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The first non-Model Act provision is subparagraph (a)(6) which permits the directors (but only in respect to corporations formed before the effective date of this Act) to adopt amended articles specifying the type of nonprofit corporation. Note that this does not give the directors the right to change the purpose of the corporation. They must be careful to correctly determine which type of corporation the entity is and only list this on the articles. (Any person filing a false certificate with the Secretary of State is subject to the liabilities set forth in Section 33-31-129.) The first sentence of subsection (b) gives directors the exclusive right to amend the articles if the corporation has members but the members are prohibited from voting on the amendment.

Section 33-31-1003. Amendment of articles by directors and members.

(a) If the corporation has members entitled to vote on the amendment, unless this chapter, the articles, or bylaws require a greater vote or voting by class, an amendment to a corporation's articles to be adopted must be approved:

(1) by the board if the corporation is a public benefit or religious corporation and the amendment does not relate to the number of directors, the composition of the board, the term of office of directors, or the method or way in which directors are elected or selected;

(2) except as provided in Section 33-31-1002(a), by the members by two-thirds of the votes cast or a majority of the voting power, whichever is less; and,

(3) in writing by any person or person whose approval is required by a provision of the articles authorized by Section 33-31-1030.

(b) If the board or the members seek to have the amendment approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in writing in accordance with Section 33-31-205. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the proposed amendment and contain or be accompanied by a copy or summary of the amendment.

(c) If the board or the members seek to have the amendment approved by the members by written consent or written ballot, the material soliciting the approval shall contain or be accompanied by a copy or summary of the amendment.
OFFICIAL COMMENT

If a corporation has members, section 10.03 requires that an amendment to its articles be approved by the members by two-thirds of those voting

An amendment may be approved by the members at a membership meeting, by written ballot or by written consent. See sections 7.01, 7.02, 7.04 and 7.08. The notice of the meeting or the materials soliciting the approval must contain or be accompanied by a copy or summary of the amendment. This is to insure that the members will be informed prior to voting on the amendment.

While the board may propose an amendment for adoption by members, board approval is not required for certain amendments. Board approval is not required for amendments relating to the number of directors, the composition of the board, the terms of office of directors, or the method by which directors are elected or selected. When board approval is not required, the board may propose amendments to the articles.

Subdivision (b) allows adoption of an amendment to be conditioned on some higher vote than would normally be reburied or upon the happening of an event or events. This ability to conditionally approve amendments provides flexibility to the corporation and allows more than the simple alternative of approving or disapproving.

An amendment must also receive any approval required by section 10.30. Section 10.30 may, for example, require an amendment to be approved by a related organization, governmental entity, specified individual, or group of delegates.

If the board initiates an amendment, it will normally recommend the amendment to the members. However, in some instances the board may have a conflict of interest and be unable to make a recommendation or for some reason believe it is inappropriate to do more than present the amendment to the members for their approval. If so, the board may simply submit the amendment to the members for their approval. The board may indicate why it is unable to present a recommendation, but this is not required.
SOUTH CAROLINA REPORTERS' COMMENTS
1. Comparison to former statute

In voting on amendments to the articles, this section normally requires the approval of both the directors and shareholders for public benefit and religious corporations (unless one of the exceptions applies). In contrast, only member approval is required to amend the articles of mutual benefit corporations. As to religious and public benefit corporations, if so required by Section 33-31-1030, the approval of a third party may be required. The former statute, found in the prior provisions of Chapter 31, Title 33, did not categorize the types of nonprofit corporations and put the

Substantial consideration was given to whether there were existing nonprofit corporations which at the effective date of this Act would not formally have directors. Was there a risk that by not having formal directors any such existing corporations would be unable to amend their articles? The answer is "no." The definition of directors in Section 33-31-140 is broad enough so that someone in every nonprofit corporation will meet the definition of a "director" and thus will be able to vote on an amendment. It should also be noted that a key policy of this Act is to require all nonprofit corporations to have someone who will fulfill the role of directors, regardless that they might be called deacons, trustees, managers, etc. Therefore, the vote of directors is required for most all amendments to the articles. (To the extent that the Official Comments suggest that in some instances the vote of the directors would not be required, this would only apply in the limited circumstances set forth in subsection (a)(1).)

