as special costs of the action and recoverable in the same manner as statutory taxable costs.
CHAPTER 13
Business Corporations - Directors and Officers
Section 33-13-10. Board of directors.
Unless otherwise provided in this Act, the articles of incorporation, the bylaws or agreements among shareholders as provided in Section 33-11-220, all corporate powers shall be exercised by or under the authority of, and the business and affairs of a corporation shall be managed under the direction of a board of directors.
Section 33-13-20. Qualification of directors.
Unless the articles of incorporation or the bylaws so require, the directors need not be residents of this State or shareholders of the corporation. The articles of incorporation or bylaws may prescribe other qualifications for directors.
Section 33-13-30. Number of directors.
(a) The board of directors of a corporation shall consist of one (1) or more members. The number of directors shall be fixed by, or in the manner provided in, the articles or bylaws, except as to the number constituting the initial board of directors which number shall be fixed by the articles.
(b) Unless otherwise provided in the articles or bylaws, the number of directors may be increased from time to time by the board of directors.
(c) No decrease in the number of directors shall have the effect of shortening the term of any incumbent director.
Section 33-13-40. Election and term of directors.
(a) Each director shall hold office until the expiration of the term for which he is elected, and until his successor shall have been elected and qualified, or until his earlier resignation, removal from office, death or incapacity.
(b) The members of the initial board of directors shall hold office until the first annual meeting of the shareholders and until their successors shall have been elected and qualified.
(c) At the first annual meeting of shareholders, and at each annual meeting thereafter, the shareholders shall elect directors to hold office until the next succeeding annual meeting, except when directors are classified as permitted by Section 33-13-50.
(d) A director may resign by written notice to the corporation. The resignation is effective upon its receipt by the corporation or a subsequent time as set forth in the resignation.
Section 33-13-50. Classification of directors; staggered terms.
(a) When the board of directors shall consist of nine (9) or more members, in lieu of electing the whole number of directors annually, the articles of incorporation may provide that the directors be divided into either two or three classes, each class to be as nearly equal in number as possible. The term of office of directors of the first class shall expire at the first annual meeting of shareholders after their election, that of the second class shall expire at the second annual meeting after their election, and that of the third class, if any, shall expire at the end of the third annual meeting after their election. At each annual meeting after such classification the number of directors equal to the number of the class whose term expires at the time of such meeting shall be elected to hold office until the second succeeding annual meeting, if there be two classes, or until the third succeeding annual meeting if there be three classes. No classification of directors shall be effective prior to the first annual meeting of shareholders.
(b) Where a corporation is authorized to issue more than one class of shares, the articles of incorporation may confer upon the holders of one or more specified classes of shares the right to elect all directors, or any specified number of them, or the directors of any class or classes established by the articles of incorporation, other than a classification by term of office as provided in subsection (a).
Section 33-13-60. Vacancies and newly created directorships.
(a) Unless the articles of incorporation or the bylaws otherwise provide, any vacancy in the board of directors may be filled by a majority of the remaining directors even though less than a quorum or by a sole remaining director and any vacancy created by an increase in the number of directors may be filled by the board of directors. If a vacancy occurs with respect to a director elected by the votes of a particular class of shares, the vacancy shall be filled by the remaining director or directors elected by that class, or by the shareholders of that class.
(b) Any director chosen under subsection (a) shall hold office only until the next shareholders' meeting at which directors of any class are elected and until a successor shall be elected and qualified.
(c) A vacancy as a result of a resignation from the board of directors made pursuant to Section 33-13-40 shall be deemed to exist at the time of the tender of written notice to the corporation. The board of directors, including directors who have resigned with the resignation to take effect at a subsequent time or the shareholders, may, then or thereafter, elect a successor to take office when by its terms such resignation becomes effective.
(d) If at any time, by reason of death, resignation or other cause, a corporation should have no directors in office, then any officer or any shareholder or an executor, administrator, trustee or guardian of a shareholder, or other fiduciary entrusted with the responsibility for the person or estate of a shareholder may as provided by Section 33-11-30 call for a special meeting of shareholders or may apply to the court for an order requiring election of directors.
(e) If, at the time of filling any vacancy or newly created directorship, the remaining directors constitute less than a majority of the board of directors, upon application of any shareholder or shareholders holding at least five percent (5%) of the total number of shares at the time outstanding having the right to vote for such directors, the court shall order an election by shareholders to be held to fill such vacancies or newly created directorships, or to replace the directors chosen by the directors as aforesaid, which election shall be governed by the applicable provisions of Section 33-11-30.
Section 33-13-70. Removal of directors.
(a) Unless a greater vote is required by the articles or bylaws, the entire board of directors or any individual director may be removed with or without cause by a vote of the holders of a majority of the shares entitled to vote at an election of directors.
(b) The removal of directors under subsection (a) shall be always subject to the following:
(1) Whenever a class of shares is entitled to elect one or more directors under authority granted by the articles of incorporation, any director so elected may be removed only by voting of the holders of the outstanding shares of that class voting as a class.
(2) No director who has been elected by cumulative voting may be removed if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire board of directors, or, if there be classes of directors, at an election of the class of directors of which he is a part.
(c) Any individual director may be removed for cause by affirmative vote of the majority of the members of the board of directors at a specially called meeting which shall consider only removal and replacement of such director.
(d) If any or all directors are removed, new directors may be elected at the same meeting.
(e) The court of the county where the registered office of the corporation is located may, at the suit of the shareholders holding at least five percent (5%) of the number of outstanding shares, with or without voting rights, remove from office any director for cause and may bar from re-election any director so removed for a period prescribed by the court. The corporation shall be made a party to any such action.
(f) 'Cause' for removal of a director under this section shall mean fraudulent or dishonest acts, or gross abuse of authority in discharge of duties to the corporation and shall be established after written notice of specific charges and opportunity to meet and refute such charges.
Section 33-13-80. Time and place of meetings of directors.
(a) Unless the bylaws otherwise provide, meetings of the board of directors, regular or special, may be held at any place either within or without this State.
(b) The time and place for holding meetings of the board of directors may be fixed by the bylaws or, if not so fixed, by the board of directors.
(c) Unless otherwise provided in the articles or bylaws, any or all directors may participate in a meeting of the board of directors by means of conference telephone or any means of communication by which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at such meeting.
Section 33-13-90. Notice of meetings of directors; person who may call meetings.
(a) Unless otherwise provided by the articles or bylaws, regular meetings o{ the board of directors may be held without notice if the time and place of meetings are fixed by the bylaws or by the board of directors.
(b) Special meetings of the board of directors shall be held upon such notice as the bylaws shall prescribe, or in the absence of any such provision, upon notice sent by any usual means of communication not less than four (4) business days before the meeting.
(c) Notice of a meeting of the board of directors need not be given to any director who signs a waiver of notice, either before or after the meeting. Attendance of a director at a meeting shall of itself constitute a waiver of notice of such meeting, except where a director attends a meeting solely for the purpose of stating his objection, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.
(d) Subject to the provisions of the bylaws, notice of adjournment of a meeting need not be given if the time and place to which it is adjourned are fixed and announced at such meeting.
(e) Except for the provisions of Section 33-11-10 (f), neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice unless the bylaws so require.
(f) Meetings of the board of directors may be called by the chairman of the board of directors, by the president (or if he is absent or is unable or refuses to act by any vice-president), by any two directors, or by any other person or persons authorized by the bylaws.
Section 33-13-100. Quorum and vote of directors.
(a) Unless a greater number is required for a quorum by the articles of incorporation or bylaws, a majority of (1) the number of directors then in office, but not less than the minimum number of directors fixed by or in a manner provided in the bylaws, or a resolution of the full board of directors, or (2) in the absence of such bylaws or resolution a majority of the number stated in the articles, shall constitute a quorum for the transaction of business.
(b) The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless the vote of a greater proportion is required by this Act, the articles of incorporation or the bylaws.
Section 33-13-110. Executive and other committees.
(a) If the articles of incorporation or the bylaws so provide, the board of directors, by a resolution adopted by a majority of the board of directors, may designate from among its members an executive committee and other committees, each consisting of one or more directors, and may delegate to such committee or committees all the authority of the board of directors, except that no such committee or committees shall have and exercise the authority of the board of directors to:
(1) Amend the articles of incorporation;
(2) Adopt a plan of merger, consolidation, or exchange;
(3) Recommend to the shareholders the sale or disposition of all or substantially all of the property and assets of the corporation other than in the usual course of its business;
(4) Recommend to the shareholders a voluntary dissolution of the corporation or revocation of such dissolution;
(5) Declare dividends or other corporate distributions;
(6) Adopt or revise a bylaw of the corporation;
(7) Fill vacancies on the board of directors;
(8) Issue stock, except by board of directors' resolution, or provisions of the articles or bylaws.
(b) The designation of any such committee and the delegation to it of authority shall not relieve the board of directors, or any member thereof, of any responsibility imposed by law.
(c) So far as applicable the provisions of this Act relating to the conduct of meetings of the board of directors shall govern meetings of committees.
(d) The board of directors may designate one or more directors as alternate members of a committee, who may replace an absent or disqualified member of the committee. The bylaws may provide that in the absence or disqualification of a member of a committee, the members thereof present at the meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in place of such an absent or disqualified member.
Section 33-13-120. Action by directors without a meeting.
(a) Action taken without a meeting by a majority of directors, or by such larger vote as the articles of incorporation or the bylaws may require, shall be deemed action of the board of directors:
(1) If the directors own all of the corporation's shares of all classes, and all directors know of the action taken and no director makes prompt objection to such action; or
(2) If all shareholders know of the action taken, and no shareholder makes prompt objection to such action; or
(3) If the directors take informal action pursuant to a custom of that corporation known generally to its shareholders, and all directors know of the action taken and no director makes prompt objection thereto.
(b) Action taken without a meeting by a majority of directors or by such larger vote as the articles of incorporation or the bylaws may require, shall be deemed action of the board of directors if all directors, execute either before or after the action is taken, a written consent thereto, and the consent is filed with the records of the corporation.
(c) If a meeting otherwise valid of the board of directors is held without call or notice where such is required, any action taken at such meeting shall be deemed ratified by a director who did not attend, unless after learning of the action taken and of the impropriety of the meeting, he makes prompt objection thereto.
(d) Objection by a shareholder, director or committee member shall be effective only if written objection to the holding of the meeting or to any specific action so taken is filed with the secretary of the corporation.
(e) Unless otherwise provided by the articles of incorporation or bylaws, an action permitted only when authorized at a meeting of the board of directors may nevertheless be taken without a meeting if, before or after the action, all members of the board of directors consent thereto in writing. The written consent shall be filed with the minutes of the meeting of the board of directors. The consent shall have the same effect as a vote of the board of directors for all purposes.
Section 33-13-130. Election, qualification and powers of officers.
Unless the articles or bylaws otherwise provide,
(a) The officers of a corporation shall consist of a president, one or more vice-presidents, a secretary, and a treasurer.
(b) The officers shall be elected by the board of directors and shall hold their offices until their successors are chosen and have qualified or until their resignation or removal.
(c) Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the board of directors or chosen in such other manner as may be prescribed in the bylaws.
(d) Any two or more offices may be held by the same person, who may act in more than one capacity where action by two or more officers is required.
(e) All officers and agents of the corporation, as between themselves and the corporation, shall have such authority and perform such duties as may be provided in the bylaws or by action of the board of directors not inconsistent with the bylaws.
(f) The president shall have authority to institute or defend legal proceedings whenever the directors or shareholders are deadlocked.
(g) The treasurer or any person performing his duties may be required by the bylaws or resolution of the board of directors to give bond for the faithful discharge of his duty in such sum and with such sureties as may be specified by the bylaws.
Section 33-13-140. Vacancies in office; removal of officers.
(a) Unless the articles otherwise provide,
(1) Any officer or agent elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation will be served thereby.
(2) Any officer or agent elected by the shareholders may be removed only by vote of the shareholders.
(3) An officer or agent may resign by written notice to the corporation. The resignation shall be effective upon its receipt by the corporation or at a subsequent time specified in the notice of resignation.
(4) Any vacancy, however occurring, in any office may be filled by the board of directors for the unexpired term.
(5) Any officer or agent appointed by an officer of the corporation may be removed by such officer.
(b) Removal from office, however effected, shall not prejudice the contract rights, if any, of the officer removed, nor shall election or appointment of an officer or agent of itself create contract rights.
Section 33-13-150. Duty of directors and officers.
(a) A director or officer shall perform his duties as a director or officer, including his duties as a member of any committee of the board of directors upon which he may serve, in good faith, in a manner he reasonably believes to be in the best interests of the corporation and of its shareholders, and with such care as an ordinary prudent person in a like position would use under similar circumstances.
(b) In performing his duties, a director or officer shall be entitled to rely on information, opinions, reports and statements, including financial statements and other financial data, in each case prepared or presented by:
(1) one or more officers or employees of the corporation whom the director or officer reasonably believes to be reliable and competent in the matters presented;
(2) counsel, public accountants or other persons as to matters which the director or officer reasonably believes to be within such person's professional or expert competence; or
(3) A committee of the board of directors upon which he does not serve, duly designated in accordance with a provision of the articles of the incorporation or the bylaws, as to matters within its authority, which committee the director or officer reasonably believes to merit confidence.
In such reliance under subsection (b), such director or officer shall not be considered to be acting in good faith if he has actual knowledge concerning the matter in question that would cause such reliance to be unwarranted.
(c) A person performing his duties as an officer or director in accord with the standard required under subsections (a) and (b) of this section shall have no liability to the corporation or its shareholders by reason of being or having been an officer or director for any acts or omissions.
(d) An action against a director or officer for failure to perform the duties imposed by this section shall be commenced within three (3) years after the cause of action has accrued, or within two (2) years after the time when the cause of action is discovered, or should reasonably have been discovered, by a person complaining thereof, whichever sooner occurs.
Section 33-13-160. Transactions between corporations and directors and officers.
(a) No transaction in which a director or officer has a personal or adverse interest, as defined in subsection (b), shall be void or voidable solely for this reason or solely because he is present at or participates in the meeting or his vote is counted, if:
(1) The material facts as to his interest and as to the transaction are disclosed to the board of directors or committee, which the board of directors or committee authorizes, approves or ratifies the transaction by a vote sufficient for such purpose without counting the vote of the interested director or directors; or
(2) Although the vote of the interested director or directors is decisive of approval or disapproval of the transaction, the material facts as to his interest and as to the transaction are disclosed to the shareholders, and the transaction is specifically approved by vote of the shareholders without counting the votes of any shares owned or controlled by the interested director or directors; or
(3) If not approved pursuant to subparagraphs (1) and (2) of this subsection, the transaction is fair and equitable as to the corporation at the time it is authorized or approved, and the party asserting the fairness of the transaction establishes fairness.
(b) A transaction in which a director or officer has a personal interest shall include:
(1) A contract or any other transaction between the corporation and one or more of its directors or officers;
(2) A contract or any other transaction between a corporation and any corporation, partnership, or association in which one or more of its directors or officers are directors or officers or have a material financial interest, direct or indirect.
(c) No contract or other transaction by a corporation with (1) any of its subsidiary, parent, or affiliated corporations, or (2) with another corporation in which there is a common director, shall be void or voidable solely for this reason, provided the contract or other transaction is fair and equitable as of the date it is authorized, approved, or ratified. The party asserting the unfairness of any such contract or transaction shall established unfairness.
(d) Common or interested directors may always be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes, approves, or ratifies a transaction. Shares owned by any interested party may be counted in determining whether a quorum of shares is present at a meeting of shareholders which ratifies or approves a transaction.
(e) Except to the extent that the articles of incorporation or bylaws otherwise provide, the board of directors shall, without regard to the provisions of this section, have authority to fix the compensation of directors for their services as directors, officers, or in any other capacity.
Section 33-13-170. Loans to directors, officers, and shareholders.
(a) A corporation shall not directly or indirectly make any loan of money or property to, or guarantee the obligation of: (1) any director or officer or nominee of a director or officer of the corporation or of an affiliated, parent or subsidiary corporation, or (2) any person or his nominee upon the security of the shares of the corporation or of an affiliated, parent or subsidiary corporation, except as provided by subsection (b).
(b) Such loan or guarantee may be made if it is for the benefit of the corporation as reflected in the minutes of the board of directors' meeting approving such loans or guarantees or if for the benefit of officers or directors and it is approved by the vote or the written consent (1) of the holder or holders of all shares of the corporation, or (2) of the holders of two-thirds (2/3) of the shares of all classes, whether voting or nonvoting shares, excluding any shares held by the director, officer, or shareholder to be benefitted by any such loan or guarantee, or by his nominee or any person under his control. No such loan or guarantee shall be made except upon adequate security and at the rate of interest then prevailing for loans of like character.
(c) If any loan or guarantee is made in violation of subsection (a), the directors who authorized or assented thereto shall be liable therefor as provided in Section 33-13-190.
(d) A sale on credit in the ordinary course of business is not a loan within the meaning of this section.
