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The provisions found in Article 7 relating to meetings of corporations with members are closely analogous to those found in the Business Corporation Act relating to shareholders' meetings. See Section 33-7-101, et seq. The statutory provision for permissive regular meetings is not found in the Business Corporation Act although it would appear that a business corporation wishing to establish regular meetings would be free to do so, so that no change is made in the law by this provision.

Subject to such provisions as section 33-31-705(c)(2) (which requires prior notice before certain matters may be brought before the members at an annual meeting), Section 33-31-701(d)(2) has been varied from the Model Act provision to permit any business to come before a corporation's annual meeting. This is somewhat different from the South Carolina Business Corporation Act.

Section 33-31-701(e) has been varied from the Model Act to make clear that corporations may specify in the articles or bylaws matters which may be taken up at regular meetings without notice. It is contemplated that corporations could provide that any business could be taken up at a regular meeting without notice.

Section 33-31-702. Special meetings.

(a) A corporation with members shall hold a special meeting of members:

(1) on call of its board or the person or persons authorized to do so by the articles or bylaws; or

(2) except as provided in the articles or bylaws of a religious corporation, if the holders of at least five percent of the voting power of any corporation sign, date, and deliver to any corporate officer one or more written demands for the meeting describing the purpose or purposes for which it is to be held.

(b) The close of business on the thirtieth day before delivery of the demand or demands for a special meeting to any corporate officer is the record date for the purpose of determining whether the five percent requirement of subsection (a) has been met.

(c) If a notice for a special meeting demanded under subsection (a)(2) is not given pursuant to Section 33-31-705 within thirty days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection (d), a person signing the

(d) Special meetings of members may be held in or out of this State at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings must be held at the corporation's principal office.

(e) Only those matters that are within the purpose or purposes described in the meeting notice required by Section 33-31-705 may be conducted at a special meeting of members.
OFFICIAL COMMENT

1. Matters To Be Considered at Special Meeting

Special meetings are called to consider matters that have arisen between annual meetings. Only those matters that are within the purpose or purposes described in the notice of the special meeting may be considered at a special meeting. Section 7.02(e). This is to ensure that members will have adequate notice of all matters to be considered, can decide whether or not to attend the meeting, and cannot be forced to vote on unnoticed matters.

2. Persons Who May Call Special Meetings

Special meetings of all nonprofit corporations may be called by: (1) the board of directors; and (2) a person or persons authorized to do so by the articles or bylaws. The articles or bylaws may authorize the presiding officer of the board, the president, any corporate officer, a member or any other person to call a special meeting of members. Except as provide din the articles or bylaws of a religious corporation a person or persons holding five percent or more of the voting power of any corporation may demand that a special meeting be called.

3. Obligations of Corporation

The corporation has thirty days from receipt of a proper demand for a special meeting to give notice of the meeting. It has discretion to set a convenient time and place for the meeting, but should give due consideration to the time and place suggested by the person demanding a special meeting. The board or person acting on behalf of the corporation must act in good faith consistent with the duties set forth in section 8.30.

4. Wrongful Refusal to Call Special Meeting

In a nonprofit corporation, unlike a business corporation, those seeking a special meeting may have no economic ability or incentive to bring a legal proceeding to compel a special meeting. Requiring those seeking a special meeting to sue may be tantamount to prohibiting special meetings wrongfully opposed by those running the corporation. Consequently, section 7.02(c) allows those seeking a special meeting to resort to self-help

If the members cannot or do not want to notice a meeting, they may sue under section 7.03 to compel the corporation to notice and hold the meeting.
SOUTH CAROLINA REPORTERS' COMMENTS

The provisions of Section 33-31-702 are very similar to those found in Section 33-7-102 of the Business Corporation Act, which governed nonprofit corporations until the passage of the present act. The differences are (i) Section 33-7-102(a)(2) requires ten percent of the voting power to call a special meeting and (ii) Section 33-7-102 (b) permits the record date to be set according to the procedures of Section 33-7-107; if the record date is not so set, then it is the date on which the first demand was signed.

Section 33-31-703. Court-ordered meeting.