Under the former statute special rules applied to "corporations sole".
Any corporation sole may have the charter of the corporation of such corporation amended in any particular by the Secretary of State after publish- ing notice of such proposed amendment in any newspaper in the county in which the holder of the charter resides once a week for three weeks.

This procedure is not continued in the new law. However, the new law does require notice to the Attorney General before any public benefit or religious corporation converts to a mutual benefit corporation.

2. Comparison to South Carolina Business Corporation Act

This section is consistent with the philosophy of the South Carolina Business Corporation Act, Section 33-10-103. (Because of the prior specific provisions in Chapter 31, Title 33, this section did not apply to nonprofit corporations.) In the South Carolina Business Corporation Act, the directors and shareholders likewise both are usually required to approve any article amendment. However, if ten percent of any class of shareholders so demands, a proposed change must be put to the vote of the

This South Carolina provision differs from the Model Act. Any increase in the vote required to amend the articles must be specified in the articles or bylaws. In order to increase the vote of either directors or members, consideration must also be given to Sections 33-31-1023 and 33-31-1024. These provisions require that before raising the vote required to adopt certain issues, the resolution to increase the vote must pass by the same greater quorum or vote.

Section 33-31-1004. Class voting by members on amendments.

(a) The members of a class in a public benefit corporation are entitled to vote as a class on a proposed amendment to the articles if the amendment would change the rights of that class as to voting in a manner different than such amendment affects another class or members of another class.

(b) The members of a class in a mutual benefit corporation are entitled to vote as a class on a proposed amendment to the articles if the amendment would:

(1) affect the rights, privileges, preferences, restrictions, or conditions of that class as to voting, dissolution, redemption, or transfer of membership in a manner different than such amendment would affect another class;

(2) change the rights, privileges, preferences, restrictions, or conditions of that class as to voting, dissolution, redemption, or transfer of membership in a manner different than such amendment would affect another class;

(3) increase or decrease the number of memberships authorized for that class;

(4) increase the number of memberships authorized for another class;

(5) effect an exchange, reclassification, or termination of the memberships of that class; or,

(6) authorize a new class of memberships.

(c) The members of a class of a religious corporation are entitled to a vote as a class on a proposed amendment to the articles only if a class vote is provided for in the articles or bylaws.

(d) If a class is to be divided into two or more classes as a result of an amendment to the articles of a public benefit or mutual benefit corporation, the amendment must be approved by the members of each class that would be created by the amendment.

(f) A class of members of a public benefit or mutual benefit corporation is entitled to the voting rights granted by this section although the articles and bylaws provide that the class may not vote on the proposed amendment.
OFFICIAL COMMENT

Section 10.04 distinguishes between public benefit, religious and mutual benefit corporations. It requires a class vote to amend articles of incorporation of public benefit and mutual benefit corporations regardless of a contrary provision in the articles if the amendment would make any of the changes specified in subsection (a) or (b).

Subsection (a) deals with public benefit corporations. A membership in a public benefit corporation does not represent a valuable economic right. It represents the right to vote for directors and thereby participate in the decision as to who will control the corporation and what policies it will follow. Consequently, class voting in regard to public benefit corporations is only mandated for amendments that would change the rights of members to vote. Apart from amendments that would directly affect the right to vote, an amendment may indirectly affect the right to vote by terminating a class of members or amending the articles to add more members to an existing class of members or to create a new class of members.

Where, however, the amendment would not affect the class in a manner different than it affects another class, class voting is not required. For example, if class A and class B each elected four directors, the proposal to have each class elect three directors normally would not affect either class differently and would not require class voting. However, if the articles required a vote of three class A directors to approve any action, a class vote would be required if the number of class A and class B directors were reduced by one.

Subsection (b) relates to mutual benefit corporations. Members in mutual benefit corporations, in addition to their voting rights, may have a valuable economic interest in the corporation. Consequently, subsection (b) specifies six types of changes that require a class vote. These changes are more extensive than the changes that would require a class vote in public benefit corporations and are designed to protect the rights of class members. See section 1.40(5) for a definition of class.

