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(a) An officer may resign at any time by delivering notice to the corporation. A resignation is effective when the notice is effective unless the notice specifies a future effective date. If a resignation is made effective at a future date and the corporation accepts the future effective date, its board of directors may fill the pending vacancy before the effective date if the board provides that the successor does not take office until the effective date.

(b) A board may remove an officer at any time with or without cause.
OFFICIAL COMMENT

Section 8.43 allows an officer to resign by giving written or oral notice to the corporation and specifies when the resignation is effective.

Section 8.43(b) provides that the board may remove any officer, at any time, with or without cause. An officer so removed may not sue for specific performance of any contract or agreement to be employed as an officer. Such removal is without prejudice to the former officer's right to bring an action for damages for breach of contract. See section 8.44.
SOUTH CAROLINA REPORTERS' COMMENTS

Previously applicable statutory law, found at Section 33-8-430 of the South Carolina Business Corporation Act, contemplated that officers might be appointed by the shareholders pursuant to provisions in shareholder agreements or the articles. Such officers are protected under Section 33-8-430 from removal by the board without cause. No such protection exists in the present section, which permits the board to remove any officer without cause. However, as noted in the South Carolina Reporters' Comments to section 33-31-801, if the articles also give the members the exclusive power to remove officers, this article provision would divest the board of its power to remove officers. Although the board has the authority so to remove officers, removal might violate officers' contract rights, for which they could have an action. See Section 33-31-844.

Section 33-31-844. Contract rights of officers.

(a) The appointment of an officer does not itself create contract rights.

(b) An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the corporation's contract rights, if any, with the officer.
OFFICIAL COMMENT

Section 8.43 makes clear that the appointment of an officer does not itself create contract rights in the officer. The removal of an officer with contract rights is without prejudice to his later enforcement of contract rights in a suit for damages for breach of contract. See the Official Comment to section 8.43. Similarly, an officer with an employment

This section represents no change from previously applicable statutory law, found at Section 33-8-440 of the South Carolina Business Corporation Act.

Section 33-31-850. Definitions.

In this subarticle:

(1) `Corporation' includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.

(2) `Director' means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic business or nonprofit corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving an employee benefit plan at the corporation's request if the director's duties to the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. `Director' includes, unless the context requires otherwise, the estate or personal representative of a director.

(3) `Expenses' include counsel fees.

(4) `Liability' means the obligation to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses actually incurred with respect to a proceeding.

(5) `Official capacity' means: (i) when used with respect to a director, the office of director in a corporation; and (ii) when used with respect to an individual other than a director, as contemplated in Section 33-31-856, the office in a corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation. `Official capacity' does not include service for any other foreign or domestic business or nonprofit corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise.

(6) `Party' includes an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding.

This section makes no substantive change from the previously applicable statute, Section 33-8-500 of the South Carolina Business Corporation Act. Subsection (2) has been altered slightly to make clear that this section applies to directors of nonprofit corporations.

Section 33-31-851. Authority to indemnify.

(a) Except as provided in subsection (d), a corporation may indemnify an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if the individual:

(1) conducted himself in good faith; and

(2) reasonably believed:

(i) in the case of conduct in his official capacity with the corporation, that his conduct was in its best interests; and

(ii) in all other cases, that his conduct was at least not opposed to its best interests; and

(3) in the case of a criminal proceeding, had no reasonable cause to believe his conduct was unlawful.

(b) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirements of subsection (a)(2)(ii).

(c) The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.

(d) A corporation may not indemnify a director under this section:

(1) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or

(2) in connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in his official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by the director.

(e) Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.

This section is in substance identical to the previously applicable statute, Section 33-8-510 of the South Carolina Business Corporation Act.

Section 33-31-852. Mandatory indemnification.

Unless limited by its articles of incorporation, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of a proceeding to which the director was a party because he is or was a director of the corporation against reasonable expenses actually incurred by the director in connection with the proceeding.
SOUTH CAROLINA REPORTERS' COMMENTS

This section made no change from the previously applicable statute, Section 33-8-520 of the South Carolina Business Corporation Act.

Section 33-31-853. Advances for expenses.

(a) A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:

(1) the director furnishes the corporation a written affirmation of his good faith belief that he has met the standards of conduct described in Section 33-31-851;

(2) the director furnishes the corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct; and

(3) a determination is made that the facts then known to those making the determination would not preclude indemnification under this chapter.

(b) The undertaking required by subsection (a)(2) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.

(c) Determinations and authorizations of payments under this section must be made in the manner specified in Section 33-31-855.
SOUTH CAROLINA REPORTERS' COMMENTS

This section does not change previously applicable statutory law, found at Section 33-8-530 of the South Carolina Business Corporation Act.