(e) The provisions of this section do not apply to banks, building and loan associations, industrial loan companies, credit unions or insurance companies or to loans permitted under any statute regulating any special class of corporations.
(f) The vote of the shareholders required for corporate action under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section.
Section 33-13-180. Right of indemnity of directors, officers, and others.
(a) As used in this section:
(1) 'Director' means any person who is or was a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise or employee benefit plan.
(2) 'Corporation' includes any domestic or foreign predecessor entity of the corporation in a merger, consolidation or other transaction in which the predecessor's existence ceased upon consultation of such transaction.
(3) 'Expenses' include attorneys' fees.
(4) 'Official capacity' means:
(A) when used with respect to a director, the office of director in the corporation, and
(B) when used with respect to a person other than a director, as contemplated in subsection (j), the elective or appointive office in the corporation held by the officer or the employee or agency relationship undertaken by the employee or agent in behalf of the corporation, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan.
(5) 'Party' includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.
(6) 'Proceeding' means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.
(b) A corporation shall have power to indemnify any person made a party to any proceeding (other than a proceeding referred to in subsection (c) by reason of the fact that he is or was a director against judgments, penalties, fines, settlements and reasonable expenses, actually incurred by him in connection with such proceeding, if
(1) he conducted himself in good faith; and
(A) in the case of conduct in his official capacity with the corporation, he reasonably believed his conduct to be in its best interests; or
(B) in all other cases, he reasonably believed his conduct to be at least not opposed to its best interests; and
(2) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. The termination of any proceeding of judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, be determinative that the person did not meet the requisite standard of conduct set forth in the preceding sentence.
(c) A corporation shall have power to indemnify any person made a party to any proceeding by or in the right of the corporation, by reason of the fact that he is or was a director, against reasonable expenses actually incurred by him in connection with such proceeding, if he conducted himself in good faith: and
(1) in the case of conduct in his official capacity with the corporation, he reasonably believed his conduct to be in its best interests,
(2) in all other cases, be reasonably believed his conduct to be at least not opposed to its best interests; provided, that no indemnification shall be made pursuant to this subsection (c) in respect of any proceeding in which such person shall have been adjudged to be liable to the corporation.
(d) A director shall not be indemnified under subsection (b) or (c) in respect of any proceeding charging improper personal benefit to him, whether or not involving action in his official capacity, in which he shall have been adjudged to be liable on the basis that personal benefit was improperly received by him.
(e) Unless otherwise limited by the articles of incorporation,
(1) a director who has been wholly successful, on the merits or otherwise, in the defense of any proceeding referred to in subsection (b) or (c) shall be indemnified against reasonable expenses incurred by him in connection with the proceeding; and
(2) a court of appropriate jurisdiction, upon application of a director and such notice as the court shall require, shall have authority to order indemnification in the following circumstances:
(A) if it determines a director is entitled to reimbursement under clause (1), the court shall order indemnification, in which case the director shall be entitled to recover the expenses of securing such reimbursement; or
(B) if it determines that the director is fairly and reasonably entitled to indemnification in which of all the relevant circumstances, whether or not he has met the standards of conduct set forth in subsection (b) or (c) or has been adjudged liable under subsection (d), the court may order such indemnification as the court shall deem proper, except that indemnification with respect to any proceeding referred to in subsection (c) and with respect to any proceeding in which liability shall have been adjudged pursuant to subsection (d) shall be limited to expenses.
(f) A court of appropriate jurisdiction may be the same court in which the proceeding involving the director's liability took place.
(g) No identification under subsection (b) or (c) shall be made by the corporation unless authorized in the specific case after a determination has been made that the indemnification of the director is permissible in the circumstances because he has met the standard of conduct set forth in the applicable subsection. Such determination shall be made:
(1) by the board of directors by a majority vote of a quorum consisting of directors not at the time parties to such proceeding; or
(2) if such a quorum cannot be obtained, then by a majority vote of a committee of the board, duly designated to act in the manner by a majority vote of the full board (in which designated directors who are parties may participate), consisting solely of two or more directors not at the time parties to such proceeding; or
(3) by special legal counsel, selected by the board of directors or a committee thereof by vote as set forth in clauses (1) or (2) of this subsection (g), or, if the requisite quorum of the full board cannot be obtained therefor and such committee cannot be established, by a majority vote of the full board (in which selected directors who are parties may participate); or
(4) by the shareholders.
(h) Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible except that if the determination that indemnification is permissible, is made by special legal counsel authorization of indemnification and determination as to reasonableness of expenses shall be made in a manner specified in clause (3) in the preceding sentence for the selection of such counsel. Shares held by directors who are parties to the proceeding shall not be voted on the subject matter under this subsection (h).
(i) Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of such proceeding if:
(1) after a determination, made in the manner specified by subsection (g), that the information then known to those making the determination (without undertaking further investigation for purposes thereof) does not establish that indemnification would not be permissible under subsection (b) or (c); and
(2) upon receipt by the corporation of:
(A) a written affirmation by the director of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation as authorized in this section; and
(B) a written undertaking by or on behalf of the director to repay such amount if it shall ultimately be determined that he has not met such standard of conduct.
(j) The undertaking required by clause (2) (B) shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make the repayment. Payments under this subsection (j) may be authorized in the manner specified in subsection (h).
(k) No provision for the corporation to indemnify a director who is made a party to a proceeding, whether contained in the articles of incorporation, the bylaws, a resolution of shareholders or directors, an agreement or otherwise (except as contemplated by subsection (k) ), shall be valid unless consistent with this section or, to the extent that indemnity hereunder is limited by the articles of incorporation, consistent therewith. Nothing contained in this section shall limit the corporation's ability to reimburse expenses incurred by a director in connection with his appearance as a witness in a proceeding at a time when he has not been made a named defendant or respondent in the proceeding.
(l) For purposes of this section, the corporation shall be deemed to have requested a director to serve an employee benefit plan where the performance by him of his duties to the corporation also imposes duties on, or otherwise involves services by him to the plan or participants or beneficiaries of the plan; excise taxes assessed on a director with respect to an employee benefit plan pursuant to applicable law shall be deemed 'fines'; and action taken or omitted by him with respect to an employee benefit plan in the performance of his duties for a purpose reasonably believed by him to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation.
(m) Unless otherwise limited by the articles of incorporation,
(1) an officer of the corporation shall be indemnified as and to the extent provided in subsection (e) for a director and shall be entitled to seek indemnification pursuant to the provisions of subsection (e) to the same extent as a director;
(2) a corporation shall have the power to provide indemnification, including advances of expenses, to an officer, employee or agent of the corporation to the same extent that it may indemnify directors pursuant to this section; and
(3) a corporation, in addition, shall have the power to indemnify an officer who is not a director, as well as employees and agents of the corporation who are not directors, to such further extent, consistent with law, as may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.
(n) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as an officer, employee or agent of another corporation, partnership, joint venture, trust, other enterprise or employee benefit plan against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this section.
(o) Any indemnification of a director in accordance with this section, including any payment or reimbursement of expenses, shall be reported in writing to the shareholders with the notice of the next shareholders' meeting or prior thereto.
Section 33-13-190. Liability of directors in certain cases.
(a) The liabilities imposed by this section shall be in addition to any other liabilities imposed by law upon directors of a corporation.
(b) Directors of a corporation who vote for or assent to:
(1) The declaration of any dividends or other distribution of the assets of a corporation to its shareholders contrary to any provisions of this Act or of the articles of incorporation, shall be jointly and severally liable for the amount of such dividend which is paid, or for the value of such assets which are distributed, in excess of the amount which could have been paid or distributed without violating the provisions of this Act or of the articles;
(2) The purchase or redemption of its own shares contrary to the provisions of this Act, shall ,be jointly and severally liable for the amount of consideration paid for such shares which is in excess of the maximum amount which could have been paid therefor without a violation of the provisions of this Act;
(3) The distribution of assets of a corporation to its shareholders during the liquidation of the corporation without the payment and discharge of or without making adequate provision for all known or reasonable ascertainable debts, obligations, and liabilities of the corporation, shall be jointly and severally liable for the value of such assets which are distributed, to the extent that such debts, obligations and liabilities of the corporation are not thereafter paid and discharged;
(4) The making of any loan or guaranty or other form of security in violation of Section 33-13-170 shall be jointly and severally liable for the amount of such loan until the repayment thereof, together with interest thereon at the rate of six (6) percent per year until paid, or for any liability of the corporation upon the guaranty.
(c) The liability imposed by this section may be enforced:
(1) By the corporation, or by any shareholder suing derivatively;
(2) By the receiver, liquidator, or trustee in bankruptcy of the corporation; and
(3) Except where the corporation's properties are being administered in liquidation, or for the benefit of creditors under the supervision of any court, by any of the corporation's creditors damaged by a violation of this subsection. Such creditor may in the same action in which he sues the corporation join one or more of the directors liable under this subsection and enforce such liability of the directors to the extent necessary to satisfy his claim against the corporation; or he may obtain a judgment against the corporation, and thereafter in a separate action enforce the liability of any director.
(d) A director shall not be liable under this section if he has met the requirements of Section 33-13-150.
(e) Right to contribution:
(1) A director against whom a claim is successfully asserted under this section is entitled:
(A) If the claim is based on an improper dividend or distribution, to contribution from shareholders who receive the dividend or distribution with knowledge that it was paid in violation of this section in proportion to the amounts received by them respectively.
(B) If the claim is based on an improper purchase of shares: (i) to contribution from sellers who sold such shares with knowledge of facts indicating that such purchase of shares by the corporation was not authorized by this Act; or (ii) upon payment to the corporation by such director of any amount of the purchase price of an improper purchase of shares, to have the corporation assign to such director such shares and any claim it may have against the sellers.
(C) If the claim is based on an improper loan to an officer, director, or employee, to contribution from the officer, director or employee who received the improper loan.
(2) In any action against a director based on this section, the director against whom suit is brought shall on motion be entitled to have any persons who may have a duty of contribution made parties defendant.
(f) Any director against whom a claim shall be asserted under or pursuant to any provision of this Act shall be entitled to contribution from the other directors who voted for or assented to the action upon which the claim is asserted, and in any action against him shall on motion be entitled to have such other directors made parties defendant.
(g) A director who is present at a meeting of the board of directors or a committee thereof at which action on any corporate matter is authorized or taken, shall be presumed to have assented to the action taken, unless his contrary vote shall be entered in the minutes of the meeting or unless his written dissent to such action shall be filed either during the meeting or sent in any reasonable manner within a reasonable time after the adjournment thereof, with the person acting as secretary of the meeting or with the secretary of the corporation. Such right to dissent shall not apply to a director who voted in favor of such action.
(h) An action against a director based on liabilities imposed by this section shall be commenced within three (3) years after the cause of action has accrued, or within two (2) years after the time when the cause of action is discovered, or should reasonably have been discovered, by a person complaining thereof, whichever sooner occurs.
CHAPTER 15
Business Corporations - Amendments to Articles of Incorporation
Section 33-15-10. Right to amend articles of incorporation; right of dissent.
(a) A corporation may amend its articles of incorporation, from time to time, in any and as many respects as may be desired if such amendment, on the filing date of the articles of amendment incorporating the amendment, contains only such provisions as might then lawfully be contained in the original articles of incorporation, and, if a change in shares or the rights of shareholders, or an exchange, reclassification or cancellation of shares necessary to effect such change, exchange, reclassification or cancellation.
(b) In particular, and without limitation upon the general power of amendment granted by subsection (a) of this section, a corporation may amend its articles of incorporation by one or more amendments so as:
(1) To enlarge, limit, or otherwise change the business for which the corporation is organized.
(2) To extend the duration of the corporation, or if the corporation has ceased to exist because the duration specified in its articles of incorporation has expired, to revive its existence.
(3) To increase or decrease the aggregate shares, or shares of any class, which the corporation is authorized to issue.
(4) To increase or decrease the par value of the authorized shares of any class having a par value, whether issued or unissued.
(5) To change the designation of all or any part of its shares, whether issued or unissued, and to change the preferences, limitation, and relative rights in respect of all or any part of its shares, whether issued or unissued.
(6) To change shares having a par value, whether issued or unissued, into the same or a different number of shares without par value; and to change shares without par value, whether issued or unissued, into the same or a different number of shares having par value.
(7) To change the shares of any class, whether issued or unissued, whether with or without par value, into a different number of shares of the same class or into the same or different number of shares, either with or without par value, of other classes.
(8) To authorize new classes of shares having rights and preferences either prior and superior or subordinate and inferior to the shares of any class then authorized, whether issued or unissued.
(9) To cancel or otherwise affect the right of holders of shares of any class to receive dividends which have accrued but have not been declared.
(10) To divide any preferred or special classes of shares, whether issued or unissued, into series and fix and determine the designations of such series and the variations in the relative rights and preferences as between the shares of such series.
(11) To authorize the board of directors to establish, out of authorized but unissued shares, series of any preferred or special class of shares and fix and determine the relative rights and preferences of the shares of any series so established; to revoke, diminish, or enlarge the authority of the board of directors to establish series out of authorized but unissued shares of any preferred or special class and fix and determine the relative rights and preferences of the shares of any series so established to limit, deny or grant to shareholders of any class the preemptive right to acquire additional or treasury shares of the corporation whether then or thereafter authorized.
(12) To authorize the board of directors to fix and determine the relative rights and preferences of the authorized but unissued shares of series previously established in respect of which either the relative rights or preferences have not been fixed and determined or the relative rights and preferences previously fixed and determined are to be changed; and to revoke, diminish or enlarge such authority of the board of directors.
(13) To revoke, diminish, or enlarge the authority of the board of directors to take any action set forth in subsections (b) (11) and (12).
(14) To exchange, classify, reclassify or cancel all or any part of the shares, whether issued or unissued.
(15) To strike out, change or add any provision for management of the business and conduct of the affairs of the corporation, or creating, defining, limiting and regulating the powers of the corporation, its officers, its directors and shareholders or any class of shareholders, including any provision which under this Act is required or permitted to be set forth in the bylaws, or in any agreement.
(c) The charter or articles of any corporation organized under any prior general corporation act of this State or any special statute may be amended in accordance with the provisions of this chapter.
(d) Right to dissent:
(1) A holder of adversely affected shares whose vote is required and who does not vote for or consent in writing to a proposed amendment may dissent, pursuant to Section 33-11-270 and receive payment for his shares thereunder, if the amendment:
(A) materially alters or abolishes a preferential right of such shares, class or series having a preference; or
(B) creates, alters or abolishes a material provision or right in respect of the redemption of such shares, class or series or a sinking fund for the redemption or purchase of such shares, class or series.
(2) A dissenting shareholder hereunder shall not receive payment for such shares determined as fair value pursuant to Section 33-11-270 which would be in excess of the sum required to be payable upon redemption of such shares, class or series or voluntary liquidation of the corporation, whichever is less.
(3) Unless otherwise provided in the articles, no shareholder may dissent as set forth in this subsection as to shares which are listed on a national securities exchange.
Section 33-15-20. Amendment of the articles of incorporation before organizational meeting or issuance of shares.
(a) Prior to holding the organizational meeting required by Section 33-7-70 and before the corporation has issued or received any payment for its shares, the articles of incorporation may be amended by a unanimous vote of the board of directors.
(b) If any amendment permitted by subsection (a) of this section effects a material change in the articles of incorporation, subscribers for shares, if any, not assenting to the amendment may rescind their subscriptions without liability, notwithstanding any contrary provision of the subscription agreement.
(c) Upon filing pursuant to Section 33-15-60 the corporation's certificate of incorporation shall be deemed to be amended accordingly pursuant to Section 33-15-70.
Section 33-15-40. Amendment by shareholders.
(a) All amendments to the articles of incorporation, except those otherwise permitted to be made as provided by Section 33-15-20 shall be made by action of the board of directors and shareholders in accordance with the following procedure:
(1) The board of directors shall adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote at an annual or special meeting of the shareholders.
(2) Written or printed notice setting forth the proposed amendment or a summary of changes to be effected thereby shall be given to each shareholder of record entitled to vote thereon in accordance with the provisions of Section 33-11-40 or pursuant to a waiver under Section 33-11-50.
(3) At such meeting a vote of the shareholders entitled to vote thereon shall be taken on the proposed amendment. The proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds (2/3) of all shares entitled to vote thereon. If any class of shares is entitled to vote thereon as a class, the proposed amendment shall be adopted only if, in addition to receiving an affirmative vote of at least two-thirds (2/3) of all shares entitled to vote thereon, it also receives the affirmative vote of the holders of at least a majority of the shares of each class entitled to vote thereon as a class.
(4) Upon adoption, articles of amendment shall be executed, verified, and delivered for filing as provided in Sections 33-1-40 to 33-1-60.
(b) Any number of amendments may be submitted to the shareholders and voted upon by them at one meeting.
(c) The articles of incorporation may contain a provision prescribing for amendment of the articles a vote greater than, but in no event less than, that prescribed by subsection (a) of this section. Such provision:
(1) May require a unanimous or less than unanimous vote
(2) May prescribe such greater vote for all amendments, or for any particular amendment, or for any special category of amendments;
(3) May confer such greater vote upon all shares, or upon any class of shares, or upon both;
(4) Shall not be altered, modified, or removed except by the same vote which such provision requires for amending the articles.
