Sec. 10.06.005. Purposes.

A corporation may be organized under this chapter for any lawful purpose.

History. (§ 1 ch 166 SLA 1988; am § 97 ch 26 SLA 1993; am § 2 ch 50 SLA 1999)

Sec. 10.06.010. General powers.

Subject to the limitations in its articles of incorporation, the provisions of this chapter and other applicable law, a corporation has all the powers of a natural person in carrying out its business activities, including, without limitation, the power to

1. have perpetual succession by its corporate name;
2. sue and be sued in its corporate name;
3. adopt a corporate seal and alter it, and use it by having it or a facsimile of it impressed, affixed, or reproduced;
4. buy, take, receive, lease, or otherwise acquire, own, hold, improve, use, and otherwise deal in, real or personal property or an interest in the property, wherever situated;
5. sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise dispose of all or a part of its property and assets;
6. lend money, if properly approved, to its employees, officers, and directors, and otherwise assist its employees, officers, and directors;
7. buy, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in shares or other interests in, or obligations of, other domestic or foreign corporations, associations, partnerships, or individuals, or direct or indirect obligations of the United States or of any other government, state, territory, governmental district or municipality or an instrumentality of these;
8. make contracts and guarantees, incur liabilities, borrow money at the rates of interest the corporation determines, issue notes, bonds, and other obligations, and secure its obligations by mortgage or pledge of all or any of its property, franchise and income;
9. lend money for its corporate purposes, invest and reinvest its money, and take and hold real and personal property as security for the payment of money loaned or invested;
10. conduct business, carry on operations, and have offices and exercise the powers granted by this chapter in a state, territory, district, or possession of the United States, or in a foreign country;
11. elect or appoint officers and agents of the corporation and define their duties and fix their compensation;
12. make and alter bylaws not inconsistent with its articles of incorporation or with state law, for the administration and regulation of the affairs of the corporation;
13. donate for the public welfare or for charitable, scientific or educational purposes, and in time of war donate in aid of war activities;
14. transact lawful business in time of war in aid of the United States in the prosecution of the war;
15. pay pensions and establish pension plans, pension trusts, profit-sharing plans, stock bonus plans, stock option plans and other incentive plans for its directors, officers, and employees;
16. cease its corporate activities and surrender its corporate franchise;
17. have and exercise the powers of a limited or general partner or a joint venturer in association with one or more persons, corporations, partnerships, or associations;
18. have and exercise all powers necessary or convenient to carry out the purposes for which the corporation is organized.

History. (§ 1 ch 166 SLA 1988; am § 1 ch 82 SLA 1989)

Sec. 10.06.015. Defense of ultra vires.

1. An act of a corporation or a transfer of real or personal property to or by a corporation, otherwise lawful, is not invalid because the corporation was without capacity or power to do the act or to make or receive the transfer, but the lack of capacity or power may be asserted
   1. in an action by a shareholder against the corporation to enjoin the doing of an act or the transfer of real or personal property by or to the corporation; if the unauthorized act or transfer sought to be enjoined is being, or is to be, performed or made under a contract to which the corporation is a party, the court may, if all of the parties to the contract are parties to the action, set aside and enjoin the performance of the contract, and in so doing may allow to the corporation or to the other parties to the contract, compensation as may be equitable for the loss or damage sustained by any of them from the action of the court in setting aside and enjoining the performance of the contract; however, anticipated profits to be derived from the contract may not be awarded by the court as a loss or damage sustained;
   2. in an action by or in the right of the corporation to obtain a judgment in its favor against an incumbent or former officer, director, or incorporator of the corporation for loss or damage due to that individual’s unauthorized act;
   3. in an action or special proceeding by the commissioner to annul or dissolve the corporation or to enjoin it from the doing of unauthorized business.
2. This section applies to contracts and conveyances made by foreign corporations in this state and to conveyances by foreign corporations of real property situated in this state.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of (a)(1) of this section on Alaska Rule of Civil Procedure 19, see sec. 15, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.020. Limitations on powers of shareholders, officers, and directors.

A limitation upon the powers of the shareholders, officers, or directors, or the manner or exercise of their powers, contained in or implied by the articles of incorporation, bylaws, or action of the board, or by AS 10.06.605 — 10.06.678 or 10.06.705 — 10.06.788 or by a shareholders’ agreement may not be asserted as between the corporation or a shareholder and a third person, except in a proceeding

1. by a shareholder or the state to enjoin the doing or continuance of unauthorized business by the corporation or its officers, or both, in a case where a third party has not acquired rights under AS 10.06.025(a) ;
2. to dissolve the corporation; or
3. by the corporation or by a shareholder suing in a representative suit against the officers or directors of the corporation for violation of their duty.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.025. Contracts or conveyances binding domestic and foreign corporations.

1. A contract or conveyance made in the name of the corporation that is authorized or ratified by the board, or is done within the scope of the authority, actual or apparent, conferred by the board or within the agency power of the officers executing it, except as the board’s authority is limited by law, binds the corporation, and the corporation acquires rights under the contract, whether the contract is executed or is wholly or in part executory.
2. This section applies to contracts and conveyances made by foreign corporations in this state and to conveyances by foreign corporations of real property situated in this state.

History. (§ 1 ch 166 SLA 1988; am § 2 ch 82 SLA 1989)

Sec. 10.06.105. Corporate name.

1. A corporate name must contain the word “corporation”, “company”, “incorporated”, or “limited”, or an abbreviation of one of these words. The corporate name may not contain a word or phrase that indicates or implies that the corporation is organized for a purpose other than the purpose contained in its articles of incorporation.
2. The corporate name may not contain the word “city”, “borough”, or “village” or otherwise imply that the corporation is a municipality. The name of a city, borough, or village may be used in the corporate name.
3. A person may not adopt a name that contains the word “corporation”, “incorporated”, or “limited”, or an abbreviation of one of these words, unless the person has been issued a certificate of incorporation, or, in the case of a foreign corporation, a certificate of authority, by the commissioner. This subsection does not prohibit a limited liability company or a limited partnership from using the word “limited” or an abbreviation of “limited” in its name.
4. A corporate name must be distinguishable on the records of the department from the name of any other organized entity and from a reserved or registered name. The department may adopt regulations to enforce this subsection. In this subsection, “organized entity” and “reserved or registered name” have the meanings given in AS 10.35.040 .

History. (§ 1 ch 166 SLA 1988; am § 3 ch 82 SLA 1989; am § 2 ch 99 SLA 1994; am §§ 3, 4 ch 50 SLA 1999)

Cross references. —

For applicability of amendments to this section made by §§ 3 and 4, ch. 50, SLA 1999, see § 36(a) and (b), ch. 50, SLA 1999 in the 1999 Temporary & Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.110. Reservation of corporate name.

The exclusive right to the use of a corporate name may be reserved by a

1. person intending to organize a corporation under this chapter;
2. domestic corporation intending to change its name;
3. foreign corporation intending to apply for a certificate of authority to transact business in this state;
4. foreign corporation authorized to transact business in this state and intending to change its name; or
5. person intending to organize a foreign corporation and to have it apply for a certificate of authority to transact business in this state.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.115. Application for and duration of reservation of name.

Reservation of a corporate name is made by filing an application with the commissioner. If the commissioner finds that the name is available for corporate use under AS 10.06.105(d) , the commissioner shall reserve it for the exclusive use of the applicant for a period of 120 days.

History. (§ 1 ch 166 SLA 1988; am § 5 ch 50 SLA 1999)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.120. Transfer of reserved name.

The holder of a reserved corporate name may transfer the right to the exclusive use of the corporate name to another person by filing a notice of transfer with the commissioner, signed by the holder of the name, and specifying the name and address of the transferee.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.125. Registration of corporate name.

A corporation organized and existing under the laws of a state or territory of the United States may register its corporate name if the name is available for corporate use under AS 10.06.105(d) .

History. (§ 1 ch 166 SLA 1988; am § 6 ch 50 SLA 1999)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.130. Exclusive right to use name; remedies.

1. A corporation that is organized under this chapter has the exclusive right to the name under which it was organized. A foreign corporation that has obtained a certificate of authority under this chapter has the exclusive right to the name under which it received its certificate of authority. A corporation that has registered a name under AS 10.06.125 has the exclusive right to the use of the registered name.
2. A corporation with the exclusive right to a name under (a) of this section
   1. may enjoin the use of a name that is not distinguishable on the records of the department from the name to which the corporation has the exclusive right under (a) of this section;
   2. has a cause of action for damages against a person who uses a name that is not distinguishable on the records of the department from the name to which the corporation has the exclusive right under (a) of this section.

History. (§ 1 ch 166 SLA 1988; am § 4 ch 82 SLA 1989; am § 7 ch 50 SLA 1999)

Cross references. —

For applicability of amendments to this section made by § 7, ch. 50, SLA 1999, see § 36(a) and (b), ch. 50, SLA 1999 in the 1999 Temporary & Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Collateral references. —

18A Am. Jur. 2d, Corporations, §§ 235 – 244.

18 C.J.S., Corporations, § 132 et seq.

Right to protection of corporate name, as between domestic corporation and foreign corporation not qualified to do business in state. 26 ALR3d 994.

Incorporation of company under particular name as creating exclusive right to such name. 68 ALR3d 1168.

Use of “family name” by corporation as unfair competition. 72 ALR3d 8.

Sec. 10.06.135. Procedure for registration of corporate name.

Registration of a corporate name is made by filing with the commissioner

1. an application for registration executed by an officer of the corporation setting out the name of the corporation, the state or territory under the laws of which it is incorporated, the date of incorporation, a statement that it is doing business, and a brief statement of its business; and
2. a certificate from an official of the state or territory where the corporation is organized who has custody of the records pertaining to corporations stating that the corporation is in good standing under the laws of that state or territory.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.140. Fee for and duration of registered name.

1. The fee for registration of a corporate name shall be established by the department by regulation.
2. The registration is effective until the close of the calendar year in which the application for registration is filed unless terminated earlier by involuntary dissolution in accordance with AS 10.06.633 .

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.145. Renewal of registered name.

A corporation that has registered its corporate name may renew the registration each year by (1) filing an application for renewal setting out the facts required in an original application for registration; (2) filing a certificate of good standing required for an original registration; and (3) paying a fee established by the department by regulation. An application for renewal shall be filed between October 1 and December 31 in each year. The renewal extends the registration for the following calendar year.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.150. Registered office and registered agent.

A corporation shall continuously maintain in this state a registered agent and a registered office. The registered office may be the same as the place of business of the corporation. The registered agent may be either an individual resident of this state whose business office is the same as the registered office, or a domestic or foreign corporation authorized to transact business in this state whose business office is the same as the registered office.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.155. Registration of agent by nonresident with controlling interest. [Repealed, § 59 ch 82 SLA 1989.]

Sec. 10.06.160. Filing list of registered corporations with superior court; updating and publishing. [Repealed, § 35 ch 126 SLA 1994.]

Sec. 10.06.165. Change of registered office or agent by corporation.

1. A corporation may change its registered office, agent, or both, by filing with the department a statement signed by the president or a vice-president including
   1. the name of the corporation;
   2. the address of its registered office;
   3. the address of its new registered office if the registered office is to be changed;
   4. the name of its registered agent;
   5. the name of its new registered agent if the registered agent is to be changed; and
   6. a statement that the change is authorized by resolution of its board of directors.
2. If the commissioner finds that the statement complies with this chapter, the commissioner shall file it in the commissioner’s office. The change becomes effective when the statement is filed.

History. (§ 1 ch 166 SLA 1988; am § 4 ch 65 SLA 1998)

Sec. 10.06.170. Change by agent or resignation of agent.

1. A registered agent of a domestic or foreign corporation may change the location of the agent’s office from one address to another in this state. The agent may change the registered office for each corporation for which the person is acting as registered agent by filing in the office of the commissioner a statement setting out (1) the name of the agent; (2) the address of the agent’s office before change; (3) the address to which the office is changed; and (4) a list of corporations for which the person is the registered agent. The statement shall be executed by the registered agent in the individual name of the agent or, if the agent is a corporation, it shall be executed by its president or a vice-president. The statement shall be delivered to the commissioner and, if the commissioner finds that the statement complies with this chapter, the commissioner shall file it in the commissioner’s office. The change becomes effective when the statement is filed.
2. A registered agent may resign by filing a written notice and an exact copy of the notice with the commissioner. The written notice of resignation shall set out the latest address of the principal office of the corporation and the names, addresses, and titles of the most recent officers of the corporation known by the agent. The commissioner shall immediately mail a copy of the notice to the corporation at its principal office. The resignation becomes effective 30 days after the filing of the written notice, unless the corporation sooner appoints a successor registered agent, as provided in AS 10.06.165 .

History. (§ 1 ch 166 SLA 1988; am § 5 ch 65 SLA 1998)

Sec. 10.06.175. Service on corporation.

1. The registered agent of a corporation is an agent upon whom process, notice, or demand required or permitted by law to be served upon the corporation may be served.
2. If a corporation fails to appoint or maintain a registered agent in this state, or if its registered agent cannot, with reasonable diligence, be found at the registered office, the commissioner is an agent of the corporation upon whom the process, notice, or demand may be served. A person may serve the commissioner under this subsection by
   1. serving on the commissioner or the designee of the commissioner a copy of the process, notice, or demand, with any papers required by law to be delivered in connection with the service, and a fee established by the department by regulation;
   2. sending to the corporation being served by certified mail a notice that service has been made on the commissioner under this subsection and a copy of the process, notice, or demand and accompanying papers; notice to the corporation shall be sent to
      1. the address of the last registered office of the corporation as shown by the records on file in the office of the commissioner; and
      2. the address, the use of which the person initiating the proceedings knows or, on the basis of reasonable inquiry, has reason to believe is most likely to result in actual notice; and
   3. filing with the appropriate court or other body, as part of the return of service, the return receipt of mailing and an affidavit of the person initiating the proceedings that this section has been complied with.
3. The commissioner shall keep a record of processes, notices, and demands served upon the commissioner under this section.
4. This section does not affect the right to serve process, notice, or demand required or permitted by law to be served upon a corporation in any other manner permitted.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Collateral references. —

19 Am. Jur. 2d, Corporations, §§ 1882 – 1904, 2083.

36 Am. Jur. 2d, Foreign Corporations, § 476 et seq.

19 C.J.S., Corporations, §§ 679, 802 et seq.

Service of process upon dissolved domestic corporation in absence of express statutory direction. 75 ALR2d 1399.

Manner of service of process upon foreign corporation which has withdrawn from state. 86 ALR2d 1000.

Attorney representing foreign corporation in litigation as its agent for service of process in unconnected actions or proceedings. 9 ALR3d 738.

Who is “general” or “managing” agent of foreign corporation under statute authorizing service of process on such agent. 17 ALR3d 625.

Validity, construction, and application of “fiduciary shield” doctrine — modern cases. 79 ALR5th 587.

Sec. 10.06.205. Incorporators.

One or more natural persons at least 18 years of age may act as incorporators of a corporation by signing and delivering to the commissioner an original and an exact copy of the articles of incorporation for the corporation.

History. (§ 1 ch 166 SLA 1988; am § 6 ch 65 SLA 1998)

Sec. 10.06.208. Articles of incorporation.

The articles of incorporation must set out

1. the name of the corporation;
2. the purpose or purposes for which the corporation is organized, which may be stated to be, or to include, the transaction of any or all lawful business for which corporations may be incorporated under this chapter;
3. if incorporation is after March 24, 1982, the address of its initial registered office and the name of its initial registered agent;
4. the name and address of each alien affiliate or a statement that there are no alien affiliates;
5. if the corporation is authorized to issue only one class of shares, the total number of shares that the corporation is authorized to issue;
6. if the corporation is authorized to issue more than one class of shares, or if a class of shares is to have two or more series,
   1. the total number of shares of each class the corporation is authorized to issue, and the total number of shares of each series that the corporation is authorized to issue or of which the board is authorized to fix the number of shares;
   2. the designation of each class, and the designation of each series or that the board may determine the designation of any series; and
   3. the rights, preferences, privileges, and restrictions granted to or imposed on the respective classes or series of shares or the holders of the shares, or that the board, within any limits and restrictions stated, may determine or alter the rights, preferences, privileges, and restrictions granted to or imposed on a wholly unissued class of shares or a wholly unissued series of any class of shares.

History. (§ 1 ch 166 SLA 1988; am § 10 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective May 15, 2015, deleted (6)(D) and made related changes.

Editor’s notes. —

Section 9, ch. 166, SLA 1988, provides:

“(a) The provisions of AS 10.06.208 and 10.06.210 relating to the contents of articles of incorporation do not apply to domestic corporations existing on July 1, 1989 unless and until an amendment of the articles is filed stating that the corporation elects to be governed by all of the provisions of the Alaska Corporations Code (AS 10.06) not otherwise applicable to it under this Act. If an amendment makes no change in the articles of incorporation other than conforming the statement of purposes and powers to AS 10.06.208 (2) or 10.06.210 (1)(F) or deletes references to par value or location of principal office, it may be adopted by approval of the board of directors of the corporation alone; otherwise, it shall be approved as provided in AS 10.06.504 — 10.06.506 , as enacted by sec. 1 of this Act.

“(b) A corporation organized and existing under the provisions of former AS 10.05 shall comply with AS 10.06.208 and 10.06.210 , as enacted by sec. 1 of this Act, on or before July 1, 1994.”

Sec. 10.06.210. Articles of incorporation; optional provisions.

The articles of incorporation may set out

1. any of the following provisions, which are not effective unless expressly provided in the articles:
   1. a provision granting, with or without limitations, the power to levy assessments on the shares or class of shares;
   2. a provision removing from shareholders preemptive rights to subscribe to any or all issues of shares or securities;
   3. special qualifications of persons who may be shareholders;
   4. a provision limiting the duration of the corporation’s existence to a specified date;
   5. a provision restricting or eliminating the power of the board or of the outstanding shares to adopt, amend, or repeal provisions of the bylaws as provided in AS 10.06.228 ;
   6. a provision requiring, for any corporate action except as provided in AS 10.06.460 and 10.06.605 , the vote of a larger proportion or of all of the shares of a class or series, or the vote or quorum for taking action of a larger proportion or of all of the directors, than is otherwise required by this chapter;
   7. a provision limiting or restricting the business in which the corporation may engage or the powers that the corporation may exercise or both;
   8. a provision conferring on the holder of an evidence of indebtedness, issued or to be issued by the corporation, the right to vote in the election of directors and on any other matters on which shareholders may vote;
   9. a provision conferring on shareholders the right to determine the consideration for which shares shall be issued;
   10. a provision requiring the approval of the shareholders or the approval of the outstanding shares for a corporate action, even though not otherwise required by this chapter;
   11. a provision that one or more classes or series of shares are redeemable as provided in AS 10.06.325 ;
   12. a provision that confers or imposes the powers, duties, privileges, and liabilities of directors on delegates under AS 10.06.450 ;
   13. a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for the breach of fiduciary duty as a director; the articles of incorporation may not eliminate or limit the liability of a director for (i) a breach of a director’s duty of loyalty to the corporation or its stockholders; (ii) acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; (iii) wilful or negligent conduct involved in the payment of dividends or the repurchase of stock from other than lawfully available funds; or (iv) a transaction from which the director derives an improper personal benefit; the provisions of this subparagraph do not eliminate or limit the liability of a director for an act or omission that occurs before the effective date of the articles of incorporation or of an amendment to the articles of incorporation authorized by this subparagraph;
   14. if the number of shares of a series is authorized to be fixed by the board, a provision authorizing the board, within the limits and restrictions stated in the articles or stated in a resolution of the board originally fixing the number of shares constituting a series, to increase or decrease, but not below the number of shares of the series then outstanding, the number of shares of a series after the issue of shares of that series; if the number of shares of a series are decreased, the shares constituting the decrease shall resume the status they had before the adoption of the resolution originally fixing the number of shares of the series;
2. reasonable restrictions on the right to transfer or hypothecate shares of a class or series, but a restriction is not binding on shares issued before the adoption of the restriction unless the holders of those shares voted in favor of the restriction;
3. the names and addresses of the persons appointed to act as initial directors;
4. any other provision not in conflict with this chapter for the management of the business and for the conduct of the affairs of the corporation, including any provision that is required or permitted by this chapter to be stated in the bylaws.

History. (am § 1 ch 148 SLA 1988; § 1 ch 166 SLA 1988; am § 59 ch 82 SLA 1989; am § 11 ch 22 SLA 2015)

Revisor’s notes. —

The provisions of (1)(N) of this section were formerly AS 10.05.255(c) and (d), enacted by sec. 1, ch. 148, SLA 1988. Because the same legislature enacted ch. 166, SLA 1988, which enacted AS 10.06 and repealed AS 10.05, the provisions of sec. 1, ch. 148, SLA 1988 were incorporated into AS 10.06.210 (1) in 1988 to carry out legislative intent. Minor word changes were made in the provisions to conform with the organization of this section.

Effect of amendments. —

The 2015 amendment, effective May 15, 2015, redesignated (1)(M) and (N) as (1)(L) and (M), substituted “subparagraph” for “paragraph” twice in (1)(M), added (1)(N) and made related and stylistic changes.

Editor’s notes. —

Section 9, ch. 166, SLA 1988, provides:

“(a) The provisions of AS 10.06.208 and 10.06.210 relating to the contents of articles of incorporation do not apply to domestic corporations existing on July 1, 1989 unless and until an amendment of the articles is filed stating that the corporation elects to be governed by all of the provisions of the Alaska Corporations Code (AS 10.06) not otherwise applicable to it under this Act. If an amendment makes no change in the articles of incorporation other than conforming the statement of purposes and powers to AS 10.06.208 (2) or 10.06.210 (1)(F) or deletes references to par value or location of principal office, it may be adopted by approval of the board of directors of the corporation alone; otherwise, it shall be approved as provided in AS 10.06.504 — 10.06.506 , as enacted by sec. 1 of this Act.

“(b) A corporation organized and existing under the provisions of former AS 10.05 shall comply with AS 10.06.208 and 10.06.210 , as enacted by sec. 1 of this Act, on or before July 1, 1994.”

Sec. 10.06.213. Delivery of articles of incorporation.

An original and an exact copy of the articles of incorporation shall be delivered to the commissioner for processing under AS 10.06.910 and for issuance of a certificate of incorporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.215. Disclosure of corporate activities.

An incorporator presenting articles of incorporation under AS 10.06.213 shall deliver, with the articles, a separate statement of the codes, from the identification codes established under AS 10.06.870 , that most closely describe the activities in which the corporation will initially engage.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.218. Effect of issuance of certificate of incorporation.

The corporate existence begins on the issuance of the certificate of incorporation. That certificate is conclusive evidence that all precedent conditions required to be performed by the incorporators have been satisfied and that the corporation has been incorporated. Issuance does not affect the right of the state to bring a proceeding to cancel or revoke the certificate or for involuntary dissolution of the corporation. The doctrines of de jure compliance, de facto corporations, and corporations by estoppel are abolished.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.220. Liability for acting as nonexistent corporation.

1. Except as provided in (b) of this section persons who assume to act as a corporation for which there has been no issuance of a certificate of incorporation under AS 10.06.218 are jointly and severally liable for debts and liabilities incurred or arising as a result of that action.
2. The terms of a written contract between a third party and persons acting on behalf of a corporation for which there has been no issuance of a certificate of incorporation may modify or preclude the liability created by this section.
3. An oral promise, agreement or understanding is not effective to modify or preclude the liability created in (a) of this section.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.223. Organizational meeting.

After the commencement of corporate existence by the issuance of a certificate of incorporation, an organizational meeting of either the incorporators or the board of directors named in the articles of incorporation shall be held at the call of a majority of the incorporators or directors named in the articles of incorporation for the purpose of adopting bylaws, electing directors if none have been named in the articles, electing officers, and transacting such other business as may come before the meeting. The organizational meeting may be held at a designated place, by remote communication, or at a designated place and by remote communication. The designated place may be inside or outside the state. Those calling the meeting shall give at least 20 days’ notice of the meeting by mail to each incorporator or director named. The notice shall state the time and place, if the meeting is to be held at a designated place, of the meeting, and whether the meeting will also be held by remote communication.

History. (§ 1 ch 166 SLA 1988; am § 1 ch 1 SLA 2021)

Administrative Code. —

For organization and corporate functions of banks, see 3 AAC 2, art. 3.

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in the first sentence, deleted “, either inside or outside the state,” following “incorporation shall be held”, added the second sentence, rewrote the fourth sentence, which read, “The notice shall state the time and place of the meeting.”, and made stylistic and related changes.

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to this section retroactive to March 11, 2020.

Sec. 10.06.225. Power of incorporators before directors’ election.

If initial directors have not been named in the articles of incorporation, the incorporator or incorporators may do whatever is necessary and proper to perfect the organization of the corporation until the directors are elected, including the adoption and amendment of bylaws of the corporation and the election of directors.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.228. Bylaws: adoption, amendment or repeal.

Bylaws may be adopted, amended, or repealed either by approval of the outstanding shares or by approval of the board, except as provided in AS 10.06.230 . The articles of incorporation may restrict or eliminate the power of either the board or the outstanding shares to adopt, amend, or repeal bylaws.

History. (§ 1 ch 166 SLA 1988)

Collateral references. —

18A Am. Jur. 2d, Corporations, §§ 258 – 271.

18 C.J.S., Corporations, § 154 et seq.

Construction and application of provisions of articles, bylaws, statutes, or agreements restricting alienation or transfer of corporate stock. 2 ALR2d 745.

Purposes for which stockholder or officer may exercise right to examine corporate books and records. 15 ALR2d 11.

Conflict of laws as to validity and effect of corporate bylaw. 27 ALR2d 435.

Construction and effect of corporate bylaws or articles relating to change in number of directors. 3 ALR3d 623.

Sec. 10.06.230. Bylaws: number of directors and other content.

1. Unless a provision is contained in the articles, the bylaws must state the number of directors of the corporation or state that the number of directors may not be less than a stated number or more than a stated number, with the exact number of the directors to be fixed, within the limits specified, by approval of the board or the shareholders in the manner provided in the bylaws. If the articles provide for the number of directors, the number of directors may only be changed by an amendment to the articles.
2. [Repealed, § 59 ch 82 SLA 1989.]
3. After the issuance of shares, a bylaw specifying or changing a fixed number of directors, or the maximum or minimum number of directors or changing from a fixed to a variable board or vice versa, shall be adopted by approval of the outstanding shares.
4. Notwithstanding (c) of this section, a bylaw or amendment of the articles of incorporation reducing the fixed or minimum number of directors to a number less than five may not be adopted if the number of votes cast against its adoption at a meeting is more than 16 2/3 percent of the outstanding shares entitled to vote.
5. The bylaws may contain any provision, not in conflict with law or the articles of incorporation, for the management of the business of the corporation and for the conduct of the affairs of the corporation, including
   1. a provision referred to in AS 10.06.210 (2), (3), or (4);
   2. the time, for meetings held at a designated place, the place, and the manner, including by remote communication, of calling, conducting, and giving notice of meetings of shareholders, directors, and committees;
   3. the manner of execution, revocation, and use of proxies;
   4. the qualifications, duties, and compensation of directors; the time of their annual election; and the requirements of a quorum for directors’ and committee meetings;
   5. the appointment and authority of committees of the board;
   6. the appointment, duties, compensation, and tenure of officers;
   7. the mode of determination of holders of record of the shares of the corporation;
   8. the making of annual reports and financial statements to the shareholders.

History. (§ 1 ch 166 SLA 1988; am §§ 5, 59 ch 82 SLA 1989; am § 2 ch 1 SLA 2021)

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in (e), in the introductory language deleted “but not limited to,” at the end; in (e)(2), substituted “for meetings held at a designated place, the place, and the manner, including by remote communication,” for “place, and manner” following “the time,”.

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (e) of this section retroactive to March 11, 2020.

Sec. 10.06.233. Location and inspection of bylaws.

Each corporation shall keep at its principal executive office in this state or, if its principal executive office is not in this state, at its principal business office in this state, the original or a copy of its bylaws with amendments to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside this state and the corporation has no principal business office in this state, it shall upon the written request of a shareholder furnish to a shareholder a copy of the bylaws with amendments to date.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.305. Issuance of and requirements for shares.

1. Subject to the provisions of this chapter, a corporation may issue one or more classes or series of shares or both, with full, limited, or no voting rights and with other rights, preferences, privileges, and restrictions as are stated or authorized in its articles of incorporation. A denial or limitation of voting rights is not effective unless at the time one or more classes or series of outstanding shares or debt securities, singly or in the aggregate, are entitled to full voting rights. A denial or limitation of dividend or liquidation rights is not effective unless at the time one or more classes or series of outstanding shares, singly or in the aggregate, are entitled to unlimited dividend or liquidation rights.
2. All shares of a class shall have the same voting, conversion, and redemption rights and other rights, preferences, privileges, and restrictions, unless the class is divided into series. If a class is divided into series, all the shares of a series shall have the same voting, conversion, and redemption rights and other rights, preferences, privileges, and restrictions.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.308. Issuance of preferred or special classes of shares.

If authorized by the articles of incorporation, a corporation may issue preferred or special classes of shares

1. subject to redemption as provided under AS 10.06.325 ;
2. entitling the holders to cumulative, noncumulative, or partially cumulative dividends;
3. having preferences over another class or classes of shares for the payment of dividends;
4. having preference in the assets of the corporation over another class of shares upon the voluntary or involuntary liquidation of the corporation;
5. convertible into shares of another class or into shares of a series of the same or another class, except a class having prior or superior rights and preferences as to dividends or distribution of assets upon liquidation.

History. (§ 1 ch 166 SLA 1988; am § 1 ch 12 SLA 2000)

Sec. 10.06.310. Issuance of shares in series.

If authorized by the articles of incorporation, the shares of a preferred or special class may be divided into and issued in series. Each series shall be designated to distinguish the shares of the series from the shares of other series and classes.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.313. Variation in rights and preferences of shares.

Any or all of the rights and preferences of a series of a preferred or special class of shares and the variations in the relative rights and preferences between different series may be fixed and determined by the articles of incorporation, but shares of the same class shall be identical except for the following relative rights and preferences as to which there may be variations between series:

1. the rate of dividend;
2. the price and the terms and conditions on which shares may be redeemed;
3. the amount payable upon shares in the event of involuntary liquidation;
4. the amount payable upon shares in the event of voluntary liquidation;
5. sinking fund provisions for the redemption or purchase of shares;
6. the terms and conditions on which shares may be converted, if the shares of a series are issued with the privilege of conversion;
7. voting rights, if any.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.315. Series rights and preferences established by board.

If the articles of incorporation expressly vest authority in the board, then, to the extent that the articles have not established series and fixed and determined the variations in the relative rights and preferences between series, the board may divide a class into series and, within the limitations set out in AS 10.06.305 — 10.06.323 and in the articles, fix and determine the relative rights and preferences of the shares of a series.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.318. Manner of establishing series.

If the authority to establish a series is contained in the articles of incorporation, the board shall adopt a resolution setting out the designation of the series and fixing and determining the relative rights and preferences of the series to the extent not fixed and determined by the articles.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.320. Filing of statement before issuance of class or series.

1. Before the issuance of shares of a class the rights, preferences, privileges, and restrictions of which have been fixed by resolution of the board, or before the issuance of shares of a series established by resolution of the board, the corporation shall file with the commissioner a statement, and an exact copy of the statement, signed by the president or vice-president and the secretary or assistant secretary, setting out
   1. the name of the corporation;
   2. a copy of the resolution determining the rights, preferences, privileges, and restrictions of the wholly unissued class, or of the resolution establishing and designating a series, and fixing and determining the relative rights and preferences of the series;
   3. the date of the adoption of the resolution;
   4. that the resolution was adopted by the board.
2. The commissioner shall process the statement in accordance with AS 10.06.910 .

History. (§ 1 ch 166 SLA 1988; am § 7 ch 65 SLA 1998)

Sec. 10.06.323. Effect of filing statement.

When the commissioner has filed the statement under AS 10.06.320 , the resolution fixing the rights, preferences, privileges, and restrictions of a wholly unissued class of shares or the resolution establishing and designating a series of shares and fixing and determining the relative rights and preferences of the series becomes effective and constitutes an amendment of the articles of incorporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.325. Redemption of shares; creation of sinking fund; repurchase agreements.

1. A corporation may provide in the articles of incorporation for one or more classes or series of
   1. common shares that are redeemable, in whole or in part,
      1. at the option of the corporation; or
      2. to the extent and upon the happening of one or more specified events;
   2. preferred shares that are redeemable, in whole or in part,
      1. at the option of the corporation;
      2. to the extent and upon the happening of one or more specified events;
      3. at the option of the holder; or
      4. upon the vote of at least a majority of the outstanding shares of the class or series to be redeemed.
2. Notwithstanding the other provisions of this section, an open-end investment company registered under the United States Investment Company Act of 1940 may, if its articles of incorporation so provide, issue shares that are redeemable at the option of the holder at a price approximately equal to the shares’ proportionate interest in the net assets of the corporation, and a shareholder may compel redemption of the shares in accordance with their terms.
3. Nothing in this section prevents a corporation from creating a sinking fund or similar provision or entering into an agreement for the redemption or purchase of its shares to the extent permitted by this chapter.
4. Except as provided by AS 10.06.385 , a redemption of shares shall be made at the price, within the time, and upon the terms and conditions stated in the articles. When the articles permit a partial redemption of a class or series of shares, the articles must prescribe the method of selecting the shares to be redeemed. The method of selection may be
   1. pro rata;
   2. by lot;
   3. at the discretion of, or in a manner approved by, the board; or
   4. upon other terms and conditions stated in the articles.
5. Notwithstanding the provisions of AS 10.06.375 , a corporation may not issue redeemable shares unless the shares are redeemable as provided in this section.

History. (§ 1 ch 166 SLA 1988; am §§ 2 — 4 ch 12 SLA 2000)

Cross references. —

For the United States Investment Company Act of 1940, see 15 U.S.C. 80a-1 et seq.

Sec. 10.06.328. Irrevocability of subscriptions for shares.

A subscription for shares of a corporation to be organized is irrevocable for a period of six months, unless the subscription agreement provides otherwise or unless all of the subscribers consent to the revocation of the subscription.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.330. Payment of subscription for shares.

Unless otherwise provided in the subscription agreement, subscriptions for shares, whether made before or after the organization of a corporation, shall be paid in full at the time or in installments as determined by the board. A call made by the board for payment on subscriptions shall be uniform for shares of the same class or shares of the same series.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.333. Remedies for default in payment.

In case of default in the payment of an installment or call when payment is due, the corporation may proceed to collect the amount due as any debt due the corporation. The bylaws may prescribe other remedies for failure to pay installments or calls that become due. No remedy working a forfeiture of a subscription, or of the amounts paid on a subscription, may be declared against a subscriber unless the amount due remains unpaid for a period of 20 days after written demand has been made. If mailed, written demand is considered to be made when it is deposited in the United States mail in a sealed envelope addressed to the subscriber at the last post office address known to the corporation, with postage prepaid. On a sale of shares by reason of forfeiture, the excess of proceeds realized over the amount due and unpaid on the shares shall be paid to the delinquent subscriber or to the legal representative of the subscriber.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.335. Consideration for shares.

Shares may be issued for consideration expressed in dollars fixed by the board unless the articles of incorporation reserve to the shareholders the right to fix the consideration. If this right is reserved as to any shares, the shareholders shall, before the issuance of the shares, fix the consideration to be received for the shares by approval of the outstanding shares.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.338. Payment for shares.

1. Consideration for the issuance of shares may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the corporation. Unless otherwise provided in the articles of incorporation, when payment of the consideration for shares is received by the corporation, the shares are considered fully paid and nonassessable.
2. A promissory note or future service does not constitute payment or part payment for shares of a corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.340. Judgment of board or shareholders as to value of consideration.

In the absence of fraud in the transaction, the judgment of the board or the shareholders as to the value of the consideration received for shares is conclusive.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.343. Share rights and options.

Subject to a provision in its articles, a corporation may create and issue, whether or not in connection with the issuance and sale of any of its shares or other securities, rights or options entitling the holders of the rights or options to purchase from the corporation shares of any class or classes. These rights or options shall be evidenced in the manner the board approves and, subject to the provisions of the articles, must set out the terms upon which, the time within which, and the price at which the shares may be purchased from the corporation upon the exercise of the right or option. If the rights or options are to be issued to directors, officers, or employees of the corporation or of a subsidiary of the corporation and not to the shareholders generally, their issuance shall be authorized by the approval of the outstanding shares or must be consistent with a plan so approved or ratified. In the absence of fraud in the transaction, the judgment of the board as to the adequacy of the consideration received for the rights or options is conclusive.

History. (§ 1 ch 166 SLA 1988; am § 10 ch 50 SLA 1989; am § 6 ch 82 SLA 1989)

Sec. 10.06.345. Expenses of organization, reorganization, and financing.

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 the corporation out of the consideration received by the corporation in payment for its shares without rendering the shares not fully paid or assessable.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.348. Certificates representing shares.

Except as otherwise provided under AS 10.06.349 , the shares of a corporation shall be represented by certificates signed by the president or 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 of the seal. The signatures 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 registered by a registrar, other than the corporation itself or an employee of the corporation. If an officer who has signed or whose facsimile signature has been placed on the certificate ceases to be an officer before the certificate is issued, the certificate may be issued by the corporation with the same effect as if the officer were an officer at the date of its issue.

History. (§ 1 ch 166 SLA 1988; am § 7 ch 82 SLA 1989)

Sec. 10.06.349. Shares without certificates.

1. Unless the articles or bylaws provide otherwise, the board of directors may authorize the issuance without certificates of some or all of the corporation’s classes or series of shares. The authorization does not affect shares that are already represented by certificates until the certificates are surrendered to the corporation.
2. Within a reasonable time after the issuance or transfer of shares without certificates, the corporation shall send the shareholder a written statement giving the information required by AS 10.06.350 to be on certificates, and, if applicable, the information required by AS 10.06.424(c) to be disclosed to the shareholder when there is no certificate.

History. (§ 8 ch 82 SLA 1989)

Sec. 10.06.350. Information required to be stated on certificate.

1. Each certificate representing shares issued by a corporation authorized to issue shares of more than one class shall set out on the face or back of the certificate, or state that the corporation will furnish to a shareholder upon request and without charge, a full or summary 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 preferred or special class in series, the variations in the relative rights and preferences between the shares of each series so far as they have been fixed and determined and the authority of the board to fix and determine the relative rights and preferences of subsequent series.
2. Each certificate representing shares shall state upon its face
   1. that the corporation is organized under the laws of the 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, that the certificate represents.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.353. Full payment required for share.

A share with or without a certificate may not be issued until the share is fully paid.

History. (§ 1 ch 166 SLA 1988; am § 9 ch 82 SLA 1989)

Sec. 10.06.355. Issuance of fractional shares or scrip.

1. A corporation may issue a fractional share, and, by action of its board, may issue, instead of a fractional certificate, scrip in registered or bearer form that entitles the holder to receive a full share upon the surrender of the scrip aggregating a full share.
2. A fractional share entitles the holder to exercise voting rights, to receive dividends, and to participate in the assets of the corporation in the event of liquidation. Unless otherwise provided in the scrip, scrip does not entitle the holder to exercise voting rights, to receive dividends, or to participate in the assets of the corporation in the event of liquidation.
3. The board may issue scrip subject to the condition that it is void if not exchanged for full shares before a specified date, or subject to the condition that the shares for which the scrip is exchangeable may be sold by the corporation and the proceeds distributed to the holders of that scrip, or subject to other conditions that the board considers advisable.

History. (§ 1 ch 166 SLA 1988; am § 10 ch 82 SLA 1989)

Sec. 10.06.356. Shares held by nominees.

1. A corporation may establish a procedure by which the beneficial owner of shares that are registered in the name of a nominee is recognized by the corporation as the shareholder.
2. The procedure may set out
   1. the types of nominees to whom it applies;
   2. the rights or privileges that the corporation recognizes in a beneficial owner;
   3. the manner in which the procedure is selected by the nominee;
   4. the information that must be provided when the procedure is selected;
   5. the period when selection of the procedure is effective; and
   6. other aspects of the rights and duties created.

History. (§ 11 ch 82 SLA 1989)

Sec. 10.06.358. Distributions; conditions; financial statements and determinations.

1. A corporation or a subsidiary of the corporation may not make a distribution to the corporation’s shareholders as defined in AS 10.06.990 unless
   1. the amount of the retained earnings of the corporation immediately before the distribution equals or exceeds the amount of the proposed distribution; or
   2. immediately after giving effect to the distribution the
      1. sum of the assets of the corporation, exclusive of goodwill, capitalized research and development expenses, evidences of debts owing from directors or officers or secured by the corporation’s own shares, and deferred charges, would be at least equal to one and one-fourth times its liabilities, not including deferred taxes, deferred income, and other deferred credits; and
      2. current assets of the corporation would be at least equal to its current liabilities or, if the average of the earnings of the corporation before taxes on income and before interest expense for the two preceding fiscal years was less than the average of the interest expense of the corporation for those fiscal years, at least equal to one and one-fourth its current liabilities.
2. For purposes of this section,
   1. in determining the amount of the assets of the corporation, profits derived from an exchange of assets may not be included unless the assets received are currently realizable in cash;
   2. “current assets” may include net amounts that the board has determined in good faith may reasonably be expected to be received from customers during the 12-month period used in calculating current liabilities under existing contractual relationships obligating the customers to make fixed or periodic payments during the term of the contracts after in each case giving effect to future costs not then included in current liabilities but reasonably expected to be incurred by the corporation in performing the contracts.
3. For the purposes of this chapter, the amount of a distribution payable in property shall be determined on the basis of the value at which the property is carried on the corporation’s financial statements in accordance with this section.
4. Only a corporation that classifies its assets as current assets and fixed assets in accordance with this section is governed by (a)(2)(B) of this section.
5. For the purposes of this section, the board of directors may base a determination that a distribution is not prohibited either on financial statements prepared in accordance with generally accepted accounting principles or on the basis of accounting practices and principles that are fair and reasonable in the circumstances.
6. Financial statements and determinations prepared or arrived at in accordance with generally accepted accounting principles are fair and reasonable. The fair and reasonable quality of statements and determinations prepared under other practices and principles shall be proved by the corporation.

History. (§ 1 ch 166 SLA 1988; am §§ 12 — 14 ch 82 SLA 1989)

Sec. 10.06.360. Prohibited distribution; inability to meet maturing liabilities.

A corporation or subsidiary of a corporation may not make a distribution to the corporation’s shareholders if the corporation or the subsidiary making the distribution is, or as a result of the distribution would be, likely to be unable to meet its liabilities as they mature.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.363. Prohibited distribution on junior shares; liquidation preference.

A corporation or subsidiary of a corporation may not make a distribution to the corporation’s shareholders on any shares of its stock of a class or series that are junior to outstanding shares of another class or series with respect to distribution of assets on liquidation if, after giving effect to the distribution, the excess of its assets, exclusive of goodwill, capitalized research and development expenses, evidences of debts owing from directors or officers or secured by the corporation’s own shares, and deferred charges, over its liabilities, not including deferred taxes, deferred income and other deferred credits, would be less than the liquidation preference of all shares having a preference on liquidation over the class or series to which the distribution is made.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.365. Prohibited distribution on junior shares; relationship to retained earnings.

A corporation or a subsidiary of a corporation may not make a distribution to the corporation’s shareholders on any shares of its stock of a class or series that is junior to outstanding shares of another class or series with respect to payment of dividends unless the amount of the retained earnings of the corporation immediately before the distribution equals or exceeds the amount of the proposed distribution plus the aggregate amount of the cumulative dividends in arrears on all shares having a preference with respect to payment of dividends over the class or series to which the distribution is made.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.368. Exception for purchase or redemption of shares of deceased shareholder.

The provisions of AS 10.06.358 , 10.06.360 , 10.06.363 , and 10.06.365 do not apply to a purchase or redemption of shares of a deceased shareholder from the proceeds of insurance on the life of the shareholder in excess of the total amount of all premiums paid by the corporation for the insurance, in order to carry out the provisions of an agreement between the corporation and the shareholder to purchase or redeem the shares upon the death of the shareholder.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.370. Inapplicability to regulated investment company.

The provisions of AS 10.06.358 do not apply to a dividend declared by a regulated investment company, as defined in the United States Internal Revenue Code, to the extent that the dividend is necessary to maintain the status of the corporation as a regulated investment company under the provisions of that code. The provisions of this chapter do not apply to a purchase or redemption of shares redeemable at the option of the holder by a registered open-end investment company under the United States Investment Company Act of 1940, so long as the right of redemption remains unsuspended under the provisions of that statute and the articles and bylaws of the corporation.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For the United States Investment Act of 1940, see 15 U.S.C. 80a-1 et seq.

For United States Internal Revenue Service, see 26 U.S.C. 851.

Sec. 10.06.373. Share dividends: restrictions.

A dividend payable in shares of a class may not be paid to the holders of shares of another class unless authorized by the articles of incorporation or unless payment is authorized by the affirmative vote or the 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.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.375. Additional restrictions in articles, bylaws, indentures, or agreements.

Nothing in this chapter prohibits additional restrictions upon the declaration of dividends or the purchase or redemption of a corporation’s own shares by provision in the articles or bylaws of the corporation or in any indenture or other agreement entered into by the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.378. Liability of shareholders receiving prohibited distributions; suit against shareholders.

1. A shareholder who receives a distribution prohibited by this chapter with knowledge of facts indicating the impropriety of the distribution is liable to the corporation for the benefit of all of the creditors or shareholders entitled to institute an action under (b) of this section for the amount received by the shareholder with interest at the legal rate on judgments until paid. The liability of the shareholder under this subsection may not exceed the liabilities of the corporation owed to nonconsenting creditors at the time of the violation and the injury suffered by nonconsenting shareholders.
2. Suit may be brought in the name of the corporation to enforce the liability to
   1. creditors arising under (a) of this section for a violation of AS 10.06.358 or 10.06.360 against any or all shareholders liable by any one or more creditors of the corporation whose debts or claims arose before the time of the distribution to shareholders and who have not consented to the distribution, whether or not they have reduced their claims to judgment; or
   2. shareholders arising under (a) of this section for a violation of AS 10.06.363 or 10.06.365 against any or all shareholders liable by any one or more holders of preferred shares outstanding at the time of the distribution who have not consented to the distribution, without regard to the provisions of AS 10.06.435 .
3. A shareholder sued under this section may implead all other shareholders liable under this section and may compel contribution, either in that action or in an independent action against shareholders not joined in that action.
4. This section does not affect the liability that a shareholder may have under other applicable law.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of (c) of this section on Alaska Rule of Civil Procedure 19, see sec. 16, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.380. Identification of distribution in notice to shareholders.