Section 33-31-854. Court-ordered indemnification.

Unless limited by a corporation's articles of incorporation, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court after giving any notice the court considers necessary may order indemnification in the amount it considers proper if it determines:

(2) the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in Section 33-31-851(a) or was adjudged liable as described in Section 833-31-851(d), but if the director was adjudged so liable indemnification is limited to reasonable expenses incurred.
SOUTH CAROLINA REPORTERS' COMMENTS

This section is very similar to the previously applicable statute, Section 33-8-540 of the South Carolina Business Corporation Act. The first phrase of Section 33-8-540 reads: "Unless a corporation's articles of incorporation provide otherwise". The change from prior law makes clear that, as to nonprofit corporations, the articles are not permitted to provide greater scope for court-ordered indemnification than does the statute.

Section 33-31-855. Determination and authorization of indemnification.

(a) A corporation may not indemnify a director under Section 33-31-851 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in Section 33-31-851.

(b) The determination must be made:

(1) by the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding;

(2) if a quorum cannot be obtained under item (1), by majority vote of a committee duly designated by the board of directors, in which designation directors who are parties may participate, consisting solely of two or more directors not at the time parties to the proceeding;

(3) by special legal counsel:

(i) selected by the board of directors or its committee in the manner prescribed in item (1) or (2); or

(ii) if a quorum of the board cannot be obtained under item (1) and a committee cannot be designated under item (2), selected by majority vote of the full board, in which selection directors who are parties may participate; or

(4) by the members of a mutual benefit corporation.

Directors who are at the time parties to the proceeding may not vote on the determination.

(d) A director of a public benefit corporation may not be indemnified until twenty days after the effective date of written notice to the Attorney General of the proposed indemnification.
SOUTH CAROLINA REPORTERS' COMMENTS

This section makes two changes from the previously applicable statute, Section 33-8-550 of the South Carolina Business Corporation Act. The first is to limit the operation of item (4) to mutual benefit corporations only, and to take account in item (4) of the absence of shareholders and directors elected by shareholders. The second change is the addition of subsection (d).

Section 33-31-856. Indemnification of officers, employees, and agents.

Unless limited by a corporation's articles of incorporation:

(1) an officer of the corporation who is not a director is entitled to mandatory indemnification under Section 33-31-852 and is entitled to apply for court-ordered indemnification under Section 33-31-854 in each case, to the same extent as a director;

(2) the corporation may indemnify and advance expenses under this chapter to an officer, employee, or agent of the corporation who is not a director to the same extent as to a director; and

(3) a corporation also may indemnify and advance expenses to an officer, employee, or agent who is not a director to the extent, consistent with public policy, that may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.
SOUTH CAROLINA REPORTERS' COMMENTS

This section retains the previously applicable statutory law found at Section 33-8-560, except that the first phrase of that section is as follows: Unless a corporation's articles of incorporation provide otherwise. The change was made to make clear that the articles cannot provide for indemnification of officers more generous than that found in the statute.

Section 33-31-857. Insurance.

A corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a

This section made no change from the previously applicable statute, Section 33-8-560 of the South Carolina Business Corporation Act.

Section 33-31-858. Application of article.

(a) A provision treating a corporation's indemnification of or advance for expenses to directors that is contained in its articles of incorporation, bylaws, a resolution of its members or board of directors, or in a contract or otherwise, is valid only if and to the extent the provision is consistent with this subchapter. If articles of incorporation limit indemnification or advance for expenses, indemnification and advance for expenses are valid only to the extent consistent with the articles.

(b) This chapter does not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with appearing as a witness in a proceeding at a time when the director has not been made a named defendant or respondent to the proceeding.
SOUTH CAROLINA REPORTERS' COMMENTS

This section represents no substantive change from the previously applicable statute, Section 33-8-580 of the South Carolina Business Corporation Act.

Section 33-31-1001. Authority to amend articles of incorporation.

(a) A corporation may amend its articles of incorporation to add or change a provision that is required or permitted in the articles or to delete a provision not required in the articles. Whether a provision is required or permitted in the articles is determined as of the effective date of the amendment.

(b) A corporation either designated on the records of the Office of the Secretary of State as a public benefit or religious corporation, or which qualifies as such pursuant to Section 33-31-1707, may amend or restate its articles of incorporation so that it becomes designated as a mutual benefit corporation only if notice, including a copy of the proposed amendment or restatement, has been delivered to the Attorney General at least twenty days before consummation of the amendment or restatement.

Section 10.01 authorizes amendments to a corporation's articles of incorporation. The amendments may modify, delete, change or add provisions to a corporation's articles.