(d) The vote of the shareholders required for corporate action under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section.
(e) If the holders of at least ten percent (10%) of any class of shares of the corporation propose an amendment, the board of directors shall submit the proposed amendment to the shareholders at a special or annual meeting.
(f) Any amendment to the articles of incorporation submitted to the shareholders may be accepted or rejected by them.
Section 33-15-50. Class voting on amendments.
(a) The holders of the outstanding shares of any class shall be entitled to vote as a class upon a proposed amendment, notwithstanding any contrary provision of the articles of incorporation, if the amendment would:
(1) Increase or decrease the aggregate number of authorized shares of such class.
(2) Increase or decrease the par value of the shares of such class.
(3) Effect an exchange, or create a right of exchange, of all or any part of the shares of another class into the shares of such class.
(4) Change the designations, preferences, limitations or relative rights of the shares of such class, including but not limited to, the following:
(A) Cancel or otherwise affect their rights to accrue dividends;
(B) Reduce the dividend preference thereof;
(C) Make noncumulative, in whole or in part, dividends which had theretofore been cumulative;
(D) Reduce the redemption price thereof or make shares subject to redemption when they are not otherwise redeemable;
(E) Reduce any preferential amount payable thereon upon voluntary or involuntary liquidation;
(F) Eliminate, diminish or alter adversely conversion rights pertaining thereto;
(G) Eliminate, diminish, or alter adversely voting rights pertaining thereto, either directly or by increasing the relative voting rights per share of the shares of another class;
(H) Diminish or alter adversely any rights of the holders thereof to purchase other shares of the corporation;
(I) Change adversely any sinking fund provision relating thereto.
(5) Change the shares of such class into the same or a different number of shares of the same or another class or classes.
(6) Create a new class of shares having rights and preferences prior and superior to the rights of such class, or increase rights and preferences of any class having rights and preferences prior or superior to the shares of such classes.
(7) Divide the shares of such class into series and fix and determine the designation of such series and the variations of the relative rights and preferences as between the shares of such series, or authorize the board of directors to do so.
(8) Limit or deny any preemptive rights of the shares of such class.
(b) If a proposed amendment would alter or change the powers, preferences or special rights of a class so as to affect adversely one or more series of a class, but not the entire class, then only the shares of the one or more series affected by the amendment shall as a group be considered a single class for the purpose of this section and Section 33-15-10 (d).
Section 33-15-60. Contents of articles of amendment; filing.
(a) Any amendment of the articles of incorporation shall be set forth in a document entitled 'Articles of Amendment' which shall state the following:
(1) The name of the corporation;
(2) The amendment adopted;
(3) The date of adoption of the amendment;
(4) Whichever of the following is relevant:
(A) If the amendment was adopted by the board of directors pursuant to Section 33-15-20 the number and vote of the board of directors, the consent of the subscribers to such amendment, and the fact of withdrawal of any subscribers, if such is the case.
(B) If the amendment was adopted by the shareholders pursuant to Section 33-15-40, then the following:
(i) The number of shares outstanding and the number of shares entitled to vote on such amendment, and if the shares of any class or series are entitled to vote thereon as a class or series, the designation and number of outstanding shares of each class or series entitled to vote thereon;
(ii) The number of shares voted for and against such amendment, respectively; and, if the shares of any c]ass or series are entitled to vote thereon as a class or series, the number of shares of each such class or series voted for and against such amendment respectively;
(5) If such amendments provide for exchange, reclassification or cancellation of issued shares, and if the manner in which this shall be effected is not set forth in the amendment, a statement of the manner in which the same shall be effected;
(6) If such amendment effects a change in the amount of stated capital, then a statement of the manner in which the same is effected and a statement, expressed in dollars, of the amount of stated capital as changed by the amendment.
(b) All articles of amendment shall be executed, verified, and filed as provided by Sections 33-1-40 to 33-1-60, except that if the amendment is made by the board of directors provided by Section 33-15-20, the articles of amendment shall be executed by the board of directors.
Section 33-15-70. Effect of amendment.
(a) An amendment shall take effect as of the date of filing the articles of amendment with the Secretary of State or delayed, as provided by Section 33-1-60.
(b) No amendment shall prejudice any claims of creditors or relieve the corporation of any liability already created or assumed, or affect any existing cause of action in favor of or against the corporation, or any pending suit to which the corporation shall be a party, or the existing rights of persons other than shareholders, but for all such purposes the corporation, although operating under the amended articles of incorporation, shall be regarded as the same corporation. In the event the corporate name shall be changed by amendment, no suit brought by or against such corporation under its former name shall abate because of the change of name.
Section 33-15-80. Restated articles of incorporation.
(a) A corporation may execute, verify, and file, in accordance with Sections 33-1-40 to 33-1-60, a 'Restated Articles of Incorporation' which shall integrate into a single document the text of its original articles of incorporation, merger, or consolidation, together with all amendments theretofore adopted and, if so authorized, further amendments.
(1) If the restated articles restate the text of the original articles as theretofore amended and supplemented, without making further material amendment or change, the restated articles may be adopted by the board of directors without a vote of the shareholders. The restated articles shall recite that it purports merely to restate but not to change materially the provisions of the original articles as theretofore amended and supplemented, and that there is no material discrepancy between such provisions and the provisions of the restated articles.
(2) The board of directors may, without vote of the shareholders, restate the text of the original articles as provided by the foregoing subparagraph and may also include any amendment which under Section 33-15-20 may be adopted by the directors without vote of the shareholders. The restated articles shall recite that, except for such amendments by the directors which shall be identified as such it purports merely to restate but not to change materially the provisions of the original articles as therefore amended and supplemented, and that there is no material discrepancy between such provisions and the provisions of the restated articles.
(3) A corporation may restate its articles of incorporation by submitting to the shareholders for their approval the proposed restatement thereof, with or without any amendments which under Section 33-15-40 or under the articles of incorporation required the vote of the shareholders. The procedure specified in and the vote or votes required by this chapter for amendment of the articles of incorporation shall be applicable.
(b) The restated articles shall be specifically designated as such, and shall set forth the manner in which the restatement was authorized. Upon filing the restated articles with the Secretary of State, the original articles of incorporation as amended and supplemented shall be superseded, and the restated articles, including any further amendments and changes made thereby, shall be the articles of incorporation of the corporation effective as provided in Section 33-15-70.
(c) Any amendment or change effected in connection with the restatement of the articles of incorporation shall be subject to any other provision of this chapter, not inconsistent with this section. which would apply if separate articles of amendment were filed to effect such amendment or change.
(d) The restated articles may omit statements as to the incorporator or incorporators and the original subscribers for shares. The statement in the original articles regarding the then stated capital and the minimum consideration to be received before commencing business shall be retained, but the restated articles shall set forth the corporation's then stated capital if different from that stated in the original articles. Restated articles of incorporation shall be specifically designated as such in the heading thereof. They shall state, either in the heading or in the introductory paragraph, the corporation's present name, and, if it has been changed, all of its former names, and the date of filing of its original articles.
Section 33-15-90. Amendments, mergers, and other changes in connection with reorganization procedures.
(a) A corporation, a plan of reorganization of which has been confirmed by the decree or order of a court of competent jurisdiction pursuant to any applicable statute of the State of South Carolina or the United States relating to reorganization of corporations, may put into effect and carry out the plan and decrees and orders of the court relative thereto, and may take any proceedings and do any act provided in the plan or directed by such decrees and orders without further action by its board of directors or shareholders. Such authority may be exercised, and such proceedings and acts may be taken, as directed by such decrees or orders, by the trustee or trustees of such corporation appointed in the reorganization proceedings, or if none have been appointed, by any person or persons designated or appointed for the purpose by any such decree or order, with like effect as if exercised and taken by unanimous actions of the board of directors and shareholders of the corporation.
(b) Without limiting the generality of the foregoing authority, a corporation may amend its articles to:
(1) Change the name, period of duration, or business of the corporation;
(2) Change the aggregate number of shares, or shares of any class or series which the corporation has authority to issue;
(3) Change the preferences, limitations, and relative rights in respect of all or any of the shares of the corporation, and classify, reclassify or cancel all or any part of the shares of the corporation, whether issued or unissued, and make any other changes authorized by this Act;
(4) Authorize the issuance of bonds, debentures or other obligations, whether or not convertible into shares of any class or bearing warrants or other evidences of optional rights to purchase or subscribe for the shares of any class, and fix the terms and conditions thereof;
(5) Constitute or reconstitute and classify or reclassify the board of directors of the corporation and appoint directors and officers in lieu of or in addition to all or any of the directors and officers the in office;
(6) Reduce capital, transfer all or part of its assets by sale, lease or other disposition, or merge or consolidate as permitted by this Act;
(7) Repeal, alter, or amend the bylaws of the corporation.
(c) Any amendment of the articles of incorporation shall contain only such provisions as might be lawfully contained in the original articles of incorporation at the time of making such amendment.
(d) Articles of amendment approved by decree or other order of such court shall be executed and verified by the trustee or trustees or other person or persons as provided by subsection (a), and shall certify that such amendment is authorized by the plan of reorganization or decree or the order of the court relative thereto, and that the plan has been confirmed as specified in the applicable act of Congress with the title and venue of the proceeding and the date when the decree or order confirming the plan was made. Such articles of amendment shall be filed in accordance with Section 33-1-60.
(e) Nonassenting or dissenting shareholders shall have only such rights as are provided for in the plan of reorganization.
(f) If, after the filing of any articles of amendments as provided by this section the decree or order of confirmation of the plan of reorganization is reversed or vacated or the plan is modified, articles of amendment shall be executed and filed so as to conform to the plan of reorganization as finally confirmed or to the decree or order as finally made.
(g) The provisions of this section shall cease to apply to such corporation upon and after the entry of a final decree in the reorganization proceeding closing the case and discharging the trustee or trustees, if any.
Section 33-15-100. Abandonment of amendment.
Before the effective date of an amendment to the articles of incorporation for which shareholder approval is required by this Act, the amendment may be abandoned pursuant to the provisions therefor, if any, set forth in the resolution of the shareholders or board of directors approving the amendment. If articles of amendment have been filed by the corporation, it shall file a certificate of abandonment within ten (10) days after the abandonment, but not later than the proposed effective date.
CHAPTER 17
Business Corporations - Mergers, Consolidations, Exchanges
Section 33-17-10. Authority of domestic corporations to merge; plan of merger.
(a) Any two or more domestic corporations may merge into one of such corporations pursuant to a plan of merger approved in the manner provided in this Act.
(b) The board of directors of each participating corporation shall by resolution adopted by each such board, approve a plan of merger setting forth:
(1) The names of the corporations proposing to merge, and the name of the corporation into which they propose to merge.
(2) The terms and conditions of the proposed merger.
(3) The manner and basis of converting the shares of each merging corporation into shares, obligations or other securities of the surviving corporation or of any other corporation or, in whole or in part, into cash or other property.
(4) A statement of any changes in the articles of incorporation of the surviving corporation to be effected by such merger.
(5) Such other provisions with respect to the proposed merger as are deemed necessary or desirable.
(c) A corporation organized under this Act can merge with a joint stock company, unincorporated association, business trust or other corporation organized and existing under the laws of this State. The surviving corporation shall elect to exist either under this Act or under the laws applicable to the constituent corporation subject to such other law.
Section 33-17-20. Authority of domestic corporations to consolidate; plan of consolidation.
(a) Any two or more domestic corporations may consolidate into a new corporation pursuant to a plan of consolidation approved in the manner provided in this Act.
(b) The board of directors of each corporation shall, by a resolution adopted by each such board, approve a plan of consolidation setting forth:
(1) The names of the corporations proposing to consolidate and the name of the new corporation into which they propose to consolidate, which is hereinafter designated as the new corporation.
(2) The terms and conditions of the proposed consolidation.
(3) The manner and basis of converting the shares of each corporation into shares, obligations or other securities of the new corporation or of any other corporation or, in whole or in part, into cash or other property.
(4) With respect to the new corporation, all of the statements required to be set forth in articles of incorporation for corporations organized under this Act.
(5) Such other provisions with respect to the proposed consolidation as are deemed necessary or desirable.
Section 33-17-25. Authority to acquire domestic corporation through share exchange; plan of exchange.
(a) Subject to the limitations imposed by other sections of this Act, any domestic corporation may be acquired through the exchange of all its outstanding shares of one or more classes by another domestic corporation, pursuant to a plan of exchange approved in a manner as provided in this Act.
(b) The board of directors of each corporation, by resolution adopted by each such board, shall approve a plan of exchange setting forth:
(1) The name of the corporation proposing to be acquired by the exchange of shares, which is designated as the acquired corporation, and the name of the corporation to acquire outstanding shares of such corporation in exchange, which is hereinafter designated as the acquiring corporation.
(2) The terms and conditions of the proposed exchange.
(3) The manner and basis of exchanging shares of the series. class or classes of the acquired corporation for shares, obligations or other securities of the acquiring corporation or of any other corporation or, in whole or in part, for cash or other consideration.
(4) All those provisions of Section 33-17-30 applicable in such plan of exchange.
(5) Such other provisions with respect to the proposed exchange as are deemed necessary or desirable.
(c) The procedure authorized by this section shall not be deemed to limit the power of a corporation to acquire all or part of the shares of any class or classes of a corporation through a voluntary exchange or otherwise by agreement with the shareholders.
Section 33-17-30. Notice to and approval by shareholders of merger, consolidation, or exchange.
(a) The board of directors of each corporation in the case of a merger or consolidation, and the board of directors of the acquired corporation in the case of an exchange, upon approving such plan of merger, consolidation or exchange, shall, by resolution, direct that such plan be submitted to a vote at a meeting of its shareholders, which may be either an annual or special meeting.
(b) Written or printed notice of the meeting shall be given to each holder of record and voting trust certificate shareholder, whether or not entitled to vote at such meeting, in accordance with Section 33-11-40. The notice, whether the meeting be an annual or a special meeting:
(1) shall state that the purpose or one of the purposes is to consider the proposed plan of merger, consolidation or exchange;
(2) shall be accompanied by a copy of the plan of merger, consolidation, or exchange, or an accurate outline of the material features of the plan;
(3) shall be accompanied (A) by balance sheets of each corporation participating in the merger, consolidation or exchange showing in reasonable detail the financial condition of each participating corporation as of the close of the three (3) fiscal years next preceding the date of the plan of merger, consolidation or exchange, and (B) by profit and loss statements of each corporation for such periods;
(4) shall contain a clear and concise statement, prominently displayed, that shareholders dissenting to the plan of merger, consolidation or exchange may be entitled, upon compliance with Section 33-11-270, to be paid the fair value of their shares.
(c) At each such meeting a vote of the shareholders shall be taken on the proposed plan of merger, consolidation or exchange as required by this Act. Unless otherwise provided by the articles, the plan of merger, consolidation or exchange shall be approved upon receiving the affirmative vote of the holders of two-thirds (2/3) of the outstanding shares of each participating corporation, unless any class of shares of any such corporation is entitled to vote as a class thereon, in which event, as to such corporation, the plan of merger, consolidation or exchange shall be approved upon receiving the affirmative vote of the holders of two-thirds (2/3) of the outstanding shares of each class of shares entitled to vote as a class thereon and of the total outstanding shares entitled to vote thereon. Any class of shares of any such corporation shall be entitled to vote as a class if the plan of merger, consolidation or exchange, as the case may be, contains any provision which, if contained in a proposed amendment to articles of incorporation, would entitle such class of shares to vote as a class, as required by Section 33-15-50.
(d) The articles of incorporation of any corporation may contain a provision prescribing for approval of a plan of merger, consolidation or exchange greater vote than, but in no event less than, that prescribed by subsection (c) of this section. Such provision:
(1) may require a unanimous or less than unanimous vote;
(2) may designate whether all, or any specified cases of mergers, consolidations or exchanges shall be subject to the prescribed vote;
(3) may confer such vote upon all shares, or upon any class or series of shares, or upon both;
(4) shall be repealed, altered, or otherwise removed or modified only by the same vote which such provision requires for approving a plan of merger, consolidation or exchange, except that any such vote shall not be carried forward and made applicable to the surviving or consolidated corporation unless the plan of merger, consolidation, or exchange specifically so provides.
(e) (1) Notwithstanding the requirements of subsection (a), unless required by its articles of incorporation, no vote of shareholders of a corporation surviving a merger or acquiring another corporation under a plan of exchange shall be necessary to authorize a merger if:
(A) the agreement of merger does not amend in any respect the articles of incorporation of such corporation;
(B) each share of stock of such corporation outstanding immediately prior to the effective date of the merger is to be an identical outstanding or treasury share of the corporation after the effective date of the merger;
(C) either: (i) no shares of common stock of the corporation and no shares, securities, or obligations convertible into such stock are to be issued or delivered under the plan of merger; or (ii) the authorized unissued shares or the treasury shares of common stock of such corporation to be issued or delivered under the plan of merger plus those initially issuable upon conversion of any other shares, securities or obligations to be issued or delivered under such plan do not exceed twenty percent (20%) of the shares of common stock of such corporation outstanding immediately prior to the effective date of the merger.