A distribution other than one chargeable to retained earnings shall be identified in a notice to shareholders as being made from a source other than retained earnings, and shall include a statement of the accounting treatment of the distribution. The notice shall accompany the distribution or shall be given within three months after the end of the fiscal year in which the distribution is paid.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.383. Inapplicability to winding up and involuntary or voluntary dissolution.

AS 10.06.305 — 10.06.390 do not apply in a proceeding for winding up and dissolution under AS 10.06.605 — 10.06.678 .

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.385. Redemption of shares at the option of corporation; manner.

1. A corporation may redeem any or all shares that are redeemable at its option by
   1. giving notice of redemption; and
   2. payment or deposit of the redemption price of the shares as provided in its articles of incorporation or deposit of the redemption price in accordance with (d) of this section.
2. Subject to any provisions in its articles with respect to the notice required for redemption of shares, the corporation may give notice of the redemption of any or all shares subject to redemption by publishing a notice of redemption in a newspaper of general circulation in the judicial district in which the principal executive office of the corporation is located at least once a week for two successive weeks, beginning not earlier than 60 nor later than 20 days before the date fixed for redemption. The notice of redemption must set out the following:
   1. the class or series of shares or part of any class or series of shares to be redeemed;
   2. the date fixed for redemption;
   3. the redemption price; and
   4. the place at which the shareholders may obtain payment of the redemption price upon surrender of their share certificates or uncertificated shares.
3. If the corporation gives notice of redemption under (b) of this section, it shall also mail a copy of the notice of redemption to each holder of record of shares to be redeemed as of the date of mailing or record date fixed in accordance with AS 10.06.408 , addressed to the holder at the address of the holder appearing on the books of the corporation or given by the holder to the corporation for the purpose of notice not earlier than 60 nor later than 20 days before the date fixed for redemption. Failure to comply with this subsection does not invalidate the redemption of the shares.
4. On or before the date fixed for redemption of redeemable shares, a corporation may deposit with a bank or trust company in this state as a trust fund a sum sufficient to redeem the shares called on the date fixed for redemption, with irrevocable instructions to the bank or trust company to publish a notice of redemption, or to complete the publication if begun, and to pay, on and after or before the date fixed for redemption, the redemption price of the shares to holders of the shares upon the surrender of their share certificates or uncertificated shares. From and after the date of the deposit with the bank or trust company, although before the date fixed for redemption, the shares called for redemption are redeemed and dividends on those shares cease to accrue after the date fixed for redemption. The deposit constitutes full payment of the shares to their holders and from and after the date of the deposit the shares are no longer outstanding and the holders of the shares cease to be shareholders with respect to the shares and have no rights with respect to the shares except the right to receive from the bank or trust company payment of the redemption price of the shares without interest upon surrender of the certificates for the shares or the uncertificated shares, and any right to convert the shares that may exist and continue for a period fixed by the terms of the shares.

History. (§ 1 ch 166 SLA 1988; am §§ 15, 16 ch 82 SLA 1989)

Revisor’s notes. —

The term “uncertificated” was substituted for “certificateless” in (b)(4) and (d) in this section in 1989 to conform to national usage.

Sec. 10.06.388. Acquisition of corporation’s own shares; reissuance or retirement.

1. When a corporation purchases or redeems or otherwise acquires its own shares, the shares are restored to the status of authorized but unissued shares unless the articles prohibit their reissuance.
2. If the articles prohibit the reissuance of shares upon their acquisition by the corporation, then upon the acquisition of those shares the authorized number of shares of the class and series, if any, to which the shares belonged is reduced by the number of shares acquired and the articles shall be amended to reflect the reduction in authorized shares. If all of the authorized shares of a class or series are acquired and their reissue is prohibited by the articles of incorporation, then the articles shall also be amended to eliminate any statement of rights, preferences, privileges, and restrictions relating solely to that class or series. Articles of amendment shall be filed within 60 days of the acquisition of the shares in accordance with the requirements of AS 10.06.512 — 10.06.514 . Approval by the outstanding shares is not required to adopt such articles of amendment.

History. (§ 1 ch 166 SLA 1988)

Editor’s notes. —

Section 12(b), ch. 166, SLA 1988, provides: “AS 10.06.388(a) , as enacted by sec. 1 of this Act, applies only to shares acquired on or after July 1, 1989.”

Sec. 10.06.390. Capitalization of retained earnings.

The paid-in capital of a corporation may be increased by resolution of the board directing that all or a part of the retained earnings of the corporation be transferred to the paid-in capital account.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.405. Meetings of shareholders.

1. Meetings of shareholders shall be held at a place inside or outside the state, by remote communication, or at a place inside or outside the state and by remote communication, as provided in the bylaws. In the absence of a provision in the bylaws, meetings shall be held at the direction of the board or at the registered office of the corporation.
2. An annual meeting of the shareholders shall be held at the time as provided in the bylaws or, if the bylaws do not set a time, at a time determined by the board. If the annual meeting is not held within any 13-month period, the superior court may on the application of a shareholder summarily order a meeting to be held.
3. Special meetings of the shareholders may be called by the board, the chair of the board, the president, the holders of not less than one-tenth of all the shares entitled to vote at the meeting, or other persons as may be authorized in the articles of incorporation or the bylaws.
4. The failure of a corporation to hold an annual meeting at the time stated in or fixed under its bylaws does not cause the corporation to forfeit its status, does not cause a dissolution of the corporation, and does not affect the validity of corporate action.

History. (§ 1 ch 166 SLA 1988; am § 17 ch 82 SLA 1989; am § 12 ch 22 SLA 2015; am §§ 3, 4 ch 1 SLA 2021)

Effect of amendments. —

The 2015 amendment, effective May 15, 2015, substituted “chair” for “chairman” in (c).

The 2021 amendment, effective April 1, 2021, in (a), in the first sentence, substituted “the state, by remote communication, or at a place inside or outside the state and by remote communication,” for “this state” following “inside or outside”, in the second sentence, inserted “direction of the board or at the” following “held at the”; in (b), added “or, if the bylaws do not set a time, at a time determined by the board” at the end of the first sentence.

Editor’s notes.

Section 30, ch. 1, SLA 2021, makes the 2021 amendments to (a) and (b) of this section retroactive to March 11, 2020.

Sec. 10.06.408. Closing of transfer books and fixing record date.

1. To determine the shareholders entitled to notice of or to vote at a meeting of shareholders or an adjournment of a meeting, to determine the shareholders entitled to receive payment of a dividend, or to determine the shareholders for any other proper purpose, the board of a corporation may provide that the stock transfer books shall be closed for a stated period not exceeding 70 days. If the stock transfer books are closed to determine shareholders entitled to notice of or to vote at a meeting of shareholders, they shall be closed for at least 20 days immediately preceding the meeting.
2. Instead of closing the stock transfer books, the bylaws or, in the absence of an applicable bylaw, the board may fix a date as the record date for the determination of shareholders. This record date may not be more than 60 days and, in case of a meeting of shareholders, not less than 20 days before the date on which the particular action requiring the determination of shareholders is to be taken. If the stock transfer books are not closed and a record date is not fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders or for the determination of shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board declaring the dividend is adopted, is the record date for the determination of shareholders. When a determination of shareholders entitled to vote at a meeting of shareholders has been made as provided in this section, the determination applies to an adjournment of the meeting of shareholders.

History. (§ 1 ch 166 SLA 1988; am § 13 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective May 15, 2015, deleted “or” after “of a meeting,” in (a).

Sec. 10.06.410. Notice of shareholders’ meetings.

1. Written or printed notice stating the place, if the meeting will be held at a designated place, the manner, including holding the meeting by remote communication, the day, and the hour of the meeting, and, in the case of a special meeting, the purpose for which the meeting is called, shall be delivered not less than 20 or more than 60 days before the date of the meeting, either personally, by mail, or by electronic transmission under (b) of this section, by or at the direction of the president, the secretary, the officer, or persons calling the meeting, to each shareholder of record entitled to vote at the meeting. If mailed, the notice is considered delivered when deposited with postage prepaid in the United States mail addressed to the shareholder at the address of the shareholder as it appears on the stock transfer books of the corporation, or, if the shareholder has filed with the secretary of the corporation a written request that notice be mailed to a different address, addressed to the shareholder at the new address. An affidavit of the secretary or other person giving the notice or of a transfer agent of the corporation that the notice required by this section has been given is prima facie evidence of the facts stated in the affidavit. If attendance of the meeting by remote communication is permitted, the notice must state the method of remote communication by which a shareholder or a proxy holder is considered present in person at the meeting and by which the shareholder or proxy holder may vote.
2. Notice under (a) of this section may be given by electronic transmission if the shareholder authorizes delivery by electronic transmission. Authorization must be in the form of a writing signed by the shareholder or an electronic transmission that sets out or is submitted with information demonstrating that the shareholder authorized the electronic transmission. An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the corporation that the notice has been given by a form of electronic transmission shall be prima facie evidence of the facts stated in the affidavit. Notice by electronic transmission shall be considered given
   1. by facsimile telecommunication when directed to a number at which the shareholder has consented to receive notice;
   2. by electronic mail when directed to an electronic mail address at which the shareholder has consented to receive notice;
   3. by a posting on an electronic network together with a separate notice of the specific posting to the shareholder on the later of
      1. the posting; or
      2. the giving of separate notice; or
   4. by any other form of electronic transmission when directed to the shareholder.

History. (§ 1 ch 166 SLA 1988; am § 18 ch 82 SLA 1989; am §§ 1, 2 ch 103 SLA 2002; am § 5 ch 1 SLA 2021)

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in (a), in the first sentence, substituted “if the meeting will be held at a designated place, the manner, including holding the meeting by remote communication, the day, and the hour” for “day, and hour” following “stating the place,”, added the last sentence, and made a stylistic change.

Editor’s notes.

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (a) of this section retroactive to March 11, 2020.

Sec. 10.06.411. Delivery of information and items to shareholders.

1. A corporation shall be considered to have delivered an annual report, proxy statement, or other information to shareholders of record who reside at the same physical location and share an address if the corporation delivers an annual report, proxy statement, or other information to the shared address; the corporation addresses the annual report, proxy statement, or other information to the shareholders as a group (for example, “ABC Corporation Shareholders,” “Jane Doe and Household,” or “the Smith Family”) or to each of the shareholders individually (for example, “John Doe and Richard Jones”); and
   1. each shareholder consents in writing to delivery of one copy of the annual report, proxy statement, or other information to the shareholder’s shared address, and the corporation has notified each shareholder of the duration of that shareholder’s consent, explained how the shareholder can revoke the consent, and explained that the corporation will begin sending an individual copy of the annual report, proxy statement, or other information to the shareholder within 30 days after revocation of the shareholder’s consent; or
   2. all of the following conditions are met:
      1. the shareholder has the same last name as the other shareholders at the shared address or the corporation reasonably believes that the shareholders are members of the same family;
      2. the corporation has sent the shareholder a notice at least 60 days before the corporation begins to rely on this section concerning delivery of annual reports, proxy statements, or other information to that shareholder; the notice must
         1. state that only one copy of the annual report, proxy statement, or other information will be delivered to the shared address unless the corporation receives contrary instructions from the shareholder;
         2. include a toll-free telephone number or be accompanied by a reply form that is pre-addressed with postage provided that the shareholder can use to notify the corporation that the shareholder wishes to receive a separate copy of the annual report, proxy statement, or other information;
         3. state that the corporation will begin sending individual copies to a shareholder within 30 days after the shareholder notifies the corporation that the shareholder wishes to receive a separate copy of the annual report, proxy statement, or other information; and
         4. include the following statement or a similar clear and understandable statement in boldface type within the text of the notice or on the envelope containing the notice, or, in the case of a notice mailed with other shareholder communications, both within the text of the notice and on the envelope containing the notice: “Important Notice Regarding Delivery of Shareholder Documents”;
      3. the corporation has not received notice from the shareholder indicating that the shareholder wishes to continue to receive an individual copy of the annual report, proxy statement, or other information; and
      4. the corporation delivers the annual report, proxy statement, or other information to a post office box or to a residential street address; the corporation may assume a street address is a residential street address unless the corporation has information that indicates that the address is a business address.
2. If a shareholder revokes consent to delivery of one copy of the annual report, proxy statement, or other information to a shared address or notifies the corporation that the shareholder wishes to receive an individual copy of the annual report, proxy statement, or other information, the corporation shall begin sending individual copies to that shareholder within 30 days after the corporation receives the revocation of consent or notice.
3. A corporation is not required to send a notice of a shareholders’ meeting, an annual report, a payment, a notice of a payment, or a proxy statement to a shareholder until the shareholder provides the corporation with written notice of the shareholder’s current address if materials set out in (1) or (2) of this subsection have been sent by first class mail to the shareholder’s address and have been returned as undeliverable:
   1. an annual report and proxy statements for two consecutive annual shareholders’ meetings;
   2. during a period of at least 12 months, at least two payments of dividends or interest on securities, or at least two dividend reinvestment confirmations.
4. For purposes of (a) of this section, “address” means a street address, a post office box number, an electronic mail address, a facsimile telephone number, or another similar destination to which paper or electronic documents are delivered, unless otherwise provided in this section. If the corporation has reason to believe that the address is a street address of a multi-unit building, the address must include the unit number.

History. (§ 3 ch 103 SLA 2002)

Sec. 10.06.413. Voting list; liability.

1. At least 20 days before each meeting of shareholders, the officer or agent having charge of the stock transfer books for shares of a corporation shall make a list of the shareholders entitled to vote at the meeting or an adjournment of the meeting arranged in alphabetical order, with the address of and the number of shares held by each shareholder. The list shall be kept on file at the registered office of the corporation and is subject to inspection by a shareholder or the agent or attorney of a shareholder at any time during usual business hours for a period of 20 days before the meeting. The list shall also be produced and kept open at the time and place of the meeting and subject to the inspection of a shareholder during the meeting, or the list shall be kept available for the meeting on a reasonably accessible electronic network where the information required to gain access to the list is provided with the notice of the meeting. If the corporation makes the list available on an electronic network, the corporation may take reasonable steps to ensure that the information is available only to shareholders of the corporation. The original stock transfer books are prima facie evidence as to the shareholders who are entitled to examine the list or transfer books or to vote at a meeting of shareholders.
2. Failure to comply with the requirements of this section does not affect the validity of the action taken at the meeting.
3. An officer or agent having charge of the stock transfer books who fails to prepare the list of shareholders, keep it on file for a period of 20 days, or produce and keep it open for inspection at the meeting, as provided in this section, is liable for a penalty of $5,000 and shall pay this sum to a shareholder who makes a written request for performance of the duties imposed by this section.

History. (§ 1 ch 166 SLA 1988; am § 6 ch 1 SLA 2021)

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in (a), at the end of the third sentence, added “, or the list shall be kept available for the meeting on a reasonably accessible electronic network where the information required to gain access to the list is provided with the notice of the meeting”, added the fourth sentence, and made a stylistic change.

Editor’s notes.

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (a) of this section retroactive to March 11, 2020.

Sec. 10.06.415. Quorum of shareholders.

1. Unless otherwise provided in the articles of incorporation, a majority of the shares entitled to vote, represented in person, by remote communication, or by proxy, constitutes a quorum at a meeting of shareholders, but in no event may a quorum consist of less than one-third of the shares entitled to vote at the meeting. If a quorum is present, the affirmative vote of the majority of shares represented at the meeting and entitled to vote on the subject matter is the act of the shareholders, unless the vote of a greater number or voting by classes is required by this chapter, the articles of incorporation, or the bylaws.
2. Shareholders present at a meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken other than adjournment is approved by at least a majority of shares required to constitute a quorum.

History. (§ 1 ch 166 SLA 1988; am § 7 ch 1 SLA 2021)

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in the first sentence of (a), inserted “, by remote communication,” following “represented in person”.

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (a) of this section retroactive to March 11, 2020.

Sec. 10.06.418. Proxies.

1. Each person entitled to vote shares may authorize another person or persons to act by proxy with respect to the shares. A proxy purporting to be executed in accordance with the provisions of this chapter is presumed valid.
2. A proxy is not valid after the expiration of 11 months from the date of the proxy unless it qualifies as an irrevocable proxy under (e) of this section. A proxy continues in full force and effect until revoked by the person executing it, except as provided in this section. A person may revoke a proxy by a writing delivered to the corporation stating that the proxy is revoked, by a subsequent proxy executed by the person executing the prior proxy and delivered to the corporation, or by attendance at the meeting and voting in person, or by remote communication, by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which the proxies are mailed.
3. A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of the death or incapacity is received by the corporation.
4. Except as provided otherwise by written agreement of the parties, the record holder of shares held by a person as pledgee or otherwise as security or that belong to another shall, upon demand and payment of necessary expenses, issue a proxy to vote to the pledgor or to the owner of the shares.
5. Notwithstanding (c) of this section, a proxy that states that it is irrevocable is irrevocable for the period specified in the proxy when it is held by the following or a nominee of the following:
   1. a person to whom the shares are pledged for the performance of an obligation or the payment of a debt;
   2. a person who has purchased, agreed to purchase, or holds an option to purchase the shares or a person who has sold a portion of the shares of the person in the corporation to the maker of the proxy;
   3. a person who has contracted to perform services as an employee of the corporation, if a proxy is required by the contract of employment and if the proxy states that it was given in consideration of the contract of employment, the name of the employee, and the period of employment contracted for;
   4. a person designated by or under an agreement under AS 10.06.425 ; or
   5. a beneficiary of a trust with respect to shares held by the trust.
6. Notwithstanding the period of irrevocability specified in a proxy, the proxy becomes revocable when the pledge is redeemed, the option or agreement to purchase is terminated or the seller no longer owns any shares of the corporation or dies, the period of employment provided for in the contract of employment has terminated, the agreement under AS 10.06.425 has terminated, or the person ceases to be a beneficiary of the trust. In addition, a proxy may be made irrevocable if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events that, by its terms, discharge the obligations secured by it.
7. Notwithstanding a provision in a proxy that makes the proxy irrevocable, a proxy is revoked when the shares are transferred unless the transferee knows about the provision or the proxy, or the irrevocability or notice of the proxy appears on a certificate representing the shares.

History. (§ 1 ch 166 SLA 1988; am §§ 19 — 22 ch 82 SLA 1989; am § 8 ch 1 SLA 2021)

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in the third sentence of (b), inserted “, or by remote communication,” following “voting in person”.

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (b) of this section retroactive to March 11, 2020.

Sec. 10.06.420. Voting of shares.

1. An outstanding share, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except as may be otherwise provided in the articles of incorporation. If the articles provide for more or less than one vote for any share, on any matter, every reference in this chapter to a majority or other proportion of shares shall refer to a majority or other proportion of the votes entitled to be cast.
2. Shares held by the corporation, or shares held by another corporation if a majority of the shares entitled to vote for the election of directors of the other corporation is held by the corporation, may not be voted at a meeting or counted in determining the total number of outstanding shares at a given time.
3. A shareholder may vote in person, by remote communication, by proxy executed in writing by the shareholder or by the authorized attorney-in-fact of the shareholder, or by proxy executed by electronic transmission by the shareholder or by the authorized attorney-in-fact of the shareholder. A proxy executed by electronic transmission must
   1. be directed to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization, or similar agent that is authorized by the person who will be the holder of the proxy to receive the transmission; and
   2. include information that demonstrates that the shareholder authorized the transmission.
4. Unless the articles of incorporation provide otherwise, at an election for directors, each shareholder entitled to vote at the election may vote, in person, by remote communication, or by proxy, the number of shares owned by the shareholder for as many persons as there are directors to be elected and for whose election the shareholder has a right to vote, or to cumulate votes by giving one candidate votes equal to the number of directors multiplied by the number of shares of the shareholder, or by distributing votes on the same principle among any number of candidates. The rights created by this subsection may not be limited by amendment to the articles when the votes cast against the amendment would be sufficient to elect one director if voted cumulatively at an election of the entire board.
5. Except as prohibited in this subsection, shares standing in the name of another corporation may be voted by the officer, agent, or proxy as the bylaws of the other corporation may prescribe, or, in the absence of a provision, as the board of the other corporation may determine. The shares of a corporation may not be voted if they are owned, directly or indirectly, by a second corporation, domestic or foreign, and the first corporation owns, directly or indirectly, a majority of the shares entitled to vote for the directors of the second corporation.
6. Shares held by an administrator, executor, guardian, or conservator may be voted by that person, in person, by remote communication, or by proxy, without a transfer of the shares into the name of that person. Shares standing in the name of a trustee may be voted by the trustee, in person, by remote communication, or by proxy, but a trustee is not entitled to vote shares held by the trustee without a transfer of the shares into the name of the trustee.
7. Shares standing in the name of a receiver may be voted by the receiver, and shares held by or under the control of a receiver may be voted by the receiver without a transfer of the shares into the name of the receiver if authority to transfer the shares is contained in an appropriate court order by which the receiver was appointed.
8. A shareholder whose shares are pledged is entitled to vote the shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee is entitled to vote the shares so transferred.
9. Beginning on the date on which written notice of redemption of redeemable shares has been mailed to the holders of the shares and a sum sufficient to redeem the shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders of the shares upon surrender of the certificates for the shares or the uncertificated shares, the shares may not vote on any matter and are not considered to be outstanding shares.
10. If a corporation adopts rules to provide for voting by proxy executed by electronic transmission or by a ballot cast by electronic transmission, the rules must provide that all legally qualified proxies and ballots cast by electronic transmission may be voted in the same manner as the corporation’s proxy or ballot.
11. The board may permit shareholders and shareholders’ proxy holders to participate in meetings of the shareholders by remote communication using one or more methods of remote communication, whether the meetings are held at a designated place, by remote communication, or at a designated place and by remote communication. The board may adopt guidelines and procedures that apply to participation in shareholder meetings by remote communication and that the board considers appropriate. The board may limit participation to specified locations or means of communication. A shareholder participating in a meeting by remote communication permitted by the board is considered to be present in person at the meeting.

History. (§ 1 ch 166 SLA 1988; am §§ 23, 24 ch 82 SLA 1989; am §§ 4, 5 ch 103 SLA 2002; am §§ 9 — 13 ch 1 SLA 2021)

Revisor’s notes. —

The term “uncertificated” was substituted for “certificateless” in (i) of this section in 1989 to conform to national usage.

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in (c), in the first sentence of the introductory language, inserted “by remote communication,” following “vote in person,”; in (d), in the first sentence, inserted “ , by remote communication,” following “may vote, in person”, and made a stylistic change; in (f), twice substituted “in person, by remote communication,” for “either in person” preceding “or by proxy”; in (j), inserted “or by a ballot cast by electronic transmission” following “executed by electronic transmission”, “ballots cast by electronic transmission” following “legally qualified proxies”, and “or ballot” following “corporation’s proxy”; added (k).

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendments to (c), (d), (f), and (j) of this section and the 2021 enactment of (k) of this section retroactive to March 11, 2020.

Sec. 10.06.421. Corporation’s acceptance of certain documents.

1. If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a shareholder, the corporation, if acting in good faith, is entitled to accept the document and give it effect as the act of the shareholder.
2. If the name signed on a document does not correspond to the name of its shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the document and give it effect as the act of the shareholder if
   1. the shareholder is an entity and the name signed purports to be that of an officer or agent of the entity;
   2. the name signed purports to be that of an administrator, executor, guardian, or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the document;
   3. the name signed purports to be that of a receiver or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the document;
   4. the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation or the signatory’s authority to sign for the shareholder has been presented with respect to the document; or
   5. two or more persons are the shareholder as cotenants or fiduciaries, the name signed purports to be the name of at least one of the coowners, and the person signing appears to be acting on behalf of all the coowners.
3. The corporation is entitled to reject a document if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has a reasonable basis to doubt the validity of the signature on the document or the signatory’s authority to sign for the shareholder.
4. The corporation and its officer or agent who accepts or rejects a document in good faith and in accordance with the standards of this section are not liable in damages to the shareholder for the consequences of the acceptance or rejection.
5. Corporate action based on the acceptance or rejection of a document under this section is valid unless a court of competent jurisdiction determines otherwise.
6. In this section, “document” means vote, consent, waiver, or proxy appointment.

History. (§ 25 ch 82 SLA 1989)

Sec. 10.06.423. Actions taken without meeting: written consent; revocation of consent.

1. Unless prohibited by the articles or the bylaws, whenever under this chapter shareholders are required or permitted to take action by vote, the action may be taken without a meeting by written consents, identical in content, setting out the action taken, signed by the holders of all outstanding shares entitled to vote on the action.
2. A shareholder giving a written consent, or the shareholder’s proxy holder, or a transferee of the shares or a personal representative or proxy holder of the shareholder, may only revoke the consent by a writing received by the corporation before the time that written consents of the shares required to authorize the proposed action have been filed with the secretary of the corporation. The revocation is effective upon receipt by the secretary of the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.424. Shareholder agreements.

1. The shareholders of a corporation may enter into an agreement among all the shareholders to impose restrictions on the transfer or registration of shares of the corporation to
   1. maintain the corporation’s status, including election of S corporation status under 26 U.S.C. (Internal Revenue Code), when the status depends on the number or identity of its shareholders; in this paragraph, “S corporation” has the meaning given in 26 U.S.C. 1361;
   2. preserve exemptions under federal or state securities laws;
   3. ensure that shareholders will be able to control who may participate in the corporation’s business;
   4. ensure that shareholders who wish to retire will be able to liquidate their investments without disrupting corporate affairs;
   5. ensure that estates of deceased shareholders will be able to liquidate the decedents’ shares in the corporation;
   6. obligate the shareholder first to offer to the corporation or other persons, separately, consecutively, or simultaneously, an opportunity to acquire the restricted shares;
   7. obligate the corporation or other persons, separately, consecutively, or simultaneously, to acquire the restricted shares;
   8. require the corporation, the holder of any class of its shares, or another person, to approve the transfer of restricted shares, if the requirement is not manifestly unreasonable; and
   9. accomplish another reasonable purpose.
2. The shareholders of a corporation may enter into an agreement among all of the shareholders to provide for the selection of directors and officers.
3. The existence of a shareholders’ agreement that is consistent with this section shall be noted conspicuously on the front or back of each stock certificate together with a statement indicating that the agreement, or a copy of the agreement, is on file at the principal office of the corporation and that the corporation will allow inspection of the agreement or furnish a copy of the agreement without charge. If the share has been issued under AS 10.06.349 without a certificate, a statement that discloses the existence of the shareholders’ agreement shall be sent within a reasonable time to the shareholder.
4. Shares issued before compliance with (c) of this section, if acquired by a person without knowledge of the shareholders’ agreement, are not subject to the shareholders’ agreement.
5. A shareholders’ agreement may not alter or waive AS 10.06.350 , 10.06.358 , 10.06.360 , 10.06.430 , 10.06.438 , 10.06.544 , 10.06.570 , 10.06.633 , 10.06.648 , or 10.06.653 .
6. In this section, “shares” includes a security that is convertible into shares or that carries a right to subscribe for or acquire shares.

History. (§ 26 ch 82 SLA 1989)

Sec. 10.06.425. Voting trusts and agreements among shareholders.

1. Any number of shareholders of a corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares by entering into a written voting trust agreement specifying the terms and conditions of the voting trust, by depositing a copy of the agreement with the corporation at its registered office, and by transferring their shares to the trustee or trustees for the purpose of the agreement. The trustee or trustees shall keep a record of the holders of voting trust certificates evidencing a beneficial interest in the voting trust, giving the names and addresses of all the holders and the number and class of the shares for which the voting trust certificates are issued, and shall deposit a copy of the record with the corporation at its registered office. The copies of the voting trust agreement and the record deposited with the corporation are subject to the same right of examination by a shareholder of the corporation, in person or by agent or attorney, as are the books and records of the corporation under AS 10.06.430 , and the copies of the agreement and the record are subject to examination by a holder of record of voting trust certificates, either in person or by agent or attorney, at a reasonable time for a proper purpose. This subsection does not invalidate an irrevocable proxy complying with AS 10.06.418(e) .
2. Shareholders may enter into a voting agreement or any other agreement if the agreement is consistent with this chapter.

History. (§ 1 ch 166 SLA 1988; am §§ 27, 28 ch 82 SLA 1989; am § 1 ch 82 SLA 2004)

Collateral references. —

18A Am. Jur. 2d, Corporations, §§ 923 – 965.

Validity of voting trust or other similar agreement for control of voting power of corporate stock. 98 ALR2d 376.

Sec. 10.06.428. Shareholders’ preemptive rights.

1. Except to the extent limited or denied by this section or by the articles of incorporation, shareholders have a preemptive right to acquire unissued shares or securities convertible into such shares or carrying a right to subscribe to or acquire shares.
2. Unless otherwise provided in the articles of incorporation,
   1. there is no preemptive right
      1. to acquire any shares issued to directors, officers, or employees if approved by the outstanding shares or if authorized by and consistent with a plan previously approved by the outstanding shares; or
      2. to acquire shares sold for consideration other than for cash;
   2. holders of shares of a class that is preferred or limited as to dividends or assets are not entitled to a preemptive right;
   3. holders of shares of common stock are not entitled to a preemptive right to shares of a class that is preferred or limited as to dividends or assets or to any obligations, unless convertible into shares of common stock or carrying a right to subscribe to or acquire shares of common stock;
   4. holders of common stock without voting power are not entitled to a preemptive right to shares of common stock with voting power;
   5. a preemptive right is only an opportunity to acquire shares or other securities under the terms and conditions as the board may fix for the purpose of providing a fair and reasonable opportunity for the exercise of the preemptive right.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.430. Books and records.

1. A corporation organized under this chapter shall keep correct and complete books and records of account, minutes of proceedings of its shareholders, board, and committees of the board, and a record of its shareholders, containing the names and addresses of all shareholders and the number and class of the shares held by each. The books and records of account, minutes, and the record of shareholders may be in written form or in any other form capable of being converted into written form within a reasonable time.
2. A corporation organized under this chapter shall make its books and records of account, or certified copies of them, reasonably available for inspection and copying at the registered office or principal place of business in the state by a shareholder of the corporation. Shareholder inspection shall be upon written demand stating with reasonable particularity the purpose of the inspection. The inspection may be in person or by agent or attorney, at a reasonable time and for a proper purpose. Only books and records of account, minutes, and the record of shareholders directly connected to the stated purpose of the inspection may be inspected or copied.
3. An officer or agent who, or a corporation that, refuses to allow a shareholder, or the agent or attorney of the shareholder, to examine and make copies from its books and records of account, minutes, and record of shareholders, for a proper purpose, is liable to the shareholder for a penalty in the amount of 10 percent of the value of the shares owned by the shareholder or $5,000, whichever is greater, in addition to other damages or remedy given the shareholder by law. It is a defense to an action for penalties under this section that the person suing has within two years sold or offered for sale a list of shareholders of the corporation or any other corporation or has aided or abetted a person in procuring a list of shareholders for this purpose, or has improperly used information secured through a prior examination of the books and records of account, minutes, or record of shareholders of the corporation or any other corporation, or was not acting in good faith or for a proper purpose in making the person’s demand.
4. Nothing in this chapter impairs the power of a court, upon proof by a shareholder of a demand properly made and for a proper purpose, to compel the production for examination by the shareholder of the books and records of account, minutes, and record of shareholders of a corporation.

History. (§ 1 ch 166 SLA 1988; am §§ 29 — 31 ch 82 SLA 1989)

Sec. 10.06.433. Annual report to shareholders; content; financial statement on request.

1. The board shall send an annual report to the shareholders not later than 180 days after the close of the fiscal year or the date on which notice of the annual meeting in the next fiscal year is sent under AS 10.06.410 , whichever is first. A corporation with less than 100 holders of record of its shares, as determined under AS 10.06.408 , is exempt from this annual requirement unless its articles or bylaws impose the requirement. The annual report must contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by a report on the fiscal year by independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation.
2. In addition to the financial statement required by (a) of this section, unless a corporation has a nonexempt class of securities registered under 15 U.S.C. 78l (Securities Exchange Act of 1934) or files reports under 43 U.S.C. 1606(c), 1607(c), and 1625 (Alaska Native Claims Settlement Act), the annual report of a corporation having 100 or more holders of record of its shares must also briefly describe
   1. all transactions, excluding compensation of officers and directors, during the previous fiscal year involving an amount in excess of $40,000, other than contracts let at competitive bid or services rendered at prices regulated by law, to which the corporation or its parent or subsidiary was a party, and in which a director or officer of the corporation or of a subsidiary or, if known to the corporation, its parent, or subsidiary, a holder of more than 10 percent of the outstanding voting shares of the corporation had a direct or indirect material interest; the report must include the name of the person, the person’s relationship to the corporation, the nature of the person’s interest in the transaction and, if practicable, the amount of the interest; in the case of a transaction with a partnership of which the person is a partner, only the interest of the partnership need be stated; a report is not required in the case of transactions approved by the shareholders under AS 10.06.478 ;
   2. the amount and circumstances of indemnifications or advances aggregating more than $10,000 paid during the fiscal year to an officer or director of the corporation under AS 10.06.490 ; a report is not required in the case of indemnification approved by the shareholders under AS 10.06.490(d)(3) .
3. A shareholder or shareholders holding at least five percent of the outstanding shares of a class of a corporation may make a written request to the corporation for an income statement of the corporation for the three-month, six-month, or nine-month period of the current fiscal year ended more than 30 days before the date of the request and a balance sheet of the corporation as of the end of the period and, in addition, if an annual report for the last fiscal year has not been sent to shareholders, the statements required by (a) of this section for the last fiscal year. The statement shall be delivered or mailed to the person making the request within 30 days of the request. A copy of the statements shall be kept on file in the principal office of the corporation for 12 months and they shall be exhibited at all reasonable times to a shareholder demanding an examination of the statements or a copy of the statements shall be mailed to that shareholder.
4. A corporation shall, upon the written request of a shareholder, mail to the shareholder a copy of the last annual, semiannual, or quarterly income statement that it has prepared and a balance sheet as of the end of the period.
5. The quarterly income statements and balance sheets referred to in this section shall be accompanied by any report on those statements by independent accountants engaged by the corporation or the certificate of an authorized officer of the corporation that the financial statements were prepared without audit from the books and records of the corporation.
6. A corporation that neglects, fails, or refuses to prepare or submit the financial statements required by this section is subject to a penalty of $25 for each day that the failure or refusal continues, beginning 30 days after receipt of written request that the duty be performed from one entitled to make the request, up to a maximum of $1,500. The penalty shall be paid to the shareholder or shareholders jointly making the request for performance of the duty or duties imposed by this section. In addition to this penalty, the court may enforce the duty of making and mailing or delivering the information and financial statements required by this section and, for good cause shown, may extend the time limits under this section.
7. This section applies to a domestic corporation and a foreign corporation having its principal executive office in this state or customarily holding meetings of its board in this state.
8. A corporation may deliver the annual report required under (a) of this section
   1. by mail;
   2. in person; or
   3. by electronic transmission, or by a posting on an electronic network together with a separate notice of the specific posting to the shareholder, if the corporation has received a writing or an electronic transmission from the shareholder that includes information demonstrating that the shareholder authorized the electronic transmission and delivery of annual reports by electronic transmission or electronic posting.

History. (§ 1 ch 166 SLA 1988; am § 32 ch 82 SLA 1989; am § 6 ch 103 SLA 2002; am § 14 ch 22 SLA 2015)

Effect of amendments. —

The 2015 amendment, effective May 15, 2015, in the introductory language of (b), substituted “15 U.S.C. 78l (Securities Exchange Act of 1934) or files reports under 43 U.S.C. 1606(c), 1607(c), and 1625 (Alaska Native Claims Settlement Act)” for “Section 12 of the Securities Exchange Act of 1934 or files reports under Sections 7(c), 8(c), and 28 of the Alaska Native Claims Settlement Act”.

Sec. 10.06.435. Shareholders’ derivative action.

1. An action may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor by a holder of shares of the corporation, of voting trust certificates of the corporation, or of a beneficial interest in shares of the corporation.
2. In a derivative action, the complaint shall be verified and must allege that the plaintiff was a shareholder, of record or beneficially, or the holder of voting trust certificates at the time or during any part of the transaction of which the plaintiff complains or that the plaintiff ’s shares or voting trust certificates devolved upon the plaintiff by operation of law from a holder who was a holder at the time or during any part of the transaction complained of. A shareholder who does not meet the requirements of this section may be allowed in the discretion of the court to maintain the action on a preliminary showing to and determination by the court, by motion and after a hearing at which the court considers evidence, by affidavit or testimony, as it considers material, that
   1. there is a strong prima facie case in favor of the claim asserted on behalf of the corporation;
   2. no other similar action has been or is likely to be instituted;
   3. the plaintiff acquired the shares before there was disclosure to the public or to the plaintiff of the wrongdoing of which the plaintiff complains;
   4. unless the action can be maintained the defendant may retain a gain derived from the defendant’s wilful breach of a fiduciary duty; and
   5. the requested relief will not result in unjust enrichment of the corporation or a shareholder of the corporation.
3. Unless excused on grounds that a majority of the directors is implicated in or under the direct or indirect control of a person who is implicated in the injury to the corporation, before an action in the right of a domestic or foreign corporation is instituted a plaintiff who has standing under (b) of this section shall make a formal demand upon the board to secure the action the plaintiff desires.
4. If a shareholder fails to make a formal demand under (c) of this section the complaint shall state with particularity the facts establishing excuse under (c) of this section. In a motion to dismiss for failure to make demand on the board the shareholder shall have the burden to establish excuse.
5. In a case in which demand on the board is made under (c) of this section, a decision by the board that, in its business judgment, the litigation would not be in the best interest of the corporation terminates the right created by (a) of this section.
6. In a case in which demand on the board is excused under (c) of this section or the decision of the board under (e) of this section is rejected by the court as inconsistent with the directors’ duties of care and loyalty to the corporation, a plaintiff who has standing under (b) of this section shall have the right to commence or continue the action created by (a) of this section. Notwithstanding (c) or (e) of this section, disinterested, noninvolved directors acting as the board or a duly charged board committee may petition the court to dismiss the plaintiff ’s action on grounds that in their independent, informed business judgment the action is not in the best interests of the corporation. The petitioners shall have the burden of establishing to the satisfaction of the court their disinterest, independence from any direct or indirect control of defendants in the action, and the informed basis on which they have exercised their asserted business judgment. If the court is satisfied that the petitioners are disinterested, independent, and informed it shall then exercise an independent appraisal of the plaintiff ’s action to determine whether, considering the welfare of the corporation and relevant issues of public policy, it should dismiss the action.
7. A shareholder action otherwise in conformity with this section may not be dismissed because the alleged injury or wrong to the corporation has been ratified by the outstanding shares. A court may consider the fact of ratification in framing any order for relief to which it considers the corporation entitled.
8. In an action instituted or maintained in the right of a corporation by the holder or holders of record of less than five percent of the outstanding shares of any class of the corporation or of voting trust certificates for these shares, the corporation in whose right the action is brought or the defendants may at any time before final judgment move the court to require the plaintiff to give security for the reasonable expense, including attorney fees, that may be incurred by the moving party. The amount of the security may be increased or decreased from time to time in the discretion of the court upon a showing that the security has become inadequate or excessive. The corporation or other defendants may have recourse to the security in an amount as the court may determine upon the termination of the derivative action, whether or not the court finds the action was brought without reasonable cause.
9. A derivative action may not be discontinued, abandoned, compromised, or settled without the approval of the court having jurisdiction of the action. If the court determines that the interests of the shareholders or any class or classes of shareholders will be substantially affected by a discontinuance, abandonment, compromise, or settlement, the court in its discretion may direct that notice, by publication or otherwise, shall be given to the shareholders or class or classes of shareholders whose interests will be affected. If the court directs notice to be given, it shall determine which of the parties to the action shall bear the expense of giving the notice in an amount the court determines to be reasonable in the circumstances. The amount shall be awarded as special costs of the action.
10. If the derivative action is successful, in whole or in part, or if anything is received as a result of the judgment, compromise, or settlement of that action, the court may award to the plaintiff or plaintiffs reasonable expenses, including reasonable attorney fees, and shall direct an accounting to the corporation for the remainder of the proceeds. This subsection does not apply to a judgment rendered only for the benefit of injured shareholders and limited to a recovery of the loss or damage sustained by them.

History. (§ 1 ch 166 SLA 1988; am § 33 ch 82 SLA 1989)

Revisor’s notes. —

In 2012, in the last sentence of (f) of this section, “petitioners” was substituted for “petitions” to correct a manifest error in ch. 166, SLA 1988.

Cross references. —

For effect of the enactment of this section on Alaska Rules of Civil Procedure 23.1 and 82, see secs. 17 — 18, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.438. Liability of shareholders, subscribers, and others arising out of shares.

1. A holder of or subscriber to shares of a corporation is under no obligation to the corporation or its creditors as holder or subscriber with respect to the shares other than the obligation to pay the corporation the full consideration for which the shares were issued or to be issued.
2. An assignee or transferee of shares, or of a subscription for shares, in good faith and without knowledge or notice that the full consideration has not been paid, is not personally liable to the corporation or its creditors for any unpaid portion of the consideration.
3. An executor, administrator, conservator, guardian, trustee, assignee for the benefit of creditors, or receiver is not personally liable to the corporation or its creditors for any unpaid portion of the consideration.
4. A pledgee or other holder of shares as collateral security is not personally liable as a shareholder.

History. (§ 1 ch 166 SLA 1988)

Revisor’s notes. —

In 2002, in subsection (a), “A holder of” was substituted for “A holder” to correct a manifest error in ch. 166, SLA 1988.

Sec. 10.06.450. Board of directors; duty of care; right of inspection; dissent.

1. 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 except as may be otherwise provided in this chapter. If a provision is made under AS 10.06.468 or in the articles, the powers, duties, privileges, and liabilities conferred or imposed upon the board by this chapter shall be exercised, performed, extended, and assumed to the extent and by the person or persons to whom they are delegated as provided in AS 10.06.468 or in the articles. Directors need not be residents of this state or shareholders of the corporation unless required by the articles or bylaws. The articles or bylaws may prescribe other qualifications for directors. The board may fix the compensation of directors unless otherwise provided in the articles.
2. A director shall perform the duties of a director, including duties as a member of a committee of the board on which the director may serve, in good faith, in a manner the director reasonably believes to be in the best interests of the corporation, and with the care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances. Except as provided in (c) of this section, a director is entitled to rely on information, opinions, reports, or 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 reasonably believes to be reliable and competent in the matters presented;
   2. counsel, public accountants, or other persons as to matters that the director reasonably believes to be within the person’s professional or expert competence; or
   3. a committee of the board upon which the director does not serve, designated in accordance with a provision of the articles or the bylaws, as to matters within the authority of the committee if the director reasonably believes the committee to merit confidence.
3. A director is not acting in good faith if the director has knowledge concerning the matter in question that makes reliance otherwise permitted by (b) of this section unwarranted.
4. A director has the absolute right at a reasonable time to inspect and copy all books, records, and documents of every kind and to inspect the physical properties of the corporation or a domestic or foreign subsidiary of the corporation. Inspection by a director may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts. This section applies to a director of a foreign corporation having its principal executive office in this state or customarily holding meetings of its board in this state.
5. A director of a corporation who is present at a meeting of its board at which action on a corporate matter is taken is presumed to have assented to the action taken unless the director’s dissent is entered in the minutes of the meeting or unless the director files a written dissent to the action with the secretary of the meeting before adjournment or forwards the dissent by certified mail to the secretary of the corporation immediately after adjournment. The right to dissent does not apply to a director who voted in favor of the action.

History. (§ 1 ch 166 SLA 1988; am § 34 ch 82 SLA 1989)

Revisor’s notes. —

In 1989 the word “extracts” was substituted for “contracts” at the end of the second sentence of (d) of this section to correct a manifest error in the original enactment.

Cross references. —

For provision that articles of incorporation may include certain limitations on a director’s liability, see AS 10.06.210 (1)(M).

Sec. 10.06.453. Number, election, and tenure of directors; initial directors.

1. The board of directors shall consist of one or more members. The number of directors shall be fixed by, or in the manner provided in, the bylaws, unless the articles fix the number of directors, in which case a change in the number of directors shall be made only by amendment of the articles. If the number of directors is not otherwise set, the number of directors is three.
2. Except as otherwise provided in AS 10.06.230 and this section, the number of directors may be increased or decreased by amendment of the articles or the bylaws or by action of the board or the shareholders under the specific provisions of an article or a bylaw adopted by approval of the outstanding shares. A change in the number of directors, including by amendment of the articles, is subject to the following limitations:
   1. if the board is authorized by the articles or the bylaws to change the number of directors, whether by amending the bylaws or by taking action under the specific provision of an article or a bylaw adopted by approval of the outstanding shares, the amendment or action shall require the vote of a majority of the entire board;
   2. a decrease in the number of directors may not shorten the term of an incumbent director.
3. The articles may provide for the election of one or more directors by the holders of the shares of a class or series voting as a class or series.
4. The names and addresses of the members of the first board may be stated in the articles. The members of the first board hold office until the first annual meeting of shareholders, and until their successors have been elected and qualified.
5. At the first annual meeting of shareholders and at each subsequent annual meeting the shareholders shall elect directors to hold office until the next succeeding annual meeting, except in the case of the classification of directors as permitted by AS 10.06.455 . A director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified.

History. (§ 1 ch 166 SLA 1988; am §§ 35, 36 ch 82 SLA 1989)

Editor’s notes. —

Section 57(a) and (b), ch. 82, SLA 1989, provide — (a) Notwithstanding AS 10.06.453(e) and 10.06.455 , if a corporation is organized under 43 U.S.C. 1601 — 1629e and if the corporation’s bylaws, as the bylaws exist immediately before July 1, 1989, contain a provision that complies with former AS 10.05 and provides for a board of directors consisting of three or fewer classes of directors with terms of office extending not longer than the third annual meeting after the directors’ election, the corporation may continue to elect directors in the classes and for the terms provided under the bylaws.