The Model Act does not require a class vote for members of a religious corporation. The articles or bylaws of a religious corporation may, however, require a class vote. See section 10.04(c) and (e). A class vote is required for members of a religious corporation only and to the extent required by the corporation's articles or bylaws.
SOUTH CAROLINA REPORTERS' COMMENTS

This section is similar to the previously controlling statute, Section 33-10-104 of the South Carolina Business Corporation Act. Consideration was given to granting each type of nonprofit corporation the same class voting rights. This was rejected. The State of South Carolina should not dictate how religious corporations operate. Therefore, if a religious corporation desires to establish class voting, this needs to be included in the articles.

Section 33-31-1005. Articles of amendment.

A corporation amending its articles shall deliver to the Secretary of State articles of amendment setting forth:

(1) the name of the corporation;

(2) the text of each amendment adopted;

(3) the date of each amendment's adoption;

(4) if approval of members was not required, a statement to that effect and a statement that the amendment was approved by a sufficient vote of the board of directors or incorporators;

(5) if approval by members was required:

(i) the designation, number of memberships outstanding, number of votes entitled to be cast by each class entitled to vote separately on the amendment, and number of votes of each class indisputably voting on the amendment; and

(ii) either the total number of votes cast for and against the amendment by each class entitled to vote separately on the amendment or the total number of undisputed votes cast for the amendment by each class and a statement that the number cast for the amendment by each class was sufficient for approval by that class.

Section 10.05 sets forth the contents of the articles of amendment that must be delivered to the secretary of state to effectuate an amendment to the articles of incorporation. The articles of amendment must specify that the conditions required for a valid amendment to be adopted have been met. In some nonprofit corporations only the approximate vote in favor of an amendment is known. Therefore section 10.05 does not require that the exact vote be set forth in the articles of amendment. It does require that the approximate vote be set forth together with a statement that the number of votes cast for the amendment to the articles was sufficient for approval. Consequently, the person submitting the articles of amendment must be sure that the number of votes for the amendment at least meets the minimum vote required to approve the amendment.
SOUTH CAROLINA REPORTERS' COMMENTS

This section is similar to the formerly applicable statute, Section 33-10-106 of the South Carolina Business Corporation Act. Item (7) is a non-Model Act provision but similar to Section 33-10-106(3) of the South Carolina Business Corporation Act. Consideration was given to whether the actual vote on the amendment should be filed with the Secretary of State. It was decided that filling this information would keep corporations honest and was a desirable provision. Therefore, the same detailed voting information required by the Model Act and by Section 33-10-106(6) of the 1976 Code is required of nonprofit corporations.

Section 33-31-1006. Restated articles of incorporation.

(a) A corporation's board of directors may restate its articles of incorporation with or without approval by members or any other person.

(b) The restatement may include one or more amendments to the articles. If the restatement includes an amendment requiring approval by the members or any other person, it must be adopted as provided in Section 33-31-1003.

(c) If the restatement includes an amendment requiring approval by members, the board must submit the restatement to the members for their approval.

(d) If the board seeks to have the restatement approved by the members at the membership meeting, the corporation shall notify each of

(e) If the board seeks to have the restatement approved by the members by written ballot or written consent, the material soliciting the approval shall contain or be accompanied by a copy or other change it would make in the articles.

(f) A restatement requiring approval by the members must be approved by the same vote as an amendment to articles under Section 33-31-1003.

(g) If the restatement includes an amendment requiring approval pursuant to Section 33-31-1030, the board must submit the restatement for such approval.

(h) A corporation restating its articles shall deliver to the Secretary of State articles of restatement setting forth the name of the corporation and the text of the restated articles of incorporation together with a certificate setting forth:

(1) whether the restatement contains an amendment to the articles requiring approval by the members or any other person other than the board of directors and, if it does not, that the board of directors adopted the restatement; or

(2) if the restatement contains an amendment to the articles requiring approval by the members, the information required by Section 33-31-1005; and

(3) if the restatement contains an amendment to the articles requiring approval by a person whose approval is required pursuant to Section 33-31-1030, a statement that the approval was obtained.