(2) No vote of shareholders of a corporation shall be necessary to authorize a merger or consolidation if no shares of the stock of such corporation shall have been issued prior to the adoption by the board of directors of the resolution approving the agreement of merger or consolidation.
(3) If an agreement of a merger is adopted by the surviving or acquiring corporation, by action of its board of directors and without any vote of its shareholders pursuant to this subsection (e) the articles of exchange required to be filed under Section 33-17-50 shall include the certification that the agreement has been adopted pursuant to this subsection and that, as of the date of such certificate, the outstanding shares of the corporation were such as to render this subsection applicable. Such filing shall constitute a representation by the person who executes the agreement that the facts stated in the certificate remain true immediately prior to such filing.
(f) The vote of the shareholders required for corporate action under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section.
Section 33-17-40. Articles of merger, consolidation or exchange.
(a) When the merger, consolidation or exchange has been approved as required by Section 33-17-10, 33-17-20, or 33-17-25, articles of merger, consolidation or exchange shall be executed and verified as provided by Section 33-1-40 and 33-1-60, and shall be delivered for filing as provided by Section 33-1-60. The articles of merger, consolidation or exchange shall set forth:
(1) The plan of merger, consolidation or exchange.
(2) As to each corporation:
(A) The number of shares outstanding, and, if the shares of any series or class were entitled to vote as a series or class, the designation and number of outstanding shares of each such series or class;
(B) The number of shares voted for and against such plan, respectively, and, if the shares of any series or class were entitled to vote as a series or class, the number of shares of each such series or class voted for and against such plan, respectively.
(C) As to the acquiring corporation in a plan of exchange, a statement that the adoption of the plan and performance of its terms were duly approved by its board of directors and such other requisite corporate action, if any, as may be required of it.
(D) In the case of a plan of merger, consolidation or exchange without shareholder approval, any statements required to be made pursuant to Section 33-17-30(e).
(E) In the case of a merger or consolidation pursuant to Section 33-17-50, that the plan was approved by the board of directors without a vote of shareholders of the surviving corporation.
(b) Merger, consolidation or exchange shall become effective in accordance with Section 33-17-60.
Section 33-17-50. Merger of subsidiary corporation into parent; authority to merge and procedure therefor.
(a) Any corporation (in this Act termed the 'parent corporation') owning at least ninety percent (90%) of the outstanding shares of each class of another corporation or corporations (in this Act termed the 'subsidiary corporation') may merge the subsidiary corporation or corporations into itself or another subsidiary corporation without the approval by a vote of the shareholders of either corporation, by complying with the following procedure:
(1) The board of directors of the parent corporation shall, by resolution approve a plan of merger setting forth:
(A) The name of the subsidiary corporation and the name of the parent corporation or other subsidiary corporation, which is hereinafter designated as a surviving corporation.
(B) The terms and conditions of the proposed merger.
(C) The manner and basis of converting the shares of the subsidiary corporation into shares or other securities or obligations of the parent corporation, or the cash or other consideration to be paid or delivered upon surrender of each share of the subsidiary corporation.
(D) The plan shall be accompanied by a clear and concise statement, prominently displayed, that shareholders of the subsidiary corporation dissenting to the plan of merger are entitled, upon compliance with Section 33-11-270, to be paid the fair value of their shares.
(2) A copy of such plan of merger shall be mailed to each holder of record of any shares of the subsidiary corporation (other than shares held by the parent corporation), unless the giving of such notice has been waived in writing by such holders.
(3) On or after the thirtieth day after the mailing of a copy of the plan of merger to shareholders of the subsidiary corporation, or upon the waiver thereof by the holders of all outstanding shares, articles of merger shall be executed, verified, and delivered for filing, as provided by Sections 33-1-40 to 33-1-60, and shall set forth:
(A) The plan of merger;
(B) The number of outstanding shares of each class of the subsidiary corporation and the number of such shares of each class owned by the surviving corporation;
(C) The date of the mailing to shareholders of the subsidiary corporation of a copy of the plan of merger.
(4) Holders of shares of the subsidiary corporation, other than shares held by the parent corporation, shall be entitled to dissent to a merger pursuant to this section, and upon complying with the provisions of Section 33-11-270 to be paid the fair value of their shares. Holders of shares of the parent corporation dissenting to such merger shall not be entitled to payment under Section 33-11-270.
(b) Authority to merge under this section shall not bar any merger or consolidation under procedure authorized by any other provision of this chapter. Any plan of merger which requires or contemplates any changes other than those specifically authorized by this section shall be accomplished under the provisions of Section 33-17-10.
Section 33-17-60. Effect of merger or consolidation.
(a) The merger or consolidation shall be effected as of either: (1) the filing date of the articles of merger or consolidation, or (2) a date, not to exceed sixty (60) days subsequent to the filing date of the articles, when the merger or consolidation is to take effect.
(b) When such merger or consolidation has been effected:
(1) The several corporations parties to the plan of merger or consolidation shall be a single corporation, which, in the case of a merger, shall be that corporation designated in the plan of merger as the surviving corporation, and, in the case of a consolidation, shall be the new corporation provided for in the plan of consolidation.
(2) The separate existence of all corporations parties to the plan of merger or consolidation, except the surviving or new corporation, shall cease.
(3) Such surviving or new corporation shall have all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation organized under this Act.
(4) Such surviving or new corporation shall thereupon and thereafter possess all other rights, privileges, immunities, and franchises, as well of a public as of a private nature, of each of the merging or consolidating corporations. All property, real, personal and mixed, and all debts due on whatever account, including subscription to shares, and all other choses in action, and all and every other interest, of or belonging to or due to each of the corporations so merged or consolidated, shall be taken and deemed to be transferred to and vested in such single corporation without further act or deed. The title to any real estate, or any interest therein, vested in any of such corporations shall not revert or be in any way impaired by reason of such merger or consolidation.
(5) Such surviving or new corporation shall thenceforth be responsible and liable for all the liabilities and obligations of each of the corporations so merged or consolidated; and any plan existing or action or proceeding pending by or against any of such corporations may be prosecuted as if such merger or consolidation has not taken place, or such surviving or new corporation may be substituted in its place. Neither the rights of creditors nor any liens upon the property of any such corporation shall be impaired by such merger or consolidation.
(6) In the case of a merger, the articles of incorporation of the surviving corporation shall be deemed to be amended to the extent, if any, that changes in its articles of incorporation are stated in the plan of merger; and, in the case of consolidation the statements set forth in the articles of consolidation and which are required or permitted to be set forth in the articles of incorporation of corporations organized under this Act shall be deemed to be the original articles of incorporation of the new corporation.
Section 33-17-70. Merger, consolidation or exchange of shares between domestic and foreign corporations.
(a) If such merger, or consolidation or exchange is permitted by the laws of the jurisdiction under which each such foreign corporation is organized, one or more domestic corporations and one or more foreign corporations may:
(1) merge into a single surviving corporation, domestic or foreign; or
(2) consolidate into a single new corporation, domestic or foreign; or
(3) participate in an exchange.
(b) One or more subsidiary corporations, whether foreign or domestic may merge under the provisions of Section 33-17-50 into the parent corporation, whether foreign or domestic, if:
(1) Section 33-17-50 would apply except that the parent or subsidiary corporation is a foreign corporation;
(2) The laws of the jurisdiction under which each foreign participating corporation is organized permit such merger under substantially the same terms and conditions as Section 33-17-50.
(c) With respect to any proposed merger, consolidation or exchange authorized by subsections (a) and (b), each participating domestic corporation shall comply with the applicable provisions of this Act, and each foreign corporation shall comply with the applicable provisions of the laws of the jurisdiction under which it is organized.
(d) If the surviving or new corporation is or is to be a foreign corporation or the acquiring corporation is a foreign corporation:
(1) It shall comply with the provisions of this Act with respect to foreign corporations if it is to do business in this State;
(2) It shall, in every case, execute and deliver to the Secretary of State, as provided by Sections 33-1-40 and 33-1-60, a document setting forth:
(A) The name of the surviving, new or acquiring corporation.
(B) An agreement that it will promptly pay to the dissenting shareholders of any participating or acquired domestic corporation the amount, if any, to which they are entitled under Section 33-11-270.
(C) Any agreement that it may be served with process in this State in any proceeding: (i) to enforce any obligation of a participating or acquired domestic corporation or any participating foreign corporation previously subject to suit in this State and (ii) to enforce the right of dissenting shareholders of any participating domestic corporation against the surviving or new or acquired corporation.
(D) An irrevocable appointment of the Secretary of State as its agent to accept service of process in any such proceedings and post office address, within or without this State, to which the Secretary of State shall mail a copy of any process in such proceeding.
(E) The plan of merger, consolidation or exchange.
(F) As to each participating corporation:
(i) The total number of shares outstanding, and the number of such shares voted for and against the plan;
(ii) If the shares of any class are entitled to a vote as a class, the designation and number of shares of each class voted for and against the plan.
(G) The date when the merger, consolidation or exchange is to take effect.
(e) If the surviving or consolidated corporation is or is to be a domestic corporation, the effect of such merger or consolidation shall be the same as in the case of the merger or consolidation of domestic corporations. If the surviving or new corporation is or is to be a foreign corporation, the effect of such merger or consolidation shall be the same as in the case of the merger or consolidation of domestic corporations except insofar as the laws of such other jurisdiction provide otherwise.
(f) Any merger, consolidation or exchange under this section shall take effect when the articles of merger, consolidation or exchange are filed with the Secretary of State, or within sixty (60) days of the filing date, if the articles of merger or consolidation so provide.
(g) Within thirty (30) days after the effective date of a merger, consolidation or exchange the surviving or acquiring corporation shall file with the Secretary of State its certificate that the merger, consolidation or exchange has become effective under the laws of the jurisdiction of the foreign corporation which was a party thereto.
Section 33-17-80. Authority to abandon merger, consolidate or exchange.
(a) Any plan of merger, consolidation or exchange may contain a provision that at any time prior to the effectiveness of such merger, consolidation or exchange the plan may be abandoned pursuant to provision therefor, if any, set forth in the plan.
(b) If the articles of merger, consolidation or exchange have been filed and an abandonment occurs, there shall be filed a certificate of abandonment.
Section 33-17-90. Right of shareholders to dissent to certain mergers, consolidations and exchanges.
Any shareholder of a corporation, by complying with the provisions of Section 33-11-270, shall have the right to dissent from any plan of merger or consolidation or exchange to which the corporation is a party, except that the rights of dissenting shareholders to receive payment for the fair value of their shares shall not be available to:
(a) A shareholder of the surviving corporation in a merger of a subsidiary corporation into the parent corporation as authorized:
(1) by Section 33-17-50 or (2) by subsection (b) of Section 33-17-70, unless the surviving corporation is a foreign corporation and the laws of the jurisdiction of its incorporation grants to shareholders of such surviving corporation the right to receive payment for the fair value of their shares.
(b) A shareholder of the surviving corporation in a merger if such corporation is on the date of the filing of the articles of merger the owner of all the outstanding shares of the other corporations (foreign or domestic) which are parties to the merger.
(c) A shareholder of the acquiring corporation in an exchange.
(d) A shareholder of a corporation whose shares are listed on; national securities exchange, unless otherwise provided in the corporation's articles of incorporation.
CHAPTER 19
Business Corporations - Sale and Other Disposition of Corporate Assets
Section 33-19-10. 'Sale' defined.
Whenever used in Section 33-19-10 through Section 33-19-50 the term 'sale' shall include a sale, lease, exchange, or any other disposition of property and assets of the corporation except a mortgage of or other security interest in such property and assets.
Section 33-19-20. Sale of assets in regular course of business.
(a) Except to the extent that the articles of incorporation otherwise provide, the sale of all or substantially all, the property and assets of a corporation, when made in the usual and regular course of the business of the corporation, may be made upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as shall be authorized by its board of directors.
(b) Whether or not a transaction by a corporation occurs within the usual and regular course of business shall be determined by the circumstances of the transaction, including the character of the business in which the corporation is engaged at the time of or immediately preceding the transaction. A sale of assets may be deemed to be in regular course of its business if the corporation was incorporated for the purpose of liquidating such assets or property, or if the sale is a transaction or one of a series of transactions made in furtherance of the business of the corporation and not to terminate or dispose of its business.
Section 33-19-30. Sale of assets other than in regular course of business.
(a) A sale of all, or substantially all, the property and assets with or without the good will, of a corporation, if not made in the usual and regular course of its business, may be made upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property, real or personal, including shares, obligations or other securities of any other corporation, domestic or foreign, as shall be authorized in the following manner:
(1) The board of directors shall, by a resolution, adopt a plan of sale and direct that such plan be submitted to a vote at a meeting of the shareholders, which may be either an annual or special meeting.
(2) Written or printed notice shall be given to each shareholder of record whether or not entitled to vote at such meeting with the time and in the manner provided in this Act for the giving of notice of meetings of shareholders, and whether the meeting be an annual or special meeting shall state that the purpose, or one of the purposes, of the meeting is to consider the proposed sale. Such notice shall also contain a clear and concise statement prominently displayed, that shareholders dissenting to the disposition of assets are entitled to be paid the fair value of their shares upon compliance with Section 33-11-270.
(3) At such meeting the shareholders may authorize such sale, and may fix, or may authorize the board of directors to fix, any or all of the terms and conditions thereof and the consideration to be received by the corporation therefor. Such authorization shall require the affirmative vote of the holders of a majority of the outstanding shares of the corporation entitled to vote thereon, unless any class of shares is entitled to vote as a class thereon, in which event such authorization shall require the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares of each class of shares entitled to vote as a class thereon and of the total outstanding shares entitled to vote. Any class of shares of any such corporation shall be entitled to vote as a class if the resolution proposing the sale of assets contains any provision which if contained in a proposed amendment to the articles of incorporation, would entitle such class of shares to vote as a class, as required by Section 33-15-50.
(b) The articles of incorporation of any corporation may contain a provision prescribing for approval of any sale of assets a vote greater than, but in no event less than, that prescribed by subsection (a) of this section. Such provision:
(1) May require a unanimous or less than unanimous vote:
(2) May designate whether all, or any specified class of, sales or other disposition shall be subject to the vote required by the articles;
(3) Shall be repealed, altered, or otherwise removed or modified only by the same vote which such provision requires for approving a sale of assets.
(c) After such authorization by a vote of shareholders, the board of directors nevertheless, in its discretion, may abandon such plan of sale of assets, subject to the rights of third parties under any contracts relating thereto, without further action or approval by shareholders.
(d) The vote of the shareholders required for corporate action under this section may be otherwise set in the articles, but shall not be less than a majority of the shares entitled to vote under this section .
Section 33-19-40. Mortgage of or security interest in assets of corporation. Unless the articles of incorporation otherwise provide, a mortgage of or other security interest in all or substantially all of the property and assets of the corporation, whether or not in the usual and regular course of its business, may be made by authority of the board of directors of the corporation without authorization of the shareholders.
Section 33-19-50. Right of shareholders dissenting to certain sales of assets.
(a) Any shareholder of a corporation entitled to vote on the plan of sale by complying with Section 33-11-270, shall have the right to dissent from any sale of all or substantially all of the property and assets of the corporation, except when such sale is in the usual and regular course of its business, or when such sale is for cash and the shareholders' approval thereof is conditional upon the distribution of all or substantially all of the net proceeds of the sale to the shareholders in accordance with their respective interests within one (1) year after the date of sale.
(b) Unless otherwise provided in the articles, the shareholders may not dissent as to shares which are listed on a national securities exchange.
CHAPTER 21
Business Corporations - Dissolution
Section 33-21-10. Voluntary dissolution by incorporators, or directors.
A corporation which has not commenced business and which has not issued any shares, may be voluntarily dissolved by its incorporator or incorporators or the persons named as directors in the articles of incorporation at any time after the filing date of its articles of incorporation, in the following manner:
(a) Articles of dissolution shall be executed and verified by the incorporators or directors, and delivered for filing, as provided by Sections 33-1-40 to 33-1-60, and shall set forth:
(1) The name of the corporation.
(2) The filing date of its articles of incorporation.
(3) That none of its shares has been issued.
(4) That the corporation has not commenced business.
(5) That the amount, if any. actually paid in on subscriptions for its shares, less any part thereof disbursed for necessary expenses, has been returned to those entitled thereto.
(6) That no debts of the corporation remain unpaid.
(7) That a majority of the incorporators or directors elect that the corporation be dissolved.
(b) On the filing date of the articles of dissolution, the existence of the corporation shall cease.
Section 33-21-20. Voluntary dissolution by resolution of directors and shareholders.
(a) A corporation may be dissolved by resolution of the directors and shareholders when authorized in the following manner:
(1) The board of directors shall adopt a resolution recommending that the corporation be dissolved, and directing that the question of such dissolution be submitted to a vote at a meeting of the shareholders, which may be either an annual or a special meeting.