“(b) The application of (a) of this section terminates if on or after July 1, 1989, the corporation modifies or eliminates the provisions of the corporation’s bylaws on the classification and terms of office of the corporation’s directors.”

Sec. 10.06.455. Classification of directors.

1. If the board consists of three or more members, the articles of incorporation may provide that instead of electing all the directors annually the directors be divided into either two or three classes, each class to be as nearly equal in number as possible, with the term of office of directors of the first class to expire at the first annual meeting of shareholders after their election, that of the second class to expire at the second annual meeting after their election, and that of the third class, if any, to expire at the third annual meeting after their election. At each annual meeting after the classification the number of directors equal to the number of the class whose term expires at the time of the meeting shall be elected to hold office until the second succeeding annual meeting if there are two classes, or until the third succeeding annual meeting if there are three classes. A classification of directors is not effective before the first annual meeting of shareholders.
2. Unless cumulative voting rights under AS 10.06.420(d) have been eliminated by the articles of incorporation, an amendment of the articles that would establish or require classification of the board under (a) of this section may not be adopted if the votes cast against the amendment would be sufficient to elect a director if voted cumulatively at an election of the entire board.

History. (§ 1 ch 166 SLA 1988; am § 1 ch 131 SLA 1990)

Cross references. —

For applicability of this section to certain existing corporations, see § 57, ch. 82, SLA 1989 in the Temporary and Special Acts or the editor’s notes at AS 10.06.453 .

Sec. 10.06.458. Declaration of board vacancy where director of unsound mind.

The board may declare vacant the office of a director who has been declared of unsound mind by a court order.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.460. Removal of director without cause.

1. At a regular or special meeting for which notice is given under AS 10.06.410 and this section, any or all of the directors may be removed without reason if the removal is approved by the outstanding shares, subject to the following:
   1. in the case of a corporation with 500 or more holders of record entitled to vote on the removal and election of directors, as determined under AS 10.06.408 , written or printed notice of intention to seek removal under this section shall be delivered either personally or by mail to each shareholder of record entitled to vote at the meeting and if notice of intention to seek removal under this section is
      1. delivered to the president or secretary of the corporation at least 75 days before the date of the annual meeting it shall be included on the notice stating the place, day, and hour of the annual meeting without cost to the shareholder seeking removal; or
      2. not timely under (A) of this paragraph the shareholder seeking removal may, at the expense of that shareholder, deliver either personally or by mail the notice required by (1) of this subsection at any time up to 20 days before the date set for the annual meeting; if mailed, notice is considered 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;
   2. unless cumulative voting rights under AS 10.06.420(d) have been eliminated by the articles of incorporation, a director may not be removed, unless the entire board is removed, if the votes cast against removal would be sufficient to elect a director if voted cumulatively at an election at which the same total number of votes were cast; and
   3. if by provision in the articles of incorporation the holders of the shares of a class or series, voting as a class or series, are entitled to elect one or more directors, a director elected in that manner may be removed only by the applicable vote of the holders of the shares of that class or series.
2. Except as provided in this section and AS 10.06.458 , 10.06.463 , and 10.06.465(c) , a director may not be removed before the expiration of the term of office of the director.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.463. Removal of director by superior court.

The superior court may, at the suit of the board or the shareholders holding at least 10 percent of the number of outstanding shares of any class, remove from office a director for fraudulent or dishonest acts, gross neglect of duty, or gross abuse of authority or discretion with reference to the corporation and may bar from reelection a director removed in that manner for a period prescribed by the court. The corporation shall be made a party to the suit.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of this section on Alaska Rule of Civil Procedure 19, see sec. 19, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.465. Vacancies and resignation; special meeting of shareholders.

1. Unless otherwise provided in the articles or bylaws of the corporation and except for a vacancy created by the removal of a director, vacancies on the board may be filled by a majority of the directors then in office, whether or not less than a quorum, or by a sole remaining director. Unless the articles or a bylaw adopted with approval of the outstanding shares provide that the board may fill vacancies occurring in the board by reason of removal of directors, the vacancies may be filled only by approval of the shareholders.
2. The shareholders may elect a director to fill a vacancy not filled by the directors. An election by written consent to fill a vacancy requires the consent of a majority of the outstanding shares entitled to vote.
3. If, after the filling of a vacancy by the directors, the directors who have been elected by the shareholders constitute less than a majority of the directors, a holder or holders of an aggregate of 10 percent or more of the shares outstanding at the time may call a special meeting of shareholders under  AS 10.06.405 to elect the entire board. The term of office of a director terminates upon the election and qualification of a successor.
4. Notwithstanding  AS 10.06.453(e) , a director may resign effective upon giving written notice to the chairman of the board, the president, the secretary, or the board of directors of the corporation, unless the notice specifies a later time for the effectiveness of the resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

History. (§ 1 ch 166 SLA 1988; am § 37 ch 82 SLA 1989)

Collateral references. —

Provision authorizing directors to fill vacancies as applicable to newly created directorships. 6 ALR2d 174.

Sec. 10.06.468. Executive and other board committees.

1. If authorized by the articles or the bylaws of the corporation, the board, by resolution adopted by a majority of the entire board, may designate from among its members an executive committee and other committees of the board. Unless the number of directors fixed in accordance with  AS 10.06.453 is less than three, each committee shall have at least two members, who serve at the pleasure of the board of directors. Each committee, to the extent provided in the resolution or the articles or bylaws of the corporation, has the authority of the board, except that a committee may not
   1. declare dividends or distributions;
   2. approve or recommend to shareholders actions or proposals required by this chapter to be approved by shareholders;
   3. designate candidates for the office of director, for purposes of proxy solicitation or otherwise, or fill vacancies on the board or any committee of the board;
   4. amend the bylaws;
   5. approve a plan or merger not requiring shareholder approval;
   6. capitalize retained earnings;
   7. authorize or approve the reacquisition of shares unless under a general formula or method specified by the board;
   8. authorize or approve the issuance or sale of, or a contract to issue or sell, shares or designate the terms of a series of a class of shares, unless the board, having acted regarding general authorization for the issuance or sale of shares, a contract to issue or sell, or the designation of a series, authorizes a committee, under a general formula or method specified by the board by resolution or by adoption of a stock option or other plan, to fix the terms of a contract for the sale of the shares and to fix the terms upon which the shares may be issued or sold, including, without limitation, the price, the dividend rate, provisions for redemption, sinking funds, conversion, voting or preferential rights, and provisions for other features of a class of shares, or a series of a class of shares, with full power in the committee to adopt a final resolution setting out all the terms of a series for filing with the commissioner under this chapter; or
   9. authorize, approve, or ratify contracts or other transactions between the corporation and one or more of its directors, or between the corporation and a corporation, firm, or association in which one or more of its directors has a material financial interest under  AS 10.06.478 .
2. The designation of a committee, the delegation to the committee of authority, or action by the committee under that authority does not alone constitute compliance by a member of the board or the committee in question with the responsibility to act in good faith, in a manner the member reasonably believes to be in the best interests of the corporation, and with the care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.470. Meetings: call, place, notice, and waiver.

1. A regular or special meeting of the board or a committee of the board may be called by the chair of the board, the president, a vice-president, the secretary, or a director and may be held at any place designated under the bylaws inside or outside the state, by remote communication, or at a designated place inside or outside the state and by remote communication. A member of the board or of a committee of the board participating in a meeting by remote communication is considered to be present in person at the meeting for the purposes of reaching a quorum under AS 10.06.473 and for voting at the meeting.
2. A regular meeting of the board or a committee designated by the board may be held without notice if the time and place of the meeting is fixed by the bylaws or the board. A special meeting of the board or a committee designated by the board shall be held as provided in the bylaws or, in the absence of bylaw provision, after either notice in writing sent 10 days before the meeting or notice by electronic means, personal messenger, or comparable person-to-person communication given at least 72 hours before the meeting. Unless otherwise provided in the bylaws the notice of a special meeting shall include disclosure of the business to be transacted and the purpose of the meeting.
3. Notice of a meeting need not be given to a director who signs a waiver of notice, whether before or after the meeting, or who attends the meeting without protesting before the meeting or at its commencement the lack of notice.

History. (§ 1 ch 166 SLA 1988; am §§ 38, 39 ch 82 SLA 1989; am § 14 ch 1 SLA 2021)

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in (a), in the first sentence, inserted “designated under the bylaws” following “held at any place” and “, by remote communication, or at a designated place inside or outside the state and by remote communication” at the end, added the second sentence, and made stylistic changes.

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (a) of this section retroactive to March 11, 2020.

Sec. 10.06.473. Quorum of directors.

1. A majority of the number of directors fixed by the articles or bylaws of a corporation constitutes a quorum for the transaction of business unless a greater number is required by the articles or bylaws. The act of a majority of the directors present at a meeting at which a quorum is present is the act of the board, unless the act of a greater number is required by the articles or the bylaws.
2. The provisions of this section apply with equal force to committees of the board established under AS 10.06.468 and action by committees.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.475. Alternative meeting arrangements; informal action by directors.

1. Unless prohibited by the articles or bylaws of the corporation, the board of a corporation or a committee designated by the board can validly conduct a meeting by communicating simultaneously with each other by means of conference telephones or similar communications equipment.
2. Unless prohibited by the articles or bylaws of the corporation, action required or permitted to be taken by the board or a committee designated by the board may be taken without a meeting on written consents, identical in content, setting out the action taken and signed by all the members of the board or the committee. The written consents shall be filed with the minutes. The consents have the same effect as a unanimous vote.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.478. Director conflicts of interest.

1. A contract or other transaction between a corporation and one or more of the directors of the corporation, or between a corporation and a corporation, firm, or association in which one or more of the directors of the corporation has a material financial interest, is neither void nor voidable because the director or directors or the other corporation, firm, or association are parties or because the director or directors are present at the meeting of the board that authorizes, approves, or ratifies the contract or transaction, if the material facts as to the transaction and as to the director’s interest are fully disclosed or known to the
   1. shareholders and the contract or transaction is approved by the shareholders in good faith, with the shares owned by the interested director or directors not being entitled to vote; or
   2. board, and the board authorizes, approves, or ratifies the contract or transaction in good faith by a sufficient vote without counting the vote of the interested director or directors, and the person asserting the validity of the contract or transaction sustains the burden of proving that the contract or transaction was just and reasonable as to the corporation at the time it was authorized, approved, or ratified.
2. A common directorship does not alone constitute a material financial interest within the meaning of this section. A director is not interested within the meaning of this section in a resolution fixing the compensation of another director as a director, officer, or employee of the corporation, notwithstanding the fact that the first director is also receiving compensation from the corporation.
3. A contract or other transaction between a corporation and a corporation or association of which one or more directors of the corporation are directors is neither void nor voidable because the director or directors are present at the meeting of the board that authorizes, approves, or ratifies the contract or transaction, if the material facts of the transaction and the director’s other directorship are fully disclosed or known to the board and the board authorizes, approves, or ratifies the contract or transaction in good faith by a sufficient vote without counting the vote of the common director or directors or the contract or transaction is approved by the shareholders in good faith. This subsection does not apply to contracts or transactions covered by (a) of this section.
4. Interested or common directors may be counted in determining the presence of a quorum at a meeting of the board that authorizes, approves, or ratifies a contract or transaction.
5. Nothing in this section affects the prohibitions or restraints imposed by AS 45.50.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.480. Liability of directors and contributions from shareholders and other directors.

1. In addition to other liabilities, a director is liable in the following circumstances unless the director complies with the standard provided in AS 10.06.450(b) for the performance of the duties of directors:
   1. a director who votes for or assents to a distribution to the corporation’s shareholders contrary to the provisions of AS 10.06.358 , 10.06.360 , 10.06.363 , or 10.06.365 or contrary to a restriction in the articles of incorporation is liable to the corporation, jointly and severally with all other directors voting for or assenting to the distribution, for the amount of the distribution that is paid or the value of the assets that are distributed in excess of the amount of the distribution that could have been paid or distributed without violation of AS 10.06.305 — 10.06.390 or the restrictions of the articles of incorporation;
   2. a director who votes for or assents to a distribution to the corporation’s shareholders during the liquidation of the corporation without the payment and discharge of, or making adequate provision for, all known debts, obligations, and liabilities of the corporation is liable to the corporation, jointly and severally with all other directors voting for or assenting to distribution, for the value of the assets that are distributed, to the extent that the debts, obligations, and liabilities of the corporation are not thereafter paid and discharged;
   3. a director who votes for or assents to a loan of assets of the corporation to an officer or employee or a loan secured by the corporation’s shares contrary to the provisions of AS 10.06.485 or contrary to a restriction in the articles of incorporation is liable to the corporation, jointly and severally with all other directors voting for or assenting to the loan, for the amount of the loan that is in excess of a loan that could have been extended without a violation of AS 10.06.485 or the restriction in the articles of incorporation.
2. A director against whom a claim is asserted under this section for the distribution of assets of the corporation is entitled to contribution from shareholders who accepted or received the assets, knowing the distribution to have been made in violation of this chapter, in proportion to the amounts received by them. A director against whom a claim is asserted under this section for the extension of a loan is entitled to contribution from the person receiving the loan.
3. A director against whom a claim is asserted under this section is entitled to contribution from other directors who voted for or assented to the action upon which the claim is asserted.

History. (§ 1 ch 166 SLA 1988; am § 20 ch 21 SLA 2000)

Legislative history reports. —

For purpose of the amendment made by § 20, ch. 21, SLA 2000 (CSHB 435 (JUD)), see 2000 House Journal Supp. No. 10 (July 19, 2000).

Sec. 10.06.483. Officers; tenure, resignation, authority, and duties.

1. A corporation shall have a president, a secretary, a treasurer, and other officers with titles and duties as stated in the bylaws of the corporation or determined by the board and as may be necessary to enable the corporation to sign instruments and share certificates. Any two or more offices may be held by the same person, except the offices of president and secretary. When all of the issued and outstanding stock of the corporation is owned by one person, the person may hold all or any combination of offices.
2. Except as otherwise provided in the articles or bylaws of the corporation, officers shall be chosen by the board and serve at the pleasure of the board, subject to the rights, if any, of an officer under a contract of employment. An officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under a contract to which the officer is a party.
3. All officers as between themselves and the corporation have the authority and shall perform the duties in the management of the corporation as provided in the bylaws of the corporation or, to the extent not provided in the bylaws, as provided by the board.
4. Subject to the provisions of AS 10.06.020 , a note, mortgage, evidence of indebtedness, contract, conveyance, or other instrument in writing, and an assignment or endorsement of these, executed or entered into between the corporation and another person, if signed by two individuals, one of whom is the chairman of the board, the president, or a vice-president and the other of whom is the secretary, an assistant secretary, the treasurer, or an assistant treasurer of the corporation, is not invalidated as to the corporation by a lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the instrument.
5. An officer shall perform the duties of the office in good faith and with that degree of care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances. Except as provided in (f) of this section, an officer is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data in each case prepared or presented by legal counsel or public accountants.
6. An officer is not acting in good faith if the officer has knowledge concerning the matter in question that makes reliance otherwise permitted by (e) of this section unwarranted.

History. (§ 1 ch 166 SLA 1988; am §§ 40 — 42 ch 82 SLA 1989)

Sec. 10.06.485. Loans to directors, officers, and employees.

1. A loan may not be extended to an officer or employee without authorization by the board. A loan may not be extended to a director without the approval of two-thirds of the voting shares. An employee or officer who is also a director is considered a director for purposes of this section. A shareholder is not disqualified from voting on a loan to a shareholder as a director because of personal interest.
2. A loan to a director, officer, or employee and a loan secured by the shares of the corporation may not be made unless the loan would be permissible as a distribution under AS 10.06.358 — 10.06.365 . A loan under this subsection impairs the retained earnings or paid-in capital accounts to the extent of the loan.
3. For purposes of this section, a loan may consist of cash, securities, or personal or real property.
4. If a corporation acts as a guarantor on a loan to a director, officer, or employee, the guarantee is treated as a loan under this section.
5. A director, officer, or employee of an affiliate corporation is a director, officer, or employee of the lending corporation for purposes of this section.
6. A loan is to be judged by the duties of directors and officers to act in good faith in a manner reasonably believed to be in the best interests of the corporation and with the care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.490. Indemnification of officers, directors, employees, and agents; insurance.

1. A corporation may indemnify a person who was, is, or is threatened to be made a party to a completed, pending, or threatened action or proceeding, whether civil, criminal, administrative, or investigative, other than an action by or in the right of the corporation, by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise. Indemnification may include reimbursement of expenses, attorney fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with the action or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to a criminal action or proceeding, the person had no reasonable cause to believe the conduct was unlawful. The termination of an action or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to a criminal action or proceeding, the person had reasonable cause to believe that the conduct was unlawful.
2. A corporation may indemnify a person who was, is, or is threatened to be made a party to a completed, pending, or threatened action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee, or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise. Indemnification may include reimbursement for expenses and attorney fees actually and reasonably incurred by the person in connection with the defense or settlement of the action if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made in respect of any claim, issue, or matter as to which the person has been adjudged to be liable for negligence or misconduct in the performance of the person’s duty to the corporation except to the extent that the court in which the action was brought determines upon application that, despite the adjudication of liability, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for expenses that the court considers proper.
3. To the extent that a director, officer, employee, or agent of a corporation has been successful on the merits or otherwise in defense of an action or proceeding referred to in (a) or (b) of this section, or in defense of a claim, issue, or matter in the action or proceeding, the director, officer, employee, or agent shall be indemnified against expenses and attorney fees actually and reasonably incurred in connection with the defense.
4. Unless otherwise ordered by a court, indemnification under (a) or (b) of this section may only be made by a corporation upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because the director, officer, employee, or agent has met the applicable standard of conduct set out in (a) and (b) of this section. The determination shall be made by
   1. the board by a majority vote of a quorum consisting of directors who were not parties to the action or proceeding;
   2. independent legal counsel in a written opinion if a quorum under (1) of this subsection is
      1. not obtainable; or
      2. obtainable but a majority of disinterested directors so directs; or
   3. approval of the outstanding shares.
5. The corporation may pay or reimburse the reasonable expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition in the manner provided in (d) of this section if
   1. in the case of a director or officer, the director or officer furnishes the corporation with a written affirmation of a good faith belief that the standard of conduct described in AS 10.06.450(b) or 10.06.483(e) has been met;
   2. the director, officer, employee, or agent furnishes the corporation a written unlimited general undertaking, executed personally or on behalf of the individual, to repay the advance if it is ultimately determined that an applicable standard of conduct was not met; and
   3. a determination is made that the facts then known to those making the determination would not preclude indemnification under this chapter.
6. The indemnification provided by this section is not exclusive of any other rights to which a person seeking indemnification may be entitled under a bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in the official capacity of the person and as to action in another capacity while holding the office. The right to indemnification continues as to a person who has ceased to be a director, officer, employee, or agent, and inures to the benefit of the heirs, executors, and administrators of the person.
7. A corporation may purchase and maintain insurance on behalf of a 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 a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against the person and incurred by the person in that capacity, or arising out of that status, whether or not the corporation has the power to indemnify the person against the liability under the provisions of this section.

History. (§ 1 ch 166 SLA 1988)

Editor’s notes. —

Section 11, ch. 166, SLA 1988, as amended by sec. 58, ch. 50, SLA 1989, provides: “AS 10.06.490 , as enacted by sec. 1 of this Act, governs a proposed indemnification by a corporation after July 1, 1989, whether the events upon which the indemnification is based occurred before or after July 1, 1989. A statement relating to indemnification contained in the articles or bylaws of a corporation on July 1, 1989 may limit the indemnification permitted by AS 10.06.490 if the statement expressly states that indemnification is limited.”

Sec. 10.06.502. Permitted and prohibited amendments.

1. By complying with the provisions of this chapter a corporation may amend its articles of incorporation from time to time and in as many respects as desired if its articles as amended contain only provisions that would be lawful to insert in original articles filed at the time of the filing of the amendment.
2. In particular, and without limitation upon the general power of amendment, a corporation may amend its articles of incorporation to
   1. change its corporate name;
   2. extend a limitation upon its period of duration;
   3. change, enlarge, or diminish a limitation upon its corporate purpose;
   4. increase or decrease the aggregate number of shares, or shares of a class, that the corporation has authority to issue;
   5. exchange, classify, reclassify, or cancel all or part of its shares, whether issued or unissued;
   6. change the designation of all or a part of its shares, whether issued or unissued, and to change the preferences, limitations, and the relative rights of all or part of its shares, whether issued or unissued;
   7. change shares of a class, whether issued or unissued, into a different number of shares of the same class or into the same or a different number of shares of other classes;
   8. create new classes or shares having rights and preferences either prior and superior or subordinate and inferior to the shares of a class then authorized, whether issued or unissued;
   9. cancel or otherwise affect the right of the holders of the shares of a class to receive dividends that have accrued but have not been declared;
   10. divide a preferred or special class of shares, whether issued or unissued, into series and fix and determine the designation of the series and the variations in the relative rights and preferences as between the shares of the series;
   11. authorize the board to establish, out of authorized but unissued shares, series of a preferred or special class of shares and fix and determine the relative rights and preferences of the shares of the series;
   12. authorize the board to fix and determine the relative rights and preferences of the authorized but unissued shares of series in which either the relative rights and preferences have not been fixed and determined or the relative rights and preferences are to be changed;
   13. revoke, diminish, or enlarge the authority of the board to establish series out of authorized but unissued shares of a preferred or special class and fix and determine the relative rights and preferences of the shares of that series; and
   14. limit, deny, or grant to shareholders of a class the preemptive right to acquire additional shares of the corporation, whether then or thereafter authorized.
3. A corporation may not amend its articles of incorporation to alter a statement that may appear in the original articles of the names and addresses of the first directors, or the name and address of the initial agent, except to correct an error in the statement or to delete either after the corporation has filed a notice under AS 10.06.165 or 10.06.813 .

History. (§ 1 ch 166 SLA 1988)

Editor’s notes. —

Section 8, ch. 166, SLA 1988, provides: “It is the intent of the legislature in enacting AS 10.06.502(a) in sec. 1 of this Act to exercise to the fullest extent the reserve power of the state over corporations and to authorize any amendment of the articles permitted under AS 10.06.502(a) regardless of whether a provision contained in the amendment was permissible at the time of the original incorporation of the corporation.”

Collateral references. —

18 C.J.S., Corporations, § 77 et seq.

Sec. 10.06.504. Procedure to amend articles of incorporation; application to certain elections.

1. A corporation shall amend its articles of incorporation in the following manner:
   1. if shares have not been issued, the board shall adopt a resolution setting out the proposed amendment or amendments;
   2. subject to AS 10.06.506 , if shares have been issued, an amendment shall be approved by the board and the outstanding shares; approval may be initiated by the shareholders either before or after consideration by the board; if the board adopts a resolution setting out a proposed amendment, the board shall direct that the amendment be submitted to a vote at a meeting of shareholders that may be either the annual or a special meeting; if approval of the outstanding shares is obtained before action by the board, the board shall consider and either approve or reject the amendment at the next regular or special meeting;
   3. unless the articles of incorporation provide otherwise, a corporation’s board of directors may adopt one or more of the following amendments to the articles of incorporation without shareholder action:
      1. to delete the names and addresses of the initial directors;
      2. to delete the name and address of the initial registered agent or registered office, if a statement of change is on file with the commissioner; or
      3. to change each issued and unissued authorized share of an outstanding class into a greater number of whole shares if the corporation has only shares of that class outstanding.
2. A proposed amendment may be contained in restated articles of incorporation that contain
   1. a statement that except for the designated amendment the restated articles correctly set out without change the provisions of the articles being amended; and
   2. a statement that the restated articles together with the designated amendment supersede the original articles and all amendments to the original articles.
3. Written notice setting out the proposed amendment or amendments or a summary of the changes to be made shall be given to each shareholder of record entitled to vote thereon within the time and in the manner provided in this chapter for the giving of notice of meetings of shareholders. If the amendment is to be considered at an annual meeting, the proposed amendment or summary may be included in the notice of the annual meeting.
4. The requirement of an affirmative vote of at least two-thirds of the shares entitled to vote for the adoption of an amendment to the articles of incorporation as provided in former AS 10.05.276 shall remain in force for corporations existing before July 1, 1989.
5. Notwithstanding (d) of this section, an election to be governed by the voting provisions of AS 10.06.504 — 10.06.506 , may be made in the same manner as an amendment to the articles of incorporation is made under those sections. An election under this subsection requires the affirmative vote of at least two-thirds of the shares entitled to vote under former AS 10.05.276(3).

History. (§§ 1, 10(a), 10(b) ch 166 SLA 1988)

Revisor’s notes. —

Subsections (d) and (e) were enacted as § 10(a) and (b), ch. 166, SLA 1988 and codified as AS 10.06.960 (l) and (m) in 1996. Because these subsections should have been placed in this section rather than AS 10.06.960 , they were renumbered as (d) and (e) of this section in 1997, at which time “(d) of this section” was substituted for “(l) of this section” in subsection (e).

Cross references. —

For provision providing an exception to subsection (d) of this section relating to an amendment of the articles of incorporation of certain Native corporations to establish a lower quorum requirement for shareholder meetings, see AS 10.06.960(p) .

Editor’s notes. —

Chapter 166, § 10, SLA 1988 provides: “AMENDMENT OF ARTICLES OF INCORPORATION. (a) The requirement of an affirmative vote of at least two-thirds of the shares entitled to vote for the adoption of an amendment to the articles of incorporation as provided in former AS 10.05.276 shall remain in force for corporations existing before the effective date of this Act.

“(b) Notwithstanding (a) of this section, an election to be governed by the voting provisions of AS 10.06.504 — 10.06.506 , as enacted by sec. 1 of this Act, may be made in the same manner as an amendment to the articles of incorporation is made under those sections. An election under this subsection requires the affirmative vote of at least two-thirds of the shares entitled to vote under former AS 10.05.276(3).”

Sec. 10.06.506. Class voting on amendments.

1. The holders of the outstanding shares of a class may vote as a class upon a proposed amendment, whether or not the holders are entitled to vote on the amendment by the provisions of the articles of incorporation, if the amendment
   1. increases or decreases the aggregate number of authorized shares of the class;
   2. exchanges, reclassifies, or cancels all or part of the shares of the class;
   3. exchanges or creates a right of exchange of all or part of the shares of another class into the shares of the class;
   4. changes the designations, preferences, limitations, or relative rights of the shares of the class;
   5. changes the shares of the class into the same or a different number of shares of the same class or another class;
   6. creates a new class of shares having rights and preferences prior and superior to the shares of the class, or increases the rights and preferences or the number of authorized shares of a class having rights and preferences prior or superior to the shares of the class;
   7. divides the shares of a preferred or special class into series and fixes and determines the designation of the series and the variations in the relative rights and preferences between the shares of the series or authorizes the board to do so;
   8. limits or denies the existing preemptive rights of the shares of the class;
   9. cancels or otherwise affects dividends on the shares of the class that are accrued but not declared.
2. If the holders of the outstanding shares of a class are entitled to vote as a class under (a) of this section, the amendment is not approved unless it receives a majority vote of the outstanding shares of that class and approval of the outstanding shares.

History. (§ 1 ch 166 SLA 1988)

Editor’s notes. —

Chapter 166, § 10, SLA 1988 provides: “AMENDMENT OF ARTICLES OF INCORPORATION. (a) The requirement of an affirmative vote of at least two-thirds of the shares entitled to vote for the adoption of an amendment to the articles of incorporation as provided in former AS 10.05.276 shall remain in force for corporations existing before the effective date of this Act.

“(b) Notwithstanding (a) of this section, an election to be governed by the voting provisions of AS 10.06.504 — 10.06.506 , as enacted by sec. 1 of this Act, may be made in the same manner as an amendment to the articles of incorporation is made under those sections. An election under this subsection requires the affirmative vote of at least two-thirds of the shares entitled to vote under former AS 10.05.276(3).”

Sec. 10.06.508. Greater voting requirements.

If the articles of incorporation require the vote of a larger proportion or of all of the shares of a class or series, or of a larger proportion or of all the directors, than is otherwise required by this chapter, the provision in the articles requiring the greater vote may not be altered, amended, or repealed except by that greater vote unless otherwise provided in the articles.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.510. Execution and content of articles of amendment.

The articles of amendment shall be executed by the corporation by its president or vice-president and by its secretary or an assistant secretary and must set out the

1. name of the corporation;
2. amendment adopted;
3. date of the approval of the amendment by the board and outstanding shares, or by the board if shares have not been issued;
4. number of shares outstanding and the number of shares entitled to vote, and, if the shares of a class are entitled to vote as a class, the designation and number of outstanding shares of each class entitled to vote;
5. number of shares voted for and against the amendment and, if the shares of a class are entitled to vote as a class, the number of shares of each class voted for and against the amendment or, if shares have not been issued, a statement to that effect; and
6. manner in which an exchange, reclassification, or cancellation of issued shares is to be carried out if the amendment provides for an exchange, reclassification, or cancellation of issued shares and is not set out in the amendment.

History. (§ 1 ch 166 SLA 1988; am § 8 ch 65 SLA 1998)

Sec. 10.06.512. Filing of articles of amendment.

An original and an exact copy of the articles of amendment shall be delivered to the commissioner for processing according to AS 10.06.910 and for issuance of a certificate of amendment.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.514. Effective date and effect of amendment.

1. An amendment is effective upon the issuance of a certificate of amendment by the commissioner, or on a later date, not more than 30 days after the filing of the certificate with the commissioner, as provided in the articles of amendment.
2. An amendment may not affect an existing cause of action in favor of or against the corporation, or a pending suit to which the corporation is a party, or the existing rights of persons other than shareholders. If the corporate name is changed by amendment, a suit brought by or against the corporation under its former name does not abate.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.516. Restated articles of incorporation.

A domestic corporation may, by resolution adopted by the board, restate its articles of incorporation as amended up to that time. Upon the adoption of the resolution, restated articles shall be executed by the corporation by its president or a vice-president and by its secretary or an assistant secretary and must set out all of the operative provisions of the articles as amended up to that time together with a statement that the restated articles correctly set out without change the corresponding provisions of the articles as amended up to that time and that the restated articles supersede the original articles and all amendments to them.

History. (§ 1 ch 166 SLA 1988; am § 9 ch 65 SLA 1998)

Sec. 10.06.518. Filing of restated articles of incorporation.

An original and an exact copy of the restated articles of incorporation shall be delivered to the commissioner for processing according to AS 10.06.910 and for issuance of a restated certificate of incorporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.520. Effect of issuance of restated certificate of incorporation.

Upon the issuance of a restated certificate of incorporation, the restated articles of incorporation become effective and supersede the original articles and all amendments.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.522. Amendment of articles of incorporation in reorganization proceedings.

1. If a plan of reorganization of a corporation has been confirmed by decree or order of a court in proceedings for the reorganization of the corporation under an applicable statute of the United States relating to reorganization of corporations, the articles of the corporation may be amended as necessary in the manner provided in (c) of this section, in order to carry out the plan and put it into effect, only if the articles as amended contain provisions that might be lawfully contained in original articles at the time of the making of the amendment.
2. In particular, and without limitation upon the general power of amendment, the articles of incorporation may be amended to
   1. change the corporate name, period of duration, or corporate purposes of the corporation;
   2. repeal, alter, or amend the bylaws of the corporation;
   3. change the aggregate number of shares or shares of a class that the corporation has authority to issue;
   4. change the preferences, limitation, and relative rights of all or part of the shares of the corporation, and classify, reclassify, or cancel all or part of the shares, whether issued or unissued;
   5. authorize the issuance of bonds, debentures, or other obligations of the corporation, whether or not convertible into shares of a class or bearing warrants or other evidences of optional rights to purchase or subscribe for shares of a class, and fix the terms and conditions of the bonds, debentures, or other obligations; and
   6. constitute or reconstitute and classify or reclassify the board of the corporation, and appoint directors and officers in place of or in addition to all or any of the directors or officers then in office.
3. Articles of amendment approved by decree or order of a court shall be executed by the person or persons the court designates or appoints for the purpose and must set out the name of the corporation, the amendments of the articles approved by the court, the date of the decree or order approving the articles of amendment, the title of the proceedings in which the decree or order was entered, and a statement that the decree or order was entered by a court having jurisdiction of the proceedings for the reorganization of the corporation under an applicable statute of the United States.

History. (§ 1 ch 166 SLA 1988; am § 10 ch 65 SLA 1998)

Sec. 10.06.524. Filing of amendment of articles in reorganization proceedings.

An original and an exact copy of the articles of amendment in reorganization proceedings shall be delivered to the commissioner for processing according to AS 10.06.910 and for issuance of a certificate of amendment.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.526. Effective date and effect of amendment of articles in reorganization proceedings.

An amendment becomes effective upon the issuance of a certificate of amendment in reorganization proceedings, and the articles are considered to be amended without action by the directors or shareholders of the corporation and with the same effect as if the amendments had been adopted by unanimous action of the directors and shareholders of the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.530. Merger.

Two or more domestic corporations may merge into one of such corporations under a plan of merger approved in the manner provided in AS 10.06.530 — 10.06.582 .

History. (§ 1 ch 166 SLA 1988)

Collateral references. —

19 Am. Jur. 2d, Corporations, § 2148 et seq.

19 C.J.S., Corporations, § 885 et seq.

Valuation of stock of dissenting stockholders in case of consolidation or merger of corporation, sale of its assets, or the like. 48 ALR3d 430.

“Golden parachute” defense to hostile corporate takeover. 66 ALR4th 138.

Lock-up option defense to hostile corporate takeover. 66 ALR4th 180.

Sec. 10.06.532. Procedure for merger.

A plan of merger approved by a resolution of the board of each corporation shall be proposed setting out

1. the names of the corporations proposing to merge and the name of the surviving 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 or other securities or obligations of the surviving corporation;
4. a statement of changes in the articles of incorporation of the surviving corporation caused by the merger; and
5. other provisions of the merger considered necessary or desirable.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.534. Consolidation.

Two or more domestic corporations may consolidate into a new domestic corporation under a plan of consolidation approved in the manner provided in AS 10.06.530 — 10.06.582 .

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.536. Procedure for consolidation.

A plan of consolidation approved by a resolution of the board of each corporation shall be proposed setting out

1. the names of the corporations proposing to consolidate and the name of the new corporation into which they propose to consolidate;
2. the terms and conditions of the proposed consolidation;
3. the manner and basis of converting the shares of each corporation into shares or other securities or obligations of the new corporation;
4. the statements with respect to the new corporation required to be set out in the articles of incorporation for corporations organized under this chapter; and
5. other provisions of the consolidation considered necessary or desirable.

History. (§ 1 ch 166 SLA 1988)

Collateral references. —

19 Am. Jur. 2d, Corporations, § 2227 et seq.

19 C.J.S., Corporations, § 885 et seq.

Sec. 10.06.538. Share exchange.

All of the issued or outstanding shares of one or more classes of a domestic corporation may be acquired through the exchange of all of the issued or outstanding shares of the class or classes by another domestic or foreign corporation under a plan of exchange approved in the manner provided in AS 10.06.530 — 10.06.582 .

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.540. Procedure for share exchange.

1. A plan of exchange approved by a resolution of the board of each corporation shall be proposed setting out
   1. the name of the corporation the shares of which are proposed to be acquired by exchange and the name of the acquiring corporation;
   2. the terms and conditions of the proposed exchange;
   3. the manner and basis of exchanging the shares to be acquired for shares, obligations, or other securities of the acquiring corporation or another corporation, or, in whole or in part, for cash or other property;
   4. other provisions of the proposed exchange considered necessary or desirable.
2. The procedure authorized by this section does not limit the power of a corporation to acquire all or part of the shares of any class or classes of a corporation through voluntary exchange or otherwise by agreement with the shareholders.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.542. Disparate treatment of shares of the same class or series prohibited; exceptions.

1. Except as provided in (b) of this section all shares of the same class or series shall be treated equally with respect to a distribution of shares, cash, property, rights, or securities in any plan of merger, consolidation, or share exchange.
2. Disparate treatment of shares of the same class or series may be proposed in a plan of merger, consolidation, or share exchange if
   1. disparate treatment is necessary to preserve a subchapter S election under the Internal Revenue Code of 1954;
   2. there is a sound business reason for disparate treatment and proponents of the plan prove it is consistent with fiduciary duties owed to all shareholders; or
   3. there is unanimous consent of all shareholders.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.544. Notice to and approval by shareholders.

Upon approval by the board of each corporation of a plan of merger, consolidation, or exchange, each board shall, by resolution, direct that the plan be submitted for approval, at either an annual or special meeting, by the outstanding shares of each corporation. Written notice shall be given to each shareholder of record, whether or not the share or shares of the shareholder have voting rights under the articles of the corporation, not less than 20 days before the meeting, in the manner provided in this chapter for the giving of notice of meetings of shareholders. Whether the meeting is an annual or special meeting, the notice shall state that the purpose or one of the purposes of the meeting is to consider the proposed plan of merger, consolidation, or exchange. A copy or summary of the plan of merger, consolidation, or exchange, as well as a copy of AS 10.06.574 and 10.06.576 , concerning the rights of a dissenting shareholder, shall be included with the notice.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.546. Manner of approval by shareholders.

At each meeting for which notice is given under AS 10.06.544 a vote of the shareholders shall be taken on the proposed plan of merger, consolidation, or exchange. Each outstanding share of each corporation may vote on the proposed plan whether or not the share has voting rights under the articles of the corporation. The plan is approved if it receives the affirmative vote of at least two-thirds of the outstanding shares of each corporation. If a class of shares of a corporation is entitled to vote on the plan as a class, the plan is approved if it receives the affirmative vote of at least two-thirds of the outstanding shares of each class of shares entitled to vote on the plan as a class and the affirmative vote of at least two-thirds of the total shares entitled to vote on the plan. A class of shares of a corporation is entitled to vote as a class if a plan contains a provision that, if contained in a proposed amendment to the articles of incorporation, would entitle the class of shares to vote as a class and, in the case of an exchange, if the class is included in the exchange.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.548. Abandonment of plan of merger, consolidation, or exchange.

After approval of the outstanding shares of each corporation under AS 10.06.546 and before the filing of the articles of merger, consolidation, or exchange, the merger, consolidation, or exchange may be abandoned under provisions set out in the plan.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.550. Execution and contents of articles of merger, consolidation, or exchange.

After approval, articles of merger, articles of consolidation, or articles of exchange shall be executed by each corporation by its president or a vice-president and by its secretary or an assistant secretary, and must set out the

1. plan of merger, consolidation, or exchange;
2. number of shares outstanding of each corporation and, if the shares of a class were entitled to vote as a class, the designation and number of outstanding shares of the class; and
3. number of shares voted for and against the plan and, if the shares of a class were entitled to vote as a class, the number of shares of the class voted for and against the plan.

History. (§ 1 ch 166 SLA 1988; am § 11 ch 65 SLA 1998)

Sec. 10.06.552. Filing of articles of merger, consolidation, or exchange.

An original and an exact copy of the articles of merger, consolidation, or exchange shall be delivered to the commissioner for processing according to AS 10.06.910 and for the issuance of a certificate of merger, consolidation, or exchange.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.554. Merger of subsidiary corporation.

A corporation owning at least 90 percent of the outstanding shares of each class of another corporation may merge the other corporation into itself without approval by a vote of the shareholders of either corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.556. Procedure for merger of subsidiary corporation.

1. The board of a proposed surviving corporation shall, by resolution, approve a plan of merger setting out
   1. the name of the subsidiary corporation and the name of the corporation owning at least 90 percent of its shares;
   2. subject to AS 10.06.542 , the manner and basis of converting the shares of the subsidiary corporation into shares, obligations, or other securities of the surviving or other corporation or, in whole or in part, into cash or other property.
2. A copy of a plan of merger shall be mailed to each shareholder of record of the subsidiary corporation.
3. Articles of merger shall be executed by the surviving corporation by its president or a vice-president and by its secretary or an assistant secretary and must set out the
   1. plan of merger;
   2. number of outstanding shares of each class of the subsidiary corporation and the number of those shares of each class owned by the surviving corporation; and
   3. date of the mailing to shareholders of the subsidiary corporation of the plan of merger.

History. (§ 1 ch 166 SLA 1988; am § 12 ch 65 SLA 1998)

Sec. 10.06.558. Filing of articles of merger of subsidiary corporation.

An original and an exact copy of the articles of merger of a subsidiary corporation shall be delivered to the commissioner for processing according to AS 10.06.910 and for the issuance of a certificate of merger.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.560. Effective date and effect of merger, consolidation, or exchange.

1. A merger, consolidation, or exchange is effective upon the issuance of a certificate of merger, consolidation, or exchange by the commissioner, or on a later date, not more than 30 days after the filing of the certificate with the commissioner, as provided in the plan.
2. When a merger or consolidation becomes effective,
   1. the corporations that are parties to the plan of merger or consolidation shall be a single corporation that, 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 that are parties to the plan of merger or consolidation, except the surviving or new corporation, ceases;
   3. a surviving or new corporation has all the rights, privileges, immunities, and powers and is subject to all the duties and liabilities of a corporation organized under this chapter;
   4. the surviving or new corporation possesses all the public and private rights, privileges, immunities, and franchises of each of the merging or consolidating corporations; all property, real, personal, and mixed, and all debts due on whatever account, including subscriptions to shares, and all other choses in action, and every other interest of, belonging to, or due to each of the merged or consolidated corporations, shall be transferred to and vested in the surviving or new corporation without further act; and the title to real estate, or an interest in real estate, vested in any of the corporations may not revert or be in any way impaired by reason of a merger or consolidation;
   5. a surviving or new corporation is responsible and liable for all the liabilities and obligations of each of the merged or consolidated corporations; a claim existing or action or proceeding pending by or against the merged or consolidated corporations may be prosecuted as if the merger or consolidation has not taken place, or the surviving or new corporation may be substituted in its place; and the rights of creditors or any liens upon the property of the merged or consolidated corporations may not be impaired by the merger or consolidation;
   6. in the case of a merger, the articles of incorporation of the surviving corporation are considered to be amended to the extent that changes in its articles are stated in the plan of merger; and, in the case of a consolidation, the statements set out in the articles of consolidation that are required or permitted to be set out in the articles of incorporation of corporations organized under this chapter are considered to be the original articles of the new corporation.
3. When a merger, consolidation, or exchange becomes effective, the shares of the corporation or corporations party to the plan that are to be converted or exchanged under the terms of the plan cease to exist, in the case of a merger or consolidation, or are considered to be exchanged, in the case of an exchange, and the holders of the shares are entitled only to the shares, obligations, other securities, cash, or other property into which the shares have been converted or for which they have been exchanged, in accordance with the plan, subject to the rights under AS 10.06.574 .

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.562. Merger, consolidation, or exchange of shares between domestic and foreign corporation.

One or more foreign corporations and one or more domestic corporations may be merged or consolidated, or participate in an exchange, if the merger, consolidation, or exchange is permitted by the laws of the state under which each foreign corporation is organized and

1. each domestic corporation complies with the provisions of this chapter with respect to the merger, consolidation, or exchange of domestic corporations and each foreign corporation complies with the applicable provisions of the laws of the state under which it is organized; and
2. if the surviving or new corporation is to be governed by the laws of another state, it complies with the provisions of this chapter concerning foreign corporations if it is to transact business in this state and it files with the commissioner an
   1. agreement that the surviving or new foreign corporation may be served with process in this state in a proceeding for the enforcement of an obligation of a domestic corporation that is a party to the merger or consolidation and in a proceeding for the enforcement of the rights of a dissenting shareholder of a domestic corporation against the surviving or new corporation;
   2. irrevocable appointment of the commissioner as the agent of the surviving or new corporation to accept service of process in a proceeding described in (A) of this paragraph; and
   3. agreement that it will promptly pay to the dissenting shareholders of a domestic corporation the amount to which they are entitled under provisions of this chapter with respect to the rights of dissenting shareholders.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.564. Disclosure of alien affiliates.

Not less than 20 days before the consummation of an organic change under AS 10.06.530 — 10.06.562 , the surviving or new corporation shall deliver to the commissioner

1. a list of the names and addresses of each alien affiliate of the surviving or new corporation;
2. the percentage of outstanding shares controlled by each alien affiliate; and
3. a specific description of the nature of the relationship between the surviving or new corporation and its alien affiliate.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.566. Disposition of assets in regular course of business; mortgage or pledge of assets.

The board of the corporation, without the approval of the shareholders or outstanding shares of the corporation, may authorize the sale, lease, exchange, or other disposition of all, or substantially all, the property and assets of a corporation in the usual and regular course of its business and the mortgage or pledge of any or all property and assets of a corporation whether or not in the usual and regular course of business, upon terms and conditions and for consideration, that may consist in whole or in part of cash or other property, including shares, obligations, or other securities of another domestic or foreign corporation.

History. (§ 1 ch 166 SLA 1988)

Collateral references. —

19 Am. Jur. 2d, Corporations, § 2267 et seq.

36 Am. Jur. 2d, Foreign Corporations, §§ 142-149.

19 C.J.S., Corporations, § 715.

Applicability of statutes regulating sales of assets or property of corporation as affected by purpose or character of corporation. 9 ALR2d 1306.

Sec. 10.06.568. Disposition of assets not in regular course of business.

1. A sale, lease, exchange, or other disposition of all, or substantially all, of the property and assets, with or without the good will, of a corporation, if not in the usual and regular course of its business, may be made upon terms and conditions and for consideration, that may consist in whole or in part of cash or other property, including shares, obligations or other securities of another foreign or domestic corporation, as authorized in (b) of this section.
2. A sale, lease, exchange, or other disposition shall be recommended to the shareholders by resolution approved by the board and submitted to a vote of the shareholders at a regular or special meeting. Written notice shall be given to each shareholder of record of the corporation, whether or not the shares have voting rights under the articles of the corporation, not less than 20 days before the meeting, in the manner provided in this chapter for the giving of notice of meetings of shareholders. Whether the meeting is an annual or special meeting the notice shall state that the purpose or one of the purposes of the meeting is to consider the proposed sale, lease, exchange, or other disposition, and include a copy of AS 10.06.574 — 10.06.576 , concerning the rights of a dissenting shareholder.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.570. Approval of transaction by shareholders.