(a) The court of common pleas of the county where a corporation's principal office in this State or, if none in this State, its registered office, is located may summarily order a meeting to be held:

(1) on application of a member or other person entitled to participate in an annual or regular meeting, and in the case of a public benefit corporation, the Attorney General, if an annual meeting was not held within the earlier of six months after the end of the corporation's fiscal year or fifteen months after its last annual meeting; or

(2) on application of a member or other person entitled to participate in a regular meeting, and in the case of a public benefit corporation, the Attorney General, if a regular meeting is not held within forty days after the date it was required to be held; or

(3) on application of a member who signed a demand for a special meeting valid under Section 33-31-702, a person or persons entitled to call a special meeting and, in the case of a public benefit corporation, the Attorney General, if:

(b) The court may fix the time and place of the meeting, specify a record date for determining members entitled to notice of and to vote at the meeting, prescribe the form and content of the meeting notice, fix the quorum required for specific matters to be considered at the meeting, or direct that the votes represented at the meeting constitute a quorum for action on those matters, and enter other orders necessary to accomplish the purpose or purposes of the meeting.

(c) If the court orders a meeting, it may also order the corporation to pay the member's costs, including reasonable counsel fees, incurred to obtain the order.
OFFICIAL COMMENT

Section 7.03 allows members, persons entitled to participate in an annual or regular meeting or to call a special meting, and the attorney general in the case of a public benefit corporation, to have a court enforce the provisions of sections 7.01 and 7.02 requiring annual, regular and special meetings. The court may act if (1) the annual meeting has not been held within the earlier of six months after the end of the corporation's fiscal year or fifteen months after its last annual meeting; (2) the regular meeting has not been held within 40 days after the date it was required to be held; or (3) a special meeting is not noticed within thirty days after the date demand was delivered to a corporate officer or was not held within a reasonable time. See section 7.05.

Under section 7.03 a court has discretion to determine whether or not to call an annual, regular or special meeting, when and where it should be held, what the record date will be, and what conditions, if any, should be imposed as a condition to holding the meeting. If it orders a meeting, it also has discretion to determine whether or not attorney's fees and costs should be paid by the corporation. In exercising its discretion the court should consider the good faith of the parties, the reasons the meeting has not been noticed or held, and other relevant factors.

Subsection (b) allows the court to fix the quorum requirement "or direct that the votes represented at the meeting constitute a quorum for" specified matters. This second alternative prevents those opposing the meeting from not attending the meting or withholding sufficient proxies to prevent a meeting from occurring due to lack of a quorum. A court-ordered notice should set forth any special quorum requirements to prevent members from being misled.

This section follows very closely the analogous provisions of South Carolina Business Corporation Act Section 33-7-103, altered only for purposes of clarity and application to nonprofit corporations. It therefore represents no substantive change from prior law.

Section 33-31-704. Action by written consent.

(a) Unless limited or prohibited by the articles or bylaws, action required or permitted by this chapter to be approved by the members may be approved without a meeting of members if the action is approved by members holding at least eighty percent of the voting power. The action must be evidenced by one or more written consents describing the action taken, signed by those members representing at least eighty percent of the voting power, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.

(b) If not otherwise determined under Section 33-31-703 or 33-31-707, the record date for determining members entitled to take action without a meeting is the date the first member signs the consent under subsection (a).

(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document filed with the Secretary of State.

(d) Written notice of member approval pursuant to this section must be given to all members who have not signed the written consent. If written notice is required, member approval pursuant to this section is effective ten days after the written notice is given.
OFFICIAL COMMENT

Section 7.04 authorizes members holding at least eighty percent of the voting power acting by written consent to take any cation that could be taken at a meeting of members. See section 1.40(35) for a definition of voting power. Members, sale of all or substantially all of a corporation's assets, dissolution and other significant corporate actions can be approved by written consent. The articles or bylaws may limit or prohibit action by written consent.

Subsection (d) requires that each member who did not sign the written consent be given written notice of any action approved pursuant to section 7.04. Action authorized pursuant to section 7.04 is effective ten days after such notice is given. See section 1.41 for a definition of the effective date of the notice. This notice provides an opportunity for members to protect their rights.