(2) If the holders of at least ten percent (10%) of all the outstanding shares of the corporation propose dissolution, the board of directors shall submit the proposed resolution recommending dissolution to the shareholders at a special or annual meeting.
(3) Written or printed notice shall be given to each shareholder of record entitled to vote at such meeting within the time and in the manner provided in Sections 33-11-40 and 33-11-50 of this Act for the giving of notice of meetings of shareholders, and, whether the meeting be an annual or special meeting, shall state that the purpose, or one of the purposes, of such meeting is to consider the advisability of dissolving the corporation.
(4) At such meeting a vote of shareholders entitled to vote thereat shall be taken on a resolution to dissolve the corporation. Unless the articles of incorporation shall require a different vote, the resolution shall be adopted upon receiving the affirmative vote of a majority of the outstanding shares of the corporation, unless any class of shares is entitled to vote as a class thereon, in which event the resolution shall require for its adoption the affirmative vote of the holders of a majority of those shares voting, but not less than a majority of the outstanding shares of each class of shares entitled to vote as a class thereon. Any class of shares of any such corporation shall be entitled to vote as a class if the resolution to dissolve the corporation contains any provision which, if contained in a proposed amendment to the articles of incorporation, would entitle such class of shares to vote as a class as required by Section 33-15-50.
(5) Upon the adoption of such resolution, a statement of intent to dissolve shall be executed, verified, and delivered for filing, as provided by Sections 33-1-40 to 33-1-60, and shall set forth:
(A) The name of the corporation.
(B) The names and respective addresses of its officers.
(C) The names and respective addresses of its directors.
(D) A copy of the resolution adopted by the shareholders authorizing the dissolution of the corporation.
(E) The number of shares outstanding, and, if the shares of any class are entitled to vote as a class, the designation and number of outstanding shares of each class.
(F) The number of shares voted for and against the resolution, respectively, and, if the shares of any class are entitled to vote as a class, the number of shares of each such class voted for and against the resolution, respectively.
Section 33-21-30. Voluntary dissolution by written consent of all shareholders.
(a) A corporation may be voluntarily dissolved by written consent of the owners of all outstanding shares, unless otherwise provided by the articles of incorporation.
(b) Upon the execution of such written consent, a statement of intent to dissolve shall be executed, verified and delivered for filing, as provided by Sections 33-1-40 to 33-1-60, and shall set forth:
(1) The name of the corporation.
(2) The names and respective addresses of its officers.
(3) The names and respective addresses of its directors.
(4) A copy of the written consent signed by all shareholders of the corporation.
(5) A statement that such written consent has been signed by all shareholders of the corporation or signed by their duly authorized attorneys.
Section 33-21-40. Dissolution of corporation by expiration of articles of incorporation; reinstatement.
(a) If a corporation is limited to a period of duration specified by its articles of incorporation, and the corporate existence has not been extended or made perpetual by amendment of the articles or otherwise, a statement of intent to dissolve shall be executed, verified, and filed as provided by Sections 33-1-40 to 33-1-60 on or before the date upon which the corporate existence is due to expire.
(b) The statement of intent to dissolve shall set forth:
(1) The name of the corporation.
(2) The expiration date specified in the articles of incorporation, and that the duration of the corporate existence, has not been extended or made perpetual by amendment of the articles or otherwise.
(3) The names and addresses of its officers and directors of the date of executing the statement.
(c) Unless the articles of incorporation otherwise provide, at any time prior to the expiration date specified in the articles of incorporation, the directors of the corporation may amend the articles of incorporation to extend or to make perpetual the duration of the corporation. Such amendment, if filed after the filing of the statement or intent to dissolve but before the expiration date specified in the articles, shall automatically revoke the statement of intent to dissolve, and the corporation may carry on its business.
(d) Unless the articles of incorporation otherwise provide, as provided by Sections 33-1-40 to 33-1-60, and shall set forth:
(1) At any time within one (1) year after the expiration date specified in the articles of incorporation, one or more persons who were directors of the corporation as of the expiration date may execute, verify, and deliver for filing, as provided by Sections 33-1-40 to 33-1-60, an application for reinstatement of the corporation. The Secretary of State shall file the application upon receiving all fees and taxes which would have been payable during the period between expiration and reinstatement, together with a reinstatement fee.
(2) As of the filing date of the application, the corporate existence shall be deemed to have continued without interruption from the expiration date. If the name of the corporation has, during such period, been assumed or reserved or registered by any other person or corporation, the reinstated corporation shall not engage in business until it has amended its articles of incorporation to change its name.
Section 33-21-50. Effect of statement of intent to dissolve corporation.
Upon the filing by the Secretary of State of a statement of intent to dissolve, as provided by Section 33-21-20, Section 33-21-30 or Section 33-21-40, the corporation shall cease to carry on its business, except insofar as may be necessary or appropriate for the winding up thereof, but for such winding up its corporate existence shall continue until the filing date of the articles of dissolution, or until a decree dissolving the corporation has been entered by a court of competent jurisdiction.
Section 33-21-60. Procedure after filing of statement of intent to dissolve. After the filing as provided by Section 33-21-20, 33-21-30 or 33-21-40:
(a) The corporation shall immediately cause notice of the filing of the statement of intent to dissolve to be mailed to each known creditor of the corporation and to the South Carolina Tax Commission. It shall also publish such notice in a newspaper published or having general circulation in the county in which the registered office of the corporation was located at the time of filing of the statement of intent to dissolve.
(b) The corporation shall fulfill or discharge its contracts, collect its assets, convey and dispose of such properties as are not to be distributed in kind to its shareholders, pay, satisfy and discharge its liabilities and obligations, and do all other acts required or appropriate to wind up and to liquidate its business and affairs, as expeditiously as practicable.
(c) After paying or adequately providing for the payment of all its obligations, the corporation shall distribute the remainder of its assets, either in cash or in kind, among its shareholders according, to their respective rights and interests.
(d) The corporation, at any time during the liquidation of its business and affairs, may apply to the court in which the registered office or principal place of business of the corporation is situated, to have the liquidation continued under the supervision of the court as provided in Section 33-21-150.
Section 33-21-70. Revocation of voluntary dissolution proceedings.
(a) By resolution of the directors and shareholders, a corporation may, at any time prior to the date of filing the articles of dissolution with the Secretary of State, revoke voluntary dissolution proceedings authorized pursuant to Section 33-21-20, in the following manner:
(1) The board of directors shall adopt a resolution recommending that the voluntary dissolution proceedings be revoked, and directing that the question of such revocation be submitted to a vote at a special meeting of the shareholders.
(2) Unless the articles provide a different vote for dissolution, in which case such vote shall be controlling, at such meeting a vote of the shareholders entitled to vote thereat shall be taken on a resolution to revoke the voluntary dissolution proceedings, which shall require for its adoption the affirmative vote of two-thirds (2/3) of outstanding shares voting at such meeting.
(b) Upon the adoption of such resolution, a statement of revocation of voluntary dissolution proceedings shall be executed, verified, and delivered for filing as provided by Sections 33-1-40 to 33-1-60, and such statement shall set forth:
(1) The name of the corporation.
(2) The names and respective addresses of its officers.
(3) The names and respective addresses of its directors.
(4) A copy of the resolution adopted by the shareholders revoking the voluntary dissolution proceedings.
(5) The number of shares outstanding.
(6) The number of shares voted for and against the resolution, respectively.
Section 33-21-80. Revocation of voluntary dissolution proceedings by consent of all stockholders.
(a) By written consent the owners of all of its outstanding shares entitled to vote under Section 33-21-20, a corporation may, at any time prior to the date of filing the articles of dissolution with the Secretary of State, revoke voluntary dissolution proceedings previously authorized.
(b) Upon execution of such written consent, a statement of revocation of voluntary dissolution proceedings shall be executed, verified, and delivered for filing as provided by Sections 33-1-40 to 33-1-60, and such statement shall set forth:
(1) The name of the corporation.
(2) The names and respective addresses of its officers.
(3) The names and respective addresses of its directors.
(4) A copy of the written consent signed by all shareholders of the corporation revoking such voluntary dissolution proceedings.
(5) That such written consent has been signed by all shareholders of the corporation or signed in their names by their duly authorized attorneys.
Section 33-21-90. Effect of statement of revocation of voluntary dissolution proceedings.
Upon the filing by the Secretary of State of a statement of revocation of voluntary dissolution proceedings as provided by Section 33-21-70 or Section 33-21-80, the revocation of the voluntary dissolution proceedings shall become effective, and the corporation may again carry on its business.
Section 33-21-100. Articles of dissolution.
(a) If voluntary dissolution proceedings have not been revoked, then when all debts, liabilities and obligations of the corporation have been paid and discharged, or adequate provision has been made therefor, and all remaining property and assets of the corporation have been distributed to its shareholders, articles of dissolution shall be executed, verified, and delivered for filing as provided by Sections 33-1-40 to 33-1-60, and such articles shall set forth:
(1) The name of the corporation.
(2) That the Secretary of State has previously filed a statement of intent to dissolve the corporation, and the date on which such statement was filed.
(3) That all debts, obligations and liabilities of the corporation have been paid and discharged or that adequate provision has bee made therefor.
(4) That all remaining property and assets of the corporation have been distributed among its shareholders in accordance with their respective rights and interests.
(5) That there are no suits pending against the corporation in any court, or that adequate provision has been made for the satisfaction of any judgment, order or decree which may be entered against it in any pending suit.
(6) The names of the directors, if any, or if none, then the names of the shareholders.
(b) Such articles shall be accompanied by a certificate of the appropriate official of this State dated not more than thirty (30) days before the filing of the articles of dissolution, that there are no unpaid fees or franchise taxes payable by the corporation.
(c) Upon the filing date of the articles of dissolution, the existence of the corporation shall cease, except for the purpose of suits, other proceedings, and appropriate corporate action by and against shareholders, directors and officers as provided in this Act.
Section 33-21-110. Dissolution by administrative action.
(a) A domestic corporation shall be dissolved by the Secretary of State if it has failed to:
(1) File its annual report within the time required by Section 33-25-10;
(2) Pay its franchise tax on or before the date on which such franchise taxes are due and payable;
(3) Appoint and maintain a registered agent in this State; or
(4) File a change in registered office or agent statement required by Section 33-5-50 within thirty (30) days after such change.
(b) The Secretary of State shall send to the corporation, by mail addressed to its registered office, notice of its impending dissolution, setting forth the ground thereof, and stating that the default must be removed within ninety (90) days of the date of the notice.
(c) Such notice shall also be sent to any nonprofit corporation chartered under Chapter 31 or 35 of this title which has failed to file its annual report within the time required, or pay its annual license fee or franchise tax on or before the date on which such fees or franchise taxes are due and payable.
(d) If, within ninety (90) days from the date of the notice, the corporation shall not have removed the default, the Secretary of State shall prepare a declaration of dissolution of the corporation by forfeiture stating the ground therefor, and shall file the declaration in his office. The Secretary of State shall send a copy of such declaration to the corporation by registered or certified mail addressed to its registered office.
(e) Upon the filing date of the declaration of dissolution the existence of the corporation shall cease, except for the purpose of suit, other proceedings and appropriate corporate action by and against shareholders, directors and officers.
Section 33-21-120. Reinstatement of corporation dissolved by administrative action.
(a) At any time with five (5) years after the date of the declaration of dissolution by forfeiture, one or more persons who were directors of the corporation as of that date may execute, verify, and deliver for filing as provided by Section 33-1-40 to 33-1-60 an application for reinstatement of the corporation. The Secretary of State shall file the application after the corporation has removed the default which was the ground for its dissolution, paid all fees and taxes which would have been payable during the period between dissolution and reinstatement, paid any outstanding judgments, and paid to the Secretary of State a reinstatement fee.
(b) As of the filing date of the application the corporate existence shall be deemed to have continued without interruption from the date of dissolution. If the name of the corporation has, during such period, been assumed or reserved or registered by any other person or corporation, the reinstated corporation shall not engage in business until it has amended its articles of incorporation to change its name.
Section 33-21-130. Dissolution pursuant to provision in articles of incorporation.
(a) The articles of incorporation of any corporation created under this Act may contain a provision that any shareholder, or the holders of any specified number or proportion or class of outstanding shares may dissolve the corporation at will or upon the occurrence of any specified event or contingency.
(b) A provision authorized by subsection (a) shall be valid only so long as the shares of the corporation are not listed on any national securities exchange.
(c) A transferee of shares in a corporation whose shareholders have entered into a provision authorized by subsection (a) shall be bound by such agreement if he takes the shares with actual notice thereof. A transferee shall be deemed to have actual notice of any such agreement if the text of the agreement, with any amendments, is set forth in the articles of incorporation.
(d) Each certificate of shares in any corporation whose articles of incorporation authorize dissolution as permitted by this section shall set forth on the back of the certificate the text of any such provision or, if by reason of its length it is impracticable to reproduce the text thereof, then a clear reference to the existence and purport of such provision.
(e) If the articles of incorporation as originally filed do not contain the provision authorized by subsection (a) they may be amended to contain such provision provided such amendment is authorized by the holders of all outstanding shares entitled to vote.
Section 33-21-140. Judicial dissolution of corporation on petition of Attorney General.
(a) A corporation may be dissolved by a decree of the court of the county in which its principal place of business or registered office is, or its last known registered office was located, in an action filed by the Attorney General when it is established that:
(1) The corporation has continued wilfully to exceed or abuse the authority conferred upon it by law.
(2) The corporation procured its articles of incorporation through fraudulent misrepresentation or concealment of a material fact.
(b) The Attorney General shall bring such action in every case where he determines that the public interest warrants the action; and he shall bring the action in every other case in which satisfactory security shall be given to indemnify the State against the cost and expenses to be incurred thereby.
Section 33-21-150. Dissolution pursuant to court order.
The courts of this State shall have full power to decree the dissolution of, and to liquidate the assets and business of, a corporation.
(a) In an action filed by a shareholder or director, when it is established that:
(1) The directors of the corporation are so divided respecting the management of the corporation's business and affairs that the votes required by the board of directors cannot be obtained and the shareholders are unable to terminate the division, with the consequence that (A) the corporation is suffering or will suffer irreparable injury, or (B) the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally;
(2) The shareholders are so divided that they have failed, for a period which includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the qualification of their successors;
(3) The shareholders are so divided respecting the management of the business and affairs of the corporation that (A) the corporation is suffering or will suffer irreparable injury, or (B) the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders;
(4) The acts of the directors or those in control of the corporation (A) are illegal or fraudulent or dishonest, or (B) are oppressive or unfairly prejudicial either to the corporation or to any shareholder whether in his capacity as a shareholder, director, or officer of the corporation;
(5) The corporation assets are being misapplied or wasted;
(6) The petitioning shareholder has a right under a provision of the articles of incorporation as permitted by Section 33-21-130 to dissolution of the corporation at will or upon the occurrence of any specified event or contingency;
(7) The corporation has abandoned its business and has failed, within a reasonable time, to take steps to dissolve and liquidate its affairs and distribute its assets; or
(8) The corporation is insolvent or unable to afford reasonable security to those who may deal with it.
(b) In an action filed by a creditor of the corporation:
(1) When the claim of the creditor has been reduced to judgment and an execution thereon returned unsatisfied and the corporation is insolvent;
(2) When the corporation has admitted in writing that the claim of the creditor is due and owing and is established that the corporation is insolvent; or
(3) The corporate assets are being misapplied or wasted.
(c) Upon application by a corporation which has filed a statement of intent to dissolve under Section 33-21-60 and to have its liquidation continued under the supervision of the court.
(d) When an action has been filed under Section 33-21-140 by the Attorney General to dissolve a corporation and it is established that liquidation of its business and affairs should precede the entry of a decree of dissolution.
(e) Proceedings under subsections (a), (b), (c), or (d) of this section shall be brought in the county in which the registered office or the principal place of business of the corporation is located.
(f) In determining whether dissolution shall be ordered on petition of a shareholder or director under subsection (a), dissolution shall not be denied solely because it is found that the business of the corporation has been or could be conducted at a profit.
Section 33-21-155. Discretion of court to grant relief other than dissolution.
(a) In any action filed by a shareholder or director to dissolve the corporation on the grounds enumerated in Section 33-21-150, the court may make such order to grant such relief, other than dissolution, as in its discretion it deems appropriate, including, without limitation, an order:
(1) Canceling or altering any provision contained in the articles of incorporation, or any amendment thereof, or in the bylaws of the corporation;
(2) Canceling, altering, or enjoining any resolution or other act of the corporation;
(3) Directing or prohibiting any act of the corporation or of shareholders, directors, officers or other persons party to the action; or
(4) Providing for the purchase of their fair value of shares of any shareholder, either by the corporation or by other shareholders.
(b) Such relief may bc granted as an alternative to a decree of dissolution or may be granted whichever the circumstances of the case are such that relief, but not dissolution, would be appropriate.
Section 33-21-160. Procedure in judicial dissolution; liquidation of corporation.