1. At a meeting for which notice is given under AS 10.06.568(b) a vote of the shareholders shall be taken on the recommended sale, lease, exchange, or other disposition and the shareholders may fix, or may authorize the board to fix, the terms and conditions and the consideration to be received by the corporation. The transaction is approved if the recommendation of the board receives the affirmative vote of at least two-thirds of the outstanding shares of the corporation, unless a class of shares is entitled to vote as a class, in which event the transaction shall be approved upon receiving the affirmative vote of at least two-thirds of the outstanding shares of each class of shares entitled to vote as a class and of the total shares entitled to vote.
2. If the buyer in a sale of assets under AS 10.06.568 is in control of or under common control with the seller, the principal terms of the sale must be approved by at least 90 percent of the outstanding shares of the seller unless the sale is to a domestic or foreign corporation in consideration for the nonredeemable common shares of the purchasing corporation or its parent.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.572. Abandonment of transaction by board.

The board in its discretion may abandon a sale, lease, exchange, or other disposition of assets after approval by the shares without further action or approval by the shares, subject to the rights of third parties under contracts relating to the sale, lease, exchange, or other disposition.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.574. Right of shareholders to dissent.

1. A shareholder may dissent from the following corporate actions:
   1. a plan of merger, consolidation, or exchange to which the corporation is a party; or
   2. a sale or exchange of all or substantially all of the property and assets of the corporation not made in the usual and regular course of its business, including a sale in dissolution, but not including a sale under a court order or a sale for cash on terms requiring that all or substantially all of the net proceeds of the sale be distributed to the shareholders in accordance with their respective interests within one year after the date of sale.
2. The rights of a shareholder who dissents as to less than all of the shares registered in the name of the shareholder shall be determined as if the shares as to which the shareholder dissents and the other shares of the shareholder are registered in the names of different shareholders.
3. This section does not apply to the shareholders of the surviving corporation in a merger if a vote of shareholders of the surviving corporation is not necessary to authorize the merger.
4. This section does not apply to the holders of shares of a class or series if the shares of the class or series were registered on a national securities exchange on the date fixed to determine the shareholders entitled to vote at the meeting of shareholders at which the plan of merger, consolidation, or exchange or the proposed sale or exchange of property and assets is to be acted upon unless the articles of the corporation provide otherwise.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.576. Procedures relating to the exercise of a shareholder’s right to dissent; completion of corporate action; notice of election; treatment of shares.

1. A shareholder electing to exercise a right to dissent shall file with the corporation, before or at the meeting of shareholders at which the proposed corporate action is submitted to a vote, a written objection to the proposed corporate action. The objection must include a notice of election to dissent, the shareholder’s name and residence address, the number and classes of shares as to which the shareholder dissents, and a demand for payment of the fair value of the shares if the action is taken. A shareholder to whom the corporation did not give notice of the meeting in accordance with this chapter is not required to make the objection provided in this section.
2. Within 10 days after the shareholders’ vote authorizing the action, the corporation shall given written notice of the authorization to each shareholder who filed written objection or from whom written objection was not required. The corporation may consider that a shareholder who voted for the proposed action has elected not to enforce a right of dissent under this chapter, and need not give notice to the shareholder.
3. Within 20 days after notice has been given under (b) of this section, a shareholder from whom written objection was not required under (a) of this section and who elects to dissent shall file with the corporation a written notice of the election, stating the shareholder’s name and residence address, the number and classes of shares as to which the shareholder dissents, and a demand for payment of the fair value of the shares. A shareholder who elects to dissent from a merger under AS 10.06.532 , a consolidation under AS 10.06.534 , a share exchange under AS 10.06.540 , a transaction authorized under AS 10.06.562 , or a sale of assets under AS 10.06.568 shall file a written notice of the election to dissent within 20 days after the merger plan, consolidation plan, share exchange plan, or sale of assets resolution has been mailed to the shareholder.
4. A merger, consolidation, or exchange is considered completed within the meaning of this chapter on the effective date determined in accordance with AS 10.06.560 ; a transaction under AS 10.06.568 is completed within the meaning of this chapter when the corporation has received the consideration specified in the board resolution that was submitted to the shareholders in accordance with that section.
5. Upon completion of the corporation action, the shareholder shall cease to have the rights of a shareholder except the right to be paid the fair value of the shares as to which the dissenter’s rights were perfected under this chapter. A notice of election may be withdrawn by the shareholder at any time before an acceptance under AS 10.06.578(f) , but in no case later than 60 days from the date of completion of the corporate action, except that the time for withdrawing a notice of election shall be extended for 60 days from the date an offer is made, if the corporation fails to make a timely offer under AS 10.06.578 . After the time for withdrawal has expired, withdrawal of a notice of election requires the written consent of the corporation. In order to be effective, withdrawal of a notice of election must be accompanied by the return to the corporation of an advance payment made to the shareholder as provided in AS 10.06.578 . If a notice of election is withdrawn, if the corporate action is rescinded, if a court determines that the shareholder is not entitled to the right to dissent, or if the shareholder otherwise loses the right to dissent, the shareholder shall not have the right to receive payment for the shares and shall be reinstated to all rights as a shareholder that were effective on the date of the completion of the corporate action. The rights to which the shareholder is reinstated include intervening preemptive rights and the right to payment of an intervening dividend or other distribution. If an intervening right has expired or if a dividend or distribution that is not in cash has been completed, the corporation may elect to pay the shareholder the fair value of the shares in cash at the value, as determined by the board, at the time of the expiration or completion. The election to pay the value in cash shall be without prejudice to a corporate proceeding that has occurred in the interim.
6. At the time of filing the notice of election to dissent, or within 30 days after the shareholder has filed the notice, the shareholder shall submit to the corporation, or to its transfer agent, the certificates representing the shares for which payment is claimed, if certificates have been issued. The corporation or its transfer agent shall note conspicuously on the certificates, or on a separate document if certificates have not been issued for the shares, that a notice of election has been filed, and shall return the certificates or the separate document to the shareholder or to the person who submitted them on the shareholder’s behalf. Unless a court, for good cause shown, otherwise directs, a shareholder who fails to comply with this subsection loses the right to dissent granted by this chapter, if the corporation gives written notice that the right to dissent will be lost to the shareholder within 45 days from the date that the shareholder filed the notice of election to dissent. If the corporation fails to exercise this notice option in a timely manner, the shareholder retains the right to dissent granted by this chapter.
7. When a share of a dissenting shareholder under (f) of this section is transferred, the new certificate must bear a notation similar to that made under (f) of this section and state the name of the original dissenting holder of the shares, or, if the share is an uncertificated share, the corporation must give the transferee a written notice stating that a notice of election to dissent has been filed and giving the name of the original dissenting holder. A transferee acquires only the rights in the corporation that the original dissenting shareholder had at the time of transfer.

History. (§ 1 ch 166 SLA 1988; am §§ 43, 44 ch 82 SLA 1989)

Revisor’s notes. —

The term “uncertificated” was substituted for “certificateless” in (g) of this section in 1989 to conform to national usage.

Sec. 10.06.578. Offer and payment to dissenting shareholders; circumstances where prohibited.

1. Within 15 days after the expiration of the period within which shareholders may file their notice of election to dissent under AS 10.06.576 , or within 15 days after the proposed corporate action is completed, whichever is later, the corporation or, in the case of a merger or consolidation, the surviving or new corporation, shall make a written offer by certified mail to each shareholder who has filed the notice of election, to pay the amount the corporation estimates to be the fair value of the shares. The offer shall be made at the same price for each share to all dissenting shareholders of the same class, or if divided into series, of the same series.
2. The offer required by (a) of this section must be accompanied by a
   1. balance sheet of the corporation whose shares the dissenting shareholder holds; the date of the balance sheet shall be that of the most recent balance sheet produced in the 12 months before the offer;
   2. profit and loss statement or statements for at least 12 months preceding the date of the balance sheet; if the corporation was not in existence during the entire 12-month period preceding the balance sheet required by (1) of this subsection, then a profit and loss statement for that portion of the 12-month period preceding the balance sheet during which the corporation was in existence;
   3. statement of the total number of shares with respect to which notices of election to dissent have been received and the total number of holders of these shares; and
   4. copy of this section and AS 10.06.580 .
3. If the corporate action has been completed the offer required by (a) of this section must also be accompanied by
   1. advance payment to each shareholder who submitted the share certificates to the corporation, or to whom notice was sent if the shares were uncertificated, as provided in AS 10.06.576(f) , of the amount offered under (a) of this section; or
   2. a statement to a shareholder who has not submitted the share certificates, if certificates were issued for the shares, that advance payment of the amount offered under (a) of this section will be made by the corporation promptly upon submission of the certificates.
4. If the corporate action has not been completed when the offer required by (a) of this section is made, the advance payment or statement about the advance payment shall be sent to each shareholder entitled to the payment or notice, after completion of the corporate action.
5. The advance payment or statement about the advance payment shall include advice to the shareholder that acceptance of the payment does not constitute a waiver of the shareholder’s right to dissent.
6. The corporation may consider that a shareholder who fails to make written objection to the amount tendered under (c)(1) of this section or to submit shares in response to the statement sent under (c)(2) of this section within 30 days of the date the statement was mailed has agreed that the amount offered represents the fair value of the shares. The shareholder shall have no interest in the shares or the outcome of litigation begun under AS 10.06.580 .
7. Notwithstanding the other provisions of this section, if the payments otherwise required by (c) and (d) of this section or determined in accordance with AS 10.06.580 would be distributions in violation of AS 10.06.358 — 10.06.365 , or 10.06.375 , the corporation may not make a distribution to a dissenting shareholder. In that event, a corporation that would otherwise have the payment obligation under (c) and (d) of this section or AS 10.06.580 shall, in addition to complying with (a) and (b) of this section, give written notice within the time limits of (a) and (b) of this section to dissenting shareholders of its inability to make payment. The notice must include
   1. an explanation why the corporation is unable to make the payments otherwise required by this section;
   2. a statement that a dissenting shareholder has an option to
      1. withdraw the shareholder’s notice of election to dissent, and that the corporation will consider that the withdrawal was made with the written consent of the corporation; or
      2. retain the status of a dissenter, and, if the corporation is liquidated, be subordinated to the rights of the creditors of the corporation, but have rights superior to the nondissenting shareholders, but if the corporation is not liquidated, retain the right to be paid under (c) and (d) of this section or AS 10.06.580 and the corporation must satisfy the obligation when the restrictions on distributions do not apply; and
   3. a statement that if the corporation does not receive the written election provided under (2) of this subsection within 60 days after notice given as required by this section, the corporation will consider that the shareholder has withdrawn the notice of election under (2)(A) of this subsection.

History. (§ 1 ch 166 SLA 1988; am § 45 ch 82 SLA 1989)

Revisor’s notes. —

The term “uncertificated” was substituted for “certificateless” in (c)(1) of this section in 1989 to conform to national usage. In 2002, in (b)(2) of this section, “subsection” was substituted for “section” to correct a manifest error.

Sec. 10.06.580. Action to determine value of shares.

1. If the corporation fails to make the offer required by AS 10.06.578(a) or the shareholder rejects the offer within the 30-day period specified in AS 10.06.578(f) ,
   1. the corporation shall, within 20 days after the expiration of the 30-day period specified in AS 10.06.578(f) , file a petition in the court of the judicial district where the registered office of the corporation is located, requesting that the fair value of the shares be determined; if, in the case of a merger or consolidation, the surviving or new corporation is a foreign corporation without a registered office in the state, the petition shall be filed in the judicial district where the registered office of the domestic corporation was last located; or
   2. if the corporation fails to institute a proceeding as provided in this section, a dissenting shareholder may institute a proceeding in the name of the corporation; if a dissenting shareholder does not institute a proceeding within 30 days after the expiration of the 20-day period granted the corporation under (1) of this subsection, the dissenter loses the dissenter’s rights unless the superior court, for good cause shown, otherwise directs.
2. All dissenting shareholders who have rejected the corporate offer extended under AS 10.06.578(a) , wherever residing, shall be made parties to the proceeding as an action against their shares quasi in rem. The corporation shall serve a copy of the complaint in the proceeding on each dissenting shareholder who is a resident of this state in the manner provided by the Alaska Rules of Civil Procedure, and on each nonresident dissenting shareholder either by certified mail and publication, or in another manner permitted by law. The jurisdiction of the court shall be plenary and exclusive. A dissenting shareholder who is a party to the proceeding is entitled to judgment against the corporation for the amount determined under (c) of this section to be the fair value of the shares of that shareholder.
3. The court shall determine whether a dissenting shareholder who is a party to the court action is entitled to receive payment for the shareholder’s shares. If the corporation does not request a determination, or if the court finds that a dissenting shareholder is entitled to a determination, the court shall establish the value of the shares; for the purposes of this section, the value shall be the fair value at the close of business on the day before the date on which the vote was taken approving the proposed corporate action. In fixing the fair value of the shares, the court shall consider the nature of the transaction giving rise to the right to dissent under AS 10.06.576 , its effects on the corporation and its shareholders, the concepts and methods customary in the relevant securities and financial markets for determining the fair value of shares of a corporation engaging in a similar transaction under comparable circumstances, and other relevant factors. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value of the shares. The appraisers have the power and authority specified in the order of appointment or as amended.
4. The judgment must include an allowance for interest at the rate the court finds to be fair and equitable, from the date on which the proposed corporate action vote was taken to the date of payment. In determining the rate of interest, the court shall consider all relevant factors, including the rate of interest that the corporation would have had to pay to borrow money during the pendency of the proceeding. If the court finds that the refusal of a shareholder to accept the corporate offer of payment for the shares is arbitrary, vexatious, or otherwise in bad faith, the court shall deny interest to the shareholder.
5. A party to the proceeding shall bear its own costs and expenses, including the fees and expenses of its counsel and of any experts employed by it. Notwithstanding the foregoing, the court may, in its discretion, apportion and assess all or part of the costs, expenses, and fees incurred by the corporation against one or more of the dissenting shareholders who are parties to the proceeding, if the court finds that a refusal to accept the corporate offer was arbitrary, vexatious, or otherwise in bad faith. The court may, in its discretion, apportion and assess all or a part of the costs, expenses, and fees incurred by one or more of the dissenting shareholders who are parties to the proceeding against the corporation if the court finds that
   1. the fair value of the shares materially exceeds the amount that the corporation offered to pay;
   2. an offer or required advance payment was not made by the corporation as provided in AS 10.06.578 ;
   3. the corporation failed to institute the special proceeding within the period specified under (a) of this section; or
   4. the action of the corporation in complying with its obligations as provided in this chapter was arbitrary, vexatious, or otherwise in bad faith.
6. Unless prohibited by AS 10.06.578(g) , within 60 days after the final determination of the proceeding, the corporation shall pay to each dissenting shareholder who is a party the amount determined under (e) of this section in exchange for the surrender of the certificate representing the dissenter’s shares or the dissenter’s shares if the shares are uncertificated. Upon payment of the judgment, the dissenting shareholder ceases to have an interest in the shares.

History. (§ 1 ch 166 SLA 1988; am § 46 ch 82 SLA 1989; am § 14 ch 35 SLA 2003)

Revisor’s notes. —

The term “uncertificated” was substituted for “certificateless” in (f) of this section in 1989 to conform to national usage.

Cross references. —

For effect of the enactment of (b) of this section on Alaska Rules of Civil Procedure 4 and 19, see secs. 20 and 21, ch. 166, SLA 1988 in the Temporary and Special Acts; for effect of the enactment of (e) of this section on Alaska Rule of Civil Procedure 82, see sec. 22, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.582. Status of shares acquired from dissenting shareholders.

Shares acquired by a corporation under AS 10.06.578 and 10.06.580 shall be held and disposed of by the corporation as other shares reacquired under AS 10.06.388 , except that, in the case of a merger or consolidation, they shall be held and disposed of as the plan of merger or consolidation may otherwise provide.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.590. Conversion to limited liability company. [Repealed, § 29 ch 60 SLA 2013.]

Sec. 10.06.595. Application of provisions.

Except as provided by AS 10.55.201(c)(1)(A) and 10.55.301(d) , a corporation may enter into a merger, interest exchange, conversion, or domestication under AS 10.55. AS 10.06.566 and 10.06.568 do not apply to mergers, interest exchanges, conversions, and domestications that are covered by AS 10.55.

History. (§ 1 ch 60 SLA 2013)

Effective dates. —

Section 34, ch. 60, SLA 2013 makes this section effective July 1, 2014.

Editor’s notes. —

Under sec. 32, ch. 60, SLA 2013 in the 2013 Temporary and Special Acts, this section does not affect an action or proceeding begun or right accrued before July 1, 2014.

Sec. 10.06.600. Definitions.

In AS 10.06.530 — 10.06.590 ,

1. “consolidation” means a consolidation authorized by AS 10.06.534 or 10.06.562 ;
2. “merger” means a merger authorized by AS 10.06.530 or 10.06.562 ;
3. “share exchange” means a share exchange authorized by AS 10.06.538 or an exchange of shares covered by AS 10.06.562 .

History. (§ 1 ch 60 SLA 2013)

Effective dates. —

Section 34, ch. 60, SLA 2013 makes this section effective July 1, 2014.

Editor’s notes. —

Under sec. 32, ch. 60, SLA 2013 in the 2013 Temporary and Special Acts, this section does not affect an action or proceeding begun or right accrued before July 1, 2014.

Sec. 10.06.605. Voluntary dissolution by vote or written consent of shares, or by approval of the board.

1. A corporation may elect voluntarily to wind up and dissolve by
   1. the vote of shareholders taken at a special or annual meeting with notice under AS 10.06.410 to each shareholder entitled to vote at the meeting and stating that the purpose, or one of the purposes, of the meeting is to consider approval of voluntary dissolution of the corporation; at the meeting the election to voluntarily dissolve is adopted upon receiving the affirmative votes of two-thirds or more of the shares of the corporation entitled to vote, unless any class of shares is entitled to vote as a class, in which case the election is adopted upon receiving the affirmative vote of two-thirds or more of the shares of each class entitled to vote as a class and of two-thirds or more of the shares entitled to vote; or
   2. written consent of the shares taken without a meeting under AS 10.06.423 .
2. A corporation may elect by approval of the board to wind up and dissolve if the corporation has
   1. been adjudicated bankrupt;
   2. disposed of all of its assets and has not conducted any business for a period of five years immediately preceding the adoption of the resolution to dissolve the corporation; or
   3. issued no shares.

History. (§ 1 ch 166 SLA 1988; am § 47 ch 82 SLA 1989)

Sec. 10.06.608. Certificate of election: contents, signing, and filing.

1. A corporation that has elected to wind up and dissolve shall immediately file a certificate evidencing the election as provided in this section.
2. The certificate must be an officers’ certificate or shall be signed by at least a majority of the directors then in office, by one or more shareholders authorized to do so by the shareholders holding shares representing 50 percent or more of the voting power, or by the officer or shareholder designated in the written consent and must set out
   1. the name of the corporation, the names and addresses of its officers under AS 10.06.483 , the names and addresses of its directors, and the statement that the corporation has elected to wind up and dissolve;
   2. the number of shares voting for the election if the election was made by the vote of shareholders and a statement that the election was made by shareholders representing at least two-thirds of the voting power under AS 10.06.605(a)(1) ;
   3. a copy of the written consent signed by all shareholders of the corporation if the election was made by the written consent of the shares;
   4. circumstances showing the corporation to be within one of the categories described in AS 10.06.605(b) if the election was made by the board under that subsection.
3. An original and an exact copy of the certificate conforming to (b) of this section shall be delivered to the commissioner for processing according to AS 10.06.910 .

History. (§ 1 ch 166 SLA 1988; am § 13 ch 65 SLA 1998)

Revisor’s notes. —

Due to a typographical manifest error, the amendment made by § 13, ch. 65, SLA 1998 to (b) of this section indicated that it was made to AS 10.06.068(b).

Sec. 10.06.610. Revocation of election; contents, signing, and filing of certificate.

1. A voluntary election to wind up and dissolve under AS 10.06.605 may be revoked before distribution of assets by an election to revoke made in the same manner as an election under AS 10.06.605 . A certificate evidencing the election to revoke shall be signed and filed in the manner prescribed in AS 10.06.608 .
2. The certificate must set out
   1. that the corporation has revoked its election to wind up and dissolve;
   2. that no assets have been distributed as a result of the election;
   3. the number of shares voting for the revocation and the total number of outstanding shares the holders of which were entitled to vote on the revocation, if the election to revoke was made by the vote of shareholders;
   4. a copy of the written consent signed by all shareholders of the corporation if the election to revoke was made by the written consent of the shares;
   5. the resolution of the board if the election to revoke was made by the board.

History. (§ 1 ch 166 SLA 1988; am § 14 ch 65 SLA 1998)

Sec. 10.06.613. Effective date of revocation and effect of revocation.

Revocation of a voluntary dissolution proceeding is effective upon compliance with AS 10.06.610 and the corporation may again carry on its business.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.615. Commencement and conduct of voluntary proceedings for winding up; cessation of business; notice.

1. Voluntary proceedings for winding up the corporation commence upon the resolution of shareholders or directors of the corporation electing to wind up and dissolve, or upon the filing with the corporation of a written consent of the shareholders.
2. If a voluntary proceeding for winding up has commenced, the board shall continue to act as a board and has powers as provided in (c) of this section to wind up and settle its affairs, both before and after the filing of the certificate of dissolution.
3. If a voluntary proceeding for winding up has commenced, the corporation shall cease to carry on business except to the extent necessary for the beneficial winding up of its business and except during the period the board considers necessary to preserve the corporation’s goodwill or going-concern value pending a sale of its business or assets, in whole or in part. The board shall give written notice of the commencement of the proceeding for voluntary winding up by mail to all shareholders and all known creditors and claimants whose addresses appear on the records of the corporation. It is unnecessary to give notice to shareholders who voted in favor of winding up and dissolving the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.618. Judicial supervision of voluntary winding up; petition and notice; orders protecting shareholders and creditors.

If a corporation is in the process of voluntary winding up, a court, upon the petition of the corporation, a five-percent shareholder, or three or more creditors, and upon notice to the corporation and to other persons interested in the corporation as shareholders and creditors as the court may order, may take jurisdiction over the voluntary winding-up proceeding if it appears necessary for the protection of any parties in interest. The court, if it assumes jurisdiction, may make orders as to any and all matters concerning the winding up of the affairs of the corporation and for the protection of its shareholders and creditors of the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.620. Articles of dissolution: contents.

If a corporation has been completely wound up without court proceedings, a majority of the directors then in office shall sign articles of dissolution stating that

1. the corporation has been completely wound up;
2. its known debts and liabilities have been actually paid, or adequately provided for under AS 10.06.668 , or paid or adequately provided for as far as the assets of the corporation permit, or that it has incurred no known debts or liabilities; if there are known debts or liabilities for which adequate provision for payment has been made, the articles of dissolution must state what provision has been made, setting out the name and address of the corporation, person, or governmental agency that has assumed or guaranteed payment, or the name and address of the depositary with which deposit has been made and such other information as may be necessary to enable the creditor or other person to whom payment is to be made to appear and claim payment of the debt or liability;
3. its known assets have been distributed to shareholders, or, if there are no shareholders, to persons entitled to the assets, or wholly applied or deposited on account of its debts and liabilities, or that it acquired no known assets;
4. the corporation is dissolved.

History. (§ 1 ch 166 SLA 1988; am § 15 ch 65 SLA 1998)

Sec. 10.06.623. Filing of articles of dissolution.

An original and an exact copy of the articles of dissolution shall be delivered to the commissioner for processing according to AS 10.06.910 and for issuance of a certificate of dissolution.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.625. Effect of certificate of dissolution.

Upon the issuance of a certificate of dissolution, the existence of the corporation ceases, except for the purpose of suits, other proceedings, and appropriate corporate action by shareholders, directors, and officers as provided in this chapter.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.628. Involuntary dissolution by verified complaint; filing; intervention by shareholder or creditor.

1. A verified complaint for involuntary dissolution of a corporation on any of the grounds specified in (b) of this section may be filed in the superior court by the following persons:
   1. one-half or more of the directors in office;
   2. a shareholder or shareholders who hold shares representing not less than 331/3 percent of the total number of outstanding shares, assuming conversion of preferred shares convertible into common shares, or of the outstanding common shares, or of the equity of the corporation, exclusive of shares owned by persons who have personally participated in any of the transactions enumerated in (b)(4) of this section;
   3. a shareholder if the ground for dissolution is that the period for which the corporation was formed has terminated without extension; or
   4. another person expressly authorized to do so in the articles.
2. The grounds for involuntary dissolution are:
   1. the corporation has abandoned its business for more than one year;
   2. the corporation has an even number of directors who are equally divided and cannot agree as to the management of its affairs, so that its business can no longer be conducted to advantage or so that there is danger that its property and business will be impaired or lost, and the holders of the voting shares of the corporation are so divided into factions that they cannot elect a board consisting of an uneven number;
   3. there is internal dissension and two or more factions of shareholders in the corporation are so deadlocked that its business can no longer be conducted with advantage to its shareholders, or the shareholders have failed at two consecutive annual meetings at which all voting power was exercised to elect successors to directors whose terms have expired or would have expired upon election of their successors;
   4. those in control of the corporation have been guilty of or have knowingly countenanced persistent and pervasive fraud, mismanagement or abuse of authority or persistent unfairness toward shareholders, or the property of the corporation is being misapplied or wasted by its directors or officers;
   5. in the case of any corporation with 35 or fewer shareholders of record, liquidation is reasonably necessary for the protection of the rights or interests of the complaining shareholder or shareholders; or
   6. the period for which the corporation was formed has terminated without extension.
3. Before the trial of the action a shareholder or creditor of the corporation may intervene.
4. For purposes of this section, “shareholder” includes a beneficial owner of shares who has entered into an agreement under AS 10.06.425(a) .

History. (§ 1 ch 166 SLA 1988; am § 48 ch 82 SLA 1989)

Cross references. —

For effect of the enactment of this section on Alaska Rules of Civil Procedure 11 and 24, see secs. 23 and 24, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.630. Avoiding dissolution by verified complaint; purchase of plaintiff’s shares; determination of fair value; stay; appraisal; award; appeal.

1. Subject to a contrary provision in the articles of incorporation, in a suit for involuntary dissolution under AS 10.06.628 the corporation or, if it does not elect to purchase, the holders of 50 percent or more of the voting power of the corporation, the “purchasing parties”, may avoid the dissolution of the corporation and the appointment of a receiver by purchasing for cash the shares owned by the plaintiffs, the “moving parties”, at their fair value. The fair value shall be determined on the basis of the liquidation value, taking into account the possibility of sale of the entire business as a going concern in a liquidation. The election of the corporation to purchase may be made by the approval of the outstanding shares excluding shares held by the moving parties.
2. If the purchasing parties elect to purchase the shares owned by the moving parties, and are unable to agree with the moving parties upon the fair value of the shares, and give bond with sufficient security to pay the estimated reasonable expenses, including attorney fees, of the moving parties if the expenses are recoverable under (c) of this section, the court upon application of the purchasing parties shall stay the winding up and dissolution proceeding and shall proceed to ascertain and fix the fair value of the shares owned by the moving parties.
3. The court shall appoint three disinterested appraisers to appraise the fair value of the shares owned by the moving parties, and shall make an order referring the matter to the appraisers for the purpose of ascertaining the value of the shares. The order shall prescribe the time and manner of producing evidence if evidence is required. The award of the appraisers or of a majority of the appraisers, when confirmed by the court, is final and conclusive upon all parties. The court shall enter a decree that provides in the alternative for winding up and dissolution of the corporation unless payment is made for the shares within the time specified by the decree. If the purchasing parties do not make payment for the shares within the time specified, judgment shall be entered against the purchasing parties and the surety or sureties on the bond for the amount of the expenses, including attorney fees, of the moving parties. A shareholder aggrieved by the action of the court may appeal.
4. If the purchasing parties desire to prevent the winding up and dissolution, they shall pay to the moving parties the value of their shares as provided under this section less an allowance for the costs of the appraisal as the court shall determine. In the case of an appeal, the purchasing parties shall pay to the moving parties the value of the shares and costs of appraisal as fixed on appeal. On receiving payment or the tender of payment as determined by the court, the moving parties shall transfer their shares to the purchasing parties.
5. For the purposes of this section, “shareholder” includes a beneficial owner of shares who has entered into an agreement under AS 10.06.425(a) .

History. (§ 1 ch 166 SLA 1988; am § 49 ch 82 SLA 1989)

Cross references. —

For effect of the enactment of this section on Alaska Rule of Civil Procedure 65, see sec. 25, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.633. Involuntary dissolution by the commissioner: grounds, procedure, reinstatement.

1. A corporation may be dissolved involuntarily by the commissioner if
   1. the corporation is delinquent six months in filing its biennial report or in paying its biennial corporation tax or a penalty;
   2. the corporation has failed for 30 days to appoint and maintain a registered agent in the state;
   3. the corporation has failed for 30 days after change of its registered office or registered agent to file in the office of the commissioner a statement of the change;
   4. the corporation has failed for two years to complete dissolution under a certificate of election under AS 10.06.608 to dissolve;
   5. a vacancy on the board of the corporation is not filled within six months or the next annual meeting, whichever occurs first;
   6. a misrepresentation of material facts has been made in the application, report, affidavit, or other document submitted under this chapter; or
   7. the corporation is 90 days delinquent in filing notice of change of an officer, director, alien affiliate, or five percent shareholder, as required by this chapter.
2. A corporation may not be dissolved under this section unless the commissioner has given the corporation written notice of its delinquency, failure, or noncompliance by mail as provided by (i) of this section. If the corporation fails, within 60 days after the requirements of (i) of this section have been satisfied, to contest the alleged neglect, omission, delinquency, or noncompliance by a written request for a hearing conducted by the office of administrative hearings (AS 44.64.010 ) or fails to correct the asserted neglect, omission, delinquency, or noncompliance, it may be dissolved under (d) of this section.
3. If, following a hearing, the commissioner determines the presence of neglect, omission, delinquency, or noncompliance providing grounds for involuntary dissolution under this section, the corporation may appeal to the superior court by filing with the clerk of the court a notice of appeal setting out a copy of the notice given by the commissioner under (b) of this section together with a copy of a timely demand for a hearing by the corporation, and a copy of an affirmation by the commissioner of an intention to dissolve under (d) of this section. The matter shall be tried de novo by the superior court, and the court shall either sustain the commissioner or direct the commissioner to take action the court considers proper.
4. If a corporation has given cause for involuntary dissolution and has failed to correct the neglect, omission, delinquency, or noncompliance as provided in this section, and there has been no order of the superior court, the commissioner shall dissolve the corporation by issuing a certificate of involuntary dissolution containing a statement that the corporation has been dissolved, the date, and the reason for which it was dissolved. The original certificate of dissolution shall be placed in the department files and a copy of it mailed to the corporation as provided by (i) of this section. Upon the issuance of the certificate of involuntary dissolution, the existence of the corporation ceases, except as otherwise provided in this section, and its name shall be available to and may be adopted by another corporation no less than six months after the dissolution.
5. A corporation dissolved under this section may be reinstated within two years from the date of the certificate of involuntary dissolution if it is established to the satisfaction of the commissioner that in fact there was no cause for the dissolution, or if the neglect, omission, delinquency, or noncompliance resulting in dissolution has been corrected and payment made of double the amount delinquent along with the amount the corporation would have paid had it not been dissolved during the two-year period. Reinstatement may not be authorized if the name is not available for corporate use under AS 10.06.105(d) unless the corporation being reinstated amends its articles of incorporation to change its name to conform with the provisions of this chapter.
6. Nothing in this section relieves a corporation reinstated under this section from penalty or forfeiture of its powers in a case of failure to pay subsequently accruing licenses and taxes imposed by a law of the state.
7. An action arising out of a contract assigned by a corporation dissolved under this section may be brought in the name of the assignee. The fact of assignment and of purchase by the plaintiff shall be set out in the complaint or other process. The defense may avail itself of any defense the defense might have availed itself of in a suit upon the claim by the corporation had it not been dissolved under this section.
8. Service of process on a corporation dissolved under this section shall be made in the same manner prescribed by law as if the corporation had not been dissolved.
9. If the mailing of an item is required by (b) or (d) of this section, the commissioner shall first mail the item by certified mail to the corporation’s registered office at the last known address of the registered office shown on the records of the commissioner. If the item mailed to the registered office is returned to the commissioner, the commissioner shall mail the item by first class mail to the registered agent of the corporation at the last known address of the registered agent shown on the records of the commissioner. If the item mailed to the registered agent is returned to the commissioner, the commissioner shall mail the item by first class mail to the president of the corporation at the last known address for the president shown on the records of the commissioner. If the name and address of the president are not shown on the records of the commissioner, the commissioner shall mail the item by first class mail to an officer shown on the records of the commissioner at the last known address shown on the records of the commissioner. If the name and address of an officer of the corporation are not shown on the records of the commissioner, the commissioner shall mail the item by first class mail to a member of the board of directors of the corporation at the last known address shown on the records of the commissioner. If the name and address of an officer or board member are not shown on the records of the commissioner, the commissioner is not required to mail the item again. If the item mailed to the president, other officer, or board member is returned to the commissioner, the commissioner is not required to mail the item again. If the address shown on the records of the commissioner for a mailing after the initial certified mailing is not different from the address for the previous mailing, the commissioner is not required to mail the item to the same address, but shall mail the item to the next required addressee whose address is different from the address for the returned mailing, and, if none of the mailings required after a returned mailing has an address that is different from the address for the returned mailing, the commissioner is not required to mail the item again. In this subsection, “item” means the notice required by (b) of this section or the certificate of involuntary dissolution under (d) of this section.

History. (§ 1 ch 166 SLA 1988; am § 50 ch 82 SLA 1989; am §§ 1 — 3 ch 45 SLA 1999; am § 8 ch 50 SLA 1999; am § 25 ch 163 SLA 2004)

Cross references. —

For effect of the enactment of this section on Alaska Rules of Appellate Procedure 204 and 609, see secs. 26 and 27, ch. 166, SLA 1988 in the Temporary and Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.635. Commissioner’s authority to bring action for involuntary dissolution; grounds; relief.

1. In addition to other remedies provided by law, a corporation may be dissolved involuntarily by a decree of the superior court in an action filed by the commissioner when it is established that the corporation has
   1. procured its certificate of incorporation through fraud;
   2. continued to exceed or abuse the authority conferred upon it by law;
   3. seriously violated a statute regulating corporations; or
   4. violated a provision of law by an act or default that under the law is a ground for forfeiture of corporate existence.
2. The court may order dissolution or other or partial relief as it considers just and expedient. The court also may appoint a receiver under AS 10.06.643 for winding up the affairs of the corporation or may order that the corporation be wound up by its board subject to the supervision of the court.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.638. Commencement of commissioner’s action; notice; default.

1. An action for the involuntary dissolution of a corporation under AS 10.06.635 shall be commenced by the commissioner in the superior court.
2. Summons shall issue and be served as in civil actions. If no registered agent or office is found to serve, the commissioner shall publish notice as in civil cases in a newspaper published in the judicial district where the registered office of the corporation is situated, containing a notice of the pendency of the action, the title of the court, the title of the action, and the date on or after which default may be entered. The commissioner may include in one notice the names of any number of corporations against which actions are pending in the same court.
3. The commissioner shall mail a copy of the notice to an office of the corporation, if one is known, within 10 days after the first publication of the notice.
4. Notice shall be published at least once each week for two successive weeks, and the first publication may begin after the summons has been returned.
5. Unless a corporation is served with summons, a default may not be taken against the corporation earlier than 30 days after the first publication of notice.

History. (§ 1 ch 166 SLA 1988)

Revisor’s notes. —

A reference to AS 10.06.635 was substituted for a reference to AS 10.06.633 in (a) of this section in 1989 to correct a manifest error in ch.166, SLA 1988.

Cross references. —

For effect of the enactment of this section on Alaska Rule of Civil Procedure 4, see sec. 28, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.640. Appointment of provisional director upon deadlock.

1. If the ground for the complaint for involuntary dissolution of the corporation is a deadlock in the board as set out in AS 10.06.628(b)(2) , the court may appoint a provisional director.
2. A provisional director shall be an impartial person, who is neither a shareholder nor a creditor of the corporation, nor related according to the common law by consanguinity or affinity within the third degree to a director of the corporation or to a judge of the court by which the provisional director is appointed. A provisional director has all the rights and powers of a director until the deadlock in the board is broken or until the provisional director is removed by order of the court or by approval of the outstanding shares.
3. Unless otherwise agreed the compensation of the provisional director shall be fixed by the court.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.643. Appointment of receiver: application, hearing and notice, security, qualifications, powers, compensation.

1. If, at the time of the filing of a complaint for involuntary dissolution under AS 10.06.628 or at any time after the filing, the court has reasonable grounds to believe that unless a receiver of the corporation is appointed the interests of the corporation and its shareholders will suffer pending the hearing and determination of the complaint, upon the application of the plaintiff and after a hearing upon notice to the corporation as the court may direct, the court may appoint a receiver to take over and manage the business and affairs of the corporation and to preserve its property pending the hearing and determination of the complaint for dissolution.
2. A receiver shall be a citizen of the United States or a corporation authorized to act as receiver. A corporate receiver may be a domestic corporation or a foreign corporation authorized to transact business in the state. A receiver shall give bond and provide sureties as the court may require.
3. The compensation of the receiver shall be paid out of the assets of the corporation and unless otherwise agreed shall be fixed by the court.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.645. Decree for winding up and dissolution; further judicial relief.

After hearing, the court may decree a winding up and dissolution of the corporation as provided in AS 10.06.625 or, with or without winding up and dissolution, may make orders and decrees and issue injunctions in the case as justice and equity may require.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.648. Commencement and conduct of involuntary proceedings for winding up; cessation of business; notice.

1. Involuntary proceedings for winding up commence when an order for winding up is entered under AS 10.06.635(b) or 10.06.645 .
2. If an involuntary proceeding for winding up has commenced, the board shall conduct the winding up of the affairs of the corporation, subject to the supervision of the court, unless other persons are appointed by the court to conduct the winding up. The directors or other persons may, subject to any restrictions imposed by the court, exercise all their powers through the executive officers of the corporation without an order of the court.
3. If an involuntary proceeding for winding up has commenced, the corporation shall cease to carry on business except to the extent necessary for the beneficial winding up of the business and except during a period the board may consider necessary to preserve the corporation’s goodwill or going-concern value pending a sale of its business or assets, in whole or in part. The directors shall mail written notice of the commencement of the proceeding for involuntary winding up to all shareholders and to all known creditors and claimants whose addresses appear on the records of the corporation, unless the order for winding up has been stayed by appeal or otherwise or the proceeding or the execution of the order has been enjoined.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.650. Jurisdiction of court.

If an involuntary proceeding for winding up has been commenced, the jurisdiction of the court includes

1. the determination of the validity of all claims and demands against the corporation, whether due or not yet due, contingent, unliquidated, or sounding only in damages, and the barring from participation of creditors and claimants failing to make and present claims and proof as required by an order;
2. the determination or compromise of all claims against the corporation or any of its property, and the determination of the amount of money or assets required to be retained to pay or provide for the payment of claims;
3. the determination of the rights of shareholders in and to the assets of the corporation;
4. the supervision of the presentation and filing of intermediate and final accounts of the directors or other persons appointed to conduct the winding up and hearing thereon, the allowance, disallowance, or settlement of the accounts, and the discharge of the directors or the other persons from their duties and liabilities;
5. the appointment of a master to hear and determine any or all matters, with the power or authority the court considers proper;
6. the filling of vacancies on the board that the directors or shareholders are unable to fill;
7. the removal of a director if it appears that the director has been guilty of dishonesty, misconduct, neglect, or abuse of trust in conducting the winding up or if the director is unable to act; the court may order an election to fill the vacancy, and may enjoin, for the time it considers proper, the reelection of the removed director; the court, in place of ordering an election, may appoint a director to fill the vacancy caused by the removal; a director appointed by the court serves until the next annual meeting of shareholders or until a successor is elected or appointed;
8. staying the prosecution of a suit, proceeding, or action against the corporation and requiring the parties to present and prove their claims in the manner required of other creditors;
9. the determination of whether adequate provision has been made for payment or satisfaction of all debts and liabilities not actually paid;
10. the making of orders for the withdrawal or termination of proceedings to wind up and dissolve, subject to conditions for the protection of shareholders and creditors;
11. the making of an order, after the allowance or settlement of the final accounts of the directors or other persons, that the corporation is legally wound up and is dissolved;
12. the making of orders for the bringing in of new parties as the court considers proper.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.653. Claims against corporation; court and non-court directed winding up; presentation; notice; payment; secured claims; rejected claims.

1. In a court-directed winding up of a corporation under AS 10.06.618 , 10.06.628 , 10.06.635 , and 10.06.645 , creditors and claimants may be barred from participation in a distribution of the general assets of the corporation if they fail to make and present claims and proofs within the time the court may order. The time in which to present claims may not be less than four nor more than six months after the first publication of notice to creditors unless it appears by affidavit that there are no claims, in which case the time may not be less than three months. If it is shown that a claimant did not receive notice because of absence from the state or other cause, the court may allow a claim to be filed or presented at any time before distribution is completed.
2. Notice to creditors in a court-directed winding up shall be published not less than once a week for three consecutive weeks in a newspaper of general circulation, published in the judicial district in which the proceeding is pending or, if a newspaper is not published in that judicial district, in a newspaper designated by the court. The notice shall direct creditors and claimants to make claims and proofs to the person, at the place, and within the time specified in the notice. A copy of the notice shall be mailed to the last known address of each person shown as a creditor or claimant on the books of the corporation.
3. A holder of a secured claim in a court-directed winding up may prove for the whole debt in order to secure payment of a deficiency. If a holder fails to present a claim, the holder is barred only as to any right against the general assets for a deficiency in the amount realized on the holder’s security.
4. Before a distribution in a court-directed winding up is made, the amount of an unmatured, contingent, or disputed claim against the corporation that has been presented and has not been disallowed, or the part of a claim to which the holder would be entitled if the claim were due, established, or absolute, shall, if presently reduced to cash, be paid to the commissioner of revenue. The amount shall be paid to the party entitled to the amount when the party becomes entitled or, if the party fails to establish a claim, the amount shall be distributed with the other assets of the corporation; the court may make other provision for payment of a claim, as it considers adequate. A creditor who has a claim that has been allowed but is not yet due is entitled to the present value of the claim upon distribution.
5. Assets of the corporation subject to claims under this section and not reduced to cash shall be held pending distribution as creditors and claimants agree or as the court directs.
6. If the ownership of shares of stock is in dispute, if the existence of a claim of a creditor or shareholder is contingent or contested, or if the amount of a claim of a creditor or shareholder is contingent, contested, or not determined, the maximum amount of the claims shall be reduced to cash and deposited with the commissioner of revenue. Amounts deposited with the commissioner of revenue under this subsection shall be paid to the creditor, shareholder, or the legal representative of the shareholder or creditor as the disputing parties may agree or a court may direct.
7. Suits against the corporation on claims that have been rejected under (d) or (f) of this section shall be commenced within 30 days after written notice of rejection is given to the claimant.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.655. Order declaring corporation wound up and dissolved; declarations; effect; additional orders; discharge of directors and other persons.

1. Upon the final settlement of the accounts of the directors or other persons appointed under AS 10.06.648 and the determination that the corporation’s affairs are in a condition for it to be dissolved, the court shall make an order declaring the corporation legally wound up and dissolved. The order shall declare that the
   1. corporation has been legally wound up, that any tax or penalty due under AS 10.06.805 — 10.06.870 has been paid or secured and that the other known debts and liabilities of the corporation have been paid or adequately provided for, or that taxes, penalties, debts, and liabilities have been paid as far as its assets permit; if adequate provision has been made for the payment of all known debts or liabilities, the order shall state what provision has been made, setting out the name and address of the corporation, person, or governmental agency that has assumed or guaranteed the payment, or the name and address of the depositary with which deposit has been made or other information as may be necessary to enable the creditor or other person to whom payment is to be made to appear and claim payment of the debt or liability;
   2. known assets of the corporation have been distributed to the persons entitled to the assets or that it acquired no known assets;
   3. accounts of directors or other persons appointed under AS 10.06.648 have been settled and that they are discharged from their duties and liabilities to creditors and shareholders;
   4. corporation is dissolved.
2. The court may make additional orders and grant further relief as it considers proper upon the evidence submitted.
3. Upon the making of the order declaring the corporation dissolved, corporate existence ceases except for the purposes of further winding up if needed. The directors or other persons appointed under AS 10.06.648 shall be discharged from their duties and liabilities, except as needed to complete the winding up.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.658. Filing of decree of dissolution.

The clerk of the court shall file with the commissioner a certified copy of a court decree dissolving a corporation. A fee may not be charged for the filing of a decree of dissolution.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of this section on Alaska Rule of Civil Procedure 73, see sec. 29, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.660. Powers and duties of directors and others in dissolution proceedings.

The powers and duties of the directors or other persons appointed by the court under AS 10.06.648 and officers after commencement of a dissolution proceeding include, but are not limited to, the following acts in the name and on behalf of the corporation:

1. to elect officers and to employ agents and attorneys to liquidate or wind up the affairs of the corporation;
2. to continue the conduct of the business insofar as necessary for the disposal or winding up of the business;
3. to carry out contracts and collect, pay, compromise, and settle debts and claims for or against the corporation;
4. to defend suits brought against the corporation;
5. to sue, in the name of the corporation, for sums due or owing to the corporation or to recover property of the corporation;
6. to collect amounts remaining unpaid on subscriptions to shares or to recover unlawful distributions;
7. to sell at public or private sale, exchange, convey, or otherwise dispose of all or any part of the assets of the corporation for cash in an amount considered reasonable by the board with or without compliance with the provisions of AS 10.06.568 and 10.06.570 and without dissenters’ rights (AS 10.06.574 — 10.06.582 ) and upon terms, conditions, and other considerations the board considers reasonable or expedient;
8. to execute bills of sale and deeds of conveyance in the name of the corporation;
9. in general to make contracts and to do any and all things in the name of the corporation that may be proper or convenient for the purposes of winding up, settling, and liquidating the affairs of the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.663. Proceeding to determine identity of directors or to appoint directors.

