H*2166 Session 104 (1981-1982)
H*2166(Rat #0203, Act #0146 of 1981) General Bill, By Carnell, T.L. Hughston and
R.L. Rigdon
Similar(S 49, S 406)
A Bill 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, 15-9-240 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 531 of 1978 which created the Tender Offer
Disclosure Act.-at
01/15/81 House Introduced and read first time HJ-172
01/15/81 House Referred to Committee on Labor, Commerce and
Industry HJ-172
04/15/81 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-1847
04/21/81 House Debate adjourned HJ-1945
04/22/81 House Debate adjourned HJ-2002
04/23/81 House Amended HJ-2020
04/23/81 House Read second time HJ-2023
04/24/81 House Read third time and sent to Senate HJ-2063
04/28/81 Senate Introduced, read first time, placed on calendar
without reference SJ-16
04/30/81 Senate Read second time SJ-31
04/30/81 Senate Ordered to third reading with notice of
amendments SJ-31
06/10/81 Senate Amended SJ-16
06/10/81 Senate Read third time SJ-16
06/10/81 Senate Returned SJ-16
06/16/81 House Senate amendment amended HJ-3230
06/16/81 House Returned HJ-3230
06/17/81 Senate Concurred in House amendment and enrolled SJ-6
06/30/81 House Ratified R 203 HJ-3463
07/02/81 Signed By Governor
07/02/81 Effective date 01/01/82 (See Act for exceptions)
07/02/81 Act No. 146
07/22/81 Copies available
(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. |