In any action or suit for judicial dissolution of a corporation:
(a) The complaint shall specify whether authorized under Section 33-21-130 or Section 33-21-150 and shall state the reasons why the corporation should be dissolved.
(b) Summons shall issue and process shall be served on the corporation as in other civil actions. It shall not be necessary to make shareholders parties to any such action or proceeding unless relief is sought against them personally, or unless the court in its discretion so orders.
(c) The court shall have full power to issue injunctions, to appoint a receiver, including a receiver pendente lite, with such powers and duties as the court may from time to time direct, and to take other proceedings and make other orders as may be requisite to preserve the corporate assets whatever situated and carry on the business of the corporation until a full hearing can be held.
Section 33-21-170. Receivers in proceedings for judicial dissolution.
(a) After a hearing had upon such notice as the court may direct to be given to all parties to the proceedings and to any other parties in interest designated by the court, the court may appoint a liquidating receiver or receivers with authority to collect the assets of the corporation, including all amounts owning to the corporation by shareholders on account of any unpaid portion of the consideration for the issuance of shares. Such liquidating receiver or receivers shall have authority, subject to the order of the court, to sell, convey and dispose of all or any part of the assets of the corporation wherever situated, either at public or private sale. The assets of the corporation or the proceeds resulting from a sale, conveyance or other disposition thereof shall be applied to the expenses of such liquidation and to the payment of the liabilities and obligations of the corporation, and any remaining assets or proceeds shall be distributed among its shareholders according to their respective rights and interests. The order appointing such liquidating receiver or receivers shall state their powers and duties. Such powers and duties may be increased or diminished at any time during the proceedings.
(b) The court may allow from time to time, as expenses of the liquidation, compensation to the receiver or receivers and to attorneys in the proceeding, and direct the payment thereof out of the assets of the corporation or the proceeds of any sale or disposition of such assets.
(c) A receiver of a corporation appointed under the provisions of this section shall have authority to sue and defend in all courts in his own name as receiver of such corporation. The court appointing such receiver shall have exclusive jurisdiction of the corporation and its property, wherever situated.
(d) A receiver shall in all cases be a citizen of the United States or a corporation authorized to act as receiver, which corporation may be a domestic corporation or a foreign corporation authorized to transact business in this State, and shall in all cases give such bond as the court may direct with such sureties as the court may require.
Section 33-21-180. Claims in liquidation proceedings.
(a) In proceedings to liquidate the assets and business of a corporation, the court may require all creditors of the corporation to file with the clerk of the court or with the receiver, in such form as the court may prescribe, proofs under oath of their respective claims. If the court requires the filing of claims, it shall fix a date, which shall be not less than four (4) months from the date of the order, as the last day for the filing of claims, and shall prescribe the notice that shall be given to creditors and claimants of the date so fixed. Prior to the date so fixed, the court may extend the time for the filing of claims. Creditors and claimants failing to file proofs of claim on or before the date so fixed may be permitted by the court, as it deems fit, to participate in the distribution of the assets of the corporation.
(b) If the corporation, or the receiver of a corporation appointed pursuant to Section 33-21-170, rejects in whole or in part a claim filed by a creditor, the corporation or the receiver shall mail notice of the rejection to the creditor. The court shall prescribe the form of such notice. The notice shall state that if the creditor does not commence an action on the claim within sixty (60) days after the notice of claim was mailed to him, the creditor and all persons claiming through or under him are forever barred from suing on the claim or otherwise realizing upon or enforcing it and shall not be entitled to any remedy against the corporation under provisions of Section 33-21-220. Failure to commence such an action is a bar to enforcement of the claim.
Section 33-21-190. Discontinuance of liquidation proceedings.
The liquidation of the assets and business of a corporation may be discontinued at any time during the liquidation proceedings when it is established that cause for liquidation did not exist or no longer exists. In such event, the court, in its discretion and subject to such conditions as it may deem appropriate, shall dismiss the proceedings and direct the receiver to redeliver to the corporation all its remaining property and assets.
Section 33-21-200. Decree of involuntary dissolution.
(a) In proceedings to liquidate the assets and business of a corporation, the court shall enter a decree dissolving the corporation, upon determining that the cost and expenses of such proceedings and all debts, obligations and liabilities of the corporation have been paid and discharged and all of its remaining property and assets distributed to its shareholders, or in case its property and assets are not sufficient to satisfy and discharge such costs, expenses, debts and obligations, all the property and assets have been applied so far as they will go to their payment.
(b) Upon entry of the decree dissolving the corporation, the existence of the corporation shall cease.
(c) In case the court shall enter a decree dissolving a corporation, it shall be the duty of the clerk of such court to cause a certified copy of the decree to be filed with the Secretary of State. No fee shall be charged by the Secretary of State for the filing thereof.
Section 33-21-210. Deposit with State Treasurer of undistributed assets due certain shareholders and creditors.
Upon the voluntary or involuntary dissolution of a corporation, the portion of the assets distributed to a creditor or shareholder who is unknown or cannot be found, shall be deposited with the State Treasurer and shall thereafter be disposed of according to the escheat law of this State.
Section 33-21-220. Survival of remedy after dissolution; liquidating trustees.
(a) Except as provided in Section 33-21-180, the dissolution of a corporation, either (1) by the filing by the Secretary of State of the articles of dissolution, (2) by a decree of court when the court has liquidated the assets and business of the corporation pursuant to the authority in Section 33-21-140 and Section 33-21-150 through Section 33-21-200, (3) by expiration of its period of duration, or (4) by forfeiture of its charter, shall not take away or impair any remedy available to or against such corporation, its directors, officers, or shareholders, for any right or claim existing, or any liability incurred. 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 shall have power to take such corporate or other action as shall be appropriate to protect such remedy, right or claim.
(b) After dissolution of a corporation, the directors as of the date of dissolution, or the survivors of such directors, shall be deemed liquidating trustees of the corporation with authority to take all action necessary or appropriate to dispose of any undistributed property of the corporation.
Section 33-21-230. Judicial reorganization under a statute of the United States; effectuation.
(a) A corporation organized under the laws of this State for which a plan of reorganization has been confirmed pursuant to the provisions of any applicable statute of the United States relating to reorganization of corporations by the decree or order of a court of competent jurisdiction, may put into effect and carry out the plan and decrees and orders of the court relative thereto and may take any proceeding and do any act provided in the plan or directed by such decree and orders without further action by its directors or shareholders. Such power and authority may be exercised, and such proceedings and acts may be taken, as may be directed by such decrees or orders, by the trustee or trustees of such corporation appointed in the reorganization proceedings (or a majority thereof), or if none be appointed and acting, by designated officers of the corporation, or by a Master or other representative appointed by the court or judge, with like effect as if exercised and taken by unanimous action of the directors and stockholders of the corporation.
(b) Such corporation may, in the manner provided in subsection (a) of this section, but without limiting the generality or effect of the foregoing, alter, amend or repeal its bylaws; constitute or reconstitute and classify or reclassify its board of directors, and name, constitute or appoint directors and officers in place of or in addition to all or some of the directors or officers then in office; amend its certificate of incorporation, and make any change in its capital or capital stock, or any other amendment, change, or alteration, or provision, authorized by this chapter; be dissolved, transfer all or part of its assets, merge or consolidate as permitted by this chapter, in which case, however, no stockholder shall have any statutory right of appraisal of his stock; change the location of its registered office, change its registered agent, and remove or appoint any agent to receive service of process; authorize and fix the terms, manner and conditions of, the issuance of bonds, debentures or other obligations, whether or not convertible into stock of any class, or bearing warrants or other evidences of optional rights to purchase or subscribe for stock of any class; or lease its property and franchises to any corporation, if permitted by law.
(c) A certificate of any amendment, change or alteration, or of dissolution, or any agreement of merger or consolidation, made by such corporation pursuant to the foregoing provisions, shall be filed with the Secretary of State and recorded in accordance with Sections 33-1-40 and 33-1-60 shall thereupon become effective in accordance with the law. Such certificate, agreement of merger or other instrument shall be made, executed and acknowledged, as may be directed by such decrees or orders, by the trustee or trustees appointed in the reorganization proceedings (or a majority thereof) or, if none be appointed and acting, by the officers of the corporation, or by a Master or other representative appointed by the court or judge, and shall certify that provision for the making of such certificate, agreement or instrument is contained in a decree or order or a court or judge having jurisdiction of a proceeding under such applicable statute of the United States for the reorganization of such corporation.
(d) The provisions of this section shall cease to apply to such corporation upon the entry of a final decree in the reorganization proceedings closing the case and discharging the trustee or trustees, if any.
(e) On filing any certificate, agreement, report or other paper made or executed pursuant to the provisions of this section, there shall be paid to the Secretary of State for the use of the State the same fees as are payable by corporations not in reorganization upon the filing of like certificates, agreements, reports or other papers.
CHAPTER 23
Business Corporations - Foreign Corporations
Section 33-23-10. Authorization of foreign corporations to do business in this State; activities not deemed doing business.
(a) A foreign corporation shall not do business in this State until it shall have been authorized to do so, as provided in Section 33-23-20. A foreign corporation may be authorized to do in this State and business which it is authorized to do in the jurisdiction of its incorporation, and which may be done in this State by a domestic corporation but no other business. A foreign corporation shall not be denied authority to do business in this State solely because the laws of the jurisdiction of its incorporation differ from the laws of this State with respect to the organization and internal affairs of the corporation and nothing in this Act shall be construed to authorize this State to regulate the organization or the internal affairs of such corporation.
(b) Without excluding other activities which may not constitute doing business in this State, a foreign corporation shall not be deemed to be doing business in this State, for purposes of this chapter, solely by reason of carrying on in this State any one or more of the following activities:
(1) Maintaining, defending, or participating in any action or proceeding whether judicial, administrative, arbitrative or otherwise, or effecting the settlement thereof or the settlement of claims or disputes.
(2) Holding meetings of its shareholders, directors, or committees.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange, and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.
(5) Borrowing or lending or acquiring indebtedness or mortgages or other security interests in real or personal property.
(6) Securing or collecting debts or enforcing any rights in property covering the same.
(7) Effecting a transaction in interstate or foreign commerce.
(8) Owning and controlling a subsidiary corporation incorporated in or transacting business within this State.
(9) Conducting within this State an isolated transaction which is completed within a period of one hundred and eighty (180) days and which is not in the course of a series or number of repeated transactions.
(10) Effecting sales through independent contractors.
(11) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where such orders require acceptance without this State before becoming binding contracts.
(c) The provisions of this section shall not be deemed to establish a standard for activities which may subject a foreign corporation to service of process under this chapter or any other statute of this State.
Section 33-23-20. Application for authority.
(a) A foreign corporation may apply for authority to do business in this State by executing, verifying, and delivering for filing, as provided by Sections 33-1-40 to 33-l-60, an application setting forth:
(1) The name of the corporation.
(2) The jurisdiction under the laws of which it is incorporated.
(3) The date of incorporation, and the period of duration of the corporation.
(4) A statement of the business which it proposes to do in this State, and a statement that it is authorized to do that business under the laws of its jurisdiction of incorporation.
(5) The address of the registered or principal office of the corporation in the jurisdiction of its incorporation.
(6) The address of its proposed registered office in this State and the name of its proposed registered agent in this State at such address.
(7) A statement of the aggregate number of shares which the corporation has authority to issue, itemized by classes, par value of shares or shares without par value, and series, if any, within a class.
(8) A statement of the aggregate number of issued shares itemized by classes, par value of shares or shares without par value, and series, if any, within a class.
(b) The application of the corporation for authority shall be accompanied by:
(1) A copy of its articles of incorporation duly authenticated by the proper official of its jurisdiction of incorporation.
(2) A certificate by such official that the corporation is in good standing under the laws of the state of its incorporation.
(3) A certificate, signed by an attorney licensed to practice in this State, that all of the requirements of this chapter relating to the authorization of foreign corporations to do business in this State have been complied with, and that, in the opinion of the attorney, such foreign corporation will be authorized to do business for lawful purposes in this State.
Section 33-23-30. Effect of authorization to do business in State.
Upon filing by the Secretary of State of the application for authority, the foreign corporation shall be authorized to do in this State any business set forth in the application. Such authority shall continue so long as the corporation retains its authority to do such business in its jurisdiction of incorporation, and so long as its authority to do business in this State has not been surrendered, suspended, revoked, or otherwise terminated as provided in this chapter.
Section 33-23-40. Powers and obligations of foreign corporation.
A foreign corporation authorized to do business in this State shall, until such authority is surrendered, suspended, revoked or otherwise terminated, have the same, but no greater, powers, rights and privileges as a domestic corporation organized for the purposes set forth in its application for authority; and except as otherwise provided in this act, shall be subject to the same duties, restrictions, liabilities, and penalties now or hereafter imposed upon a domestic corporation or like character.
Section 33-23-50. Corporate name of foreign corporation.
(a) No foreign corporation shall be authorized to do business in this State unless the name of the corporation complies with the requirements of Section 33-5-10 and Section 33-5-40.
(b) If a foreign corporation authorized to do business in this State shall change its name in its jurisdiction of incorporation, it shall within thirty (30) days after the effective date thereof, amend its application of authority as provided by Section 33-23-80.
(c) If the corporation fails to file the amendment required by subsection (b), or if the name to which it has changed would be unavailable to it on an original application for authority, the corporation's authority to do business in this State shall be suspended and it shall not thereafter do any business in this State until it has filed the amendment or has adopted a name which is available to it under the laws of this State.
Section 33-23-60. Amendment to or restatement of articles of incorporation of foreign corporation.
Whenever a foreign corporation authorized to do business in this State amends or restates its articles of incorporation, it shall, within sixty (60) days after the effective date of the amendment, deliver to the Secretary of State for filing, as provided by Sections 33-1-40 to 33-1-60, a copy of such amendment or restatement duly authenticated by the proper officer of its jurisdiction of incorporation; but the filing thereof by the Secretary of State shall not of itself enlarge or alter its authority to do business in this State or entitle it to adopt any name other than that under which it is authorized to do business in this State.
Section 33-23-70. Merger of foreign corporation authorized to do business in State. Whenever a foreign corporation authorized to do business in this State shall be the surviving corporation in a statutory merger permitted by the laws of its jurisdiction of incorporation, it shall, within sixty (60) days after the effective date of the merger, deliver to the Secretary of State for filing, as provided by Section 33-1-60, a copy of the articles of merger duly authenticated by the proper officer of the jurisdiction under the laws of which the merger was effected. It shall not be necessary for such corporation to secure either new or additional authority to do business in this State, unless the name of such corporation is changed, or the corporation proposes to do other or additional business than that which it is then authorized to do in this State.
Section 33-23-80. Amended application for authority.
(a) A foreign corporation authorized to do business in this State shall amend its application for authority if it shall:
(1) Change its corporate name, provided that such change has been effected under the laws of its jurisdiction of incorporation;
(2) Enlarge, limit, or otherwise change the business or businesses which it does or proposes to do in this State.
(b) Such amendment shall be executed, verified, and delivered for filing to the Secretary of State, as provided by Sections 33-1-40 to 33-1-60, and shall set forth:
(1) The name of the foreign corporation as it appears on the index of names of authorized foreign corporations in the office of the Secretary of State.
(2) The jurisdiction under the laws of which it is incorporated.
(3) The date on which it was authorized to do business in this State.
(4) The proposed amendment to its application of authority.
(5) If the name of the corporation is to be changed, a statement that the change of name has been effected under the laws of its jurisdiction of incorporation, and the date the change was effected.
(6) If the business which it proposes to do in this State is to be enlarged, limited or otherwise changed, a statement that it is authorized to do that business under the laws of its jurisdiction of incorporation.
(c) Upon filing of such amended application by the Secretary of State, the effect shall be the same as set forth in Section 33-23-30.
Section 33-23-90. Surrender of foreign corporation's authority to do business in State.
(a) A foreign corporation authorized to do business in this State may surrender its authority, by executing, verifying, and delivering, for filing, as provided in Sections 33-1-40 to 33-1-60, an application for surrender of authority, which shall set forth:
(1) The name of the foreign corporation as it appears on the index of names of authorized foreign corporations in the office of the Secretary of State.
(2) The jurisdiction of its incorporation.
(3) The date on which it was authorized to do business in this State.
(4) That the corporation is not as of the date of application doing business in this State.
(5) That it surrenders its authority to do business in this State.
(6) That it revokes the authority of its registered agent in this State to accept service of process, and consents that process in any action, suit or proceeding based upon any cause of action arising in this State before the date of filing the application may be served on the Secretary of State after the filing of the application.
(7) A post office address within or without this State to which the Secretary of State shall mail a copy of any process against the corporation served upon him.
(8) A certificate of the South Carolina Tax Commission dated not more than ten (10) days before the filing of the application for surrender of authority that there are no unpaid fees or franchise taxes payable by the corporation.
(b) The authority of the foreign corporation to do business in this State shall terminate as of the date of filing by the Secretary of State of the application for surrender of authority.