If the identity of a director or the right of a director to hold office is in doubt, if a director is dead or unable to act, if a director fails or refuses to act, or if the director’s whereabouts cannot be ascertained, an interested person may petition the superior court to determine the identity of the director or, if there are no directors, to appoint directors to wind up the affairs of the corporation, after hearing upon such notice as the court may direct.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.665. Distribution of corporate assets among shareholders or other persons; when to be made.

After determining that all of the known debts and liabilities of a corporation in the process of winding up have been paid or adequately provided for, the board shall distribute all the remaining corporate assets among the shareholders according to their respective rights and preferences or, if there are no shareholders, to the persons entitled to the assets. If the winding up is by court proceeding or subject to court supervision, the distribution may not be made until after the expiration of any period for the presentation of claims that has been prescribed by order of the court.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.668. Provision for payment of debt or liability.

The payment of a debt or liability, whether the whereabouts of the creditor is known or unknown, has been adequately provided for if

1. payment of the debt or liability has been assumed or guaranteed in good faith by one or more financially responsible corporations or other persons or by the United States government or an agency of the United States, and the provision was determined in good faith and with reasonable care by the board to be adequate at the time of distribution of the assets by the board under AS 10.06.605 — 10.06.678 ; or
2. the amount of the debt or liability has been deposited as provided in AS 10.06.653 .

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.670. Distribution in money, property, or securities; installments.

Distribution of assets may be made in money, in property, or in securities and either in installments or as a whole, if the distribution is done fairly and ratably and in conformity with the articles of incorporation and the rights of the shareholders, and shall be made as soon as reasonably consistent with the beneficial liquidation of the corporate assets.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.673. Plan of distribution; adoption; binding effect; notice; payment to dissenting shareholders; abandonment.

1. If a corporation in the process of winding up has both preferred and common shares outstanding, a plan of distribution of the shares, obligations, or securities of another corporation, or of the assets of the corporation, other than money, that is not in accordance with the liquidation rights of the preferred shares as specified in the articles of incorporation may be adopted if approved by the board and by approval of the outstanding shares of each class. The plan may provide that the distribution is in complete or partial satisfaction of the rights of the preferred shareholders upon distribution and liquidation of the assets.
2. A plan of distribution approved under (a) of this section is binding upon the shareholders except as provided in (c) of this section. The board shall mail notice of the adoption of the plan within 20 days after its adoption to all holders of shares having a liquidation preference.
3. Shareholders having a liquidation preference who dissent from the plan of distribution are entitled to be paid the amount of their liquidation preference in cash if they file written demand for payment with the corporation within 30 days after the date of mailing of the notice of the adoption of the plan of distribution unless the plan of distribution is abandoned. The demand shall state the number and class of the shares held of record by the shareholder for which the shareholder claims payment.
4. If a demand for cash payment is filed under (c) of this section, the board in its discretion may abandon the plan without further approval by the outstanding shares and the shareholders shall be entitled to distribution according to their rights and liquidation preferences in the process of winding up.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.675. Recovery of amounts improperly distributed.

1. If a distribution of assets has been made in the process of winding up a corporation without a court order and without prior payment or adequate provision for payment of the debts and liabilities of the corporation, the amount improperly distributed to a shareholder may be recovered by the corporation. Shareholders who received an improper distribution may be joined as a party in the same action.
2. Suit may be brought in the name of the corporation to enforce the liability under (a) of this section against a shareholder receiving an improper distribution by a creditor of the corporation, whether or not the creditor has reduced the claim of the creditor to judgment.
3. A shareholder who satisfies a liability under this section has the right of ratable contribution from other distributees who are similarly liable. A shareholder who has been compelled to return to the corporation more than the shareholder’s ratable share of the amount needed to pay the debts and liabilities of the corporation may require that the corporation recover from any or all of the other distributees the proportion of the amounts received by them by the improper distribution necessary to give contribution to shareholders held liable under this section and to make the distribution of the assets fair and ratable, according to the respective rights and preferences of the shares, after payment or adequate provision for payment of all the debts and liabilities of the corporation.
4. In this section, “process of winding up” includes proceedings under AS 10.06.605 — 10.06.678 and other distributions of assets to shareholders made in contemplation of termination or abandonment of the corporate business.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of this section on Alaska Rule of Civil Procedure 20, see sec. 30, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.678. Continued existence of dissolved corporations; purposes; abatement or commencement of actions; distribution of omitted assets.

1. A corporation that is dissolved voluntarily or involuntarily continues to exist for the purpose of winding up its affairs, defending actions against it, and enabling it to collect and discharge obligations, dispose of and convey its property, and collect and divide its assets. A dissolved corporation does not continue to exist for the purpose of continuing business except so far as necessary for winding up the business.
2. An action or proceeding to which a corporation is a party does not abate by the dissolution of the corporation or by reason of proceedings for winding up and dissolution of the corporation. A corporation that is dissolved voluntarily or involuntarily may not commence a court action, except for a court action under AS 10.06.675 .
3. Assets inadvertently or otherwise omitted from the winding up continue as assets of the dissolved corporation for the benefit of persons entitled to the assets upon dissolution of the corporation and on realization the assets shall be distributed to the persons entitled.
4. The directors of the corporation on the date of its dissolution or as determined under AS 10.06.663 shall exercise and enjoy the powers necessary to act under the terms of this section.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.705. Authorization of foreign corporation.

A foreign corporation may not transact business in this state until it has been issued a certificate of authority by the commissioner. A foreign corporation may not be issued a certificate of authority to transact business in this state that a corporation organized under this chapter is not permitted to transact. A foreign corporation may not be denied a certificate of authority because the laws of the state or country under which it is organized governing its organization and internal affairs differ from the laws of this state.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.710. Liability for transacting business without certificate of authority.

A foreign corporation that transacts business in the state without a certificate of authority is liable to this state, for the years or portions of years during which it transacts business in the state without a certificate of authority, in an amount equal to all fees and corporation taxes that would have been imposed by this chapter on the corporation if it had applied for and received a certificate of authority to transact business in this state as required by this chapter and filed all reports required by this chapter, plus all penalties imposed by this chapter for failure to pay the fees and corporation taxes, plus a penalty of up to $10,000 per calendar year or portion of a calendar year for each year it transacts business in this state without a certificate of authority. The attorney general shall bring proceedings to recover amounts due the state under this section.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.713. Certificate of authority as prerequisite for court proceedings.

A foreign corporation transacting business in this state without a certificate of authority may not maintain an action, suit, or proceeding in a court of this state until it obtains a certificate of authority. A successor or assignee of a foreign corporation transacting business without a certificate of authority may not maintain an action, suit, or proceeding in a court of this state on a right, claim, or demand arising out of the transaction of business by the corporation in this state until a certificate of authority is obtained by the corporation or by a corporation that has acquired all or substanially all of its assets.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.715. Transacting business without certificate of authority not affecting contracts and right to defend action.

The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of a contract or act of the corporation, and does not prevent the corporation from defending an action, suit, or proceeding in a court of this state.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.718. Activities not constituting transacting business in this state.

Without excluding other activities that may not constitute transacting business in this state, a foreign corporation is not considered to be transacting business in this state, for the purposes of this chapter, by reason of carrying on in this state any one or more of the following activities:

1. maintaining, defending, or settling an action, suit, or administrative or arbitration proceeding, or the settlement of claims or disputes;
2. holding meetings of directors or shareholders of the corporation, or carrying on other activities concerning the internal affairs of the corporation;
3. maintaining bank accounts;
4. maintaining an office or agency for the transfer, exchange, and registration of securities of the corporation, or appointing and maintaining a trustee or depositary for the securities of the corporation;
5. making sales through independent contractors;
6. soliciting or procuring orders by mail, through employees, agents, or otherwise, if the orders require acceptance outside the state before becoming binding contracts;
7. creating, as borrower or lender, or acquiring indebtedness or mortgages or other security interests in real or personal property;
8. securing or collecting debts, or enforcing rights in property securing debts;
9. transacting business in interstate commerce;
10. conducting an isolated transaction completed within a period of 30 days not in the course of a number of repeated transactions of like nature.

History. (§ 1 ch 166 SLA 1988)

Opinions of attorney general. —

As long as the foreign insurance company maintains no agents or offices in Alaska and has no business with Alaska except that it purchases outside of Alaska deeds of trust on Alaska real property, it is not doing business in Alaska. 1962 Alas. Op. Att'y Gen. No. 7. (Issued under prior law.)

Sec. 10.06.720. Corporate name of foreign corporation.

A certificate of authority may not be issued to a foreign corporation unless the corporate name of the corporation

1. contains the word “corporation”, “company”, “incorporated”, or “limited”, or an abbreviation of one of these words, or, for use in this state, adds at the end of its name one of these words or an abbreviation of one of them;
2. does not contain a word or phrase that indicates or implies that it is organized for a purpose other than the purpose contained in its articles of incorporation or that it is authorized or empowered to conduct the business of banking or insurance;
3. does not contain the word “city”, “borough”, or “village” or otherwise imply that the corporation is a municipality, but the name of a city, borough, or village may be used in the corporate name;
4. is available for corporate use under AS 10.06.105(d) .

History. (§ 1 ch 166 SLA 1988; am § 9 ch 50 SLA 1999)

Cross references. —

For applicability of amendments to this section made by § 9, ch. 50, SLA 1999, see § 36(a) and (b), ch. 50, SLA 1999 in the 1999 Temporary & Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Collateral references. —

36 Am. Jur. 2d, Foreign Corporations, §§ 150 – 156.

Right to protection of corporate name, as between domestic corporation and foreign corporation not qualified to do business in state. 26 ALR3d 994.

Sec. 10.06.723. Assumed corporate name.

1. If a foreign corporation applying for a certificate of authority has a name that is impermissible under any provision of AS 10.06.720 , it shall select an assumed name, acceptable under the provisions of AS 10.06.720 , under which it elects to do business in this state.
2. The commissioner shall maintain records that cross-reference the actual and assumed names of all foreign corporations authorized to transact business in this state.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.725. Change of name by foreign corporation.

If a foreign corporation authorized to transact business in this state changes its name to one under which a certificate of authority would not be granted to it, the certificate of authority of the corporation is suspended and it may not transact business in this state until it has changed its name to a name available to it under the laws of this state.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.728. Application for certificate of authority.

To receive a certificate of authority to transact business in this state, a foreign corporation shall apply to the commissioner.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.730. Contents of application.

The application must set out

1. the name of the corporation and the assumed name, if any, or if the name of the corporation does not contain the word “corporation”, “company”, “incorporated”, or “limited” or an abbreviation of one of these words, the name of the corporation with the word or abbreviation that it elects to use in this state; and the state or country under whose laws it is incorporated;
2. the date of incorporation and the period of duration of the corporation;
3. the address of the principal office of the corporation in the state or country under whose laws it is incorporated;
4. the address of the proposed registered office of the corporation in this state, and the name of its proposed registered agent in this state at that address;
5. the purpose the corporation proposes to pursue in the transaction of business in this state and the codes from the identification code established under AS 10.06.870 that most closely describe the activities in which the corporation will engage in this state;
6. the names and addresses of the directors and officers of the corporation;
7. a statement of the aggregate number of shares that the corporation may issue, itemized by classes, par value of shares, 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, shares without par value, and series, if any, within a class;
9. a statement expressed in dollars of the amount of stated capital of the corporation;
10. an estimate expressed in dollars of the
    1. value of all property to be owned by the corporation for the following year;
    2. value of the property of the corporation to be located in this state during the following year;
    3. gross amount of all business that will be transacted by the corporation during the following year; and
    4. gross amount of business that will be transacted by the corporation at or from places of business in this state during the following year;
11. additional information necessary or appropriate to enable the commissioner to determine whether the corporation is entitled to a certificate of authority and to determine and assess the fees and taxes prescribed in this chapter that are payable;
12. the name and address of each alien affiliate, the percentage of outstanding shares controlled by each alien affiliate, and a specific description of the nature of the relationship between the foreign corporation and its alien affiliate; or, a statement that there are no alien affiliates;
13. the name and address of each person owning at least five percent of the shares, or five percent of any class of shares, and the percentage of the shares or class of shares owned by that person.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.733. Forms for, and execution and filing of application for certificate of authority.

The application of the corporation for a certificate of authority shall be on forms prescribed and furnished by the commissioner. The application shall be executed by the president or vice-president of the corporation and by its secretary or an assistant secretary. The original application and an exact copy of it shall be delivered to the commissioner for processing according to AS 10.06.910 and for issuance of a certificate of authority.

History. (§ 1 ch 166 SLA 1988; am § 16 ch 65 SLA 1998)

Sec. 10.06.735. Effect of certificate of authority.

Upon the issuance of a certificate of authority by the commissioner, the corporation may transact business in this state for the purpose set out in its application, subject, however, to the right of this state to suspend or revoke the authority as provided in this chapter.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.738. Amended certificate of authority.

1. A foreign corporation authorized to transact business in this state shall obtain an amended certificate of authority if it changes its corporate name, or desires to pursue in this state other or additional purposes than those set out in its earlier application for a certificate of authority.
2. The requirements for the form and contents of an application for an amended certificate of authority, the manner of its execution, the filing of the original application and an exact copy of it with the commissioner, and the issuance and effect of an amended certificate of authority shall be the same as in the case of an original application for a certificate of authority.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.740. Status of foreign corporation.

A foreign corporation that has received a certificate of authority enjoys, until a certificate of revocation or of withdrawal has been issued as provided in this chapter, the same, but no greater, rights and privileges as a domestic corporation organized for the purposes set out in the application under which the certificate of authority is issued and, except as otherwise provided in this chapter, is subject to the duties, restrictions, penalties, and liabilities now or hereafter imposed upon a domestic corporation of like character.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.743. Revocation of certificate of authority.

A certificate of authority of a foreign corporation to transact business in this state may be revoked by the commissioner when

1. the corporation fails to file its biennial report within the time required by this chapter, or fails to pay fees, corporation taxes, or penalties prescribed in this chapter when they are due and payable;
2. the corporation fails to appoint and maintain a registered agent in this state;
3. the corporation fails, after change of its registered office or registered agent, to file with the commissioner a statement of the change as required by this chapter;
4. the corporation fails to file with the department an amendment to its articles of merger within the time prescribed by this chapter;
5. a misrepresentation of a material matter has been made in an application, report, affidavit, or other document submitted under this chapter; or
6. the corporation is a party to an illegal combination in restraint of trade.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.745. Limitations on revocation of certificate of authority.

The commissioner may not revoke a certificate of authority of a foreign corporation unless the

1. commissioner has given the corporation at least 60 days notice by certified mail addressed to its registered office in this state; and
2. corporation fails before revocation to file the biennial report, or pay the fees, corporation taxes, or penalties, or file the required statement of change of registered agent or registered office, or file the articles of merger, or correct the misrepresentation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.748. Issuance of certificate of revocation.

Upon revoking a certificate of authority, the commissioner shall

1. issue a certificate of revocation in duplicate;
2. file one of the certificates in the commissioner’s office; and
3. mail one of the certificates of revocation to the corporation at its registered office in this state under AS 10.06.753 (1).

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.750. Effect of certificate of revocation.

Upon the issuance of the certificate of revocation, the authority of the corporation to transact business in this state ceases.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.753. Registered office and registered agent of foreign corporation.

A foreign corporation authorized to transact business in this state shall have and continuously maintain in the state a registered

1. office that may be, but need not be, the same as its place of business in this state; and
2. agent, who may be either an individual resident in this state whose business office is identical to the registered office, or a domestic corporation, or a foreign corporation authorized to transact business in this state, that has a business office identical to the registered office.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.758. Change of registered office or registered agent of foreign corporation.

A foreign corporation authorized to transact business in this state may change its registered office or change its registered agent, or both, upon filing with the commissioner a statement setting out

1. the name of the corporation;
2. the address of its registered office;
3. the address of the new registered office if the address of its registered office is to be changed;
4. the name of its registered agent;
5. the name of its new registered agent if its registered agent is to be changed;
6. that the address of its registered office and the address of the business office of its registered agent, as changed, will be identical; and
7. that the change is authorized by resolution adopted by the board of directors.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.760. Filing of statement of change.

A statement of change under AS 10.06.758 shall be executed by the corporation by its president or a vice-president and delivered to the commissioner. If the commissioner finds that the statement conforms to the provisions of this chapter, the commissioner shall file the statement in the office of the commissioner and, upon the filing, the change of address of the registered office, or the appointment of a new registered agent, or both, as the case may be, becomes effective.

History. (§ 1 ch 166 SLA 1988; am § 17 ch 65 SLA 1998)

Sec. 10.06.763. Service on foreign corporation.

The registered agent appointed by a foreign corporation authorized to transact business in this state shall be an agent of the corporation upon whom process, notice, or demand required or permitted by law to be served upon the corporation may be served.

History. (§ 1 ch 166 SLA 1988)

Collateral references. —

36 Am. Jur. 2d, Foreign Corporations, § 476 et seq.

19 C.J.S., Corporations, §§ 989, 1030 et seq.

Power of state to subject foreign corporation to jurisdiction of its court on sole ground that corporation committed tort within state. 25 ALR2d 1202.

Who is “general” or “managing” agent of foreign corporation under statute authorizing service of process on such agent. 17 ALR3d 625.

Sec. 10.06.765. Service on commissioner.

When a foreign corporation authorized to transact business in this state, or not authorized to transact business in this state but doing so, fails to appoint or maintain a registered agent in this state, or when a registered agent cannot with reasonable diligence be found at the registered office, or when the certificate of authority of a foreign corporation is suspended or revoked, the commissioner is an agent upon whom process, notice, or demand may be served. Service is made upon the commissioner as provided in AS 10.06.175(b) .

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.768. Records kept by commissioner.

The commissioner shall keep a record of all processes, notices, or demands served upon the commissioner under AS 10.06.765 and shall record the time of service and action taken by the commissioner with reference to the service.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.770. Procedure not exclusive.

AS 10.06.763 — 10.06.768 do not limit or affect the right to serve a process, notice, or demand required or permitted by law to be served upon a corporation in any other manner.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.775. Organic change of foreign corporation.

If a foreign corporation authorized to transact business in this state is a party to an organic change permitted by the laws of the state or country where it is incorporated, and the corporation is the surviving corporation, it shall, within 30 days after the change becomes effective, file with the commissioner a copy of the articles of merger, consolidation, exchange, or reorganization authenticated by the proper office of the state or country under whose laws the organic change was carried out. It is not necessary for the corporation to obtain a new or amended certificate of authority to transact business in this state unless the name of the corporation is changed or unless the corporation desires to pursue in this state other or additional purposes than those that it is authorized to transact in this state.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.778. Withdrawal of foreign corporation.

A foreign corporation authorized to transact business in this state may withdraw from this state upon obtaining from the commissioner a certificate of withdrawal. To obtain a certificate of withdrawal, the foreign corporation shall deliver to the commissioner an application for withdrawal.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.780. Contents of application for withdrawal.

An application for withdrawal must set out

1. the name of the corporation and the state or country where it is incorporated;
2. that the corporation is not transacting business in this state;
3. that the corporation surrenders its authority to transact business in this state;
4. that the corporation revokes the authority of its registered agent in this state to accept service of process and consents that service of process in an action, suit, or proceeding based upon a cause of action arising in this state during the time the corporation was authorized to transact business in this state may be made on the corporation by service on the commissioner;
5. a post office address to which the commissioner may mail a copy of a process against the corporation that may be served on the commissioner;
6. a statement of the aggregate number of shares that the corporation may issue, itemized by classes, par value of shares, shares without par value, and series, if any, within a class, as of the date of the application;
7. a statement of the aggregate number of issued shares, itemized by classes, par value of shares, shares without par value, and series, if any, within a class, as of the date of the application;
8. a statement, expressed in dollars, of the amount of stated capital of the corporation, as of the date of the application;
9. additional information necessary or appropriate to enable the commissioner to determine and assess unpaid fees or corporate taxes payable as prescribed in this chapter.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.783. Form and execution of application for withdrawal.

An application for withdrawal shall be made on forms prescribed and furnished by the commissioner and shall be executed by the corporation by its president or a vice-president and by its secretary or an assistant secretary, or, if the corporation is in the hands of a receiver or trustee, the application shall be executed on behalf of the corporation by the receiver or trustee.

History. (§ 1 ch 166 SLA 1988; am § 18 ch 65 SLA 1998)

Sec. 10.06.785. Filing of application for withdrawal.

An original and an exact copy of an application for withdrawal shall be delivered to the commissioner for processing according to AS 10.06.910 and for issuance of a certificate of withdrawal.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.788. Effect of certificate of withdrawal.

Upon the issuance of a certificate of withdrawal, the authority of a corporation to transact business in this state ceases.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.805. Biennial report of domestic and foreign corporations.

A domestic corporation and a foreign corporation authorized to transact business in this state shall file a biennial report within the time prescribed by this chapter.

History. (§ 1 ch 166 SLA 1988)

Collateral references. —

18A Am. Jur. 2d, Corporations, § 272 et seq.

19 C.J.S., Corporations, §§ 638, 639.

Sec. 10.06.808. Contents of biennial report.

A biennial report must set out

1. the name of the corporation and the state or country where it is incorporated;
2. the address of the registered office of the corporation in this state, and the name of its registered agent in this state at that address, and, in the case of a foreign corporation, the address of its principal office in the state or country where it is incorporated;
3. a brief statement of the character of the business in which the corporation is engaged in this state and the codes from the identification code established under AS 10.06.870 that most closely describe the activities in which the corporation is engaged in this state;
4. the names and addresses of the directors and officers of the corporation;
5. a statement of the aggregate number of shares that the corporation has authority to issue, itemized by classes, par value of shares, shares without par value, and series, if any, within a class;
6. a statement of the aggregate number of issued shares itemized by classes, par value of shares, shares without par value, and series, if any, within a class;
7. the name and address of each alien affiliate, the percentage of outstanding shares controlled by each alien affiliate, and a specific description of the nature of the relationship between the corporation and its alien affiliates, or that there is no alien affiliate;
8. the name and address of each person owning at least five percent of the shares, or five percent of any class of shares as of September 30 of the second year of the biennial reporting period, and the percentage of the shares or class of shares owned by that person.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.811. Filing of biennial report.

1. A biennial report of a domestic or foreign corporation shall be filed with the department and is due before January 2 of the filing year. A domestic corporation filing articles of incorporation and a foreign corporation receiving a certificate of authority during an even-numbered year must file the biennial report each even-numbered year. A domestic corporation filing articles of incorporation and a foreign corporation receiving a certificate of authority during an odd-numbered year must file the biennial report each odd-numbered year. The biennial report is delinquent if not filed before February 1 of each odd or even year as provided in this section. Delinquent returns are subject to the penalty in AS 10.06.815 .
2. Proof to the satisfaction of the commissioner that on or before February 1 the report was deposited in the United States mail in a sealed envelope, properly addressed with postage prepaid, is compliance with (a) of this section.
3. The commissioner shall file the report if it conforms to the requirements of this chapter. If the commissioner finds that the report does not conform to the requirements of this chapter, the report shall promptly be returned to the corporation for necessary corrections. If the report is corrected to conform to the requirements of this chapter and returned to the commissioner in sufficient time to be filed before April 1 of the year in which it is due, the penalties for failure to file the report within the time provided in AS 10.06.815 do not apply.
4. Upon receipt of a form from the commissioner, a domestic or foreign corporation must file a biennial report within six months after original incorporation or authorization to transact business in this state.

History. (§ 1 ch 166 SLA 1988; am § 15 ch 35 SLA 2003)

Sec. 10.06.813. Filing notice of change of officers, directors, five percent shareholders, and alien affiliates.

1. In the event of a change of an officer, director, or alien affiliate of a corporation during the first year of the biennial reporting period or a change in a five percent shareholder before September 30 of the first year of the biennial reporting period, the corporation shall file a notice of change amending the biennial report of the corporation before the following January 2.
2. The notice shall be filed with the commissioner and shall state the name and current mailing address of each director, officer, five percent shareholder, or alien affiliate not included in the corporation’s last filed biennial report, and the name of the person replaced and the office held. The notice shall be signed by the president or vice-president of the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.815. Penalty for failure to file biennial report.

A domestic or foreign corporation that fails or refuses to file a biennial report within the time set by this chapter is subject to a penalty of 10 percent of the amount of the corporation tax assessed against it for the period beginning January 1 of the year for which the report should have been filed. The commissioner shall assess the penalty at the time of the assessment of the corporation tax. If the amount of the corporation tax as originally assessed is adjusted in accordance with this chapter, the amount of the penalty shall also be adjusted to 10 percent of the amount of the adjusted corporation tax. The amount of the corporation tax and the amount of the penalty shall be separately stated in a notice to the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.818. Interrogatories by commissioner; judicial review.

1. The commissioner may propound to a domestic or foreign corporation and to an officer or director of a domestic or foreign corporation interrogatories reasonably necessary and proper to enable the commissioner to ascertain whether the corporation has complied with the provisions of this chapter.
2. Interrogatories shall be propounded by the commissioner or the designee of the commissioner to
   1. a domestic corporation by complying with AS 10.06.175 ;
   2. a foreign corporation by complying with AS 10.06.763 ;
   3. an individual officer or director of a domestic or foreign corporation by mailing by certified mail a copy of the interrogatories addressed to the person at the place of business of the person in this state, or, if the person has no place of business in this state, to the principal office or place of business of the person.
3. Interrogatories shall be answered within 30 days or within the additional time fixed by the commissioner or by the superior court. Answers shall be full and complete, in writing and under oath. If the interrogatories are directed to an individual, they shall be answered by that person, and if directed to a corporation they shall be answered by the president, vice-president, secretary, or assistant secretary of the corporation or, in the instance of a foreign corporation, the person or persons functioning as comparable officers in accordance with the laws of the state of incorporation.
4. A petition stating good cause to extend the date for answer, to modify or set aside the interrogatories propounded by the commissioner, or to enforce compliance with AS 10.06.820 may be filed in the superior court before the expiration of the 30 days fixed in this section for answer.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.820. Confidentiality of information disclosed by interrogatories.

Interrogatories and answers propounded and obtained under AS 10.06.818 are not open to public inspection and the commissioner may not disclose facts or information obtained from the interrogatories except as the official duty of the commissioner requires or unless the interrogatories or the answers are required for evidence in criminal proceedings or other action by the state.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.823. Failure or refusal to answer interrogatories; filing of related documents.

Unless otherwise provided by an order of court issued in response to a petition filed under AS 10.06.818(d) ,

1. a domestic or foreign corporation and each officer or director of a domestic or foreign corporation that fails or refuses to answer truthfully and fully interrogatories propounded by the commissioner within the time prescribed by AS 10.06.818(c) is guilty of a class A misdemeanor; and
2. the commissioner need not file a document to which the interrogatories relate until the interrogatories are properly answered and need not file a document to which the interrogatories relate if the answers disclose that the document does not conform to the provisions of this chapter.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For punishment of class A misdemeanors, see AS 12.55.135(a) for imprisonment and AS 12.55.035 for fines.

Sec. 10.06.825. Penalty imposed upon officers and directors.

An officer or director of a domestic or foreign corporation who signs articles, or a statement, report, application, or other document filed with the commissioner that is known to the officer or director to be false in a material respect, is guilty of a class A misdemeanor.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For punishment of class A misdemeanors, see AS 12.55.135(a) for imprisonment and AS 12.55.035 for fines.

Sec. 10.06.828. Fees for filing articles and certain applications.

A domestic or foreign corporation that is required to file articles of incorporation, an application for a certificate of authority, amendatory articles, or other application with the department, except corporate entities organized under AS 10.20 and corporate entities organized under the laws of the United States or the laws of a state or territory of the United States or the laws of a foreign country for the same purposes as those allowed under AS 10.20, shall pay to the commissioner a filing fee established by the department by regulation. The filing fee shall be uniform and fixed without reference to the amount of authorized shares.

History. (§ 1 ch 166 SLA 1988; am § 51 ch 82 SLA 1989)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Collateral references. —

18A Am. Jur. 2d, Corporations, § 174.

18 C.J.S., Corporations, § 62.

Sec. 10.06.830. Fees for filing certain documents related to agents.

1. A foreign corporation filing with the department a certificate of the appointment and consent of an agent residing in this state, or a certificate of revocation of the appointment of a resident agent, shall pay to the commissioner a fee established by the department by regulation.
2. For filing a statement of change of address of registered agent under AS 10.06.170(a) or resignation under AS 10.06.170(b) , the agent shall pay to the commissioner a fee established by the department by regulation.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.833. Payments and filing for withdrawal of foreign corporation.

A foreign corporation that has been issued a certificate of authority under AS 10.06.705 may withdraw from this state upon payment of all biennial corporation taxes and penalties due at the time of desired withdrawal and by filing with the department an application for a certificate of withdrawal signed by its proper officers and under its corporate seal. The fee for filing the application with the commissioner shall be established by the department by regulation.

History. (§ 1 ch 166 SLA 1988; am § 11 ch 50 SLA 1989; am § 16 ch 35 SLA 2003)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.835. Fees on dissolution of domestic corporation.

A domestic corporation shall pay to the commissioner a fee established by the department by regulation for filing the documents required by this chapter for the dissolution of a domestic corporation.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.838. Payments and filing required for certificate of dissolution of foreign corporation.

If a foreign corporation desires to file a certificate of dissolution from the state of its incorporation, it shall file the certificate, signed by the proper state officer, under seal, upon payment of all biennial corporation taxes and penalties due to this state at the time of dissolution. The filing fee for the certificate of dissolution shall be established by the department by regulation.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.840. Fees for certified copies of documents.

The fee for furnishing a certified copy of a document shall be established by the department by regulation.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.843. Other filing fees.

1. The filing fee for a document not otherwise provided in this chapter shall be established by the department by regulation.
2. The department may by regulation charge a corporation subject to this chapter a fixed fee in place of the fees specified in this chapter, and for routine administrative services rendered to a corporation by the department.
3. Notwithstanding (b) of this section fees required under AS 10.06.140 and AS 10.06.828 are not included in a fixed fee.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.845. Biennial corporation tax; penalty for nonpayment.

1. A domestic corporation and a foreign corporation doing business in this state or having its articles of incorporation on file with the department shall, before January 2 of each filing year, pay to the commissioner a biennial corporation tax as follows: domestic corporation, $100; foreign corporation, $200. A corporation that fails to pay the biennial corporation tax before February 1 of the filing year must pay to the commissioner a penalty of $25 for each year or part of a year of delinquency.
2. Proof to the satisfaction of the commissioner that on or before February 1 the tax or report was deposited in the United States mail in a sealed envelope, properly addressed, with postage prepaid, is compliance with (a) of this section.
3. Corporate entities organized under AS 10.20 are not required to pay the biennial corporation tax imposed by this section.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.848. Failure to pay tax or make report as precluding suit by corporation.

1. A domestic or foreign corporation may not commence a suit, action, or proceeding in a court in this state without alleging and proving at the time it commences the suit, action, or proceeding that it has paid its biennial corporation tax last due and has filed its biennial report for the last reporting period. A certificate of the payment of the biennial corporation tax and filing of the biennial report is prima facie evidence of the payment of the tax and the filing of the biennial report. The commissioner shall issue the certificate or a duplicate for a fee established by the department by regulation.
2. A corporation that is dissolved involuntarily may commence an action under AS 10.06.675 without complying with (a) of this section.
3. A foreign or domestic corporation that satisfies (a) of this section but is dissolved after commencing the suit, action, or proceeding may continue to maintain the action after the dissolution.

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.850. Suits to compel tax payment; exemption from corporation tax.

The commissioner may institute a suit in the name of the state to enforce the payment of a biennial corporation tax. Corporate entities organized under AS 10.20 and foreign corporations organized under the laws of the United States or the laws of a state or territory of the United States or the laws of a foreign country for the same purposes as those allowed under AS 10.20 are exempt from the payment of the biennial corporation tax.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.853. Failure to pay tax as evidence of inability to meet maturing debts and liabilities.

Failure of a corporation to pay the biennial corporation tax for a period of one year after the date when payment first becomes due is prima facie evidence of the inability of a corporation to meet maturing debts and liabilities that may be shown under AS 10.06.360 by the state, a private person, or a corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.855. Payments to be made in advance.

Fees and charges provided for in this chapter, including the biennial corporation tax, shall be paid in advance.

History. (§ 1 ch 166 SLA 1988; am § 52 ch 82 SLA 1989)

Sec. 10.06.858. Accounting for and deposit of taxes and fees paid.

1. All fees and taxes paid under this chapter shall be accounted for and deposited in the general fund.
2. [Repealed, § 28 ch 90 SLA 1991.]

History. (§ 1 ch 166 SLA 1988; am § 28 ch 90 SLA 1991)

Sec. 10.06.863. Appeal from revocation of certificate of authority.

If the commissioner revokes a certificate of authority of a foreign corporation to transact business in this state under this chapter, the foreign corporation may appeal to the superior court by filing with the clerk of the court a notice of appeal setting out a copy of its certificate of authority and a copy of the notice of revocation given by the commissioner. The matter shall be tried de novo by the superior court, and the court shall either sustain the action of the commissioner or direct the commissioner to take action the court considers proper.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of this section on Alaska Rules of Appellate Procedure 204 and 609, see secs. 31 and 32, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.865. Cancellation of certificates issued and filings accepted.

The commissioner may, within one year after a filing, and after written notice to the corporation or individual making the filing, cancel a certificate issued or filing accepted under this chapter, on any ground existing at the time of issuance or filing for which the commissioner could have originally refused to issue the certificate or accept the filing. The notice of cancellation must state the reason for the cancellation. A corporation or individual may request a hearing conducted by the office of administrative hearings (AS 44.64.010 ) within 90 days after receipt of the notice. Cancellation becomes final if the corporation or individual does not request a hearing within 90 days after receipt of notice. Notice of cancellation shall be sent by certified mail with return receipt requested. If the return receipt is not received by the department within a reasonable time and the department has made diligent inquiry as to the address of the corporation, notice may be made by publication in a newspaper of general circulation in the vicinity of the registered office of the corporation or the address of the individual who made the filing, and the cancellation becomes final 60 days after publication of the notice if the person or corporation does not request a hearing.

History. (§ 1 ch 166 SLA 1988; am § 26 ch 163 SLA 2004)

Sec. 10.06.868. Forms to be furnished by the commissioner.

Reports required by this chapter to be filed with the department or the commissioner must be on forms prescribed and furnished by the commissioner. Forms for other documents to be filed in the office of the department or the commissioner shall be furnished by the commissioner on request, but the use of those forms, unless required in this chapter, is not mandatory.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.870. Identification codes.

The commissioner shall establish and adopt a coded list of business activities and shall make the list available to the public.

History. (§ 1 ch 166 SLA 1988; am § 12 ch 50 SLA 1989)

Sec. 10.06.905. Voting of shares; quorum; status of disqualified shares.

1. If the articles of incorporation provide for more or less than one vote for a share on a matter, a reference in this chapter to a majority or other proportion of shares means a majority or other proportion of the votes entitled to be cast on that matter. If shares are disqualified from voting on a matter, they may not be considered outstanding for the determination of a quorum at a meeting to act upon or for the required vote to approve action upon that matter.
2. A requirement in this chapter for a vote of each class of outstanding shares means a vote regardless of limitations or restrictions upon the voting rights of that class, unless expressly limited to voting shares.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.910. Processing of writings delivered to the commissioner.

If a writing delivered to the commissioner for filing conforms to law and all fees and corporation taxes prescribed in this chapter have been paid, the commissioner shall

1. endorse on each original and an exact copy the word “filed” and the date of the filing;
2. file the exact copy in the commissioner’s office;
3. return the original of the writing, together with any writing issued by the commissioner attached to the original, to the corporation or its representative.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.915. Disapproval of writing by commissioner; appeal.

If the commissioner fails to approve articles of incorporation, amendment, merger, consolidation, exchange, or dissolution, or any other document required by this chapter to be approved by the commissioner, the commissioner shall, within 10 days after the delivery of the document to the commissioner, give written notice of disapproval to the person or domestic or foreign corporation, delivering the document, and specifying the reasons for disapproval. The person or corporation may appeal from the disapproval to the superior court by filing with the clerk of the court a notice of appeal setting out a copy of the document sought to be filed and a copy of the written disapproval. The matter shall be tried de novo by the superior court, which shall either sustain the action of the commissioner or direct the commissioner to take action the court considers proper.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of this section on Alaska Rule of Civil Procedure 10, see sec. 33, ch. 166, SLA 1988 in the Temporary and Special Acts; for effect of the enactment of this section on Alaska Rules of Appellate Procedure 204 and 609, see secs. 34 and 35, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.920. Correction of filed writings.

A writing relating to a corporation filed by the commissioner under this chapter may be corrected if it contains an error apparent on the face or defect in the execution of the writing, including the deletion of a matter not permitted to be stated in the writing. A certificate, entitled “Certificate of Correction of . . . (correct title of writing and name of corporation)”, shall be signed in the same manner as the original writing and shall be delivered to the commissioner. The certificate must set out the name of the corporation, the date the writing to be corrected was filed by the commissioner, the provision in the writing corrected or eliminated, and, if the execution was defective, the proper execution. The filing of the certificate by the commissioner does not alter the effective time of the writing being corrected and does not affect any right or liability accrued or incurred before the filing. A corporate name may not be changed or corrected under this section.

History. (§ 1 ch 166 SLA 1988; am § 19 ch 65 SLA 1998)

Sec. 10.06.925. Writings and absence of filings as evidence.

1. A writing filed by the commissioner relating to a corporation and containing statements of fact required or permitted by law and a certification by the commissioner of the absence of a filing shall be received in all courts, public offices, and official bodies as prima facie evidence of these facts and of the execution of the writing.
2. If under the laws of a jurisdiction other than this state a writing by an officer in that jurisdiction or a copy of a writing certified or exemplified by the officer may be received as prima facie evidence of the incorporation, existence, or capacity of any foreign corporation incorporated in that jurisdiction, the writing when exemplified shall be received by all courts, public offices, and official bodies of this state as prima facie evidence with the same force as in another jurisdiction. The writing or certified copy of the writing shall be received without being exemplified if it is certified by the secretary of state or official performing the equivalent function as to corporate records of that jurisdiction.

History. (§ 1 ch 166 SLA 1988)

Cross references. —

For effect of the enactment of this section on Alaska Rule of Evidence 803(8), see sec. 36, ch. 166, SLA 1988 in the Temporary and Special Acts.

Sec. 10.06.930. Corporate seal as evidence.

The presence of a corporate seal on a writing purporting to be executed by authority of a corporation shall be prima facie evidence that the writing was executed with the authority of the corporation.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.935. Waiver of notice.

If notice is required to be given to a shareholder or director of a corporation under the provisions of this chapter or under the provisions of the articles or bylaws of the corporation, a waiver of the notice in writing signed by the person entitled to notice, whether before or after the time stated for notice, is equivalent to the giving of notice.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.950. Powers of commissioner.

The commissioner has the power and authority reasonably necessary to enable the commissioner to administer this chapter and to perform the duties imposed upon the commissioner by this chapter.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.953. Regulations.

To the extent provided by explicit reference in this chapter, the department shall adopt regulations referred to in this chapter in accordance with the Administrative Procedure Act (AS 44.62).

History. (§ 1 ch 166 SLA 1988)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.06.955. Application to existing corporations.

1. This chapter applies to a domestic corporation organized under former AS 10.05 (the Alaska Business Corporation Act), and to the extent provided in AS 10.06.010 , 10.06.020 , 10.06.233 , 10.06.433(g) , 10.06.435 , 10.06.450(d) , and 10.06.705 — 10.06.870 to a foreign corporation authorized to do or doing business in this state.
2. The existence of a corporation formed or existing on the date of enactment of this chapter is not affected by the enactment of this chapter or by any change in the requirements for the formation of corporations.

History. (§ 1 ch 166 SLA 1988; am § 1 ch 126 SLA 1994)

Cross references. —

See also §§ 7 and 9, ch. 166, SLA 1988; § 10, ch. 166, SLA 1988, as amended by § 57, ch. 50, SLA 1989; and §§ 57 and 58, ch. 82, SLA 1989 in the Temporary and Special Acts.

Sec. 10.06.958. Provisions construed as restatements and continuations.

If a provision of this chapter is substantially the same as a statutory provision in former AS 10.05 existing on July 1, 1989, it shall be construed as a restatement and continuation, and not as a new enactment.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.960. Corporations organized under Alaska Native Claims Settlement Act.

1. A corporation organized under 43 U.S.C. 1601 et seq. as amended (Alaska Native Claims Settlement Act) shall be incorporated under and is subject to this chapter except
   1. each corporation shall issue without further consideration the number of shares of common stock that may be necessary to comply with the requirements of the Act and all stock so issued is considered fully paid and nonassessable when issued;
   2. unless otherwise provided in the articles of incorporation, the capital
      1. is considered the consideration for the initial issuance of shares; and
      2. of a corporation organized under the Act includes the
         1. land or interests in it conveyed to the corporation by the United States under the Act, except that which is required to be conveyed under 43 U.S.C. 1613(c)(1), (3), and (4), entered at its fair value to the corporation upon receiving the conveyance of it; and
         2. money, when received under 43 U.S.C. 1605 and 43 U.S.C. 1608, that is retained by the corporation and that is not immediately distributed or required to be distributed under 43 U.S.C. 1606(j).
2. Notwithstanding the provision of AS 10.06.305 — 10.06.390 , payment from the money of a corporation organized under the Act that is required by the language of the Act to be distributed to shareholders or to other corporations so organized is not a distribution to its shareholders as defined in AS 10.06.990 .
3. Notwithstanding the provisions of AS 10.06.546 , a plan of merger, consolidation, or exchange in which each participating corporation either (1) was organized under the Act, within the same one of the 12 regions of Alaska established under the Act, or (2) resulted from the prior merger, consolidation, or exchange of other similarly organized corporations within the same region, is approved if it receives the affirmative vote of the holders of at least a majority of the outstanding shares of each corporation. If a class of shares of a corporation specified in this subsection is entitled to vote as a class, the plan of merger, consolidation, or exchange is approved if it receives the affirmative vote of the holders of at least a majority of the outstanding shares of each class of shares entitled to vote as a class and of the total outstanding shares. Notwithstanding AS 10.06.574 — 10.06.582 , a plan of merger, consolidation, or exchange approved under this section before December 19, 1991, may not include a right of shareholders to dissent.
4. [Repealed, § 21 ch 6 SLA 1993.]
5. Notwithstanding the provision of AS 10.06.502 — 10.06.510 , a corporation organized under the Act may amend its articles by a vote of the board of directors in order for the corporation to comply with the mandatory requirements of the Act.
6. Notwithstanding the other provisions of this chapter, a corporation organized under the Act is governed by the Act to the extent the Act is inconsistent with this chapter, and the corporation may take any action, including amendment of its articles, authorized by the Act, and the action is considered to be approved and adopted if approved under the Act. An amendment approved under the Act and delivered to the commissioner under AS 10.06.512 shall be filed by the commissioner under AS 10.06.910 , and a certificate of amendment shall be issued.
7. Notwithstanding AS 10.06.358 , if there are no retained earnings, the directors of a corporation organized under the Act may declare and pay distributions in cash or property out of its net profits for the fiscal year in which the distribution is declared and for the preceding fiscal year, except when the corporation is insolvent under AS 10.06.360 . For the purposes of this subsection, a corporation’s debts include the amounts it is required to distribute under 43 U.S.C. 1606(i) and 43 U.S.C. 1606(j). The directors may determine the net profits derived from the exploitation or liquidation of wasting assets without consideration of the depletion of those assets resulting from lapse of time, consumption, liquidation, or exploitation, of the assets, and a distribution declared from those net profits shall be described, concurrently with distribution of the net profits to shareholders, as a distribution from wasting assets without consideration of the depletion of the assets. In this subsection, “wasting assets” means timber resources and subsurface estates.
8. Notwithstanding AS 10.06.358 , the directors of a corporation organized under the Act may, from time to time, distribute to its shareholders in partial liquidation a portion of the corporation’s assets out of capital, in cash or property, except that a distribution
   1. may not be made at a time when the corporation is insolvent under AS 10.06.360 ;
   2. may not be made unless the articles of incorporation authorize the board to make the distribution or the distribution is authorized by the affirmative vote of the holders of at least two-thirds of the outstanding shares;
   3. when made, shall be identified as a distribution in partial liquidation and the amount per share shall be disclosed to the shareholders concurrently with the distribution.
9. Notwithstanding AS 10.06.633 (e), a corporation that is organized as a Native corporation under the Act, that has been involuntarily dissolved by the commissioner under AS 10.06.633 , and that has failed to apply for reinstatement during the period established under AS 10.06.633(e) , may be reinstated under AS 10.06.633(e) within one year of June 29, 1994. The reinstated corporation and its shareholders have all of the rights, privileges, liabilities, and obligations that would have applied to them if the corporation had not been dissolved, and all corporate and shareholder actions taken during the period of dissolution are considered to be as valid as if dissolution had not occurred.
10. If a corporation is formed before June 29, 1994 to replace a Native corporation that has been involuntarily dissolved under AS 10.06.633 , and if the replacing corporation has the same name as the dissolved corporation, the replacing corporation and its shareholders succeed, upon payment of any amounts that would have been required for the reinstatement of the dissolved corporation under AS 10.06.633(e) , to all of the rights, privileges, liabilities, and obligations that would have applied to the dissolved corporation and its shareholders if the dissolved corporation had been reinstated under AS 10.06.633(e) .
11. Notwithstanding (i) of this section and AS 10.06.633 (e), a corporation that is organized as a Native village corporation under the Act, that has been involuntarily dissolved by the commissioner under AS 10.06.633 , and that has failed to apply for reinstatement during the period established under AS 10.06.633(e) may be reinstated under AS 10.06.633(e) on or before December 31, 2020. The reinstated corporation and its shareholders have all of the rights, privileges, liabilities, and obligations that would have applied to them if the corporation had not been dissolved, and all corporate and shareholder actions taken during the period of dissolution are considered to be as valid as if dissolution had not occurred. If a corporation elects to reinstate under this subsection and if the corporation’s previously used corporate name is no longer available for use by the corporation, then, notwithstanding AS 10.06.502 — 10.06.510 , an amendment to the articles of incorporation changing the previously used corporate name may be adopted by action of the corporation’s board of directors alone.
12. [Renumbered as AS 10.06.504(d) .]
13. [Renumbered as AS 10.06.504(e) .]
14. Notwithstanding AS 10.06.504(d) , an amendment to the articles of incorporation of a corporation organized under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act) and incorporated under former AS 10.05.005 to add a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages under AS 10.06.210 (1)(M) may be adopted by the affirmative vote of a majority of the shares represented at the regular or special meeting at which a quorum is present in person, by proxy, or by remote communication.
15. Notwithstanding AS 10.06.455(b) and 10.06.504(d) , an amendment to the articles of incorporation of a village corporation organized under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act) and incorporated under former AS 10.05.005 to add a provision authorizing the classification of directors under AS 10.06.455 may be adopted by the affirmative vote of a majority of the shares represented at a regular or special meeting at which a quorum is present in person, by proxy, or by remote communication.
16. Notwithstanding AS 10.06.504(d) , a Native corporation incorporated under former AS 10.05 before July 1, 1989, may amend its articles under this subsection to reduce the quorum necessary to hold a meeting of shareholders to one-third of the outstanding shares entitled to vote at a meeting, represented in person, by remote communication, or by proxy. An amendment under this subsection is approved if it receives an affirmative vote of two-thirds of the shares represented in person, by remote communication, or by proxy at an annual meeting. The Native corporation may not use the reduced quorum established under this subsection to adopt other amendments of the articles or to adopt resolutions to which 43 U.S.C. 1629b applies. AS 10.06.504(d) continues to apply to the adoption of other amendments of the articles.
17. In this section,
    1. “Act ” means 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act);
    2. “Native corporation” has the meaning given in 43 U.S.C. 1602(m).