Corporations with numerous members can usually hold a meeting quicker than they can take action pursuant to section 7.04. Consequently

A member may withdraw his or her consent at any time prior to consents representing eighty percent of the voting power being delivered to the corporation. Any such withdrawal is ineffective if delivered after the requisite consents have been delivered to the corporation. The withdrawing member may bring some court action to annul the consent if it was procured by fraud or some other improper means.

Action by written consent cannot serve as a substitute for a special meeting. If a special meeting is properly demanded, it must be held even though the matter or matters to be considered at the meeting could be voted upon by written consent. Similarly the annual meting requirement of the Model Act may not be circumvented by having a written consent. Even if directors are elected by written consent, the annual meeting must be held as provided in section 7.01.
SOUTH CAROLINA REPORTERS' COMMENTS

This section is very similar to the provisions of Section 33-7-104 of the South Carolina Business Corporation Act, except that under this section the signed writing need not be unanimous (unless so provided by the articles or bylaws).

Section 33-31-705. Notice of meeting.

(a) A corporation shall give notice consistent with its bylaws of meetings of members in a fair and reasonable manner.

(b) Any notice that conforms to the requirements of subsection (c) is fair and reasonable, but other means of giving notice also may be fair and reasonable when all the circumstances are considered. However, notice of matters referred to in subsection (c)(2) must be given as provided in subsection (c).

(c) Notice is fair and reasonable if:

(1) the corporation notifies its members of the place, date, and time of each annual, regular and special meeting of members no fewer than ten or if notice is mailed by other than first class or registered mail, thirty, nor more than sixty days before the meeting date;

(2) notice of an annual or regular meeting includes a description of any matter that must be approved by the members under Section 33-31-831, 33-31-856, 33-31-1003, 33-31-1021, 33-31-1104, 33-31-1202, 33-31-1401, or 33-31-1402; and

(3) notice of a special meeting includes a description of the matter for which the meeting is called.

(e) When giving notice of an annual, regular, or special meeting of members, a corporation shall give notice of a matter a member intends to raise at the meeting if:

(1) requested in writing to do so by a person entitled to call a special meeting; and

(2) the request is received by the secretary or president of the corporation at least ten days before the corporation gives notice of the meeting.
OFFICIAL COMMENT

Section 7.05 provides alternative ways of complying with the notice requirements of the Model Act. A nonprofit corporation may comply with the "safe harbor" notice requirements contained in subsection (c) or for some matters it may give notice by any means consistent with its bylaws that is "fair and reasonable when all the circumstances are considered." The circumstances include the purpose of the meeting and the nature, size, customs, and operations of the corporation. Section 7.05(b).

The "safe harbor" provisions require notice of the place, date and time of each annual and special meeting of members. This notice must be given no fewer than 10 nor more than 60 days before the meeting date unless the notice is mailed by other than first class or registered mail. To save money, many nonprofit corporations use their nonprofit mailing privileges to send notices. To accommodate this practice, section 7.05(c)91) authorizes mailing by other than first class or certified mail but requires that notice sent by such means be mailed at least 30 days before the meeting date.

The "safe harbor" provisions distinguish between annual, regular and special meetings in one respect. Notice of special meetings must include a description of the matter or matters that will be considered at the meeting. The notice of annual and regular meetings does not require a description of any matters to be considered at the meetings unless there is a proposal to amend the articles or bylaws, to indemnify a director or to approve a merger, sale of assets, dissolution or conflict of interest transaction.

In determining whether notice is fair and reasonable past practice is of great significance but is not necessarily controlling. The fact that a corporation has traditionally given notice in a particular way is strong evidence that it is fair and reasonable. To be fair and reasonable, notice must follow provisions set forth in a corporation's bylaws.

Numerous other matters including the following may be important in determining whether notice was given in a fair and reasonable manner: the cost of complying with the "safe harbor" provisions relative to the assets of the corporation, the difficulty in complying with the "safe harbor" provisions, the good faith of those giving the notice, the importance and uniqueness of the matter voted upon, the sophistication and expectations of the members and the historical attitude of the members toward notice of meetings.