Section 33-23-100. Foreign corporation's termination of existence in jurisdiction of its incorporation; effect upon authority in this State.
(a) When a foreign corporation authorized to do business in this State shall be dissolved, or its authority or existence otherwise canceled or terminated, in its jurisdiction of incorporation, or when the corporation is merged into or consolidated with another foreign corporation which is not authorized to do business in this State, the corporation or its successor or trustee shall deliver for filing with the Secretary of State a certificate of the appropriate official of its jurisdiction of incorporation attesting to, or a certified copy of an order or decree of a court of its jurisdiction of incorporation directing the dissolution of such foreign corporation, the termination of existence, the cancellation or revocation of its authority, or its merger into or consolidation with another foreign corporation.
(b) The authority of the foreign corporation to do business in this State shall terminate as of the date of filing by the Secretary of State of the certificate.
(c) The Secretary of State shall be the agent of the foreign corporation for service of process in any action, suit, or proceeding based upon any cause of action arising in the State before the date of filing, the certificate, order or decree, and he shall promptly send by certified mail a copy of any such process to the corporation at the post office address on file in his office.
Section 33-23-110. Revocation of foreign corporation's authority to do business in State.
(a) The authority of a foreign corporation to do business in this State may be revoked by the Secretary of State, as provided by subsection (b), if a foreign corporation has failed to:
(1) File its annual report within the time specified by Section 33-25-10;
(2) pay any fees, franchise taxes or penalties prescribed by the law of South Carolina when they have become due and payable;
(3) appoint and maintain a registered agent in this State as required by Section 33-5-40;
(4) file change of registered office or registered agent as required by Section 33-5-50;
(5) file with the Secretary of State with the required time any filing required to be made under this Act; or if
(6) a misrepresentation has been made of a material fact in an application, report, affidavit, interrogatory or other document required by this Act.
(b) The authority of a foreign corporation shall be revoked only after the Secretary of State (1) shall have mailed to the corporation's registered office in this State at least ninety (90) days' notice of impending revocation of its authority to do business in this State, including a specification of the default, and (2) the corporation shall fail prior to revocation to remove the ground of default.
(c) Upon revoking the authority of the foreign corporation, the Secretary of State shall issue a certificate of revocation in duplicate, file one copy in his office, and mail the other by certified mail to the corporation at its registered office in this State, or if there be no such registered office, to the post office address of the corporation in the jurisdiction of its incorporation on file in such office.
(d) The authority of the corporation to do business in this State shall cease as of the date of the certificate of revocation.
Section 33-23-120. Suits by Attorney General against foreign corporations.
(a) The Attorney General may bring an action in the county where the registered or principal office of the corporation is located within this State to restrain a foreign corporation from doing in this State:
(1) without authority any business for which authority is required by this Act;
(2) any business not set forth in its application for authority or amendment thereto filed with the Secretary of State;
(3) any business after its authority to transact business in this State has been surrendered or revoked;
(4) any business after it is dissolved or its authority or existence is otherwise terminated or canceled in the jurisdiction of its incorporation; or
(5) any business, authority for which was obtained through fraud, misrepresentation, or concealment of a material fact. A certified copy of any order of court in such action shall be filed with the Secretary of State.
(b) The Secretary of State shall be the agent of the foreign corporation upon whom process against it may be served in any action, suit or proceeding arising under this section based upon any cause of action arising in this State before the date of filing the order of court, and he shall promptly send by certified mail a copy of any such process to the corporation at the post office address on file in his office.
(e) The enumeration in this section of grounds for actions by the Attorney General does not exclude any other statutory or common law action by the Attorney General for such relief or revocation or forfeiture of corporate franchises.
Section 33-23-130. Service of process on foreign corporations.
Service of process on foreign corporations shall be in accord with the applicable provisions of Title 15.
Section 33-23-150. Application for chapter to corporations previously authorized to do business in State. Every foreign corporation which on January 1, 1964, is authorized to do business in this State shall continue to have such authority for any purpose or purposes for which a corporation might secure authority under this Act. Such foreign corporations shall have the same duties, limitations, restrictions, liabilities and penalties as a foreign corporation authorized under this Act.
CHAPTER 25
Business Corporations - Annual Reports, Powers of Secretary of State; Miscellaneous Provisions
Section 33-25-10. Annual Reports of Domestic and Foreign Corporations. Each domestic corporation and foreign corporation authorized to do business in this State which is required to file an annual report with the South Carolina Tax Commission under Title 12, Chapter 19 of the 1976 Code shall file an annual report with the Secretary of State at the time specified for filing an annual report with the South Carolina Tax Commission, setting forth:
(a) The name of the corporation and its jurisdiction of incorporation.
(b) The name of its registered agent by this State and address of the registered office of the corporation in this State; and in the case of a foreign corporation the address of its registered or principal office in the jurisdiction of its incorporation.
(c) The names and business and residence addresses of the directors and officers of the corporation.
(d) Such other information as shall be required by the reports submitted to the South Carolina Tax Commission under Section 12-19-20.
Section 33-25-20. Powers of Secretary of State.
The Secretary of State shall have the power and authority reasonably necessary to enable him to administer this Act efficiently and to perform the duties therein imposed upon him.
Section 33-25-30. Interrogatories by Secretary of State.
(a) The Secretary of State may propound to any corporation, domestic or foreign, which he has reason to believe is subject to the provisions of this Act, and to any officer or director thereof, such interrogatories as may be reasonably necessary and proper to enable him to ascertain whether such corporation has complied with all the provisions of this Act which are or may be applicable to such corporations.
(b) Interrogatories so propounded shall be answered within thirty days after the mailing thereof, or within such additional time as may be fixed by the Secretary of State. Answers to interrogatories shall be full and complete and shall be made in writing and under oath. If such interrogatories be directed to an individual they shall be answered by him, and if directed to a corporation they shall be answered by the president, vice-president, secretary or assistant secretary thereof.
(c) The Secretary of State need not file any document to which such interrogatories relate until they be answered as herein provided, and not then if the answers thereto disclose that such document is not in conformity with the provisions of this Act.
(d) The Secretary of State shall certify to the Attorney General, for such action as the Attorney General may deem appropriate, all interrogatories and answers thereto which disclose a violation of any of the provisions of this Act.
Section 33-25-40. Information in interrogatories shall not be disclosed.
Interrogatories propounded by the Secretary of State and the answers thereto shall not be open to public inspection nor shall the Secretary of State disclose any facts or information obtained therefrom except insofar as his official duty may require disclosure, or in the event such interrogatories or the answers thereto are required for evidence in any proceeding instituted by this State.
Section 33-25-50. Effect of failure to answer interrogatories.
(a) Each corporation, domestic or foreign, which fails or refuses within the prescribed time to answer fully and truthfully any interrogatories propounded by the Secretary of State in accordance with Section 33-25-30 shall be deemed guilty of a misdemeanor and upon conviction thereof may be fined in an amount not exceeding five hundred dollars ($500.00).
(b) Each officer and director of a corporation, domestic or foreign, who fails or refuses within the prescribed time to answer fully and truthfully any interrogatories propounded to him by the Secretary of State in accordance with Section 33-25-30 shall be deemed guilty of a misdemeanor and upon conviction thereof may be fined in an amount not exceeding five hundred dollars ($500.00).
(c) A domestic corporation which fails or refuses within the prescribed time to answer any interrogatories shall be subject to dissolution by administrative action under Section 33-21-110; a foreign corporation failing or refusing within the prescribed time to answer such interrogatories shall be subject to revocation of its authority under Section 33-23-110.
Section 33-25-60. Effect of false and misleading statements in documents filed with Secretary of State.
(a) Any person who signs any document required to be delivered for filing with the Secretary of State by any corporation, domestic or foreign, knowing that such document contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, shall be deemed guilty of a misdemeanor and upon conviction thereof may be fined in an amount not exceeding five hundred ($500.00) dollars.
(b) Any person who violates subsection (a) shall be liable to any person who is damaged thereby.
Section 33-25-70. Certified copies of documents filed with Secretary of State as prima facie evidence.
All copies of documents which have been filed with the Secretary of State as required by any provision of this Act shall, when certified by him, be taken and received in all courts, public offices and official bodies as prima facie evidence of the facts therein stated."
Voting of shareholders
SECTION 3. Section 34-25-40 of the 1976 Code is amended to read:
"Section 34-25-40. Voting of shareholders.
In the determination of all questions requiring action by the shareholders of a savings and loan association or a building and loan association, each shareholder shall be entitled to cast one vote, plus an additional vote for each one hundred dollars or fraction thereof of the withdrawal value of savings accounts, if any, held by such shareholder. No shareholder, however, shall cast more than fifty votes.
At any meeting of the shareholders of a savings and loan association or a building and loan association, voting may be in person or by proxy. Every proxy shall be in writing and signed by the shareholder or his attorney in fact and, when filed with the secretary, shall, unless otherwise specified in the proxy, continue in force from year to year until revoked by a writing delivered to the secretary or until superseded by subsequent proxies."
Service of process on domestic corporations
SECTION 4. Section 15-9-210 of the 1976 Code is amended to read:
"Section 15-9-210. Service of process on domestic corporations.
(a) The registered agent appointed by any domestic corporation shall be the agent of such corporation for service of any process, notice, or demand required or permitted by law to be served, and such service shall be binding upon the corporation.
(b) Whenever a corporation shall fail to appoint or maintain a registered agent in this State, or whenever its registered agent cannot with reasonable diligence be found at the registered office, the Secretary of State shall be an agent of such corporation upon whom any such process, notice, or demand may be served. Service on the Secretary of State of any such process, notice, or demand shall be made by delivering to and leaving with him, or with any person designated by him to receive such service, duplicate copies of such process, notice, or demand. In the event any such process, notice, or demand is served on the Secretary of State, he shall immediately forward one of the copies by certified mail, addressed to the corporation at its registered office. Any service so had on the Secretary of State shall be returnable in not less than thirty (30) days.
(c) The Secretary of State shall keep a record of all processes, notices and demands served upon and shall record therein the time of service and his action with reference thereto.
(d) Nothing herein contained shall limit or impair the right to serve any process, notice, or demand required or permitted by law to be served upon a corporation in any other manner permitted by law.
(e) The Secretary of State shall charge a fee of ten (10) dollars to accompany such service."
Service of process on foreign corporations
SECTION 5. Section 15-9-240 of the 1976 Code is amended to read:
"Section 15-9-240. Service of process on authorized foreign corporation.
(a) The registered agent appointed by a foreign corporation authorized to do business in this State under Section 33-5-50 shall be an agent of such corporation for service of any process, notice or demand required or permitted by law to be served, and such service shall be binding upon the corporation.
(b) Whenever a foreign corporation authorized to do business in this State shall fail to appoint or maintain a registered agent in this State, or whenever any such registered agent cannot with reasonable diligence be found at the registered office, or whenever the certificate of authority of a foreign corporation shall be suspended 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.
(1) Service on the Secretary of State of any such process, notice or demand shall be made by filing such service with him, duplicate copies of such process, notice or demand. In the event any such process, notice or demand is served on the Secretary of State, he shall immediately cause one of such copies thereof to be forwarded by certified mail, addressed to the corporation at its registered office or principal office in its jurisdiction of incorporation. Any service so had on the Secretary of State shall be returnable in not less than thirty (30) days.
(2) Proof of service shall be by affidavit of compliance filed, together with a copy of process, with the clerk of court in which the action or proceeding is pending. There shall be filed with the affidavit of compliance, the return receipt signed by such foreign corporation or other official proof of delivery, or if acceptance was refused, there shall be filed the original envelope with the notation by the postal authorities that acceptance was refused. If acceptance was refused, a copy of the notice and process together with the notice of the mailing by certified mail and of refusal to accept shall be sent to such foreign corporation. Refusal to accept delivery of the certified mail or to sign the return receipt shall not affect the validity of the service and the foreign corporation refusing to accept such certified mail shall be charged with knowledge of the contents thereof.
(3) The Secretary of State shall keep a record of all processes, notices and demands served upon him under this section and shall record therein the time of such service and his action with reference thereto.
(A) Nothing herein contained shall limit or affect the right to serve any process, notice or demand, required or permitted by law to be served upon a corporation in any other manner now or hereafter permitted by law.
(B) The Secretary of State shall charge a fee of ten (10) dollars for such service."
Service of process on corporations not authorized to do business in this State
SECTION 6. The 1976 Code is amended by adding:
"Section 15-9-245. Service of process on foreign corporation not authorized to do business in State.
(a) Every foreign corporation which is not authorized to do business in this State shall, by doing in this State, either itself or through an agent, any business, including any business activity for which authority need not be obtained as provided by Section 33-23-10, be deemed to have designated the Secretary of State as its agent upon whom process against it may be served in any action or proceeding arising in any court in this State out of or in connection with the doing of any business in this State.
(b) Service of such process shall be made by delivering to and leaving with the Secretary of State, or with any person designated by him to receive such service, duplicate copies of such process, notice, or demand. The Secretary of State shall thereupon immediately cause one of such copies to be forwarded by certified mail, addressed to the corporation, either at its registered office in the jurisdiction of its incorporation, its principal place of business in such jurisdiction, or at the last address of such foreign corporation known to the plaintiff, in that order.
(c) Proof of service shall be by affidavit of compliance with this section and filed, together with a copy of the process, with the clerk of court in which the action or proceeding is pending. There shall be filed with the affidavit of compliance the return receipt signed by such foreign corporation or other official proof of delivery, or if acceptance was refused, there shall be filed the original envelope with a notation by the postal authorities that acceptance was refused. If acceptance was refused, a copy of the notice and process, together with notice of the mailing by certified mail and of refusal to accept shall be promptly sent to such foreign corporation. If this section is complied with, the refusal to accept delivery of the certified mail or to sign the return receipt shall not affect the validity of the service, and the foreign corporation refusing to accept such certified mail shall be charged with knowledge of the contents thereof.
(d) Service under this section may also be made by delivery of a copy of the process to any foreign corporation outside the State. Proof of such delivery shall be made by affidavit of the person making delivery, and the affidavit shall be filed with the clerk of court in which the action or proceeding is pending.
(e) The Secretary of State shall charge a fee of ten ($10) dollars for such service."
Service on nonresident directors of domestic corporations
SECTION 7. Section 15-9-430 of the 1976 Code is amended to read:
"Section 15-9-430. Service on nonresident directors of domestic corporations.
(a) Each director of a domestic corporation who is a nonresident of this State at the time of his election or who becomes a nonresident during his term in office, shall by his acceptance of election or by continuing in office as director be deemed to have appointed the Secretary of State as an agent to receive service of process upon him in any action or proceeding relating to actions of such corporation and arising while he held office as director of such corporation.
(b) Service of such process shall be made by delivering to and leaving with the Secretary of State, or with any person designated by him to receive such service, duplicate copies of such process. The Secretary of State shall thereupon immediately cause one of such copies to be forwarded to the nonresident director by certified mail. Proof of service shall be by affidavit of compliance with this section filed, together with a copy of the process, with the clerk of court in which the action or proceeding is pending.
(c) Service under this section may also be made by delivery of a copy of the process to the nonresident director at his address outside the State. Proof of such delivery shall be made by affidavit of the person mailing delivery and the affidavit shall be filed with the clerk of court in which the action or proceeding is pending.
(d) The resignation in good faith of any nonresident director shall effective as of the date of filing with the Secretary of State a notice of his resignation, terminate the application to him of the provisions of this section, except for any cause of action already accrued.
(e) Every corporation which has any director who is or becomes a nonresident of this State shall file with the Secretary of State the names and addresses of such directors, and shall file supplementary reports showing any change of address or residence of any such director. Such reports shall be filed within ten (10) days from the date of election, removal from this State, or change of address, of any such director. The Secretary of State shall compile and maintain a current list, indexed by corporations, of all nonresident directors of domestic corporations.
(f) The Secretary of State shall charge a fee of ten dollars ($10) to accompany service thereunder."
Items deleted
SECTION 8. Section 33-29-10 of the 1976 Code is amended by deleting items (10), (11) and (38).
Take-over Bid Disclosure Act
SECTION 9. Title 35 of the 1976 Code is amended by adding:
"CHAPTER 2
Take-Over Bid Disclosure Act
Section 35-2-10. Short title.
This chapter shall be known as the Take-over Bid Disclosure Act.
Section 35-2-20. Definitions.
When used in this chapter:
(1) 'Securities Commissioner' means the Secretary of State.
(2) 'Take-over bid' means the offer to acquire or the acquisition of any equity security of a target company, pursuant to a tender offer or request or invitation for tenders, if after acquisition the offeror would be directly or indirectly a record or beneficial owner of more than ten percent of any class of the outstanding equity securities of the target company.