History. (§ 1 ch 166 SLA 1988; am §§ 53, 54 ch 82 SLA 1989; am § 21 ch 6 SLA 1993; am §§ 1, 2 ch 120 SLA 1994; am §§ 1, 2 ch 24 SLA 1996; am § 1 ch 127 SLA 1998; am § 1 ch 31 SLA 2000; am § 1 ch 7 SLA 2003; am §§ 3 — 14 ch 56 SLA 2005; am § 1 ch 77 SLA 2005; am § 15 ch 22 SLA 2015; am § 1 ch 40 SLA 2015; am § 1 ch 86 SLA 2018; am §§ 15 — 17 ch 1 SLA 2021)

Revisor’s notes. —

In 1989, the word “and” was inserted preceding “the corporation may take” in the first sentence of subsection (f).

Subsections (i) and (j) were enacted as (j) and (k) respectively. Relettered in 1994, at which time former (i) was relettered as (k). Subsection (k) was enacted as ( l ) and relettered in 1996. Former subsections ( l ) and (m) were enacted as § 10(a) and (b), ch. 166, SLA 1988 and codified in 1996, and were renumbered as AS 10.06.504(d) and (e) in 1997, at which time internal references in subsections (n) and (o) were conformed. Subsection (n) was enacted in § 57, ch. 50, SLA 1989 and codified in 1996, at which time an internal reference was conformed. Subsection (o) was enacted in § 2, ch. 24, SLA 1996 and codified in 1996, at which time an internal reference was conformed, and former subsection (k) was relettered as (p).

Subsection (p) was enacted as (q); relettered in 2015 at which time former subsection (p) was relettered as (q).

Cross references. —

As to status of land reconveyed to Native corporation, see editor’s note at Alaska Native Claims Settlement Act, § 14.

Effect of amendments. —

The first 2015 amendment, effective May 15, 2015, in (n), substituted “AS 10.06.210 (1)(M)” for “AS 10.06.210 (1)(N).”

The second 2015 amendment, effective October 14, 2015, added (q) [now (p)].

The 2018 amendment, effective August 18, 2018, in (k), substituted “December 31, 2020” for “December 31, 2006” at the end of the first sentence.

The 2021 amendment, effective April 1, 2021, in (n) and (o), added “, or by remote communication” at the end, and made related changes; in (p), in the first and second sentences, inserted “, by remote communication,” preceding “or by proxy”.

Editor’s notes —

Section 30, ch. 1, SLA 2021, makes the 2021 amendments to (n), (o), and (p) of this section retroactive to March 11, 2020.

Sec. 10.06.961. Distributions by Native corporations to minors in the custody of a state.

1. Notwithstanding AS 13.46.085 or the appointment of a guardian of the property of the child under AS 47.10.010 , when a child who is in the custody of this state under AS 47.10 or a minor who is in the custody of this state under AS 47.12 or of another state under a provision similar to AS 47.10 or AS 47.12 becomes entitled to receive dividends or other distributions resulting from the ownership of stock or a membership in a corporation organized under this chapter and under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act), the corporation paying the dividends or making the other distributions shall retain the dividends and other distributions in an interest bearing account for the benefit of the child or minor during the state custody.
2. The corporation may not spend, obligate, or otherwise use the property held in an account established under (a) of this section unless the use is approved by a court.
3. Upon presentation of proof of entitlement by the person entitled to distribution, the corporation shall distribute the property remaining in an account established under (a) of this section to the
   1. minor when the minor reaches the age of 18 years, whether or not the minor is still in the state custody;
   2. legal guardian of the minor, when the state custody terminates while the minor is less than 18 years of age;
   3. minor’s heirs if the minor dies before the distribution.
4. The retention and distribution of dividends and distributions under this section is not subject to AS 13.46.
5. In this section, “minor” means a person under 18 years of age.

History. (§ 1 ch 81 SLA 1993; am § 1 ch 59 SLA 1996; am § 2 ch 99 SLA 1998; am § 15 ch 56 SLA 2005)

Sec. 10.06.963. Severability.

If a provision of this chapter is held invalid, the invalidity does not affect other provisions of this chapter that can be given effect without the invalid provision.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.965. Reservation of power.

The legislature reserves the right to alter, amend, suspend, or repeal in whole or in part this chapter at its pleasure, or a certificate of incorporation or the authority to do business in this state, of a domestic or foreign corporation, whether or not existing or authorized on July 1, 1989.

History. (§ 1 ch 166 SLA 1988)

Revisor’s notes. —

In 2012, “its” was inserted before “pleasure” to correct a manifest error in ch. 166, SLA 1988.

Sec. 10.06.968. Signature.

“Signature” includes a mark when the signer cannot write. The signer’s name shall be written near the mark by a witness who shall write the witness’ own name near the signer’s name. A signature by mark can be acknowledged or can serve as a signature to a sworn statement.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.06.970. Rules of construction and interpretation.

Unless a provision or the context otherwise requires, the following general provisions and rules of construction govern this chapter:

1. title, chapter, article, and section headings do not affect the scope, meaning, or intent of the provisions of this chapter;
2. when, by the provisions of this chapter, a power is granted to, or a duty imposed upon, a public officer, the power may be exercised or the duty performed by a deputy of the officer or by a person authorized, under law, by the officer, unless this chapter expressly provides otherwise;
3. when a notice, report, statement, or record is required or authorized by this chapter, it shall be made in writing in a manner reasonably calculated to communicate the notice, report, statement, or record to the recipient;
4. a reference in this chapter to mailing means first-class mail, postage prepaid, unless certified mail is specified; certified mail includes registered mail;
5. subject to a specific accounting treatment required by a particular section of this chapter,
   1. references in this chapter to financial statements, balance sheets, income statements, and statements of changes in financial position of a corporation and references to assets, liabilities, earnings, retained earnings, and similar accounting items of a corporation mean financial statements or items prepared fairly and reasonably to present the purported matters;
   2. financial statements prepared or determined in accordance with generally accepted accounting principles then applicable are fair and reasonable;
   3. references in this chapter to financial statements mean, in the case of a corporation that has subsidiaries, consolidated statements of the corporation and its subsidiaries, and all references to accounting items mean items determined on a consolidated basis in accordance with consolidated financial statements;
6. a reference in this chapter to the time a notice is given or sent means, unless otherwise expressly provided, the time a written notice by mail is deposited in the United States mail, postage prepaid; or the time any other written notice is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by electronic means to the recipient by the person giving the notice; or the time an oral notice is communicated in person or by electronic means to the recipient or to a person at the office of the recipient whom the person giving the notice has reason to believe will promptly communicate it to the recipient;
7. when reference is made to any portion of this chapter or of any other law of this state, the reference applies to all amendments and additions;
8. “shall” is mandatory, “may” is permissive, and “may not” is prohibitory.

History. (§ 1 ch 166 SLA 1988)

Revisor’s notes. —

Former paragraph (9) was renumbered as AS 10.06.990 (25) in 1989.

Sec. 10.06.990. Definitions.

In this chapter, unless the context otherwise requires,

1. “acknowledged” means that a document is accompanied by a certificate of its acknowledgment as provided in AS 09.63.010 — 09.63.130 ;
2. “affiliate” means a person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, a corporation subject to this chapter;
3. “alien” means
   1. an individual who is not a citizen or national of the United States, or who is not lawfully admitted to the United States for permanent residence, or paroled into the United States under 8 U.S.C. 1101 — 1524 (Immigration and Nationality Act), as amended;
   2. a person, other than an individual, that was not created or organized under the laws of the United States or of a state, or whose principal place of business is not located in any state; or
   3. a person, other than an individual, that was created or organized under the laws of the United States or of a state, or whose principal place of business is located in a state, and that is controlled by a person described in (A) or (B) of this paragraph;
4. “approved by the board” or “approval of the board” means approved or ratified by the vote of the board or by the vote of a committee authorized to exercise the powers of the board, except as to matters not within the competence of the committee under AS 10.06.468 ;
5. “approved by the outstanding shares” or “approval of the outstanding shares” means approved by the affirmative vote of a majority of the outstanding shares entitled to vote; this approval includes the affirmative vote of a majority of the outstanding shares of each class or series entitled by the articles of incorporation or this chapter to vote as a class or series on the subject matter and also includes the affirmative vote of a greater proportion, including all, of the outstanding shares of a class or series if a greater proportion is required by the articles or this chapter;
6. “approved by the shareholders” or “approval of the shareholders” means approved or ratified by the affirmative vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present or by the written consent of shareholders (AS 10.06.423 ) or by the affirmative vote or written consent of a greater proportion, including all, of the shares of a class or series if a greater proportion is required by the articles of incorporation or this chapter for all or any specified shareholder action;
7. “articles” or “articles of incorporation” means the original or restated articles of incorporation and all amendments and includes articles of merger;
8. “authorized shares” means the shares of all classes that the corporation may issue;
9. “board” means the board of directors of a domestic or foreign corporation;
10. “commissioner” means the commissioner of commerce, community, and economic development or a designee of the commissioner;
11. “common shares” means shares that have no preference over other shares with respect to distribution of assets on liquidation or with respect to payment of dividends;
12. “control” means
    1. owning directly or indirectly, or having the power to vote, 25 percent or more of a class of voting securities of a corporation subject to this chapter; or
    2. influencing or affecting in any substantive manner the election of a majority of the directors or trustees of a corporation subject to this chapter;
13. “corporation” or “domestic corporation” means a corporation for profit subject to the provisions of this chapter, but does not include a foreign corporation or a national bank;
14. “corporation tax” means the biennial corporation tax imposed under Alaska law on corporations;
15. “department” means the Department of Commerce, Community, and Economic Development;
16. “director” means a natural person designated in the articles of incorporation or elected by the incorporators as a director and includes a natural person and successor of that person designated, elected, or appointed by any other name or title to act as a director;
17. “distribution to its shareholders” means the transfer of cash or property by a corporation or its subsidiary to its shareholders without consideration, whether by way of dividend or otherwise, except a dividend in shares of the corporation, or the purchase or redemption of its shares for cash or property; the time of a distribution of a dividend is the date of the declaration of the dividend and the time of a distribution by purchase or redemption of shares is the date cash or property is transferred by the corporation, whether or not under a contract of an earlier date; however, if a negotiable debt security is issued in exchange for shares, the time of the distribution is the date when the corporation acquires the shares in the exchange; in the case of a sinking fund payment, cash or property is transferred within the meaning of this paragraph at the time that it is delivered to a trustee for the holders of preferred shares to be used for the redemption of those shares or physically segregated by the corporation in trust for that purpose;
18. “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient of the communication and that may be directly reproduced in paper form by a recipient through an automated process;
19. “entire board” means the total number of directors that the corporation has if there are no vacancies;
20. “filed,” unless otherwise expressly provided, means filed in the office of the commissioner;
21. “five percent shareholder” means a person owning at least five percent of the shares or five percent of any class of shares of a corporation;
22. “foreign corporation” means a corporation for profit organized under laws other than the laws of Alaska for a purpose for which a corporation may be organized under this chapter;
23. “independent accountant” means a certified public accountant or a public accountant who is independent of the corporation as determined in accordance with generally accepted auditing standards and who is engaged to audit financial statements of the corporation or perform other accounting services;
24. “liquidation preference” means amounts payable for shares of a class upon voluntary or involuntary dissolution, winding up or distribution of the entire assets of the corporation, including any cumulative dividends accrued and unpaid, in priority to shares of another class or classes;
25. “net assets” means the amount by which the total assets of a corporation exceed the total debts of the corporation;
26. “oath” includes affirmation;
27. “officers’ certificate” means a certificate signed by the chair of the board, the president or a vice-president and by the secretary, the treasurer, or an assistant secretary or assistant treasurer;
28. “on the certificate” means that a statement appears on the face of a share certificate or on the reverse of the certificate with a reference to the statement on the face;
29. “organic change” means a merger, consolidation, share exchange, or sale of assets other than in the regular course of business;
30. “paid-in capital” means the consideration actually received by a corporation for issuance of its shares, plus any additional amount capitalized by its board under AS 10.06.390 ;
31. “parent” means an affiliate controlling a specified corporation directly or indirectly through one or more intermediaries;
32. “person” means an individual, a corporation, a partnership, an association, a joint-stock company, an estate, a trust if the interests of the beneficiaries are evidenced by a security, an unincorporated association, a government, a political subdivision of a government, or a combination of these entities;
33. “preferred shares” means shares other than common shares;
34. “proxy” means a written authorization or an electronic transmission signed by a shareholder or the shareholder’s attorney-in-fact giving another person power to vote with respect to the shares of the shareholder;
35. “proxy holder” means the person to whom a proxy is given;
36. “redemption price” means the amount in cash, property or securities, or any combination of these, payable on shares of any class or series upon the redemption of the shares; unless otherwise expressly provided, the redemption price is payable in cash;
37. “remote communication” means communication by means of electronic communication, conference telephone, videoconference, the Internet, electronic transmission, or other means by which persons not physically present in the same location may communicate with and hear each other on a substantially simultaneous basis;
38. “retained earnings” means the account of the corporation representing undistributed and uncapitalized net profits, income, gains, and losses from the date of incorporation;
39. “series of shares” means those shares within a class that have the same rights, preferences, privileges, and restrictions but that differ in one or more rights, preferences, privileges, or restrictions from other shares within the same class;
40. “shareholder” means a holder of record of a share in a corporation;
41. “shares” means the units into which the proprietary interests in a corporation are divided;
42. “signed,” as it relates to proxies, means the placing of the shareholder’s name on the proxy by manual signature by the shareholder or the shareholder’s attorney-in-fact or by electronic means if the electronic means clearly demonstrates that the shareholder has authorized the placing of the shareholder’s name or the name of the shareholder’s attorney-in-fact on the proxy;
43. “state” means any of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territory of the Pacific Islands, or any other territory or possession of the United States;
44. “subscriber” means one who subscribes for a share in a corporation before or after incorporation;
45. “subsidiary” of a specified corporation means a corporation in which the specified corporation owns more than 50 percent of the voting power directly or indirectly through one or more other subsidiaries of the specified corporation;
46. “vacancy” when used with respect to the board means any authorized position of director that is not then filled by a duly elected director, whether caused by death, resignation, removal, change in the authorized number of directors, or otherwise;

(45) “surviving corporation” means a corporation into which one or more other corporations are merged;

(48) “verified” means that a document has been certified to be true as provided in AS 09.63.040 ;

(49) “vote” includes authorization by written consent subject to the provisions of AS 10.06.423 and 10.06.475 ;

(50) “voting power” means the power to vote for the election of directors at the time a determination of voting power is made and does not include the right to vote upon the happening of a condition or event that has not yet occurred; when different classes of shares are entitled to vote as separate classes for different members of the board, the determination of percentage of voting power shall be made on the basis of the percentage of the total number of authorized directors that the shares in question have the power to elect in an election at which all shares then entitled to vote for the election of any directors are voted;

(51) “writing” includes any form of recorded message capable of comprehension by ordinary visual means.

History. (§ 1 ch 166 SLA 1988; am §§ 55, 56 ch 82 SLA 1989; am § 98 ch 26 SLA 1993; am § 20 ch 65 SLA 1998; am §§ 7, 8 ch 103 SLA 2002; am §§ 16 — 18 ch 22 SLA 2015; am § 18 ch 1 SLA 2021)

Revisor’s notes. —

In 1999, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

In 1989, 2002, 2012, and 2021, the paragraphs in this section were renumbered to maintain alphabetical order.

Effect of amendments. —

The 2015 amendment, effective May 15, 2015, in (3)(A), substituted “8 U.S.C. 1101 — 1524 (Immigration and Nationality Act), as amended” for “the Immigration and Nationality Act (8 U.S.C. 1101 — 1525, as amended)”, in (24), deleted “ ‘liquidation price’ or” at the beginning, and in (31), deleted “or ‘parent corporation’ ” before “means an affiliate”.

The 2021 amendment, effective April 1, 2021, added (51) [now (37)].

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 enactment of paragraph (37) of this section retroactive to March 11, 2020.

Sec. 10.06.995. Short title.

This chapter may be cited as the Alaska Corporations Code.

History. (§ 1 ch 166 SLA 1988)

Sec. 10.10.010. Incorporation.

Three or more persons, who are residents of this state, who desire to create an industrial development corporation under this chapter for the purpose of promoting, developing, and advancing the prosperity and economic welfare of the state and, to that end, to exercise the powers and privileges provided in this chapter, may be incorporated by filing articles of incorporation in the office of the commissioner as provided in this chapter.

History. (§ 1 ch 94 SLA 1967; am § 63 ch 218 SLA 1976)

Revisor’s notes. —

Enacted as AS 10.35.010 . Renumbered in 1967.

Sec. 10.10.020. Assistance of commissioner.

The commissioner shall assist the incorporators in forming the corporation and shall meet with and advise the corporation’s board of directors.

History. (§ 1 ch 94 SLA 1967; am § 64 ch 218 SLA 1976)

Revisor’s notes. —

Enacted as AS 10.35.020 . Renumbered in 1967.

Sec. 10.10.030. Articles of incorporation and certificate of incorporation.

1. The articles of incorporation must contain:
   1. the name of the corporation, which must include the words “Industrial Development Corporation of the State of Alaska”;
   2. the location of the principal office of the corporation, but the corporation may have offices in other places in the state fixed by the board of directors;
   3. the purposes for which the corporation is organized, which must be to promote, stimulate, develop, and advance the business prosperity and economic welfare of this state and its citizens; to encourage and assist through loans, investments or other business transactions in the location of new business and industry in this state and to rehabilitate and assist existing business and industry; to stimulate and assist in the expansion of all kinds of business activity which will tend to promote the business development and maintain the economic stability of this state, provide maximum opportunities for employment, encourage thrift, and improve the standard of living of the citizens of this state; to cooperate and act in conjunction with other organizations, public or private, in the promotion and advancement of industrial, commercial, agricultural, and recreational developments in this state; and to provide financing for the promotion, development, and conduct of all kinds of business activity in this state;
   4. the names and post office addresses of the members of the first board of directors, who, unless otherwise provided by the articles of incorporation or the bylaws, shall hold office for the first year of existence of the corporation or until their successors are elected and have qualified;
   5. any provision which the incorporators may choose to insert for the regulation of the business and for the conduct of the affairs of the corporation; any provision creating, dividing, limiting, and regulating the powers of the corporation, the directors, stockholders or any class of the stockholders, including, but not limited to a list of the officers; and any provision governing the issuance of stock certificates to replace lost or destroyed certificates;
   6. the amount of authorized capital stock and the number of shares into which it is divided, the par value of each share and the amount of capital with which it will commence business and, if there is more than one class of stock, a description of the different classes; the names and post office addresses of the subscribers of stock and the number of shares subscribed by each; the aggregate of the subscription shall be the minimum amount of capital with which the corporation shall commence business and may not be less than $1,000.
2. The articles of incorporation shall be in writing subscribed by not fewer than three natural persons competent to contract and acknowledged by each of the subscribers before an officer authorized to take acknowledgments and filed in duplicate originals in the office of the commissioner for approval.
3. The commissioner may not approve articles of incorporation for a corporation organized under this chapter until a total of at least seven financial institutions authorized to do business within this state have agreed in writing to become members of the corporation, and the agreement in writing is filed with the commissioner together with the articles of incorporation. When the articles of incorporation have been filed in the office of the commissioner and approved, the commissioner shall
   1. endorse on each duplicate original the word “filed,” and the date of the filing;
   2. file one duplicate original in the commissioner’s office;
   3. issue a certificate of incorporation and affix the other duplicate original to it;
   4. return to the incorporators or their representative the certificate of incorporation, together with the duplicate original of the articles of incorporation affixed.
4. Upon the issuance of the certificate of incorporation, the corporate existence begins.  The certificate of incorporation is conclusive evidence that all conditions precedent required to be performed by the incorporators have been complied with and that the corporation has been incorporated.

History. (§ 1 ch 94 SLA 1967; am § 65 ch 218 SLA 1976)

Revisor’s notes. —

Enacted as AS 10.35.030 . Renumbered in 1967.

Sec. 10.10.040. General powers.

In furtherance of its purposes and in addition to the powers now or hereafter conferred on business corporations by AS 10.06.010 , the corporation shall, subject to the restrictions and limitations contained in this chapter have the following powers:

1. to elect, appoint, and employ officers, agents, and employees; to make contracts and incur liabilities for a purpose of the corporation, except that the corporation may not incur a secondary liability by way of guaranty or endorsement of the obligations of a person, firm, corporation, joint-stock company, association or trust, or in another manner;
2. to borrow money from its members and the Small Business Administration and any other federal agency for a purpose of the corporation; to issue for those purposes its bonds, debentures, notes or other evidences of indebtedness, whether secured or unsecured, and to secure them by mortgage, pledge, deed of trust or other lien on its property, franchises, rights, and privileges of every kind and nature, or a part of them or interest in them, without securing stockholder or member approval;
3. to make loans to a person, firm, corporation, joint-stock company, association or trust, and to establish and regulate the terms and conditions with respect to the loans and the charges for interest and service connected with them, except that the corporation may not approve an application for a loan unless and until the person applying for the loan shows that the applicant has applied for the loan through ordinary banking channels and that the loan has been refused by at least one bank or other financial institution;
4. to purchase, receive, hold, lease, or otherwise acquire, and to sell, convey, transfer, lease, or otherwise dispose of real and personal property, together with the rights and privileges that are incidental and appurtenant to the property and the use of it, including real or personal property acquired by the corporation from time to time in the satisfaction of debts or enforcement of obligations;
5. to acquire the good will, business, rights, real and personal property and other assets, or a part of them, or interest in them, of any persons, firms, corporations, joint-stock companies, associations or trusts, and to assume, undertake, or pay the obligations, debts, and liabilities of the person, firm, corporation, joint-stock company, association or trust; to acquire improved or unimproved real estate for the purpose of constructing industrial plants or other business establishments thereon or for the purpose of disposing of the real estate to others for the construction of industrial plants or other business establishments; and to acquire, construct or reconstruct, alter, repair, maintain, operate, sell, convey, transfer, lease, or otherwise dispose of industrial plants or business establishments;
6. to acquire, subscribe for, own, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the stock, shares, bonds, debentures, notes, or other securities and evidences of interest in, or indebtedness of any person, firm, corporation, joint-stock company, association or trust, and while the owner or holder of them to exercise all the rights, powers, and privileges of ownership, including the right to vote on them;
7. to mortgage, pledge, or otherwise encumber any property, right or thing of value, acquired under the powers contained in (4), (5), and (6) of this section as security for the payment of a part of the purchase price of them;
8. to cooperate with and avail itself of the facilities of the United States Department of Commerce, the state Department of Commerce, Community, and Economic Development, and any other state or federal governmental agencies; and to cooperate with and assist, and otherwise encourage organizations in the various communities of the state in the promotion, assistance, and development of the business prosperity and economic welfare of the communities or of the state or of a part of the state;
9. to do whatever is necessary or convenient to carry out the powers expressly granted in this chapter.

History. (§ 1 ch 94 SLA 1967, am § 20 ch 170 SLA 1976; am § 66 ch 218 SLA 1976; am § 2 ch 166 SLA 1988)

Revisor’s notes. —

Enacted as AS 10.35.040 . Renumbered in 1967.

In 1999, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development” in this section, in accordance with § 3, ch. 47, SLA 2004.

Sec. 10.10.050. Authorization of members.

1. Notwithstanding any rule at common law or provision of a general or special law or provision in their respective charters, agreements of association, articles of organization, or trust indentures,
   1. a natural person, domestic corporation, foreign corporation authorized to transact business in the state, insurance company, or a financial institution which becomes a member of the corporation, may acquire, purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of shares of the capital stock of the corporation or bonds, securities or other evidence of indebtedness created by the corporation; and while the owner of shares of capital stock of the corporation may exercise all the rights, powers and privileges of ownership, all without the approval of any regulatory authority of the state except as otherwise provided in this chapter; the amount of capital stock of the corporation which may be acquired by a member may not exceed 10 percent of the loan limit of the member;
   2. a financial institution may become a member of the corporation and make loans to the corporation as provided in this chapter.
2. The amount of capital stock of the corporation which a member may acquire under the authority granted in this section is in addition to the amount of capital stock in corporations which the member may otherwise be authorized to acquire.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.050 . Renumbered in 1967.

Sec. 10.10.060. Admission to membership.

A financial institution may request membership in the corporation by making application to the board of directors on the form and in the manner the board of directors require, and membership becomes effective upon acceptance of the application by the board.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.060 . Renumbered in 1967.

Sec. 10.10.070. Loans by members.

1. Each member of the corporation shall make loans to the corporation when called upon by it to do so on the terms and other conditions approved from time to time by the board of directors, subject to the following conditions:
   1. all loans limits shall be established at the thousand dollar amount nearest to the amount computed under this subsection;
   2. a loan to the corporation may not be made if immediately thereafter the total amount of the obligations of the corporation would exceed 10 times the amount then paid in on the outstanding capital stock of the corporation;
   3. the total amount outstanding on the loans to the corporation made by any member at any one time, when added to the amount of the investment in the capital stock of the corporation then held by the member, may not exceed
      1. 20 percent of the total amount then outstanding on loans to the corporation by all members, including in the total amount outstanding amounts validly called for loan but not yet loaned;
      2. the following limit, to be determined as of the time the member becomes a member on the basis of the audited balance sheet of the member at the close of its fiscal year immediately preceding its application for membership, or in the case of an insurance company, its last annual statement to the state insurance commissioner: two and one-half percent of the capital and surplus of a commercial bank or trust company; one-half of one percent of the total outstanding loans made by a savings and loan association or building and loan association; two and one-half percent of the capital and unassigned surplus of a stock insurance company, except a fire insurance company; two and one-half percent of the unassigned surplus of a mutual insurance company, except a fire insurance company; two and one-half percent of the unassigned surplus of a mutual insurance company, except a fire insurance company; one-tenth of one percent of the assets of a fire insurance company; and such limits as may be approved by the board of directors of the corporation for other financial institutions;
   4. subject to (3)(A) of this subsection, each call made by the corporation shall be prorated among the members of the corporation in substantially the same proportion that the adjusted loan limit of each member bears to the aggregate of the adjusted loan limits of all members; the adjusted loan limit of a member shall be the amount of the member’s loan limit, reduced by the balance of outstanding loans made by the member to the corporation and the investment in capital stock of the corporation held by the member at the time of the call;
   5. all loans to the corporation by members shall be evidenced by bonds, debentures, notes, or other evidences of indebtedness of the corporation, which shall be freely transferable at all times, and which shall bear interest at a rate of not less than one-quarter of one percent in excess of the rate of interest determined by the board of directors to be the prime rate prevailing at the date of issuance thereof on unsecured commercial loans; the prime rate of interest is defined in this chapter as the rate of interest normally paid by banks or lending institutions.
2. A member may not be obligated to make loans to the corporation pursuant to calls made after notice of the intended withdrawal of the member.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.070 . Renumbered in 1967.

Sec. 10.10.080. Duration of membership.

Membership in the corporation is for the duration of the corporation, but upon written notice given to the corporation five years in advance, a member may withdraw from membership in the corporation at the expiration date of the notice.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.080 . Renumbered in 1967.

Sec. 10.10.090. Powers of stockholders and members.

The stockholders and the members of the corporation have the following powers of the corporation:

1. to determine the number of and elect directors as provided in AS 10.10.120 ;
2. to make, amend, and repeal bylaws;
3. to amend this charter as provided in AS 10.10.110 ;
4. to dissolve the corporation as provided in AS 10.10.180 ;
5. to do all things necessary or desirable to secure aid, assistance loans and other financing from any financial institutions, and from any agency established under 15 U.S.C. 661 —  697 (Small Business Investment Act of 1958), or other similar federal laws now or hereafter enacted;
6. to exercise other of the powers of the corporation consistent with this chapter which may be conferred on the stockholders and the members by the bylaws.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.090. Renumbered in 1967.

Sec. 10.10.100. Voting by members and stockholders.

1. On all matters requiring action by the stockholders and the members of the corporation, the stockholders and members shall vote separately by classes, and except as otherwise provided in this chapter, these matters require the affirmative vote of a majority of the votes to which the stockholders present or represented at the meeting are entitled and the affirmative vote of a majority of the votes to which the members present or represented at the meeting are entitled.
2. Each stockholder shall have one vote, in person, by remote communication, or by proxy, for each share of capital stock held by that stockholder, and each member shall have one vote, in person, by remote communication, or by proxy, except that a member having a loan limit of more than $1,000 shall have one additional vote, in person, by remote communication, or by proxy, for each additional $1,000 that the member is authorized to have outstanding on loans to the corporation at any one time as determined under AS 10.10.070(a)(3)(B) .
3. A proxy may be executed in writing by a stockholder or by the authorized attorney-in-fact of the stockholder, or executed by electronic transmission by the stockholder or by the authorized attorney-in-fact of the stockholder. A proxy executed by electronic transmission must
   1. be directed to the person who will be the holder of the proxy or to a proxy solicitation person, including a proxy support service organization or similar agent that is authorized by the person who will be the holder of the proxy to receive the transmission; and
   2. include information that demonstrates that the stockholder authorized the transmission.
4. In this section, “electronic transmission” and “remote communication” have the meanings given in AS 10.06.990 .

History. (§ 1 ch 94 SLA 1967; am §§ 19, 20 ch 1 SLA 2021)

Revisor’s notes. —

Enacted as AS 10.35.100. Renumbered in 1967.

Cross references. —

For a saving clause declaring that the 2021 amendment to (b) of this section and enactment of (c) and (d) of this section do not affect a court action or court proceeding begun or a right accrued before April 1, 2021, see sec. 29, ch. 1, SLA 2021, in the 2021 Temporary and Special Acts.

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in (b), inserted “, by remote communication,” three times following “in person”, and made a stylistic change; added (c) and (d).

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (b) of this section and the enactment of (c) and (d) of this section retroactive to March 11, 2020.

Sec. 10.10.110. Amendment of articles.

1. The articles of incorporation may be amended by the vote of the stockholders and the members of the corporation, voting separately by classes. Amendments must be approved by the affirmative vote of two-thirds of the votes to which the stockholders are entitled and two-thirds of the votes to which the members are entitled.  An amendment of the articles of incorporation may not be made which is inconsistent with the general purposes expressed in this chapter or which authorizes an additional class of capital stock to be issued, or which eliminates or curtails the right of the commissioner of administration to examine the corporation or the obligation of the corporation to make reports as provided in AS 10.10.150 . An amendment of the articles of incorporation which increases the obligation of a member to make loans to the corporation, or makes a change in the principal amount, interest rate, maturity date, or in the security or credit position of an outstanding loan of a member to the corporation, or affects a member’s right to withdraw from membership as provided in this chapter, or affects a member’s voting rights as provided in this chapter, may not be made without the consent of each member affected by the amendment.
2. Within 30 days after a meeting at which an amendment of the articles of incorporation has been adopted, articles of amendment signed and sworn to by the president, treasurer, and a majority of the directors, setting out the amendment and adoption of the amendment, shall be submitted in duplicate originals to the commissioner who shall examine them, and upon finding that they conform to the requirements of this chapter, shall
   1. endorse on each duplicate original the word “filed,” and the date of the filing;
   2. file one duplicate original in the commissioner’s office;
   3. issue a certificate of amendment and affix the other duplicate original to it;
   4. return to the corporation or its representative the certificate of amendment, together with the duplicate articles of amendment affixed.
3. Upon the issuance of a certificate of amendment by the commissioner, the amendment becomes effective.

History. (§ 1 ch 94 SLA 1967; am § 67 ch 218 SLA 1976)

Revisor’s notes. —

Enacted as AS 10.35.110. Renumbered in 1967.

Sec. 10.10.120. Directors and officers; annual and special meetings.

1. The business and affairs of the corporation shall be conducted by a board of directors, a president, a vice president, a secretary, a treasurer, and other officers and agents the corporation by its bylaws may authorize.  The board of directors shall consist of a number not less than seven nor more than 21, determined in the first instance by the incorporators and thereafter annually by the members and the stockholders of the corporation.  The board of directors may exercise all the powers of the corporation except those that are conferred by law or by the bylaws of the corporation upon the stockholders or members and shall choose and appoint all the agents and officers of the corporation and fill all vacancies except on the board of directors.  The board of directors shall be elected in the first instance by the incorporators and thereafter at the annual meeting, which shall be held during the month of January or, if no annual meeting can be held in the year of incorporation, then within 90 days after the approval of the articles of incorporation at a special meeting.  At each annual meeting, or at each special meeting held as provided in this section, the members of the corporation shall elect two-thirds of the board of directors, and the stockholders shall elect the remaining directors.  The directors hold office until the next annual meeting of the corporation or special meeting held in lieu of the annual meeting after the election and until their successors are elected and qualified unless sooner removed in accordance with the bylaws.  A vacancy in the office of a director elected by the members shall be filled by the directors elected by the members, and a vacancy in the office of a director elected by the stockholders shall be filled by the directors elected by the stockholders.
2. Directors and officers are not responsible for losses unless they are occasioned by the wilful misconduct of the directors and officers.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.120. Renumbered in 1967.

Sec. 10.10.130. Earned surplus.

Each year the corporation shall set apart as earned surplus not less than 10 percent of its net earnings for the preceding fiscal year until the surplus equals one half of the amount paid in on the capital stock then outstanding. Whenever the amount of the surplus is less than the required amount, it shall be built up again to the required amount in the manner provided for its original accumulation. Net earnings and surplus shall be determined by the board of directors, after providing for reserves the directors consider desirable, and the determination of the directors made in good faith shall be conclusive on all persons.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.130. Renumbered in 1967.

Sec. 10.10.140. Designation of depository; prohibition against receiving deposits.

The corporation may not deposit any of its funds in a banking institution unless the institution has been designated as a depository by a vote of a majority of the directors present at an authorized meeting of the board of directors, exclusive of a director who is an officer or director of the depository. The corporation may not receive money on deposit.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.140. Renumbered in 1967.

Sec. 10.10.150. Examinations, reports of condition, and required information.

The corporation shall be examined at least once annually by the commissioner of administration and shall make reports of its condition not less than annually to the commissioner of administration and more frequently upon call of the commissioner of administration, who in turn shall make copies of the reports available to the commissioner of commerce, community, and economic development and the governor. The corporation shall also furnish other information that may from time to time be required by the commissioner of administration. The corporation shall pay the actual cost of the examinations.

History. (§ 1 ch 94 SLA 1967; am § 21 ch 170 SLA 1976)

Revisor’s notes. —

Enacted as AS 10.35.150. Renumbered in 1967.

In 1999, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” in this section, in accordance with § 3, ch. 47, SLA 2004.

Sec. 10.10.160. First meeting of corporation.

1. The first meeting of the corporation shall be called by a notice signed by three or more of the incorporators, stating the time, place, and purpose of the meeting.  A copy of the notice shall be mailed or delivered to each incorporator at least five days before the day appointed for the meeting.  The first meeting may be held without notice upon agreement in writing signed by all the incorporators.  There shall be recorded in the minutes of the meeting a copy of the notice or of the unanimous agreement of the incorporators.
2. At the first meeting, the incorporators shall choose, by ballot, a temporary clerk, adopt bylaws, elect directors by ballot, and act upon other matters within the powers of the corporation.  The temporary clerk shall be sworn and shall make and attest a record of the proceedings.  A majority of the incorporators, but not fewer than three, shall be a quorum for the transaction of business.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.160. Renumbered in 1967.

Sec. 10.10.170. Duration of corporation.

The duration of the corporation shall be 50 years, subject, however, to the right of the stockholders and the members to dissolve the corporation before the expiration of that period as provided in AS 10.10.180 .

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.170. Renumbered in 1967.

Sec. 10.10.180. Dissolution of corporation.

The corporation may upon the affirmative vote of two-thirds of the votes to which the stockholders are entitled and two-thirds of the votes to which the members are entitled dissolve the corporation. Upon dissolution of the corporation, none of the corporation’s assets shall be distributed to the stockholders until all sums due the members of the corporation as creditors of the corporation have been paid in full.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.180. Renumbered in 1967.

Sec. 10.10.185. Cancellation of corporate filings.

The provisions in AS 10.06 (Alaska Corporations Code) relating to the cancellation of certain corporate filings apply to corporations created under this chapter.

History. (§ 41 ch 123 SLA 1980)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Cross references. —

For provisions relating to cancellation of certificates and filings, see AS 10.06.865 .

Sec. 10.10.190. Prohibition of pledge of credit of state.

The credit of the state may not be pledged to a corporation organized under the provisions of this chapter.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.190. Renumbered in 1967.

Sec. 10.10.200. Corporation a “state development company”.

A corporation organized under the provisions of this chapter shall be a state development company, as defined in 15 U.S.C. 661 — 696 (Small Business Investment Act of 1958), or any other similar federal legislation, and shall be authorized to operate on a statewide basis.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.200. Renumbered in 1967.

Editor's notes. —

The Small Business Investment Act has been amended to include a new section, 15 U.S.C. 697g.

Sec. 10.10.210. Definitions.

In this chapter, unless the context otherwise requires,

1. “board of directors” means the board of directors of the corporation created under this chapter;
2. “commissioner” means the commissioner of commerce, community, and economic development;
3. “corporation” means the Alaska Business and Industrial Development Corporation created under this chapter;
4. “financial institution” means a banking corporation or trust company, savings and loan association, insurance company or related corporation, partnership, foundation, or other institution engaged primarily in lending or investing funds;
5. “loan limit” means for any member, the maximum amount permitted to be outstanding at one time on loans made by the member to the corporation, as determined under this chapter;
6. “member” means a financial institution authorized to do business within this state that undertakes to lend money to a corporation created under this chapter, upon its call, and in accordance with this chapter.

History. (§ 1 ch 94 SLA 1967; am § 68 ch 218 SLA 1976)

Revisor’s notes. —

Enacted as AS 10.35.210. Renumbered in 1967.

Reorganized in 1985 to alphabetize the defined terms.

In 1999, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 10.10.220. Short title.

This chapter may be cited as the Business and Industrial Development Corporation Act.

History. (§ 1 ch 94 SLA 1967)

Revisor’s notes. —

Enacted as AS 10.35.220. Renumbered in 1967.

Sec. 10.13.010. Purposes.

The purposes of this chapter are to

1. promote economic development by encouraging the formation of one or more BIDCOs to help meet the financing assistance and management assistance needs of businesses in the state;
2. establish a system of licensing, regulation, and enforcement to enable a BIDCO to satisfy the eligibility requirements for participating in programs that further the purposes of the BIDCO;
3. encourage capital sources to invest in and lend money to BIDCOs by providing for BIDCOs a system of licensing, regulation, and enforcement designed to prevent fraud, conflict of interest, and mismanagement, and to promote competent management, accurate record keeping, and appropriate communication with shareholders;
4. safeguard the general reputation of BIDCOs in order to increase the confidence of prospective equity investors in and prospective debt sources for BIDCOs.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.020. Qualifications for BIDCO license.

The department shall issue a license to operate as a BIDCO to a corporation that is incorporated under AS 10.06, or that has been issued a certificate of authority under AS 10.06 to transact business in the state, and that submits an application to the department, if the department determines that

1. the applicant has the net worth required under AS 10.13.040 ;
2. the directors, officers, and controlling persons of the applicant satisfy the criteria under AS 10.13.050 ;
3. it is reasonable to believe that the corporation will comply with this chapter;
4. the applicant has a reasonable promise of being a viable, ongoing BIDCO, satisfying the basic objectives of the corporation’s business plans, and achieving long-term financial success.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.030. Application procedure.

When applying for a license, an applicant shall provide the information required by the department in the form required by the department. The information must include information on the directors, officers, and controlling persons of the applicant, the applicant’s business plan, including at least 10 years of detailed financial projections and other relevant information, and additional information considered relevant by the department.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.040. Requisite net worth.

1. In order to receive a license, an applicant must demonstrate to the satisfaction of the department that the applicant has raised sufficient capital so that
   1. the net worth of the BIDCO is expected to be adequate, in the context of its business plan, to support the BIDCO’s management team and to achieve an appropriate spreading of the risk involved in the BIDCO’s provisions of financing assistance; and
   2. the BIDCO has a reasonable promise of being a viable, ongoing BIDCO, satisfying the basic objectives of its business plan and achieving long-term financial success.
2. The department may not establish a minimum net worth for a BIDCO under this section of less than $1,500,000.

History. (§ 1 ch 133 SLA 1992; am § 2 ch 2 SLA 2004; am § 1 ch 26 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 13, 2018, rewrote (b), which read, “Unless the BIDCO receives a loan under AS 37.17.500 – 37.17.690, the department may not establish a minimum net worth for a BIDCO under this section of less than $1,500,000. If the BIDCO, as part of its initial capitalization, receives a loan under AS 37.17.500 – 37.17.690. The minimum net worth of the BIDCO may be $500,000, excluding organization costs paid for or owed by the BIDCO.”

Legislative history reports. —

For governor's transmittal letter for ch. 26, SLA 2018 (HB 340), which amended (b) of this section, see 2018 House Journal 2378.

Sec. 10.13.050. Criteria for directors, officers, and controlling persons.

1. A license may only be issued if the department determines that each director, officer, and controlling person of the applicant is
   1. of good character and sound financial standing;
   2. competent to perform the director’s or officer’s functions for the applicant; and
   3. when considered collectively with the other directors, officers, and controlling persons, adequate to manage the business of the applicant as a BIDCO.
2. The department may determine that a director, officer, or controlling person of an applicant is not of good character. Bases the department may use to make that determination include proof that the director, officer, or controlling person, or a director or officer of a controlling person has
   1. had an administrative sanction imposed under 31 U.S.C. 3801 — 3812 (Program Fraud Civil Remedies Act of 1986) for an offense under 15 U.S.C. 645; or
   2. been convicted of a crime involving fraud or dishonesty, including a conviction for an offense under 15 U.S.C. 645; in this paragraph, “conviction” includes a conviction based on a guilty plea or plea of nolo contendere.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.060. Determination of likelihood of future noncompliance.

The department may determine that it is not reasonable to believe that an applicant would comply with this chapter if licensed. Bases the department may use to make that determination include proof that the applicant has been convicted of a crime involving fraud or dishonesty, including a conviction based on a guilty plea or plea of nolo contendere.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.070. Denial of application.

If the department denies a license the department shall provide the applicant with a written statement explaining the reasons for the denial.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.080. Display of license.

A licensee shall post the license in a conspicuous place in the licensee’s principal office.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.090. Transfer or assignment of license prohibited.

A licensee may not transfer or assign its license.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.100. Surrender of license.

1. Upon approval by a two-thirds vote of its board of directors and after complying with (b) and (c) of this section, a licensee may apply to the department to have the department accept the surrender of the licensee’s license. If the department determines that the requirements of this section have been satisfied, the department shall approve the application unless the department determines that the purpose of the application is to evade a current or prospective action by the department under AS 10.13.700 — 10.13.830 .
2. Not less than 60 days before filing an application under (a) of this section, a licensee shall notify all of its shareholders and creditors of its intention to file the application. Each creditor shall be notified of the right to comment to the department. Each shareholder shall be notified of the right to file with the licensee an objection to the proposed surrender of the license within the 60-day period and shall be advised that, if the shareholder files an objection, the shareholder may also send a copy of the objection to the department.
3. If shareholders representing 20 percent of the outstanding voting securities of the licensee file an objection with the licensee, the licensee may not proceed with the application unless the application is approved by a vote of shareholders representing two-thirds of the outstanding voting securities of the licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.120. Corporate name and representation of status.

1. The corporate name of a licensee must include the word “BIDCO” or “Bidco” and must be distinguishable on the records of the department from the name of any other organized entity and from a reserved or registered name. A licensee may not transact business under a name other than its corporate name. In this subsection, “organized entity” and “reserved or registered name” have the meanings given in AS 10.35.040 .
2. Before being issued a license, a corporation that proposes to apply for a license or that applies for a license may perform, under a name that indicates that the corporation is a corporation licensed under this chapter, the acts necessary to apply for and obtain a license and otherwise prepare to begin business as a licensee. The corporation may not represent that it is a licensee until after the license has been obtained.

History. (§ 1 ch 133 SLA 1992; am § 10 ch 50 SLA 1999)

Cross references. —

For applicability of amendment to (a) of this section made by § 10, ch. 50, SLA 1999, see § 36(a) and (b), ch. 50, SLA 1999 in the 1999 Temporary & Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.13.130. Board of directors.

1. The board of directors of a licensee must have at least seven directors.
2. The board of directors shall hold at least one meeting each calendar quarter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.140. Notice of officer and director changes.

Within 30 days of each of the following events, the licensee shall notify the department in writing of the event and provide any additional information that the department requires:

1. the death, resignation, or removal of a director or officer;
2. the election of a director; or
3. the appointment of an officer.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.150. Dividends.