An amendment may be adopted if it: (1) results in provisions permitted in the articles (see sections 2.02 and 2.06(b)); (2) does not contravene or delete provisions the Model Act requires the articles to contain (see section 2.02(a)); and (3) is adopted pursuant to the provisions of chapter 10.

Whether the first two tests are met is determined as of the effective date of the amendment. The third test is determined as of the time the amendment is adopted.

Members' rights are protected by: (1) the right to vote on amendments, including the right to vote by class in appropriate cases (sections 10.03 and 10.04); (2) the duty of the board to approve amendments consistent with its obligations under section 8.30; and (3) contractual commitments made by the corporation.

A corporation may have entered into some oral or written contractual relationship with its members. A person may, for example, have joined an organization based in part on the representation that certain benefits would be provided under specified conditions. If so, the corporation's obligations may be enforced apart from any provisions contained in the articles. The articles may require an amendment to be approved by a specified person or persons. See section 10.30. If so, that approval must be obtained prior to amending the articles.

As section 10.01 provides broad power to amend a corporation's articles, the Model Act does not enumerate the myriad of possible amendments or require the articles to include an express power of amendment.
SOUTH CAROLINA REPORTERS' COMMENTS
1. Compared to former law

This section has a counterpart in the former Chapter 31, Title 33. Prior Section 33-31-130 provided that the Secretary of State could amend the charter of the corporation if notice had been given by newspaper publication or directly to the members and there was a majority vote of the members present at a meeting. A "corporation sole's" charter could be similarly amended; however, this required a three-week public notice. This new provision places the responsibility for amendment with the corporation. The Secretary of State merely files the change. This

Paragraphs (b) and (c) of the section are not Model Act provisions. Paragraph (b) helps protect against a wrongful privatization of a public benefit corporation. If, after notice, the Attorney General is concerned about a "public" charity "going private" he can take appropriate action pursuant to Section 33-31-170. Both a corporation formally designated as, or one which merely qualifies as, either a public benefit or religious corporation must notify the Attorney General before amending the articles.

Paragraph (c) is comparable to Section 33-10-101(b) of the South Carolina Business Corporation Act. The exemption of Section 33-31-611(c) relates to transfer rights. The articles of a mutual benefit corporation (only) may permit a member to transfer his membership rights. If these rights exist they cannot be deleted without the holder's consent.

Section 33-31-1002. Amendment of articles by directors.

(a) Unless the articles provide otherwise, a corporation's board of directors may adopt one or more amendments to the corporation's articles without member approval:

(1) to extend the duration of the corporation if it was incorporated at a time when limited duration was required by law;

(2) to delete the names and addresses of the initial directors;

(3) to delete the name and address of the initial registered agent or registered office, if a statement of change is on file with the Secretary of State;

(4) to change the corporate name by substituting the word `corporation', `incorporated', `company', `limited', or the abbreviation `corp.', `inc.', `co.', or `ltd.', for a similar word or abbreviation in the name, or by adding, deleting, or changing a geographical attribution to the name; or

(5) to make any other change expressly permitted by this chapter to be made by director action.

(6) with respect to a corporation incorporated before the effective date of this chapter, to include, consistent with its purpose, a statement of whether the corporation is a public benefit, mutual benefit, or religious corporation.

(b) If a corporation has no members, or has no members entitled to vote on the amendment to the articles, its incorporators, until directors are chosen, and thereafter its board of directors, may adopt one or more amendments to the corporation's articles subject to any approval required

Section 10.02 distinguishes between corporations with members and those without members. If a corporation has members, subsection (a) allows directors to approve specified amendments, as the amendments do not adversely affect members' substantive rights.

If a corporation does not have members, subsection (b) allows the board to amend the articles by a vote of a majority of the directors in office at the time the amendment is adopted. The notice of the meeting to approve the amendment must be in accordance with section 8.22 and state that one purpose of the meting is to consider an amendment to the articles.

It is not necessary that the directors be provided with a copy or summary of the amendment prior to the meeting so long as the meeting notice states the general nature of the amendment. Failure to give proper notice may be waived under the conditions set forth in section 8.23.

Even if a corporation does not have members, an amendment to the articles may require the approval of a specified person or persons. Section 10.30. The articles may, for example, require the approval of a related organization, governmental entity, specified individual or group of delegates.

If a corporation does not have members, its incorporators, until directors have been chosen, may exercise the power of the directors in amending articles. The incorporators must follow the rules applicable to directors.

Amendments may be adopted by incorporators or by the directors by unanimous written consent. See section 8.21.
SOUTH CAROLINA REPORTERS' COMMENTS
1. Prior law

Subsection (a) is similar to Section 33-10-103 of the South Carolina Business Corporation Act. (However, the provision for adding perpetual existence and the type of corporation do not exist in the Business Corporation Act.)

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