Section 1.41 sets forth various ways in which notice can be given. Subsection (f) of section 1.41 may be particularly helpful to nonprofit corporations. It allows a "notice . . . mailed or delivered as part of a newsletter, magazine or other publication regularly sent to members to constitute written notice. . . ."

Section 7.22 should be consider when giving notice of annual, regular and special meetings because the quorum requirement of section 7.22 vary depending on the type of notice provided and the number of members attending the meeting in person or by proxy.
SOUTH CAROLINA REPORTERS' COMMENTS

Although this section is very similar to the analogous Section 33-7-105 of the Business Corporation Act, it represents changes from prior law in:

(i) giving greater flexibility to nonprofit corporations than is enjoyed by business corporations; and

(ii) making provision for conveyance to members of members' initiatives, in appropriate circumstances.

(a) A member may waive any notice required by this chapter, the articles, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the member entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.

(b) A member's attendance at a meeting:

(1) waives objection to lack of notice or defective notice of the meeting, unless the member at the beginning of the meeting objects to holding the meeting or transacting business at the meeting;

(2) waives objection to consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the member objects to considering the matter when it is presented.
OFFICIAL COMMENT

1. Written Waiver

A member may waive any notice requirement imposed by the Model Act or a corporation's articles or bylaws by signing and delivering a written waiver of notice to the corporation. The waiver may be signed and delivered either before or after the meeting or other event the notice of which is being waived. It may be a general waiver of all matters considered at a meeting or a limited waiver of specified actions.

2. Waiver by Attending Meeting

A member waives defective notice or failure to give notice of the date, time and place of a meeting by appearing at the meeting without raising an objection at the beginning of the meeting. If a member objects at the beginning of the meeting, the member preserves the right to object to the defective notice or lack of notice.

"Defects waived by attendance . . . include a failure to send the notice altogether, delivery to the wrong address, a misstatement of the date, time or place of the meeting, and a failure to notice the meeting within the time periods specified in section 7.05. . . . For purposes of this section, `atten- dance' at a meeting involves the presence of the [member] in person or by proxy." Official Comment to Section 7.06 of the Model Business Corporation Act.

To meet the "safe harbor" provisions of section 7.05(c), each matter to be considered at special meetings and certain matters to be considered at annual and regular meetings must be set forth in the notice of the meeting. A member who attends a meting would not necessarily know that these matters would be considered unless the member received proper notice. Mere attendance at a meeting should not, and under the Model Act, does not, waive a member's right to object to consideration of matters not

In some instances the waiver procedures of the Model Act may be unfair to a nonaggressive or unsophisticated member who learns of a meting just before it commences or walks into a meeting while it is in progress without knowing what is occurring. On balance, however, the waiver provisions provide certainty to the corporation and prevent members from appearing, losing a vote, and subsequently raising an objection to a lack of notice in a legal proceeding.
SOUTH CAROLINA REPORTERS' COMMENTS

This section is virtually identical to Section 33-7-106 of the Business Corporation Act, and accordingly represents no change from prior statutory law.

"Delivered", as used in subsection (a), is defined in Section 33-31-140(8) to include "mail". The affidavit of an appropriate agent of the corporation that delivery has been made should shift the burden of proof to the party alleging failure of delivery.

Section 33-31-707. Record date - determining members entitled to notice and vote.

(a) The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to notice of a members' meeting. If the bylaws do not fix or provide for fixing a record date, the board may fix a future date as a record date. If no record date is fixed, members at the close of business on the business day preceding the day on which notice is given or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held are entitled to notice of the meeting.

(b) The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to vote at a members' meeting. If the bylaws do not fix or provide for fixing a record date, the board may fix a future date as a record date. If no record date is fixed, members on the date of the meeting who are otherwise eligible to vote are entitled to vote at the meeting.

(c) The bylaws may fix or provide the manner for determining a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. If the bylaws do not fix or provide for fixing a record date, the board may fix in advance a record date. If no record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or

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