1. A licensee may not pay or obligate itself to pay a cash dividend or dividend in kind to the licensee’s shareholders unless the payment is consistent with a dividend policy that has been adopted by the licensee and approved by the department.
2. When approving dividend policies under this section, the department shall consider the special characteristics of BIDCOs and the diverse range of dividend policies that are potentially appropriate for a BIDCO, without allowing the licensee to engage in unsafe or unsound acts that could threaten the viability of the licensee as an ongoing BIDCO by eroding its capital base.
3. The department may at any time withdraw a previous approval of a dividend policy if the department determines that the withdrawal is necessary to prevent unsafe or unsound acts.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.160. Share buy-back.

A licensee may not buy back or obligate itself to buy back a share of equity interest from a shareholder without the prior approval of the department.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.170. Offices.

1. A licensee shall maintain at least one office in this state.
2. A licensee may not maintain an office outside this state.
3. The location of each office of a licensee must be reasonably accessible to the public.
4. A licensee shall post in a conspicuous place at each of the licensee’s offices a sign that bears the corporate name of the licensee.
5. If a licensee establishes, relocates, or closes an office, the licensee shall give the department written notice within 30 days of the event.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.180. Business of licensee.

A licensee may not engage in a business other than providing financing assistance and management assistance to businesses.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.190. General powers.

In addition to the other powers given by this chapter and the powers conferred on the licensee by the laws under which it is incorporated that are not inconsistent with this chapter, a licensee may

1. borrow money and otherwise incur indebtedness for the licensee’s purposes, including the issuing of corporate bonds, debentures, notes, and other evidence of indebtedness; a licensee’s indebtedness may be secured or unsecured, and may involve equity features, including provisions for conversion to stock and warrants to purchase stock;
2. make contracts;
3. incur and pay necessary and incidental operating expenses;
4. purchase, receive, hold, lease, acquire, sell, convey, mortgage, pledge, or otherwise acquire or dispose of real or personal property, and the rights and privileges that are incidental and appurtenant to the transactions, if the real or personal property is for the licensee’s use in operating the licensee’s business or if the real or personal property is acquired by the licensee from time to time in satisfaction of debts or the enforcement of obligations;
5. make donations for charitable, educational, research, or similar purposes;
6. provide financing assistance and management assistance to businesses and establish the terms and conditions of the assistance;
7. implement a reasonable and prudent policy for conserving and investing the licensee’s money before the money is used to provide financing assistance to businesses or to pay the expenses of the licensee;
8. exercise the incidental powers that are necessary, convenient, or reasonably related to providing financing assistance and management assistance to businesses.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.200. Financing assistance form, terms, and conditions.

A licensee may determine the form, terms, and conditions for the financing assistance that it will provide.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.210. Financing assistance allowed.

The financing assistance that a licensee may provide includes

1. loans;
2. purchase of debt instruments;
3. straight equity investments including the purchase of common stock or preferred stock;
4. debt with equity features including warrants to purchase stock, convertible debentures, or receipt of a percent of net income or sales;
5. royalty-based financing;
6. debt guarantees;
7. property leasing.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.220. Participation in governmental programs.

1. A licensee may participate in a federal, state, or local government program for which the licensee is eligible and that has as the program’s function the provision or facilitation of financing assistance or management assistance to businesses.
2. If a licensee participates in a program referred to in (a) of this section, the licensee shall comply with the requirements of the program.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.230. Scope of management assistance.

When providing management assistance, a licensee may provide management advice, management services, technical advice, and technical services.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.240. Limitation to purposes of business.

Financing assistance and management assistance provided by a licensee to a business may only be for the business purposes of the business.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.250. Holding control of another business generally.

A licensee may not hold control of another business, except as provided under AS 10.13.260 — 10.13.280 . In this section, “licensee” includes the licensee in concert with a director, officer, controlling person, or affiliate of the licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.260. Control of assisted business.

1. A licensee that has provided financing assistance to a business may acquire and hold control of the business to the extent it becomes necessary to protect the licensee’s interest as a creditor of, or investor in, the business.
2. Unless the department approves a longer period, a licensee holding control of a business under this section shall divest itself of the control as soon as practicable, or within five years after acquiring the interest, whichever is sooner.
3. Within 30 days after a licensee exercises its authority to acquire and hold control of a business under this section, the licensee shall notify the department of the action. The notification must include the reasons why it is necessary for the licensee to acquire and hold control of the business and the length of time the licensee anticipates that it may be necessary to hold control of the business.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.270. Control of business providing financing assistance and management assistance.

With the approval of the department, a licensee may acquire and hold control of another business that is engaged only in the business of providing financing assistance and management assistance to businesses.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.280. Department approval to hold control of other businesses.

1. With the approval of the department, a licensee may acquire and hold control of a business not otherwise allowed under AS 10.13.250 — 10.13.270 .
2. The department may not approve an application under (a) of this section unless the department determines that
   1. the acquisition and control will not cause the amount of the licensee’s investments in businesses covered by this section to exceed 15 percent of the assets of the licensee; and
   2. in the department’s judgment the approval will promote the purposes of this chapter.
3. An approval under (a) of this section may not be for a period of more than three years, unless the department determines that a longer period is necessary and consistent with the purposes of this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.285. “Hold control” defined.

In AS 10.13.250 — 10.13.280 , “hold control” means to directly or indirectly own, of record or beneficially, 50 percent or more of a business’s outstanding voting equity interests.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.290. Business practice standards and reserves.

1. A licensee shall transact its business in a safe and sound manner and shall maintain itself in a safe and sound condition.
2. In determining whether a licensee is transacting business in a safe and sound manner, the department may not consider the risk of providing financing assistance to a business, unless the department determines that the risk is great enough to demonstrate gross mismanagement when compared with the return that can be realistically expected.
3. Notwithstanding the other provisions of this section, the department may
   1. if the amount of the financing assistance is unduly large in relation to the total assets or the total shareholder equity of the licensee, determine that a licensee’s financing assistance to a single business or group of affiliated businesses violates (a) of this section or constitutes an unsafe or unsound act;
   2. require that a licensee maintain a reserve in the amount of anticipated losses;
   3. require that a licensee have in effect a written financing assistance policy approved by the licensee’s board of directors, including credit evaluation and other matters; the department may not require that a licensee adopt a financing assistance policy that contains standards that prevent the licensee from exercising needed flexibility in evaluating and structuring financing assistance to businesses on an individual basis.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.300. Disclosure of potential conflict of interest.

A person shall disclose a potential conflict of interest that occurs in a transaction in the financing documents of the transaction or, if the transaction does not involve financing assistance, in another appropriate document, if the person

1. participates in a decision of a licensee relating to the transaction; and
2. knows of a potential conflict of interest involving the transaction.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.310. Terms and conditions where potential conflict of interest is involved.

If a licensee provides financing assistance to a business or engages in another business transaction, and if the assistance or transaction involves a potential conflict of interest, the terms and conditions under which the licensee provides the assistance or engages in the transaction may not be less favorable to the licensee than the terms and conditions that would be required by the licensee in the ordinary course of business if the assistance or transaction did not involve a potential conflict of interest.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.320. Examples of potential conflicts of interest.

1. In AS 10.13.300 — 10.13.310 , licensee transactions that involve a potential conflict of interest include
   1. providing financing assistance to a principal shareholder of the licensee, to a person controlled by a principal shareholder of the licensee, or to a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of the licensee;
   2. providing financing assistance to a business to which one or more of the following provides or plans to provide contemporaneous financing assistance:
      1. a principal shareholder of the licensee;
      2. a director, officer, partner, relative, controlling person, or affiliate of a principal shareholder of a licensee;
      3. an affiliate of a principal shareholder of a licensee; or
      4. a person controlled by a principal shareholder of the licensee;
   3. providing financing assistance to a business that has or is expected to have a substantial business relationship with another business that has a director, officer, or controlling person who is also
      1. a director, officer, or controlling person of the licensee; or
      2. the spouse of a director, officer, or controlling person of the licensee;
   4. providing financing assistance to a business if the business, or a director, officer, or controlling person of the business contemporaneously has lent or will lend money to an associate of the licensee;
   5. providing financing assistance for the purchase of property of an associate or principal shareholder of the licensee;
   6. selling or otherwise transferring an asset of the licensee to an associate or principal shareholder of the licensee.
2. In this section, “relative” means a parent, child, sibling, spouse, grandparent, grandchild, nephew, niece, aunt, or uncle, or a relative of the same degree through marriage.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.400. Acquiring control of a licensee.

A person may not acquire control of a licensee without the prior approval of the department.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.410. Application to acquire control.

1. The department shall approve an application to acquire control of a licensee under AS 10.13.400 if the department determines that
   1. the applicant and the directors and officers of the applicant are of good character and sound financial standing;
   2. it is reasonable to believe that the applicant will comply with this chapter; and
   3. the plans, if any, of the applicant to make a major change in the business, corporate structure, or management of the licensee are not detrimental to the safety and soundness of the licensee.
2. If, after notice and a hearing, the department determines that the criteria for approval in (a) of this section have not been satisfied, the department shall deny the application.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.420. Determinations.

1. When the department is reviewing an application under AS 10.13.410 , the department may determine that an
   1. applicant or a director or officer of an applicant is not of good character if the person has been convicted of a crime involving fraud or dishonesty, including a conviction based on a guilty plea or plea of nolo contendere;
   2. applicant’s plan to make a major change in the management of a licensee is detrimental to the safety and soundness of the licensee if the plan provides for a person to become a director or officer of the licensee and the person has been convicted of a crime involving fraud or dishonesty, including a conviction based on a guilty plea or plea of nolo contendere.
2. The conditions described in (a) of this section are not the only conditions upon which the department may determine that an applicant or a director or an officer of an applicant is not of good character or that an applicant’s plan to make a major change in the management of a licensee is detrimental to the safety and soundness of the licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.430. Merger.

A licensee may not merge with another corporation unless the merger is approved by the department, and, if the licensee is not the surviving corporation, the surviving corporation is a licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.440. Purchase.

A licensee may not purchase all or substantially all of the business of another person unless the purchase is approved by the department.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.450. Sale.

A licensee may not sell all or substantially all of the licensee’s business or of the business of an office of the licensee to another person unless the purchaser is a licensee and the sale is approved by the department.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.460. Department approval.

The department may not approve a merger, purchase, or sale under AS 10.13.430 — 10.13.450 unless the department determines that

1. the merger, purchase, or sale will be safe and sound with respect to the acquiring licensee;
2. upon consummation of the merger, purchase, or sale, it is reasonable to believe that the acquiring licensee will comply with this chapter;
3. the merger, purchase, or sale will not have a major detrimental effect on competition in the providing of financial assistance or management assistance to businesses, or, if there will be a detrimental effect, the merger, purchase, or sale is necessary in the interests of the safety and soundness of a party to the merger, purchase, or sale, or is otherwise, on balance, in the public interest.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.470. Administration.

The department shall administer this chapter. The department may issue orders and may adopt regulations that, in the opinion of the department, are necessary to execute, enforce, and achieve the purposes of this chapter. Adoption of regulations under this chapter is subject to AS 44.62 (Administrative Procedure Act).

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.480. Conditions of order or license.

When the department issues an order or license under this chapter, the department may impose conditions that the department determines are necessary to carry out the purposes of this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.490. Declaratory rulings.

The department may provide to an interested person a declaratory ruling on a provision of this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.500. Judicial review.

A final order, decision, license, or other official act of the department under this chapter is subject to judicial review by the superior court under the applicable rules of court.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.510. Investigations.

The department may make public or private investigations inside or outside the state that the department considers necessary to determine whether to approve an application for a license, to determine whether a person has violated or is about to violate this chapter, to aid in the enforcement of this chapter, or to aid in issuing an order or adopting a regulation under this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.520. Investigative powers.

For the purposes of an investigation, examination, or other proceeding under this chapter, the department may administer oaths and affirmations, subpoena witnesses, compel the attendance of witnesses, take evidence, and require the production of books, papers, correspondence, memoranda, agreements, and other documents or records that the department considers relevant or material to the proceeding.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.530. Failure to comply or testify.

If a person fails to comply with a subpoena issued by the department under this chapter or to testify with respect to a matter covered by this chapter, the superior court may issue an order requiring the attendance of the person and the giving of testimony or production of evidence.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.540. Service of process.

If the department is authorized to make service of process in connection with a noncriminal administrative proceeding under this chapter, the department may make the service by registered or certified mail.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.550. Fees.

A person shall pay the department

1. $2,500 for filing an application for a license;
2. $1,250 for filing an application for approval to acquire control of a licensee;
3. $1,250 for filing an application for approval for a merger, purchase, or sale under AS 10.13.430 — 10.13.460 ; if two or more applications relating to the same merger, purchase, or sale are filed, the fee for filing each application is the figure resulting from dividing $1,250 by the number of the applications;
4. $2,500 each calendar year at the time established by the department, if the person is a licensee;
5. a fee established by the department for the examination of a licensee or a subsidiary of a licensee; the fee shall be paid within 30 days after receiving a statement from the department; a fee established under this paragraph must include
   1. the proportionate part of the salaries and cost of employee benefits of the examiners while conducting the examination and while preparing the examination report; and
   2. the transportation costs and per diem costs of each examiner while away from the examiner’s duty station.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.560. Fee payment and refunds.

A fee for filing an application with the department shall be paid at the time the application is filed with the department and is not refundable.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.570. Records and report requirements.

1. A licensee shall make and keep books, accounts, and other records in the form and manner, at the place, and for the period of time that the department establishes.
2. A licensee, affiliate of a licensee, and a subsidiary of a licensee shall file with the department the reports that the department requires. A report must be in the form and contain the information that the department requires.
3. The department may require by order that a licensee include an asset on the licensee’s books and records at a valuation that represents the current value of the asset.
4. Not later than 90 days after the close of the calendar year, or a longer period if established by the department, a licensee shall file with the department an audit report containing
   1. financial statements, including a balance sheet, statement of income or loss, statement of changes in capital accounts, and statement of changes in financial position for, or as of the end of, the calendar year, prepared with an audit by an independent certified public accountant in accordance with generally accepted accounting principles;
   2. a report, certificate, or opinion of the independent certified public accountant who performs the audit, stating that the financial statements were prepared in accordance with generally accepted accounting principles; and
   3. other information that the department may require.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.580. Records kept by others.

1. If a person other than a licensee makes or keeps all or part of the books, accounts, or other records of the licensee, this chapter applies to the person with respect to the books, accounts, and other records to the same extent as if the person were the licensee.
2. If a person other than an affiliate or subsidiary of a licensee makes or keeps all or part of the books, accounts, or other records of the affiliate or subsidiary, this chapter applies to the person with respect to the books, accounts, and other records to the same extent as if the person were the affiliate or subsidiary.
3. If the department considers it expedient, the department may require a licensee to obtain the approval of the department before permitting another person to make or keep all or part of the books, accounts, or other records of the licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.590. Information on economic development effect.

Each year the department shall publish and provide to the legislature information on the effect of this chapter on promoting economic development in the state. The information must include aggregate statistics on

1. the number and dollar amount of the financing assistance made by licensees to businesses; the amounts shall be organized into broad categories based on the types of industry involved; the standard industrial classification manual may be used for the categories;
2. the number and dollar amount of the financing assistance made by licensees to minority-owned businesses and to businesses owned by women; and
3. estimates of the number of jobs created or retained.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.600. Examination of licensees and subsidiaries.

1. The department may at any time examine a licensee or a subsidiary of a licensee. Licensure under this chapter constitutes implied consent to examination by the department.
2. [Repealed, § 4 ch 26 SLA 2018.]
3. At the department’s request the following persons shall provide to the department the books, accounts, and records of a licensee or a licensee’s subsidiary and shall otherwise facilitate the department’s examination of the licensee to the fullest extent possible:
   1. a director, officer, or employee of a licensee being examined by the department;
   2. a director, officer, or employee of a subsidiary of a licensee being examined by the department;
   3. a person having custody of the books, accounts, or records of a licensee being examined by the department;
   4. a person having custody of the books, accounts, or records of a subsidiary of a licensee being examined by the department.
4. The department may retain a certified public accountant, attorney, appraiser, or other person to assist the department in the examination of a licensee or a subsidiary of a licensee if the department determines that the assistance is necessary. Within 10 days after receipt of a statement from the department, the licensee being examined shall pay the fees of a person retained by the department under this subsection.

History. (§ 1 ch 133 SLA 1992; am § 4 ch 26 SLA 2018)

Effect of amendments. —

The 2018 amendment, effective September 13, 2018, repealed (b).

Sec. 10.13.610. Misrepresentation.

1. Except as otherwise provided in AS 10.13.120 , a person transacting business in the state who is not a licensee may not knowingly use a name or title that indicates that the person is a BIDCO or otherwise represent that the person is a BIDCO or a licensee.
2. A licensee may not knowingly misrepresent the meaning or effect of its license.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.620. Inspection or copying refusal.

A person having custody of all or part of the books, accounts, or other records of a licensee may not knowingly refuse to allow the department, upon request, to inspect or make copies of the records.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.630. Financing assistance to associates of licensee.

A licensee may not directly or indirectly provide financing assistance to an associate of the licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.640. Financing assistance to discharge obligation to associate of licensee.

A licensee may not directly or indirectly provide financing assistance to discharge, or to free money for use in discharging, part or all of an obligation to an associate of the licensee. This section does not apply to a transaction of an associate of a licensee in the normal course of the associate’s business involving a line of credit or financing assistance with a term of not more than five years.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.650. Contemporaneous financing assistance.

1. If the terms on which a licensee provides financing assistance to a business are less favorable to the licensee than the terms on which an associate of the licensee provides financing assistance to the business, the licensee may not directly or indirectly provide the assistance to the business within one year before or after the associate provides assistance.
2. If the financing assistance provided by the licensee’s associate is of a different kind from the financing assistance provided by the licensee, the burden is on the licensee to prove that the terms on which the licensee provided the financing assistance were at least as favorable to the licensee as the terms on which the associate provided the assistance.
3. This section does not apply
   1. if the associate is a controlling person of the licensee and is also the only shareholder of the licensee;
   2. if the associate is a subsidiary of the licensee;
   3. to a transaction of an associate of a licensee in the normal course of the associate’s business involving either a line of credit or financing assistance with a term of not more than five years.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.660. Compensation of associate.

1. An associate of a licensee may not directly or indirectly receive from a person to whom the licensee provides financing assistance
   1. compensation in connection with the providing of the financing assistance; or
   2. other things of value for procuring, influencing, or attempting to procure or influence the licensee’s action with respect to providing the financing assistance.
2. This section does not apply to the receipt of fees by an associate of a licensee for bona fide services performed by the associate if
   1. the associate, with the consent and knowledge of the person to whom the financing assistance is provided, is designated by the licensee to perform the services;
   2. the services are appropriate and necessary under the circumstances;
   3. the fees for the services are approved as reasonable by the licensee; and
   4. the fees for the services are collected by the licensee, and the licensee pays the associate.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.670. Exemptions.

1. If the department finds that the exemption is in the public interest and that the regulation of the person or transaction is not necessary for the purposes of this chapter, the department may exempt a person or transaction from AS 10.13.630 — 10.13.660 for the purposes of a particular transaction.
2. The exemption may be unconditional or upon specified terms and conditions and for specified periods.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.700. Injunction and enforced compliance; appointment of receiver or conservator.

If, in the opinion of the department, a person has violated this chapter, or if there is reasonable cause to believe that a person is about to violate this chapter, the department may bring an action in superior court to enjoin the violation or to enforce compliance with this chapter. Upon a proper showing, a restraining order, preliminary or permanent injunction, or writ of mandamus shall be granted, and a receiver or a conservator may be appointed for the defendant or the defendant’s assets.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.710. Cease and desist orders for unlicensed persons.

If the department finds that a person has violated or that there is reasonable cause to believe that the person is about to violate AS 10.13.120(b) or 10.13.610(a) , the department may order the person to cease and desist from the violation unless and until the person is issued a license under this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.720. Cease and desist orders for violations by licensees or subject persons.

After notice and a hearing, if the department determines that a licensee or a subject person of a licensee has violated or is violating, or that there is reasonable cause to believe that the licensee or subject person is about to violate this chapter, the department may order the licensee or subject person to cease and desist from the action. The order may require the licensee or subject person to take affirmative action to correct a condition resulting from the action.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.730. Cease and desist orders for unsafe and unsound acts.

After notice and a hearing, if the department determines that a licensee or subject person of a licensee has engaged in or that there is a reasonable cause to believe that the licensee or subject person is about to engage in an unsafe or unsound act with respect to the business of the licensee, the department may order the licensee or subject person to cease and desist from the action. The order may require the licensee or subject person to take affirmative action to correct a condition resulting from the action.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.740. Other cease and desist orders.

If the department determines that a factor set out in AS 10.13.720 — 10.13.730 is true with respect to a licensee or subject person of a licensee and that the action or violation is likely to cause the insolvency or substantial dissipation of the assets or earnings of the licensee, is likely to seriously weaken the condition of the licensee, or is likely to otherwise seriously prejudice the interests of the licensee before the completion of proceedings conducted under AS 10.13.720 — 10.13.730 , the department may order the licensee or subject person to cease and desist from the action or violation. The order may require the licensee or subject person to take affirmative action to correct a condition resulting from the action or violation.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.750. Removal, prohibition, and suspension orders for certain acts.

1. The department may issue an order removing a subject person of a licensee from office with the licensee and prohibiting the subject person from further participating in any manner in the conduct of the business of the licensee if the department determines after notice and a hearing that
   1. the person has violated this chapter or another applicable law, has engaged in an unsafe or unsound act with respect to the business of the licensee, or has engaged in an act that constitutes a breach of the person’s fiduciary duty;
   2. the act, violation, or breach of fiduciary duty has caused or is likely to cause substantial financial loss or other damage to the licensee, has seriously prejudiced or is likely to seriously prejudice the interest of the licensee, or the person has received financial gain by reason of the act, violation, or breach of fiduciary duty; and
   3. the act, violation, or breach of fiduciary duty involves dishonesty on the part of the person, demonstrates the person’s gross negligence with respect to the business of the licensee, or demonstrates the person’s wilful disregard for the safety and soundness of the licensee.
2. The department may issue an order removing a subject person of the licensee from office with the licensee and prohibiting the subject person from further participating in any manner in the conduct of the business of the licensee, except with the prior consent of the department if, after notice and a hearing, the department determines that, by engaging or participating in an act with respect to a financial or other business institution that resulted in substantial financial loss or other damage, the subject person of a licensee demonstrated
   1. dishonesty or a wilful or continuing disregard for the safety and soundness of the financial or other business institution; and
   2. unfitness to continue as a subject person of the licensee or to participate in conducting the business of the licensee.
3. The department may immediately issue an order suspending a subject person of a licensee from the person’s office, if any, with the licensee and prohibiting the subject person from further participating in any manner in the conduct of the business of the licensee except with the consent of the department, if the department determines that
   1. the factors in (a) or (b) of this section are true with respect to the person; and
   2. an immediate order is necessary to protect the interests of the licensee or the public.
4. In this section, “office” means, when used with respect to a licensee, the position of director, officer, or employee of the licensee or of a subsidiary of the licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.760. Removal, prohibition, and suspension orders in cases of indictment, binding over, or conviction.

1. If the department determines that a subject person of a licensee has been indicted by a grand jury or has been bound over for trial by a court for a crime involving dishonesty or breach of trust, and that the continuation of the person as a subject person of the licensee may threaten the interests of the licensee or may threaten to impair public confidence in the licensee, the department may issue an order suspending the person from the person’s office, if any, with the licensee and prohibiting the person from further participating in any manner in the conduct of the business of the licensee until the person’s charge has been disposed of.
2. If the department determines that a subject person or former subject person of a licensee to whom an order was issued under (a) of this section, or another subject person of a licensee, has been convicted of a crime involving dishonesty or breach of trust, and that the continuation or resumption of the person as a subject person of the licensee may threaten the interests of the licensee, the department may issue an order suspending or removing the person from the person’s office, if any, with the licensee and prohibiting the person from further participating in any manner in the conduct of the business of the licensee, except with the prior consent of the department.
3. The failure to convict a subject person who is charged with a crime involving dishonesty or breach of trust does not prevent the department from issuing an order to the person under another provision of this chapter.
4. In this section, “office” has the meaning given in AS 10.13.750 .

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.770. Hearings on orders; rescission and modification.

1. Within 30 days after an order is issued under AS 10.13.710 , 10.13.740 , 10.13.750(c) , or 10.13.760 , the licensee or subject person of a licensee to whom the order is directed may file with the department an application for a hearing on the order.
2. If the department fails to promptly notify the office of administrative hearings (AS 44.64.010 ) of the application and the office fails to begin a hearing within 15 business days after the application is filed or within a longer period to which the licensee or subject person consents, the order shall be considered rescinded.
3. After the hearing, the department shall affirm, modify, or rescind the order.
4. A person to whom an order is issued under this section may apply to the department to modify or rescind the order. The department may not modify or rescind the order unless the department determines that it is in the public interest to do so and that it is reasonable to believe that the person will comply with this chapter.
5. The right of a licensee or subject person to whom an order is issued under AS 10.13.710 , 10.13.740 , 10.13.750(c) , or 10.13.760 to an interlocutory review of the order is not affected by the failure of the licensee or subject person to apply to the department for a hearing on the order issued under this section.

History. (§ 1 ch 133 SLA 1992; am § 27 ch 163 SLA 2004)

Sec. 10.13.780. Disclosure to shareholders.

If the department determines that the results of a department communication or order addressed to the licensee or to a subject person of the licensee should be disclosed to the licensee’s shareholders, the department may require the licensee to make the disclosure in the form and manner determined by the department.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.790. Meetings of directors and shareholders called by department.

1. If the department considers it expedient, the department may call a meeting of the board of directors or of the shareholders of a licensee.
2. The department shall send notification of the time, place, and purpose of the meeting not less than five days before the meeting to each director, if a directors’ meeting, or to each shareholder, if a shareholders’ meeting, either by personal service or by registered or certified mail sent to the person’s last known address as shown in the records of the department.
3. The licensee shall pay the notice and meeting expenses for a meeting of shareholders called under (a) of this section.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.800. Orders restricting additional financing assistance.

1. The department may issue an order directing a licensee to refrain from providing additional financing assistance to businesses if, in the opinion of the department, the order is necessary to protect the interests of the licensee or the public, and if, after notice and a hearing, the department determines that
   1. the licensee or a controlling person, subsidiary, or affiliate of the licensee has violated this chapter or another applicable law;
   2. the licensee is conducting the licensee’s business in an unsafe and unsound manner;
   3. the licensee is in a condition that makes it unsafe or unsound for the licensee to transact business;
   4. the licensee has ceased to transact business as a BIDCO;
   5. the licensee is insolvent;
   6. the licensee has suspended payment of the licensee’s obligations, has made an assignment for the benefit of the licensee’s creditors, or has admitted in writing the licensee’s inability to pay the licensee’s debts as the debts become due;
   7. the licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under a bankruptcy, reorganization, insolvency, or moratorium law, an involuntary petition in bankruptcy against the person has not been dismissed in 90 days, or a person has applied for the relief under the law against a licensee and the relief has been granted or the licensee has by an affirmative act approved of or consented to the action; or
   8. a fact or condition exists that would have been grounds for denying the licensee a license if the fact or condition had existed when the licensee applied for the license.
2. If the department determines that a factor in (a) of this section is true with respect to a licensee and that it is necessary for the protection of the interests of the licensee or the public that the department immediately prevent the licensee from providing additional financing assistance to businesses, the department may issue the order without a hearing.
3. If the department consents, a licensee that has been the subject of an order under (a) or (b) of this section may resume providing financing assistance to businesses under the conditions that the department prescribes.
4. A person to whom an order is issued under (a) or (b) of this section may apply to the department to modify or rescind the order. The department may not grant the application unless the department determines that it is in the interest of the public to do so and that it is reasonable to believe that the person will comply with this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.810. Taking possession of licensee.

1. If the department finds that a factor in AS 10.13.800 is true with respect to a licensee and that it is necessary for the protection of the interests of the licensee or of the public, the department may take immediate possession of the property and business of the licensee and appoint a conservator for the licensee.
2. The department may appoint as conservator one of the employees of the department or another competent and disinterested person. The department shall be reimbursed out of the assets of the conservatorship for all money expended by the department in connection with the conservatorship. Upon the approval of the department, the expenses of the conservatorship paid for by the department shall be paid out of the assets of the licensee. Payment of the department expenses shall take priority over other payments from the assets and shall be fully paid before a final distribution is made.
3. Under the direction of the department, the conservator shall take possession of the books, records, and assets of the licensee and shall take other action that is necessary to conserve the assets of the licensee or to ensure payment of obligations of the licensee pending further disposition of the licensee’s business.
4. At an appropriate time, the department may terminate the conservatorship and permit the licensee to resume the transaction of the licensee’s business subject to the terms, conditions, restrictions, and limitations the department prescribes.

History. (§ 1 ch 133 SLA 1992; am § 16 ch 14 SLA 2005)

Legislative history reports. —

For governor’s transmittal letter for ch. 14, SLA 2005 (SB 52), amending (b) of this section, see 2005 Senate Journal 42 — 43.

Sec. 10.13.820. Receivership.

1. The department may apply to the superior court for the appointment of a receiver for a licensee, if the department determines that the licensee should be liquidated because
   1. the licensee is insolvent;
   2. the licensee has suspended payment of the licensee’s obligations, has made an assignment for the benefit of the licensee’s creditors, or has admitted in writing the licensee’s inability to pay the licensee’s debts as the debts become due;
   3. the licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under a bankruptcy, reorganization, insolvency, or moratorium law;
   4. a person has applied for the relief described under (3) of this subsection against a licensee and the licensee has by an affirmative act approved of or consented to the action or the relief has been granted; or
   5. the licensee is in a condition that makes it unsafe or unsound for the licensee to transact business.
2. If a receiver is appointed under (a) of this section, the receiver shall liquidate the property and business of the licensee.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.830. Civil penalty.

1. If after notice and a hearing the department finds that a person has violated this chapter, the department may order the person to pay to the department a civil penalty in the amount the department specifies. The civil penalty may not exceed $1,000 for each violation, or in the case of a continuing violation, $1,000 for each day the violation continues.
2. This section does not apply to an act committed or omitted in good faith in conformity with an order, regulation, declaratory ruling, or written interpretative opinion of the department, even if the order, regulation, declaratory ruling, or written interpretative opinion is later amended, rescinded, or repealed, or determined by judicial or other authority to be invalid.
3. The provisions of (a) of this section are in addition to, and not alternative to, the other provisions of this chapter that authorize the department to issue orders or to take other action on account of a violation of this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.850. Construction of chapter.

This chapter shall be liberally construed to accomplish its purposes.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.860. Application of Administrative Procedure Act to proceedings.

A proceeding under AS 10.13.830 is subject to AS 44.62 (Administrative Procedure Act). Except as otherwise provided in this chapter, other proceedings and actions under this chapter are exempt from AS 44.62.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.870. Appeals.

A final order of an administrative proceeding under AS 10.13.710 — 10.13.760 , 10.13.800 , 10.13.810 , or 10.13.830 may be appealed to the superior court.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.880. Application of law under which licensee incorporated.

Except as otherwise provided in this section, the provisions of the law under which a licensee is incorporated apply to the licensee. If a provision of the licensee’s incorporating law conflicts with a provision of this chapter, this chapter controls.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.890. Associates.

1. In AS 10.13.300 — 10.13.320 and 10.13.630 — 10.13.660 , a person who is an associate within six months before or after a licensee provides financing assistance shall be considered to be an associate as of the date the licensee provides the assistance.
2. If a licensee, in order to protect the licensee’s interests, designates a person to serve as a director of, officer of, or in a management capacity of a business to which the licensee provides financial assistance, the person may not, on that account, be considered to be an associate under AS 10.13.300 — 10.13.310 or 10.13.630 — 10.13.660 . This subsection does not apply if the person has, directly or indirectly, another financial interest in the business or if the person, at any time before the licensee provides the financing assistance, served as a director of, officer of, or in another capacity in the management of the business for a period of 30 days or more.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.900. Other licenses.

A corporation that is licensed under this chapter may apply for and be issued a license under another law of the state, federal government, or of another state in the United States unless the transaction of business by the corporation as a licensee under the other license would violate this chapter or would be contrary to the purposes of this chapter.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.910. Exemption.

A licensee is not subject to the provisions of AS 06.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.920. Department authority regarding conflicts of interest.

The provisions of this chapter relating to conflicts of interest do not limit the authority of the department to determine that an act involves a conflict of interest and is therefore an unsafe or unsound act.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.13.930. Confidentiality.

1. The commissioner, deputies, and other employees of the department may not disclose information acquired by them in the discharge of their duties under this chapter except to the extent disclosure of the information is required by law, other than the public records provisions of AS 40.25.110 — 40.25.220 , or is required by court order.
2. Notwithstanding (a) of this section, the department may disclose information that is confidential under (a) of this section if the department determines that disclosure of the information is necessary to promote the public interest. This subsection does not authorize the disclosure of information acquired by the department in the course of an examination of a licensee.
3. [Repealed, § 4 ch 26 SLA 2018.]
4. A BIDCO may provide to a current or prospective creditor or shareholder of the BIDCO a copy of an examination report on the BIDCO made by the department under this chapter.

History. (§ 1 ch 133 SLA 1992; am § 3 ch 2 SLA 2004; am § 4 ch 26 SLA 2018)

Revisor’s notes. —

In 2000, “AS 40.25.110 — 40.25.220 ” was substituted for “AS 09.25.110 — 09.25.220 ” to reflect the 2000 renumbering of AS 09.25.110 — 09.25.220 .

Effect of amendments. —

The 2018 amendment, effective September 13, 2018, repealed (c).

Sec. 10.13.990. Definitions.

In this chapter,

1. “affiliate” means, if used with respect to a nonnatural person, a person who controls the nonnatural person, who is controlled by the nonnatural person, or who is controlled by a person who also controls the nonnatural person;
2. “associate” means, if used with respect to a licensee,
   1. a controlling person, director, or officer of the licensee;
   2. a director, officer, or partner of a person referred to in (A) of this paragraph;
   3. a person who controls, is controlled by, or is under common control with a person referred to in (A) of this paragraph, directly or indirectly through an intermediary;
   4. a close relative of a person referred to in (A) of this paragraph; in this subparagraph, “close relative” means a parent, child, sibling, or spouse, or a relative of the same degree through marriage;
   5. a person of which a person referred to in (A) — (D) of this paragraph is a director or officer;
   6. a person in which a person referred to in (A) — (D) of this paragraph, or a combination of the persons acting in concert, owns or controls, directly or indirectly, a 20 percent or greater equity interest;
3. “BIDCO” means a corporation that is licensed under this chapter to provide financial and management assistance to businesses;
4. “business” means a person who transacts or proposes to transact business on a regular and continual basis;
5. “control” means, if used with respect to a specific person, the power to direct or cause the direction of, directly or indirectly through an intermediary, the management and policies of the person, through the ownership of voting interests, by contract other than a commercial contract for goods or nonmanagement services, or by other means; a natural person is not considered to control another person solely because the natural person is a director, officer, or employee of the other person; a person is rebuttably presumed to control a corporation if the person directly or indirectly owns of record, holds beneficially with power to vote, or holds proxies with discretionary authority to vote, 20 percent or more of the then outstanding voting securities issued by a corporation;
6. “controlling person” means, if used with respect to a specific person, a person who controls the specific person, directly or indirectly through an intermediary;
7. “corporate name” means the name of a corporation in its articles of incorporation;
8. “department” means the Department of Commerce, Community, and Economic Development;
9. “insolvent” means not paying debts in the ordinary course of business, not paying debts as they become due, or liabilities exceeding assets;
10. “interests of the licensee” includes the interests of the shareholders of the licensee;
11. “license” means a license issued under this chapter;
12. “licensee” means a corporation that is licensed under this chapter;
13. “officer” means
    1. with respect to a corporation, a person appointed or designated as an officer of the corporation by or under applicable law or the corporation’s articles of incorporation or bylaws, or a person who performs with respect to the corporation the functions usually performed by an officer of a corporation;
    2. with respect to a specific person other than a natural person or a corporation, a person who performs for the specific person the functions usually performed by an officer of a corporation for a corporation;
14. “order” means an approval, consent, authorization, exemption, denial, prohibition, or requirement applicable to a specific case and issued by the department, including a license condition and an agreement made by a person with the department under this chapter;
15. “person” includes a government and an agency of a government; when used with respect to acquiring control of or controlling a specific person, “person” includes a combination of two or more persons acting in concert;
16. “principal shareholder” means a person who owns, directly or indirectly, of record or beneficially, securities representing 10 percent or more of the outstanding voting securities of a corporation;
17. “subject person” means
    1. a controlling person, subsidiary, or affiliate of a licensee;
    2. a director, officer, or employee of a licensee or of a controlling person, subsidiary, or affiliate of a licensee;
    3. another person who participates in the conduct of the business of a licensee; or
    4. if used with respect to a licensee, a company or business of which the licensee holds control under AS 10.13.260 — 10.13.280 .

History. (§ 1 ch 133 SLA 1992)

Revisor’s notes. —

In 1999, “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in this section in accordance with § 88, ch. 58, SLA 1999.

In 2004, “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development” in this section, in accordance with § 3, ch. 47, SLA 2004.

Sec. 10.13.995. Short title.

This chapter may be cited as the Alaska BIDCO Act.

History. (§ 1 ch 133 SLA 1992)

Sec. 10.15.005. Purposes for which cooperatives may be organized.

A cooperative may be organized under this chapter for any lawful purpose, except for the purpose of banking or insurance or the furnishing of electric or telephone or related telecommunications service.

History. (§ 3 ch 107 SLA 1959; am § 1 ch 29 SLA 2020)

Effect of amendments. —

The 2020 amendment, effective April 30, 2020, added “or related telecommunications” near the end.

Sec. 10.15.010. General powers.

Each cooperative may

1. have perpetual succession unless a limited period of duration is stated in its articles;
2. sue and be sued, complain and defend, in its corporate name;
3. adopt a corporate seal and alter it, and use it by having it or a facsimile of it impressed, affixed, or reproduced;
4. buy, take, receive, lease, take by gift, devise or bequest, or otherwise acquire, own, hold, improve, use and otherwise deal in, real or personal property, wherever situated;
5. sell, convey, mortgage, pledge, lease, exchange, transfer and otherwise dispose of its property and assets;
6. buy, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in, shares or other interests in, or obligations of, other domestic or foreign cooperatives and corporations, partnerships or individuals, or direct or indirect obligations of the United States or of any other government, state, territory, or its governmental district or municipality or instrumentality;
7. make contracts and incur liabilities, borrow money at the rates of interest the cooperative determines, issue notes, bonds, certificates of indebtedness and other obligations, issue certificates representing equity interests in its assets, and secure its obligations by mortgage or pledge of its property, franchise and income;
8. lend money for its corporation purposes, invest and reinvest its funds and take and hold real and personal property as security for the payment of funds loaned or invested;
9. conduct business and affairs and have offices and exercise its powers in a state, territory, district or possession of the United States, or in a foreign country;
10. elect or appoint officers and agents, and define their duties and fix their compensation;
11. make and alter bylaws, consistent with its articles and the laws of the state, for the administration and regulation of its affairs;
12. donate for the public welfare or for charitable, scientific or educational purposes;
13. indemnify a director, officer or agent or former director, officer or agent, or a person who may have served at its request as a director or officer of another domestic or foreign cooperative of which it is a member, against expenses necessarily incurred in defense of a proceeding in which that person is a party because that person served as a director, officer or agent, but this paragraph does not apply to proceedings in which the director, officer or agent is adjudged liable for negligence or misconduct in the performance of duty, and indemnification under this paragraph is not exclusive of other rights to which the director, officer or agent may have been entitled;
14. cease its activities and surrender its franchise;
15. have and exercise all powers necessary or convenient to carry out the purposes for which the cooperative is organized.

History. (§ 4 ch 107 SLA 1959)

Sec. 10.15.015. Bylaws.

The board of directors shall adopt the initial bylaws of a cooperative. The members of the cooperative may alter, amend or repeal the bylaws or adopt new bylaws. Bylaws may contain provisions for the regulation and management of the affairs of the cooperative not inconsistent with law or the articles.

History. (§ 5 ch 107 SLA 1959)

Sec. 10.15.020. Membership.

1. Membership in a cooperative is conditioned on ownership of a share of membership stock or payment of a membership fee as set forth in the articles.  However, the bylaws of a cooperative may authorize membership conditioned upon payment of part of the membership fee or payment for part of the membership stock subscribed for and compliance with an agreement to pay the balance.
2. The bylaws of the cooperative shall set forth the qualifications for membership and method of acceptance of members; however, the bylaws may not deny membership privileges or votes to any owner or holder of a producer’s certificate of equity if they own or hold payable or past due certificates of $2,500 or more.
3. Bylaws may provide for termination of membership and the conditions and terms of termination.

History. (§ 6 ch 107 SLA 1959; am § 22 ch 170 SLA 1976)

Sec. 10.15.025. Registered office and registered agent.

Each cooperative shall continuously maintain in this state a registered

1. office which may, but need not, be the same as its place of business;
2. agent, who may be either an individual resident in the state whose business office is identical with the registered office, or a domestic corporation having a business office identical with the registered office, or a foreign corporation authorized to transact business in the state and having a business office identical with the registered office.

History. (§ 7(1) ch 107 SLA 1959)

Sec. 10.15.030. Change of registered office or agent.

A cooperative may change its registered office or registered agent under the procedure set out in AS 10.06.165 , and a person who has been designated by a cooperative as its registered agent may resign under the procedure set out in AS 10.06.170 .

History. (§ 7(2) ch 107 SLA 1959; am § 3 ch 166 SLA 1988)

Sec. 10.15.035. Service on agent is service on cooperative.

A registered agent appointed by a cooperative is an agent of the cooperative upon whom process, notice or demand required or permitted by law to be served upon the cooperative may be served.

History. (§ 7(3) ch 107 SLA 1959)

Sec. 10.15.040. Defense of ultra vires.

An act or a transfer of property to or by a cooperative is not invalid because it is in excess of the cooperative’s power to do the act or make or receive the transfer, except that the lack of power may be asserted in a proceeding by

1. a member, shareholder or director against the cooperative to enjoin an act or transfer of property to or by the cooperative; if the unauthorized act or transfer sought to be enjoined is being, or is to be, performed or made under a contract to which the cooperative is a party, the court may, if all of the parties to the contract are parties to the proceeding and if it considers it equitable, set aside and enjoin the performance of the contract, and in so doing may allow to the cooperative or to the other parties to the contract compensation for the loss or damage sustained by either of them resulting from the action of the court in setting aside and enjoining the performance of the contract; but the court may not award anticipated profits to be derived from the performance of the contract as a loss or damage sustained;
2. a cooperative, its legal representative, or through its members or shareholders in a representative suit, against the officers or directors or former officers and directors of the cooperative;
3. the attorney general against the cooperative in an action to dissolve the cooperative or to enjoin it from the transaction of unauthorized business.

History. (§ 8 ch 107 SLA 1959)

Sec. 10.15.045. Capital stock.

A cooperative, including a cooperative that requires a membership fee rather than the holding of membership stock as a prerequisite of membership, may issue the number of shares of capital stock stated in its articles. The shares may be divided into more than one class with the designations, preferences, limitations and relative rights stated in the articles, except that capital stock has no voting power except as specifically authorized in this chapter.

History. (§ 9(1) ch 107 SLA 1959)

Sec. 10.15.050. Membership stock.

The articles may require that members own one or more shares of membership stock, and may provide limitations on the issuance and transferability of the stock.

History. (§ 9(2) ch 107 SLA 1959)

Sec. 10.15.055. Transfer of stock.

Unless restricted by the articles, stock other than membership stock may be issued or transferred without limitation.

History. (§ 9(2) ch 107 SLA 1959)

Sec. 10.15.060. Payment required for issuance.

A stock certificate may not be issued except upon payment of the par value of the shares it represents if the shares have par value, or if the shares are without par value, upon payment of the consideration for the shares expressed in dollars as fixed for the shares by the board. Payment for shares may be in cash or other tangible or intangible property. If payment is made in property other than cash, the value of the property shall be determined by the board. The determination, if made in good faith, is conclusive.

History. (§ 9(3) ch 107 SLA 1959)

Sec. 10.15.065. No preemptive right to new issues.

Shareholders have no preemptive right to purchase additional shares.

History. (§ 9(4) ch 107 SLA 1959)

Sec. 10.15.070. Certificates representing shares.

Each certificate of stock of a cooperative must bear the manual or facsimile signature of a principal officer and must include the following information:

1. the name of the cooperative, number and class of the shares represented by the certificate, the par value of each share or a statement that the shares are without par value, and if the shares are membership stock, that designation;
2. any restrictions on the issuance or transfer of the shares;
3. if more than one class of stock is authorized or if stock is authorized in a cooperative that requires a membership fee of its members, designation of the several classes of stock and the respective preferences, limitations, and relative rights of the classes; instead of a full statement, the information required by this paragraph may be given in summary form.

History. (§ 10 ch 107 SLA 1959)

Sec. 10.15.075. Manner of voting by shareholders.

AS 10.06.420 relating to voting of shares in business corporations applies to shareholders of cooperatives and shares of the capital stock of cooperatives other than membership stock.

History. (§ 11(1) ch 107 SLA 1959; am § 4 ch 166 SLA 1988)

Sec. 10.15.080. Determining who are shareholders for purposes of notice, voting, and dividends.

For the purpose of determining shareholders entitled to notice of or to vote at meetings, or entitled to receive payment of a dividend, the bylaws may fix in advance a date as the record date for the determination of shareholders. The date shall be not more than 50 days and not less than 10 days prior to the date on which the particular action requiring the determination of shareholders is to be taken. If no record date is fixed by the bylaws, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring the dividend is adopted, as the case may be, is the record date for the determination of shareholders. When a determination of shareholders entitled to vote at a meeting is made as provided in this section, the determination applies to any adjournment of that meeting.

History. (§ 11(2) ch 107 SLA 1959)

Sec. 10.15.085. Subscription for shares.