(i) Duly adopted restated articles of incorporation supersede the original articles of incorporation and all amendments to them.

(j) The Secretary of State may certify restated articles of incorporation, as the articles of incorporation currently in effect, without including the certificate information required by subsection (h).

(k) If the restatement provides for an exchange, reclassification, or cancellation of memberships, provisions for implementing the restatement if not contained in the restatement itself must be included in the restated articles.

(l) Restated articles of incorporation shall include all statements required to be included in original articles of incorporation except that no

Section 10.06 allows a corporation to restate its articles of incorporation without a member vote. Such restate articles are often useful, particularly where numerous amendments have been adopted over a period of years.

Where the restated articles involve a change other than a change authorized by section 10.02(a), they should be submitted to the members, if any, for their approval.

In some instances, it may be necessary to make grammatical and other minor changes between the original articles and the restated articles of incorporation. In these instances, the restated articles of incorporation should be submitted to the members for their approval. This approval may also require class voting and approval by third persons. See sections 10.04 and 10.30. Any such approval should follow the requirements of this chapter for approving amendments to articles of incorporation. The material seeking approval of the members should contain or be accompanied by a copy or summary restatement of the articles that identifies any amendments or other changes the restatement would make in the articles. While it is not necessary to restate matters that are, or may reasonably be viewed as, mere changes in form, other changes should be brought to the attention of the members.
SOUTH CAROLINA REPORTERS' COMMENTS

This section is similar to Section 33-10-107 of the South Carolina Business Corporation Act which was previously applicable. The South Carolina section improves on the Model Act by specifying what the restated articles must contain.

Section 33-31-1007. Amendment pursuant to judicial reorganization.

(a) A corporation's articles may be amended without board approval or approval by the members or approval required pursuant to Section 33-31-1030 to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under federal statute if the articles after amendment contain only provisions required or permitted by Section 33-31-202.
(b) A corporation's articles may be amended in a proceeding brought by the Attorney General in the court of common pleas for Richland County to correct the statement in the articles of incorporation with regard to whether the corporation is a public benefit or mutual benefit corporation or, subject to the provisions of Section 33-31-180, a religious corporation.

(1) the name of the corporation;

(2) the text of each amendment approved by the court;

(3) the date of the court's order or decree approving the articles of amendment;

(4) the title of the reorganization proceeding in which the order or decree was entered; and

(5) a statement that the court had jurisdiction of the proceeding under federal statute.

(d) Subsection (a) does not apply after entry of a final decree in the reorganization proceeding even though the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the reorganization plan.
OFFICIAL COMMENT

Section 10.07 is based on section 10.08 of the Model Business Corporation Act. Section 10.08 "provides a simplified method of conforming corporate documents filed under state law with the federal statutes relating to corporate reorganization. If a federal court confirms a plan of reorganization that requires articles of amendment to be filed, those amendments may be prepared and filed by the persons designated by the court and the approval of neither directors nor [members] is required. . . . This section only applies to amendments in articles of incorporation approved prior to the entry of a final decree in the reorganization plan." Official Comment to Section 10.08 of the Model Business Corporation Act.
SOUTH CAROLINA REPORTERS' COMMENTS

Subsection (a), (b), and (d) of this section are essentially identical to formerly applicable statute, Section 33-10-108 of the South Carolina Business Corporation Act. Subsection (b) is not a Model Act provision and has no counterpart in the South Carolina Business Corporation Act. This provision gives the Attorney General some limited policing power to change a corporation from one type to another if the corporation has wrongly designated itself. For example, a corporation which in actuality is a mutual benefit corporation might designate itself as a public benefit corporation. In such a situation, the Attorney General can ask that the articles be amended to properly designate the corporation as a mutual benefit corporation.

Section 33-31-1008. Effect of amendment and restatement.

An amendment to articles of incorporation does not affect a cause of action existing against or in favor of the corporation, a proceeding to

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