(3) 'Take-over bid' does not include:
(a) An offer to purchase equity securities to be effected by a broker, registered under the laws of this State, on a stock exchange or in the over-the-counter market if the broker performs only the customary broker's function, and receives no more than the customary broker's commissions and neither the principal nor the broker solicits or arranges for the solicitation of orders to sell such equity securities; provided, however, that take-over bid shall not exclude any such offer made by a person who intends to change the control of the target company unless such person shall have filed with the Securities Commissioner and with the registered agent in this State of the target company a statement setting forth the purpose of such change, the method of carrying out such intention and such other information as the Securities Commissioner may require as necessary in the public interest or for the protection of investors; and any person who, at the time he makes such offer, is a record or beneficial owner of in excess of ten percent of any class of the equity securities of the target company and has purchased more than one percent of such class during the twelve month period preceding such offer shall be presumed to have such intention unless the Securities Commissioner determines otherwise pursuant to item (h). A person required to file a Schedule 13D with the Securities and Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 may file a signed copy of such Schedule 13D with the Securities Commissioner if such Schedule 13D contains the information required in the preceding sentence.
(b) An offer made by an offeror to purchase its own equity securities, or equity securities of a target company if more than fifty percent of the shares entitled to vote in the election or removal of directors, trustees or a general partner of the target company are held directly or indirectly by the offeror.
(c) An offer the acceptance of which will require a vote by holders of the equity securities in question of the target company, under the certificate of incorporation, declaration of trust, partnership agreement or the applicable law, on a merger, consolidation, share exchange, reclassification of securities or sale of assets in consideration, in whole or in part, of the issuance of securities of another corporation, real estate investment trust or limited partnership.
(d) An offer in which the acquisition by the offeror, in the instant transaction and in all acquisitions of equity securities of the same class during the preceding twelve months, does not exceed two percent of that class of equity securities of the target company.
(e) An offer for the sole account of the offeror to not more than twenty-five beneficial owners of the equity securities in question within any consecutive twelve month period, in good faith and not for the purpose of avoiding this chapter.
(f) An offer solely in exchange for other securities, except to the extent of cash for fractions of a unit of securities, for the sole account of the offeror, in good faith and not for the purpose of avoiding this chapter, where the offeror has registered the offer pursuant to the terms of the Securities Act of 1933, and where the offer has also been registered under the provisions of the law of this State or is exempted from registration by the terms of the law.
(g) An offer to purchase equity securities of a class not registered pursuant to Section 12 of the Securities Exchange Act of 1934.
(h) An offer which the Securities Commissioner by order, after notice to the offeror and to the target company, shall exempt from the provisions of this chapter as not entered into for the purpose of, and not having the effect of, changing or influencing the control of the target company or otherwise as not comprehended within the purposes of this chapter.
Any person contending that an offer is not a take-over bid shall have the burden of proof of such proposition by a preponderance of the evidence.
(4) 'Person' means an individual, partnership, limited partnership, syndicate, corporation, joint-stock company, unincorporated organization, trust or association.
(5) 'Target company' means a corporation, real estate investment trust or limited partnership (a) organized under the laws of South Carolina, or (b) having its principal place of business and substantial assets within this State, or (c) which has equity securities owned of record or beneficially by 100 or more South Carolina residents, or (d) which has a class of equity securities five percent or more of which is owned of record or beneficially by South Carolina residents.
(6) 'Equity security' means (a) any stock, bond or other obligation of or interest in a corporation, real estate investment trust or limited partnership, the holder of which has the right to vote for the election or removal of directors, trustees or a general partner of the corporation, real estate investment trust or limited partnership, respectively;
(b) any security convertible into a security carrying such rights; or
(c) any right, option or warrant to purchase any of the foregoing.
(7) 'Offeror' means a person who makes an offer, and includes persons acting jointly or in concert, or who intend to exercise jointly or in concert any voting rights attached to the securities for which the offer is made. An 'offeror' does not include any bank, broker-dealer, attorney, accountant or consultant furnishing information or advice to an offeror and not otherwise participating in the offer.
(8) 'Offeree' means the beneficial or record owner of securities which an offeror acquires or offers to acquire in connection with an offer.
(9) 'Commencement' of a take-over bid shall be deemed to occur on the date of the first invitation to deposit or sell securities.
(10) 'Associate' used to indicate a relationship with any person means (a) any corporation or organization of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity securities, (b) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar capacity, and (c) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person.
Section 35-2-30. Exceptions.
This chapter shall not apply to an offer in which the target company is: (1) a domestic insurer covered by the provisions of Sections 38-29-60 to 38-29-130; (2) a public utility company or a holding company, as defined in Section 2 of the Federal Public Utility Holding Company Act of 1935, an acquisition of or by, or merger with, which is subject to approval by the appropriate federal agency as provided in such act; or (3) a national banking association or bank holding company subject to the Federal Bank Holding Company Act of 1956, an acquisition of or by, or merger with, which is subject to approval by the appropriate federal agency as provided in such act.
Section 35-2-40. Filing of ownership information.
(1) Any person who after acquiring directly or indirectly the beneficial ownership of any equity security of a target company, is directly or indirectly a beneficial owner of more than five percent of any class of the outstanding equity securities of the issuer shall, within ten days after such acquisition, file with the Securities Commissioner a statement containing the following information and such additional information as the Securities Commissioner by rule prescribes:
(a) The identity and background of all persons on whose behalf the acquisition of any equity security of the target company has been or is to be effected.
(b) The source and amount of funds or other consideration used or to be used in acquiring any equity security, including, a statement describing any securities which are being offered in exchange for the equity securities of the target company, and if any part of the acquisition price is or will be represented by borrowed funds or other considerations a description of the transaction and the names of the parties thereto.
(c) If the purpose of the acquisition is to gain control of the target company, a statement of any plans or proposals which such person has, upon gaining control, to liquidate the target company, sell its assets, effect its merger or consolidation, or make any other major change in its business, corporate structure, management or personnel.
(d) The number of shares or units of any equity security of the target company of which each such person and each associate of such person and each person included as an offeror is the beneficial owner or which each such person has a right to acquire, directly or indirectly, together with the name and address of each such person.
(e) Material information as to any contracts, arrangements or understandings which the filing person has with any person with respect to any equity security of the target company, including transfers of any equity security, joint ventures, loan or option arrangements, puts and calls, guarantees of loans, guarantees against loss, guarantees of profits, division of losses or profits, or the giving or withholding of proxies, stating the names and addresses the persons with whom such contracts, arrangements or understandings have been entered into.
(2) If the target company is an issuer the acquisition of whose equity securities is subject to the requirements of Section 13(d) of the Securities Exchange Act of 1934, any person may file with the Securities Commissioner a signed copy of any Schedule 13D required thereby in lieu of the statement prescribed in subsection (1) if such Schedule 13D contains the information required in subsection (1).
(3) Any person may file with the Securities Commissioner, in lieu of the statement prescribed in subsection (1) and unless otherwise ordered by the Securities Commissioner, a statement containing his name and address, the number of shares or units of any equity security of the target company which are beneficially owned directly or indirectly by him and each of his associates, the date of their acquisition and such other information as the Securities Commissioner may by rule prescribe, if he certifies that such securities were acquired by him in the ordinary course of his business and not for the purpose of having the effect of changing or influencing the control of the issuer nor in connection with or as a participant in any transaction having such purpose or effect, and that he does not intend to make a take-over bid involving the target company.
(4) If any material change occurs in the facts set forth in the statement, the person filing the statement shall, within ten days thereafter, file with the Securities Commissioner an amendment describing the change, in accordance with such rules as the Securities Commissioner prescribes.
(5) Each person required to file any statement or amendment thereto with the Securities Commissioner under this section shall send a signed copy of such statement or amendment by certified mail to the target company at its registered office in this State not later than the date of filing.
(6) No person required to file any ownership statement under this section, who is delinquent in the filing of such statement, may file a registration statement relating to a take-over bid for a period of thirty days after the date of filing of the ownership statement, except as may be permitted by order of the Securities Commissioner.
Section 35-2-50. Requirements for making take-over bid.
It shall be unlawful for any person to make a take-over bid involving a target company, or to acquire any equity securities of a target company pursuant to the take-over bid, unless a registration statement has been filed pursuant to this chapter.
Section 35-2-60. Filing of registration statement; amendment of statement.
(1) Not more than twenty-four hours after commencement of a take-over bid, the offeror shall file with the Securities Commissioner and with the target company, at its registered office in this State, a registration statement of the offeror's take-over bid, which shall include:
(a) The name and address of the offeror;
(b) The identity and number of securities to be purchased;
(c) The consideration to be offered;
(d) The time at which the offer commenced and at which it is intended to expire;
(e) Whether the offeror will unconditionally accept all or any part of the securities tendered;
(f) The conditions, if any, upon which acceptance will be made;
(g) Any other contractual terms of the offer;
(h) Copies of all prospectuses, brochures, advertisements, circulares, letters, or other matter by means of which the offeror is disclosing to offerees all information material to a decision to accept or reject the offer.
(2) If any material change occurs in the facts set forth in the registration statement required by this chapter, the offeror who filed this statement shall promptly notify the Securities Commissioner and the target company of the change and shall amend the disclosure statement to reflect the change.
Section 35-2-70. Hearing
(1) The Securities Commissioner may in his discretion order a hearing to determine whether the take-over bid provides full and fair disclosure to the offerees of all material information concerning the offer, whether the requirements of this chapter have been met or whether the price or any other substantial term of the take-over bid is unfair to the offerees. The offeror and the target company and any other person which the Securities Commissioner may in his discretion permit to participate shall have an opportunity to participate in any such hearing.
(2) Any hearing called by the Securities Commissioner pursuant to this section shall have the burden of proving by a preponderance of the evidence that the take-over bid provides full and fair disclosure to the offerees of all material information concerning the offer, that the price and all other substantial terms of the offer are fair to the offerees, and that the take-over bid is in compliance with this chapter. After the conclusion of the hearing, if the Securities Commissioner finds that the take-over bid fails to provide full and fair disclosure to the offerees of all material information concerning the offer, or that the price or any other substantial term of the offer is unfair to the offerees, or that the take-over bid is not in compliance with this chapter, the Securities Commissioner shall issue findings to that effect for the purpose of informing the security holders and may issue an order prohibiting the take-over bid, stating the basis for the order. The Securities Commission's findings and order, if any, shall be issued within fifty-five days of the commencement of the take-over bid. Prior to the earlier of issuance of such findings and order, if any, or the passage of the fifty-five days from the commencement of the take-over bid, no equity securities of the target company shall be purchased or paid for.
Section 35-2-80. Requirements of take-over bid.
The following provisions shall apply to every take-over bid:
(1) No offeror may make a take-over bid which is not made to all holders of the class or series of the target company's equity securities in this State on substantially the same terms as made to holders who reside in other states.
(2) The period of time within which securities may be deposited pursuant to a take-over bid shall not be less than twenty days; such period to commence on the day after the commencement of the take-over bid.
(3) Securities deposited pursuant to a take-over bid may be withdrawn by an offeree by demand in writing to the offeror or the depository at any time within twenty days after the commencement of the take-over bid and at any time after thirty-five days after the commencement of the take-over bid.
(4) Where a take-over bid is made for less than all the outstanding equity securities of a class and where a greater number of securities is deposited pursuant thereto than the offeror is bound or willing to take up and pay for, the securities taken up by the offeror shall be taken up as nearly as possible on a pro rata basis, disregarding fractions, according to the number of securities deposited by each depositor.
(5) If an offeror varies the term of a take-over bid before its expiration date by increasing the consideration offered to security holders, the offeror shall pay the increased consideration for all equity securities accepted, whether such securities have accepted by the offeror before or after the variation in the terms of the offer.
(6) No offeror may make a take-over bid involving a target company in this State, or acquire any equity securities of a target company pursuant to the offer, at any time when an administrative or injunctive proceeding is pending on behalf of the Securities Commissioner against the offeror alleging a violation of this chapter or the Uniform Securities Act.
Section 35-2-90. Promulgation of regulations, forms and orders; cease and desist orders; court actions; Securities Commissioner as agent for service of process.
(1) The Securities Commissioner may promulgate regulations, forms and orders necessary to carry out the purposes of this chapter. In addition to other powers of the Securities Commissioner, the Securities Commissioner, by regulations or order, may exempt transactions from, modify or suspend particular provisions of this chapter to the extent the Securities Commissioner deems such action necessary or appropriate to make their applications reasonably consistent with the Securities Exchange Act of 1934.
(2) Whenever it appears to the Securities Commissioner that any person has engaged or is about to engage in an act or practice constituting a violation of any provision of this chapter or any regulation or order adopted under this chapter, he may investigate an issue orders and notices including cease and desist orders. In addition to all other remedies, he may bring an action in a court of competent jurisdiction in the name and on behalf of the State against any person participating in or about to participate in a violation of this chapter to enjoin those persons form continuing or doing any act in violation of this chapter or to enforce compliance with this chapter. In any court proceedings, the Securities Commissioner may apply for and on due showing be entitled to have issued the court's subpoena requiring the appearance of any person and his employees or agents and the production of documents, books and records as may appear necessary for the hearing of the petition, to testify and give evidence concerning the acts or conduct or things complained of in the action. Upon a proper showing the court may grant a permanent or temporary injunction or temporary restraining order or may order rescission of any sales, tenders for sale, purchases or tenders for purchase of equity securities determined to be unlawful under this chapter or any regulation or order of the Securities Commissioner.
(3) Every nonresident offeror, except a foreign corporation which has appointed and keeps a resident agent in this State, shall be deemed to have appointed the Securities Commissioner as his agent upon whom may be served any lawful process, authorized by this chapter, with the same effect as though served upon the offeror personally. Service of process shall be accomplished by leaving a copy of the process in the office of the Securities Commissioner, but it shall not be effective unless notice of the service and a copy of the process is sent by registered mail to the nonresident offeror served at his last know address.
Section 35-2-100. Penalties; limitations period; criminal proceedings.
(1) Any person, including a controlling person of an offeror or target company, who violates this chapter or any regulation or order promulgated under the provisions of this chapter shall be deemed guilty of a misdemeanor and upon conviction shall be fined not more than five thousand dollars or imprisoned not more than three years or both. Each of the acts specified shall constitute a separate offense and a prosecution or conviction for any one of such offenses shall not bar prosecution or conviction for any other offense. No indictment or information may be returned under this chapter more than three years after the alleged violation.
(2) The Securities Commissioner may refer such evidence as is available concerning violations of this chapter or of any regulation or order hereunder to the attorney general or the solicitor of the appropriate circuit who may, with or without any reference, institute the appropriate criminal proceedings under this chapter, If referred to a solicitor, he shall within ninety days file with the Securities Commissioner a statement concerning any action taken or, if no action has been taken, the reasons therefor.,
(3) Nothing in this chapter shall limit the power of the State to punish any person for any conduct which constitutes a crime under any other statute.
Section 35-2-110. Liability of offeror to seller for certain conduct.
Any offeror who:
(1) Purchases an equity security in connection with a take-over bid not incompliance with this chapter; or
(2) Purchases an equity security in connection with a take-over bid by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, the seller not knowing of the untruth or omission, and who does not sustain the burden of proof that he did not know and in the exercise of reasonable care could not have known, of the untruth or omission;
Is liable to the person selling the security to him, who may sue either at law or in equity (a) to recover the security, plus any income received thereon by the offeror, upon tender of the consideration received; or (b) for damages, including interest at eight percent per year, together with costs and reasonable attorney's fees.
No findings made by the Securities Commissioner pursuant to Section 35-2-70, including any decision regarding the calling of a hearing and any findings made in conjunction with the hearing, shall preclude any claim under this section.
No action may be maintained under this section unless commenced before the expiration of three years after the termination of the take-over bid.
The rights and remedies under this chapter are in addition to any other rights or remedies that may exist at law or in equity.
Section 35-2-120. Fees
The Commissioner shall charge a filing fee of two hundred dollars for a registration statement filed by the offeror and two hundred dollars for a request for hearing filed by a target company or any other person. All fees shall be paid to the State Treasurer to be used by the Secretary of State for the administration and enforcement of this chapter.
Section 35-2-130. Saving provisions.
(1) Prior law exclusively governs all suits, actions, prosecutions or proceedings which are pending or may be initiated on the basis of facts or circumstances occurring before the effective date of this chapter, except that no civil suit or action may be maintained to enforce any liability under prior law unless brought within any period of limitation which applied when the cause of action accrued.
(2) All effective registrations under prior law, all administrative orders relating to such registrations, and all conditions imposed upon such registrations remain in effect so long as they would have remained in effect if this chapter had not been passed. They are considered to have been filed, entered or imposed under this chapter but are governed by prior law.
This section shall take effect July 1, 1981, but this section shall not apply to any take-over bid where such take-over bid in substantially the same form was commenced prior to the effective date of this section."
Repeal
Section 10. Act 531 of 1978 is repealed.
Analysis for identification purposes only
Section 11. The analysis lines following the code sections in this act are not intended as part of the sections but are only for purposes of identification.
Time effective
Section 12. This act shall take effect January 1, 1982, except the provisions of Sections 33-5-35, 33-5-60, 33-13-10, 33-13-80, 33-13-150, 33-13-160, 33-13-180 and 33-17-25, as contained in Section 2 of this act, and Sections 3, 4, 5, 7, 8, 9, 10 and 11 of this act shall take effect upon approval by the Governor.