A subscription for shares of a cooperative is irrevocable for six months unless otherwise provided by the subscription agreement, or unless all subscribers consent to the revocation.

History. (§ 12 ch 107 SLA 1959)

Sec. 10.15.090. Limitation of liability of members.

Except for a debt lawfully contracted between a member and the cooperative, a member is not liable for the debts of the cooperative in an amount exceeding the sum remaining unpaid on the member’s subscription for shares of the cooperative, and the sum remaining unpaid on the member’s membership fee if a fee is required by the cooperative.

History. (§ 13 ch 107 SLA 1959)

Sec. 10.15.095. Dividends on capital stock.

A cooperative organized with capital stock may pay the dividend upon capital stock authorized by its articles if its capital is not impaired and would not be impaired by the payment.

History. (§ 14 ch 107 SLA 1959)

Sec. 10.15.100. Recall, acquisition, exchange, redemption, and reissuance of stock or other evidence of equity.

Unless the articles provide otherwise, a cooperative may recall membership stock upon termination of membership, and acquire, exchange, redeem, and reissue its own shares or other evidences of equity. The consideration paid for shares of membership stock recalled by the cooperative shall be the par value of the shares plus accrued and unpaid dividends, if any. However, if the shares have no par value the consideration paid shall be the consideration in dollars for which the shares were issued plus accrued and unpaid dividends. The cooperative may set off obligations to it of the holder of membership stock or other evidence of equity.

History. (§ 15(1) ch 107 SLA 1959)

Revisor’s notes. —

In 2002, “and” was inserted before “acquire” in the first sentence to correct a manifest error.

Sec. 10.15.105. Limitations on acquisition, recall, exchange, or redemption.

No acquisition, recall, or redemption of stock or other evidence of equity may be made if the result would be to bring the value of the remaining assets of the cooperative below the aggregate of its indebtedness. The articles may provide limitations on the right of a cooperative to acquire, recall, exchange, or redeem its shares or other evidences of equity.

History. (§ 15(1) ch 107 SLA 1959)

Sec. 10.15.110. Status of acquired, recalled, exchanged, or redeemed shares.

When shares are acquired, recalled, exchanged or redeemed by the cooperative, they are restored to the status of authorized but unissued shares.

History. (§ 15(2) ch 107 SLA 1959)

Sec. 10.15.115. Missing certificates or ownership records.

1. When a certificate for a security issued by a cooperative is missing, the cooperative shall issue a duplicate certificate upon the request of the owner and upon the furnishing of the indemnity required by the cooperative.
2. When records showing ownership of securities are missing or if records upon which the apportionment of securities is based are missing, and in either case if the information which is missing is necessary to a proposed redemption of the securities, the cooperative may give notice and redeem the securities as follows:
   1. the cooperative shall set aside an amount equal to the value of the securities to be redeemed;
   2. the cooperative shall give notice of the redemption to all owners of securities of whom the cooperative has knowledge;
   3. if the ownership of any securities is unknown to the cooperative, it shall publish notice of the redemption at least once a month for four months in a newspaper of general circulation in the judicial district in which the registered office of the cooperative is located;
   4. after publication, unclaimed outstanding securities represented by the missing records may be terminated in accordance with the provisions of this chapter dealing with unclaimed distributions, redemptions or proceeds.

History. (§ 16 ch 107 SLA 1959)

Sec. 10.15.120. Meetings of members.

1. Meetings of members may be held either inside or outside the state as provided in the bylaws.  In the absence of a bylaw provision, meetings shall be held at the principal place of business of the cooperative.
2. An annual meeting of the members shall be held at the time or within the time provided in the bylaws.  If the bylaws do not fix a time for the meeting, the annual meeting shall be held in each calendar year at the time the board determines. Failure to hold the annual meeting at the designated time does not work a forfeiture or dissolution of the cooperative.
3. Special member meetings may be called by the president or the board.  The secretary shall call a special meeting upon the filing of a petition stating the business to be brought before the meeting signed by not less than 10 percent of the members of the cooperative.
4. Written notice stating the place, day and hour, and in case of a special member meeting the purpose for which the meeting is called, shall be given to each member and each shareholder, if shareholders are entitled to vote at the meeting, either personally or by mail, not less than seven or more than 30 days before the meeting by direction of the person calling the meeting.  If that notice is mailed, it is considered given when deposited in the United States mail addressed to the member or shareholder at the address of the member or shareholder as it appears on the records of the cooperative with postage prepaid. At a meeting at which the members are to be represented by delegates, notice to the members may be given by notifying the delegates and their alternates, if any.

History. (§ 17(1) — (4) ch 107 SLA 1959)

Sec. 10.15.125. Districts and district meetings.

A cooperative may provide in its bylaws (1) for the formation of districts, and the holding of member meetings by districts and the holding of elections of directors at district meetings; and (2) that delegates may be elected at district meetings to represent their districts in annual and special meetings of the members. Notice of district meetings shall be given in the same manner as prescribed in AS 10.15.120 for member meetings.

History. (§ 17(5) ch 107 SLA 1959)

Sec. 10.15.130. Voting by members.

1. Each member has one vote except that bylaws may authorize voting according to actual, estimated or potential patronage, or a combination of these plans of voting.  Shares of stock may not be given voting power except in the specific instances authorized by this chapter.
2. Members may not vote by proxy.  However, a member that is a corporation, association or partnership may designate a representative to cast its vote.  In the absence of written notice that a person has been designated to represent a member which is other than a natural person, the member may be represented by any of its principal officers.
3. If the bylaws of a cooperative provide for the formation of districts and the election of delegates at district meetings to represent their districts in member meetings, this representation is not considered voting by proxy.  The delegates shall cast the votes to which members represented by them are entitled on those matters not covered by mail ballots submitted to all members.
4. If the bylaws so provide, the board may have submitted by mail ballot any question to be voted on at a member meeting, including the election of directors.  In this event the secretary shall mail to each member, along with the notice of the meeting, the ballot on each question and a voting envelope.  The ballot shall be cast in a sealed envelope authenticated by the member’s signature.  A vote cast by mail shall be counted as if the member were present and voting in person.
5. The bylaws may set forth provisions, not inconsistent with this chapter, relating to the methods and procedures for voting.

History. (§ 18 ch 107 SLA 1959)

Sec. 10.15.135. Quorum of members.

Ten percent of voting members, in person or by proxy, if district delegates, constitute a quorum for an annual or special meeting unless the bylaws provide for a greater number.

History. (§ 19 ch 107 SLA 1959)

Sec. 10.15.140. Qualifications and membership of board of directors.

1. The board of directors shall manage the business and affairs of a cooperative.  Each director shall be a member or a representative of a member who is not a natural person. Unless the bylaws otherwise provide, directors need not be residents of this state.  The bylaws may prescribe other qualifications for directors and may provide that directors be from specified state districts.
2. The board of directors shall consist of at least three members.  The number of directors shall be fixed or determined by the bylaws, except that the number constituting the initial board shall be fixed by the articles.

History. (§ 20(1) — (2) ch 107 SLA 1959)

Sec. 10.15.145. Initial board of directors.

Directors constituting the initial board hold office until the first annual meeting of the members and until their successors are elected and take office.

History. (§ 20(3) ch 107 SLA 1959)

Sec. 10.15.150. Election and terms of directors.

At the first annual meeting and at subsequent meetings, directors shall be elected by the members in the manner and for the term of office provided in the bylaws, but not to exceed three years. Each director shall enter immediately upon the discharge of the director’s duties and, subject to resignation or removal, shall hold office for the term for which elected and until a successor takes office.

History. (§ 20(3) ch 107 SLA 1959)

Sec. 10.15.155. Removal of directors.

A director may be removed upon a majority vote of all members voting in person at a member meeting. Before a vote for removal may be taken, written reasons for removal of the director shall be presented at a meeting of members and the director sought to be removed shall have an opportunity to answer the reasons at that meeting. The written statement of reasons for removal shall be filed with the minutes of the meeting. The bylaws may contain other provisions for the removal of a director consistent with the provisions of this section.

History. (§ 20(4) ch 107 SLA 1959)

Sec. 10.15.160. Filling unexpired term.

Unless the bylaws provide otherwise, a vacancy in the board may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board. The director elected to fill a vacancy serves for the unexpired term of the director’s predecessor in office.

History. (§ 20(5) ch 107 SLA 1959)

Sec. 10.15.165. Meetings of board of directors.

1. Regular or special meetings of the board may be held inside or outside the state.
2. Regular meetings of the board may be held with or without notice as prescribed in the bylaws.  Special meetings of the board shall be held upon the notice prescribed in the bylaws. Attendance of a director at a meeting constitutes a waiver of notice of the meeting except where a director attends a meeting for the express purpose of objecting to the transaction of business because the meeting is not lawfully called or convened.
3. Unless the bylaws provide otherwise, the purpose of a meeting of the board need not be specified in the notice of the meeting.
4. Unless a greater number is required in the bylaws, a majority of the members of the board determined pursuant to the bylaws or in the absence of a bylaw fixing the number of directors, then of the number stated in the articles constitutes a quorum for the transaction of business.  Unless a greater number is required in the bylaws, an act of the majority of the directors present at a meeting at which a quorum is present is the act of the board.

History. (§ 21 ch 107 SLA 1959)

Sec. 10.15.170. Executive committee.

1. If the bylaws provide, the board may elect an executive committee consisting of three or more directors which, to the extent provided in the bylaws of the cooperative, may exercise all the authority of the board in the management of the cooperative, except for
   1. apportionment or distribution of net proceeds, savings or losses;
   2. selection of officers;
   3. filling of vacancies in the board or the executive committee.
2. The board may elect other directors as alternates for members of the executive committee.
3. Designation of an executive committee and the delegation to it of authority does not relieve the board or a member of the board of any responsibility imposed by law.

History. (§ 22 ch 107 SLA 1959)

Sec. 10.15.175. Officers.

1. The principal officers of a cooperative are a president, one or more vice presidents as prescribed in the bylaws, a secretary and a treasurer.  The officers shall be elected annually by the board at the time and in the manner the bylaws provide.  The offices of secretary and treasurer may be combined in one person.  Each principal officer except the secretary and the treasurer, and one of the vice presidents if the bylaws provide for more than one, shall be a director of the cooperative.  The manager of a cooperative may hold the office of vice president if more than one vice president is provided for in the bylaws.
2. Other officers may be chosen by the board.
3. Officers have the authority and shall perform the duties the bylaws provide, or as the board determines, not inconsistent with the bylaws.  Any officer may be removed by the board whenever in its judgment the best interests of the cooperative will be served by removal.  Election or appointment of an officer does not of itself create contract rights.

History. (§ 23 ch 107 SLA 1959)

Sec. 10.15.180. Compensation and benefits to directors, officers, and employees.

Unless the bylaws provide otherwise,

1. only the members of the cooperative may establish compensation or other benefits for a director, not available generally to officers and employees, for services as a director;
2. a director may not hold, during a term as director, a position in the cooperative on regular salary;
3. the board may provide, for prior or future services of an officer or employee, reasonable compensation, pension, or other benefits to the officer or employee and pension or other benefits to a member of the family of the officer or employee or the beneficiaries of the officer or employee; an officer or employee who is a director may not take part in a vote on compensation for services rendered or to be rendered to the cooperative by that officer or employee.

History. (§ 24 ch 107 SLA 1959)

Sec. 10.15.185. Taking action without meeting.

Action required by this chapter to be taken at a meeting of the members or directors of a cooperative, or any other action that may be taken at a meeting of the members, directors, or members of the executive committee, may be taken without a meeting if a consent in writing setting forth the action taken is signed by all of the members, directors, or executive committee members entitled to vote. This consent has the force and effect of a unanimous vote at a meeting.

History. (§ 25 ch 107 SLA 1959)

Sec. 10.15.190. Waiver of notice.

Whenever a notice is required to be given to a member or director of a cooperative under this chapter or under the articles or bylaws of a cooperative, a waiver of notice in writing signed by the person entitled to the notice, before or after the time stated in the notice, is equivalent to the giving of the notice.

History. (§ 26 ch 107 SLA 1959)

Sec. 10.15.195. Voting requirements of articles.

If the articles require the vote of a greater proportion of the members or shareholders than required by this chapter, the articles control.

History. (§ 27 ch 107 SLA 1959)

Sec. 10.15.200. Procedural requisites in action brought in right of cooperative by member or shareholder.

1. An action may not be instituted or maintained in the right of a cooperative by a member or shareholder unless that person
   1. alleges in the complaint that the person was a member or shareholder of record when a part of the transaction of which the person complains took place, or that membership or stock afterwards devolved on the person by operation of law from a person who was a member or shareholder at that time;
   2. alleges in the complaint with particularity efforts of the person to secure from the board the action desired, that the person has either informed the cooperative or board in writing of the ultimate facts of each cause of action against each director or that the person has delivered to the cooperative or board a copy of the complaint that the person proposes to file, and states the reasons for failure of the person to obtain action or the reasons for not making the effort;
   3. files a complaint in the action within 20 days after notification given to the cooperative or board as provided by (2) of this subsection.
2. The action may not be dismissed or compromised without the approval of the court.

History. (§ 28(1) — (2) ch 107 SLA 1959)

Sec. 10.15.205. Allowance of costs to plaintiff; accounting for proceeds.

If anything is recovered or obtained as the result of an action under AS 10.15.200 , whether by compromise and settlement or by judgment, the court may award the plaintiff the reasonable expenses of maintaining the action, including reasonable attorney fees, out of the proceeds of the recovery, and may direct the plaintiff to account to the cooperative for the remainder of the proceeds.

History. (§ 28(3) ch 107 SLA 1959)

Revisor’s notes. —

In 2002, “an action under AS 10.15.200 ” was substituted for “the action” to correct a manifest error in the codification of this section.

Sec. 10.15.210. Security for costs.

In an action brought in the right of a cooperative by fewer than three percent of the members or by holders of less than three percent of an outstanding class of stock, the defendants may require the plaintiff to give security for the reasonable expenses of defending the action, including attorney fees. The amount of the security may be increased or decreased in the discretion of the court upon showing that the security provided is or may be inadequate or is excessive.

History. (§ 28(4) ch 107 SLA 1959)

Sec. 10.15.215. Permitted purposes of cooperative contracts with members.

Contracts for any of the following purposes, whether contained in the bylaws or separately written, are valid when made between a cooperative and a member in which the member agrees to

1. sell, market or deliver to or through the cooperative or facilities furnished by it all or a specified part of products produced by the member or under the control of the member;
2. authorize the cooperative or facilities furnished by it to act for the member in any manner with respect to all or a specified part of products produced by the member or under the control of the member;
3. buy or procure from or through the cooperative or facilities furnished by it all or a specified part of goods or services to be bought or produced by the member;
4. authorize the cooperative or facilities furnished by it to act for the member in any manner in the procurement of goods or the procurement of performance of services.

History. (§ 29(1) ch 107 SLA 1959)

Sec. 10.15.220. Liquidated damages clause in cooperative contracts.

The contract referred to in AS 10.15.215 may fix and require liquidated damages to be paid by the member to the cooperative in the event of a breach of the contract by the member. Liquidated damages may be a percentage of the value or a specified amount per unit of the products, goods or services involved by the breach, or a specific sum.

History. (§ 29(2) ch 107 SLA 1959)

Sec. 10.15.225. Contracts between two or more cooperatives.

Two or more cooperatives may contract and act in association, corporate or otherwise, to perform collectively any of their powers or purposes authorized by this chapter.

History. (§ 29(3) ch 107 SLA 1959)

Sec. 10.15.230. Recording of cooperative contracts.

A cooperative may record a contract authorized by this chapter in the office of the recorder of the recording district in which the member resides or in which the products covered by the contract have been or are to be produced.

History. (§ 30(1) ch 107 SLA 1959)

Revisor’s notes. —

Minor word changes related to the recording of documents were made in this section in 1988 because of the enactment of ch. 161, SLA 1988.

Sec. 10.15.235. Recording of uniform cooperative contracts.

If the cooperative has substantially uniform contracts with more than one member residing or producing the products in a recording district, it may, instead of recording the original contracts, record

1. a true copy of the uniform contract; and
2. a sworn list of the names of members who have executed the contract and who reside or produce the products in the recording district, and the effective date of the contract as to each member.

History. (§ 30(1) ch 107 SLA 1959)

Revisor’s notes. —

Minor word changes related to the recording of documents were made in this section in 1988 because of the enactment of ch. 161, SLA 1988.

Sec. 10.15.240. Recording procedure.

The recorder shall number consecutively and record each contract, and shall record alphabetically in a book to be kept for that purpose the name of each party to the contract and enter opposite that name the record number of the contract and its effective date as to that party. The record book shall be available for public inspection.

History. (§ 30(2) ch 107 SLA 1959)

Revisor’s notes. —

Minor word changes related to the recording of documents were made in this section in 1988 because of the enactment of ch. 161, SLA 1988.

Sec. 10.15.245. Fees for recording contracts.

The fee for recording the contract is the same as for recording a chattel mortgage. The fee for recording the names of parties to each contract is two cents for each name.

History. (§ 30(2) ch 107 SLA 1959)

Revisor’s notes. —

Minor word changes related to the recording of documents were made in this section in 1988 because of the enactment of ch. 161, SLA 1988.

Sec. 10.15.250. Effect of recording contract; subsequent interests and liens.

Recording under AS 10.15.230 — 10.15.260 operates as a constructive notice to all persons of the existence and contents of the contract. Any right, title, interest, or lien created as to the products covered by the contract subsequent to the recording is subject to the cooperative’s right, title, or interest under the contract. If the member creates a mortgage upon any products subsequent to the recording of the contract, and if the member and the mortgagee jointly notify the cooperative in writing of the existence and amount of the mortgage, all payments from the cooperative to the member which become due after the notice by reason of the cooperative’s sale or other handling of the products shall be paid to the mortgagee until the amount of the mortgage has been paid, and the balance thereafter shall be paid to the member.

History. (§ 30(3) ch 107 SLA 1959)

Revisor’s notes. —

Minor word changes related to the recording of documents were made in this section in 1988 because of the enactment of ch. 161, SLA 1988.

Sec. 10.15.255. Termination of recorded contract.

When a contract recorded under AS 10.15.230 — 10.15.260 has been terminated in any manner, the cooperative shall, upon demand, give a statement of termination to the member party to the contract, who may record the statement in the office of the recorder where the contract was originally recorded. The recorder shall stamp “expired” after the name of the member in the alphabetical record. The fee for the recording and stamping shall be established by the department by regulation.

History. (§ 30(4) ch 107 SLA 1959; am § 42 ch 123 SLA 1980; am § 13 ch 50 SLA 1989)

Revisor’s notes. —

Minor word changes related to the recording of documents were made in this section in 1988 because of the enactment of ch. 161, SLA 1988.

Sec. 10.15.260. Recording of list of terminated contracts.

A cooperative may record in the office of the recorder where the contract was originally recorded a sworn list of the names of all persons whose contracts have been terminated in a manner other than by expiration of their term. The recorder shall stamp “expired” after the name of each of those persons in the alphabetical record. The fee for the recording and stamping shall be established by the department by regulation.

History. (§ 30(4) ch 107 SLA 1959; am § 43 ch 123 SLA 1980; am § 14 ch 50 SLA 1989)

Revisor’s notes. —

Minor word changes related to the recording of documents were made in this section in 1988 because of the enactment of ch. 161, SLA 1988.

Sec. 10.15.265. Relief against breach or threatened breach of contract and penalty for interference.

1. In the event of a breach or threatened breach of a cooperative contract authorized by this chapter, the cooperative is entitled to an injunction to prevent the breach or a further breach, and to a decree of specific performance of the contract.  Upon filing of a verified complaint showing the breach or threatened breach, and upon filing a sufficient bond, the cooperative is entitled to a temporary restraining order.
2. A person who, with knowledge that a contract exists, induces or attempts to induce a member to breach the contract with the cooperative, or who in any manner aids a breach of the contract, is liable to the cooperative for damages caused by the interference.  The cooperative is also entitled to an injunction to prevent any interference or further interference with the contract.

History. (§ 31 ch 107 SLA 1959)

Sec. 10.15.270. Action for civil penalty for inducing breach of contract with cooperative or spreading false reports about cooperative.

In addition to the remedies provided in AS 10.15.265(b) , a person who knowingly and maliciously induces or attempts to induce a member of a cooperative to breach a contract with the cooperative authorized by this chapter, or who knowingly or maliciously spreads a false report about the finances or management of a cooperative is liable, in a civil action, to the cooperative aggrieved, in the penal sum of $500 for each offense.

History. (§ 32 ch 107 SLA 1959)

Sec. 10.15.275. Apportionment and distribution of net proceeds, savings, or net losses.

The net proceeds or savings of a cooperative shall be apportioned, distributed and paid periodically to the persons entitled to receive them at the times and in the reasonable manner as the bylaws provide. However, net proceeds or savings on patronage of the cooperative by its members shall be apportioned and distributed among these members in accordance with the ratio which each member’s patronage during the period involved bears to total patronage by all members during that period. The bylaws may contain reasonable provisions for the apportionment and charging of net losses. For the purposes of this section work performed as a member of a workers’ cooperative is considered as patronage of that cooperative.

History. (§ 33(1) ch 107 SLA 1959)

Sec. 10.15.280. Manner of payment.

The apportionment, distribution, and payment of net proceeds or savings required by AS 10.15.275 may be in cash, credits, capital stock, certificates of interest, revolving fund certificates, letters of advice or other securities or certificates issued by the cooperative or by an affiliated domestic or foreign cooperative association whether or not incorporated under this chapter.

History. (§ 33(2) ch 107 SLA 1959)

Sec. 10.15.285. Manner of apportionment and distribution.

1. Apportionment and distribution of net proceeds or savings or net losses may be separately determined for and be based upon patronage of single or multiple pools, particular departments of the cooperative, or as to particular commodities, supplies or services, or upon classification of patronage according to the type of patronage.
2. A cooperative may provide in its bylaws the minimum amount of a single patronage transaction to be taken into account for the purpose of participation in allocation and distribution of net proceeds or savings or net losses under AS 10.15.275 — 10.15.290 .

History. (§ 33(3) — (4) ch 107 SLA 1959)

Sec. 10.15.290. Determination of net proceeds, savings, or losses.

For the purposes of AS 10.15.275 — 10.15.290 net proceeds or savings or net losses shall be computed in accordance with generally accepted accounting principles applicable to cooperative corporations, and after deducting from gross proceeds or savings dividends paid upon capital stock.

History. (§ 33(5) ch 107 SLA 1959)

Sec. 10.15.295. Unclaimed distribution, redemptions, or payments.

A distribution of net margins by a cooperative or a redemption of or payment based upon a security, which remains unclaimed six years after the date authorized for payment, redemption, or retirement may be forfeited by the board. The amount forfeited may revert to the cooperative, if, at least six months prior to the declared date of forfeiture, notice that the payment is available has been mailed to the last known address of the person shown by the cooperative’s records to be entitled to it or, if the address is unknown, is published as provided by law for the publication of summons.

History. (§ 34 ch 107 SLA 1959)

Sec. 10.15.300. Sale or other disposition of entire assets in regular course of business.

The sale, lease, exchange or other disposition of all, or substantially all, the property and assets of a cooperative, when made in the usual and regular course of the business of the cooperative, may be made on the terms and conditions and for the consideration authorized by the board. The consideration may consist in whole or in part of money or real or personal property, including shares of another cooperative, corporation or association, domestic or foreign, as authorized by its board. Authorization or consent of members or shareholders is not required.

History. (§ 35(1) ch 107 SLA 1959)

Sec. 10.15.305. Sale or other disposition of entire assets not in regular course of business.

A sale, lease, exchange, or other disposition of all, or substantially all the property and assets, with or without the good will, of a cooperative, if not made in the usual and regular course of its business, may be made upon the terms and for the consideration, which may consist in whole or in part of money or real or personal property, including shares of another cooperative, corporation, or association, as may be authorized in the following manner:

1. the board shall adopt a resolution recommending the sale, lease, exchange, or other disposition and directing the submission of the resolution to a vote at a meeting of members, which may be either an annual or a special meeting, or if there are shareholders the submission shall be to a joint meeting of members and shareholders; the vote may be submitted at an annual or a special meeting;
2. written notice shall be given to each member and to each shareholder within the time and in the manner provided for the giving of notice of meetings of members, and shall state that the purpose of the meeting is to consider the proposed sale, lease, exchange, or other disposition;
3. at the meeting, the members, by affirmative vote of a majority of the member votes cast, and the shareholders, by affirmative vote of a majority of the shareholder votes entitled to be voted, may approve the sale, lease, exchange, or other disposition, and may fix or may authorize the board to fix the terms and conditions of the transaction and the consideration to be received by the cooperative.

History. (§ 35(2) ch 107 SLA 1959)

Sec. 10.15.310. Abandonment of sale or other disposition.

After authorization by votes of members and shareholders, the board may abandon the sale, lease, exchange or other disposition of all or substantially all assets subject to the rights of third parties under a contract relating thereto, without further action or approval by members or shareholders.

History. (§ 35(3) ch 107 SLA 1959)

Sec. 10.15.315. Books and records; inspection.

1. A cooperative shall keep correct and complete books and records of account, and shall keep minutes of the proceedings of its members, board and executive committee. It shall keep at its principal office records of the names and addresses of all members and shareholders.  At any reasonable time, a member or shareholder, or an agent or attorney for the member or shareholder, upon written notice stating the purpose, may examine for any proper purpose books or records pertinent to the purpose specified in the notice and may make extracts from the books or records.
2. In an action or proceeding to enforce the right of a member or shareholder provided in (a) of this section, if the member or shareholder prevails in the action or proceeding, there shall be allowed to the member or shareholder, as a part of costs, a reasonable amount to be fixed by the court as attorney fees for the prosecution of the action or proceeding.

History. (§ 36 ch 107 SLA 1959)

Sec. 10.15.320. Biennial report.

1. Each cooperative shall file with the department before July 2 of the reporting year a biennial report signed by a principal officer or the general manager setting out
   1. its name and the address of its principal place of business in the state;
   2. the name of its registered agent and address of its registered office;
   3. the names and addresses of its principal officers and its general manager, if any;
   4. a statement of the aggregate number of shares that the cooperative may issue, itemized by classes, par value of shares, shares without par value;
   5. a statement of the aggregate number of shares subscribed, but not paid up, itemized by classes, par value of shares, shares without par value;
   6. a statement of the aggregate number of paid-up shares, itemized by classes, par value of shares, shares without par value;
   7. for cooperatives established without capital stock the biennial report shall contain a statement as to the amount of the membership fee and a statement as to the number of memberships which are issued;
   8. a brief statement of the character of the business in which the cooperative is engaged in this state.
2. A domestic cooperative filing its articles of incorporation and a foreign cooperative receiving a certificate of authority during an even-numbered year must file the biennial report before July 2 of each even-numbered year.  A cooperative filing its articles of incorporation or receiving its certificate of authority during an odd-numbered year must file the biennial report before July 2 of each odd-numbered year.

History. (§ 37(1) ch 107 SLA 1959; am § 44 ch 123 SLA 1980)

Sec. 10.15.325. Form of biennial report; delinquent reports.

The biennial report shall be made on forms furnished by the department. The information contained in the biennial report shall be given as of June 30 of the reporting year. The biennial report is delinquent if not filed before August 1 of each odd or even year as provided in this section. A corporation that is delinquent is subject to involuntary dissolution under AS 10.15.505 .

History. (§ 37(2) ch 107 SLA 1959; am § 23 ch 170 SLA 1976; am § 45 ch 123 SLA 1980; am § 15 ch 50 SLA 1989)

Sec. 10.15.330. Acceptance of biennial reports by department.

If the department finds that the biennial report conforms to the requirements of this chapter, it shall accept it. If the biennial report does not conform to the requirements of this chapter, the department shall return it to the cooperative for necessary corrections, in which event the penalties prescribed in this chapter for failure to file the statement within the time provided in AS 10.15.325 do not apply, if the statement is corrected to conform to the requirements of this chapter and returned to the department within 60 days after the report has been returned to the cooperative.

History. (§ 37(3) ch 107 SLA 1959; am § 46 ch 123 SLA 1980)

Sec. 10.15.331. Filing notice of change of officer or director.

1. In the event of a change of an officer or director of a corporation during the year following the filing of the biennial report, the corporation shall file notice of change amending that report before July 2 of that year.
2. The notice shall be filed in the office of the commissioner and must state the name and current address of a director or officer not stated in the corporation’s last filed biennial report, and the name of the person replaced and the office held.  The notice shall be signed by an officer of the corporation.

History. (§ 47 ch 123 SLA 1980)

Sec. 10.15.335. Procedure for incorporation.

Three or more natural persons at least 19 years of age may act as incorporators of a cooperative by signing and delivering articles for the cooperative in duplicate to the commissioner.

History. (§ 38(1) ch 107 SLA 1959; am § 21 ch 65 SLA 1998)

Collateral references. —

54 Am. Jur. 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices, § 177.

58 C.J.S., Monopolies, § 178.

Sec. 10.15.340. Filing of articles.

1. Upon finding that the articles conform to law, the commissioner shall, when all fees prescribed in this chapter have been paid,
   1. stamp on each duplicate original the word “filed” and the date of the filing;
   2. file one duplicate original in the commissioner’s office;
   3. issue a certificate of incorporation and affix the other duplicate original to the certificate.
2. The certificate of incorporation together with the duplicate original affixed to it by the commissioner shall be returned to the incorporators or their representative.

History. (§ 38(2) — (3) ch 107 SLA 1959)

Sec. 10.15.345. Effect of certificate of incorporation.

Upon the issuance of the certificate of incorporation, the corporate existence begins, and the certificate of incorporation is conclusive evidence that all conditions precedent required to be performed by the incorporators have been complied with and that the cooperative has been incorporated under this chapter, except as against the state in a proceeding to cancel or revoke the certificate of incorporation or for involuntary dissolution of the cooperative.

History. (§ 38(4) ch 107 SLA 1959)

Sec. 10.15.350. Contents of articles of incorporation; director liability.

1. The articles of incorporation must set forth
   1. the name of the cooperative and that it is a cooperative;
   2. the period of duration, which may be perpetual;
   3. the purposes for which the cooperative is organized;
   4. whether the cooperative is organized with or without membership stock, the amount of the membership fee, and the limitations, if any, on transfer of a membership;
   5. the number and par value, if any, of shares of each authorized class of stock, and if more than one class is authorized, the designation, preferences, limitations and relative rights of each class;
   6. which classes of stock, if any, are membership stock, and the limitations upon transfer, if any, applicable to the classes of membership stock;
   7. any limitation of the right to acquire or recall stock;
   8. the basis of distribution of assets in the event of dissolution or liquidation;
   9. the address of its initial registered office and the name of its initial registered agent at that address;
   10. the number of directors, not less than three, 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 the members or until their successors are elected and take office;
   11. the name and address of each incorporator.
2. In addition to the matters required to be set out in the articles of incorporation by (a) of this section, the articles of incorporation may also contain a provision eliminating or limiting the personal liability of a director to the corporation or its members for monetary damages for the breach of fiduciary duty as a director. The articles of incorporation may not eliminate or limit the liability of a director for
   1. a breach of a director’s duty of loyalty to the corporation;
   2. acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
   3. wilful or negligent conduct involved in the payment of dividends or the redemption of stock from other than lawfully available funds; or
   4. a transaction from which the director derives an improper personal benefit.
3. The provisions of (b) of this section do not eliminate or limit the liability of a director for an act or omission that occurs before the effective date of the articles of incorporation or of an amendment to the articles of incorporation authorized by (b) of this section.

History. (§ 39(1) ch 107 SLA 1959; am § 3 ch 148 SLA 1988)

Sec. 10.15.355. Other provisions in articles; relationship of articles to bylaws.

It is not necessary to set forth in the articles the corporate powers enumerated in this chapter. The articles may include additional provisions, not inconsistent with law, for the regulation of the internal affairs of the cooperative, including any provision which under this chapter is required or permitted to be set forth in the bylaws. A provision required or permitted in the bylaws has equal force and effect if stated in the articles. Whenever a provision of the articles is inconsistent with a bylaw, the articles control.

History. (§ 39(2) ch 107 SLA 1959)

Sec. 10.15.360. Organizational meeting of directors.

After the issuance of the certificate of incorporation an organizational meeting of the board of directors named in the articles shall be held, either inside or outside the state, at the call of a majority of the incorporators for the purpose of adopting bylaws, electing officers and transacting such other business as may come before the meeting.

History. (§ 40 ch 107 SLA 1959)

Sec. 10.15.365. Amendment of articles.

A cooperative may amend its articles from time to time as may be desired, so long as its articles as amended contain only those provisions which might be lawfully contained in the original articles at the time of making the amendment, and, if a change in shares or the rights of shareholders or members, or an exchange, reclassification, or cancellation of shares or the rights of shareholders or members is to be made, those provisions necessary to effect the change, exchange, reclassification, or cancellation.

History. (§ 41(1) ch 107 SLA 1959)

Sec. 10.15.370. Procedure for adopting amendments.

1. An amendment to the articles shall be made in the manner set out in this section.
2. The board shall adopt a resolution setting forth the proposed amendment and directing it to be submitted to a vote at an annual or special meeting of the members of the cooperative.
3. Written notice setting out the proposed amendment or a summary of the changes to be effected by the amendment shall be given to each member of record within the time and in the manner provided in this chapter for the giving of notice of meetings of members.  If the meeting is an annual meeting, the proposed amendment or the summary may be included in the notice of the annual meeting.
4. At the meeting the members shall vote on the proposed amendment.  The proposed amendment is adopted if it receives the affirmative vote of a majority of the member votes cast. If shareholders are entitled by this chapter to vote on the proposed amendment, the proposed amendment is adopted if it receives the approval of shareholders as specified in this chapter, as well as the affirmative vote of a majority of member votes cast.  Any number of amendments may be submitted to the members and voted upon by them at one meeting.

History. (§ 41(2) ch 107 SLA 1959)

Revisor’s notes. —

In 1989, this section was reorganized to conform to the style of the Alaska Statutes. The former introductory clause was designated as subsection (a) and minor word changes were made to reflect the reorganization. Former paragraphs (1) — (3) were redesignated as subsections (b) — (d) respectively.

Sec. 10.15.375. Shareholder and member voting on amendments to articles.

1. If a proposed amendment to articles would affect a shareholder, the shareholder, whether or not permitted to vote by the articles, may cast one vote on the amendment regardless of the dollar amount of stock or number of affected classes of stock held by the shareholder.  However, the articles may permit the affected shareholder to cast one vote for each share of stock the shareholder holds other than membership stock.  A member holding stock affected by a proposed amendment may vote both as a member and as an affected shareholder.
2. If a shareholder is entitled to vote on a proposed amendment, the meeting at which the proposed amendment is to be voted upon shall be a joint meeting of members and affected shareholders.  Notice of the meeting together with a copy of the proposed amendment or a summary of the changes to be effected by the amendment shall be given to each shareholder of record entitled to vote on the amendment within the time and in the manner provided in this chapter for the giving of notice of meetings of members.  The proposed amendment is adopted if it receives the affirmative vote of a majority of the votes of the affected shareholders entitled to vote.
3. For the purpose of this section, a shareholder is affected as to a class of stock owned by the shareholder if an amendment would expressly
   1. decrease the dividends to which the class is entitled or change the method by which the dividend rate on the class is fixed;
   2. restrict rights to transfer the class;
   3. give to another existing or new class of stock or equity interest not previously entitled to it preference as to dividends or upon dissolution which is the same or higher than preferences of that class;
   4. change the par value of shares of the class or of any other class having the same or higher preferences as to dividends or upon dissolution;
   5. increase the number of authorized shares of a class having higher preferences as to dividends or upon dissolution;
   6. require or permit an exchange of shares of a class with lower preferences as to dividends or upon dissolution for shares of that class or any other class with the same or higher preferences.

History. (§ 42 ch 107 SLA 1959)

Sec. 10.15.380. Execution and content of articles of amendment.

Following adoption of an amendment to the articles, it shall be executed in duplicate by the cooperative by its president or a vice-president and by its secretary or an assistant secretary and must set out

1. the name of the cooperative;
2. if an amendment changes a provision of the original or amended articles, an identification by reference or description of the affected provision and a statement of its text as it is amended to read, or, if an amendment strikes or deletes a provision of the original or amended articles, an identification by reference or description of the provision stricken or deleted and a statement that it is stricken or deleted, and, if the amendment is an addition to the original or amended articles, a statement of that fact and the full text of the provision added;
3. the date of the adoption of the amendment by the members;
4. the numbers of members voting for and against the amendment;
5. if affected shareholders had the right to vote, the number of affected shareholders, the number of shareholder votes entitled to be voted on the amendment, and the number of shareholder votes cast for and against the amendment.

History. (§ 43(1) ch 107 SLA 1959; am § 22 ch 65 SLA 1998)

Sec. 10.15.385. Filing of articles of amendment.

Duplicate originals of the articles of amendment shall be filed, and a certificate of amendment shall be issued and delivered to the commissioner.

History. (§ 43(2) ch 107 SLA 1959)

Sec. 10.15.390. Effect of amendments.

An amendment does not affect an existing cause of action in favor of or against the cooperative, or a pending suit to which the cooperative is a party, or the existing rights of persons other than members or affected shareholders. If the cooperative’s name is changed by amendment, a suit brought by or against the cooperative under its former name does not abate for that reason.

History. (§ 43(3) ch 107 SLA 1959)

Sec. 10.15.395. Governing law.

The provisions of AS 10.06 (Alaska Corporations Code) relating to restated articles of business corporations apply to cooperatives, except that the restated articles need not set forth the amount of stated capital.

History. (§ 43(4) ch 107 SLA 1959)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Cross references. —

For provisions on restated articles, see AS 10.06.516 — 10.06.520 .

Sec. 10.15.400. Merger and consolidation.

Two or more cooperatives may merge or consolidate pursuant to a plan of merger or consolidation adopted in the manner provided in AS 10.15.405 — 10.15.415 .

History. (§ 45(1) ch 107 SLA 1959)

Sec. 10.15.405. Approval and contents of plan of merger or consolidation.

The board of each cooperative shall, by resolution adopted by each board, approve a plan of merger or consolidation setting forth

1. the names of the cooperatives proposing to merge or consolidate, and the name of the cooperative into which they propose to merge or the name of the new cooperative into which they propose to consolidate;
2. the terms and conditions of the proposed merger or consolidation;
3. the effect of the proposed merger or consolidation on all members and shareholders of each of the cooperatives;
4. in the case of a plan for consolidation, the articles of the new cooperative, which must include all of the statements required to be set forth in articles for cooperatives organized under this chapter;
5. other provisions with respect to the proposed merger or consolidation considered necessary or desirable.

History. (§ 45(2) ch 107 SLA 1959)

Sec. 10.15.410. Adoption of plan of merger or consolidation.

The board of each cooperative, upon approving the plan of merger or plan of consolidation, shall by resolution direct that the plan be submitted to a vote at a meeting of members and shareholders, or if there are no shareholders at an annual or a special meeting of members. Written notice shall be given to each member and each shareholder in the manner provided in this chapter for meetings of members, and adoption of the plan shall be by affirmative vote of a majority of the member votes cast and affirmative vote of a majority of shareholder votes entitled to be cast.

History. (§ 45(3) ch 107 SLA 1959)

Sec. 10.15.415. Abandonment of plan of merger or consolidation.

After adoption of the plan, and at any time prior to the filing of the articles of merger or consolidation, the merger or consolidation may be abandoned under provisions, if any, set forth in the plan of merger or consolidation.

History. (§ 45(4) ch 107 SLA 1959)

Sec. 10.15.420. Execution of articles of merger or consolidation.

Upon adoption of the plan of merger or consolidation, articles of merger or articles of consolidation, as the case may be, shall be executed in duplicate by each cooperative by its president or a vice-president and by its secretary or an assistant secretary.

History. (§ 46(1) ch 107 SLA 1959; am § 23 ch 65 SLA 1998)

Sec. 10.15.425. Contents of articles.

The articles of merger or consolidation must set out

1. the plan of merger or plan of consolidation;
2. the date of adoption of the plan;
3. as to each cooperative, the number of member votes cast for and against the plan;
4. as to each cooperative, the number, if any, of shareholders, the number of shareholder votes entitled to be voted on the plan, and the number of shareholder votes cast for and against the plan.

History. (§ 46(1) ch 107 SLA 1959)

Sec. 10.15.430. Filing of articles.

Duplicate originals of the articles of merger or articles of consolidation shall be delivered to the commissioner, who, upon finding the articles conform to law, shall, when all fees and charges prescribed in this chapter have been paid,

1. endorse on each duplicate original the word “filed” and the date of the filing;
2. file one of the duplicate originals in the commissioner’s office;
3. issue and deliver to the surviving or new cooperative or to its representative, a certificate of merger or a certificate of consolidation to which the commissioner shall affix the other duplicate original, and the merger or consolidation is effective upon the issuance of the certificate.

History. (§ 46(2) ch 107 SLA 1959)

Sec. 10.15.435. Effect of merger or consolidation.

When the merger or consolidation is effective

1. the several cooperatives which are parties to the plan of merger or consolidation shall be a single cooperative, which, in case of a merger, shall be that cooperative designated in the plan of merger as the surviving cooperative, and, in the case of a consolidation, shall be the new cooperative provided for in the plan of consolidation;
2. the separate existence of all cooperatives which are parties to the plan of merger or consolidation, except the surviving or new cooperative, ceases;
3. the surviving or new cooperative possesses all the rights, privileges, immunities and franchises of a public or a private nature of each of the merging or consolidating cooperatives; and all property, real, personal and mixed, all debts due on whatever account, including subscriptions to shares, all other choses in action, and all and every other interest, of or belonging to or due to each of the cooperatives merged or consolidated are transferred to and vested in the single cooperative without further act or deed; and the title to real estate or any interest in real estate vested in the cooperatives does not revert or is not in any way impaired by reason of the merger or consolidation;
4. the surviving or new cooperative is thereafter responsible and liable for the liabilities and obligations of each of the cooperatives merged or consolidated; and any existing claim or pending action or proceeding by or against the cooperatives may be prosecuted as if the merger or consolidation had not taken place, or the surviving or new cooperative may be substituted in its place; and the rights of creditors and liens upon the property of a cooperative are not impaired by the merger or consolidation;
5. in the case of a merger, the articles of the surviving cooperative are considered amended to the extent, if any, that changes in its articles are stated in the plan of merger; and in case of a consolidation, the statements set forth in the articles of consolidation which are required or permitted to be set forth in the articles of cooperatives organized under this chapter are considered the original articles of the new cooperative.

History. (§ 47 ch 107 SLA 1959)

Sec. 10.15.440. Merger or consolidation of cooperatives and domestic and foreign corporations.

1. One or more cooperatives may merge or consolidate with or into one or more of the following classes of business organizations:
   1. a domestic corporation if the domestic corporation complies with AS 10.06 (Alaska Corporations Code) relating to merger or consolidation;
   2. a foreign cooperative if the merger or consolidation is permitted by the laws of the state under which the foreign cooperative is organized and the foreign cooperative complies with the applicable provisions of those laws;
   3. a foreign business corporation if the merger or consolidation is permitted by the laws of the state under which the foreign corporation is organized and the foreign corporation complies with the applicable provisions of those laws.
2. Each cooperative merging or consolidating under this section shall comply with the provisions of this chapter relating to merger or consolidation.
3. If the surviving or new business corporation or cooperative, as the case may be, is governed by the laws of another state, it shall comply with the provisions of the AS 10.06 (Alaska Corporations Code) with respect to foreign corporations if it is to transact business in this state.

History. (§ 48(1) — (3) ch 107 SLA 1959)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporations Act (AS 10.05)” in subsections (a)(1) and (c) to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Sec. 10.15.445. Effect of merger or consolidation.

1. If the surviving or new corporation is a cooperative, the effect of the merger or consolidation is the same as provided in this chapter for the merger or consolidation of cooperatives.
2. If the surviving or new corporation is a domestic corporation, the effect of the merger or consolidation is the same as provided in AS 10.06 (Alaska Corporations Code) for the merger or consolidation of domestic corporations.
3. If the surviving or new corporation or cooperative is governed by the laws of another state, the effect of the merger or consolidation is the same as in the case of the merger or consolidation of cooperatives or domestic corporations, as the case may be, except insofar as the laws of the other state provide otherwise.

History. (§ 48(4) ch 107 SLA 1959)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” in subsection (b) to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Sec. 10.15.450. Conversion of corporation into cooperative. [Repealed, § 29 ch 60 SLA 2013.]

Sec. 10.15.455. Definitions.

In AS 10.15.400 — 10.15.455 ,

1. “new cooperative” means the new cooperative provided for in the plan of consolidation;
2. “surviving cooperative” means the cooperative designated in the plan of merger as the surviving cooperative.

History. (§ 44 ch 107 SLA 1959; am § 2 ch 60 SLA 2013)

Sec. 10.15.460. Voluntary dissolution by act of cooperative.

1. A cooperative may be dissolved by the act of the cooperative, when authorized in the manner set out in this section.
2. The board shall adopt a resolution directing the question of dissolution to be submitted to a vote at an annual or special meeting of members.
3. Written notice shall be given to each member in the manner provided in this chapter for the giving of notice of meetings of members, and must state that the purpose, or one of the purposes, of the meeting is to consider the advisability of dissolving the cooperative.
4. At the meeting a vote of members shall be taken on a resolution to dissolve the cooperative.  The resolution is adopted if it receives the affirmative vote of two-thirds of the member votes cast.  The articles may permit shareholders to vote on a resolution for dissolution, and may fix the proportion of authorized shareholder votes required for adoption.

History. (§ 50(1) — (3) ch 107 SLA 1959)

Revisor’s notes. —

In 1989, this section was reorganized to conform to the style of the Alaska Statutes. The former introductory clause was designated as subsection (a) and minor word changes were made to reflect the reorganization. Former paragraphs (1) — (3) were redesignated as subsections (b) — (d) respectively.

Collateral references. —

19 C.J.S., Corporations, § 914 et seq.

Sec. 10.15.465. Execution and content of statement of intent to dissolve.

Upon the adoption of the resolution, a statement of intent to dissolve shall be executed in duplicate by the cooperative by its president or a vice-president and by its secretary or an assistant secretary and must set out

1. the name of the cooperative;
2. the names and addresses of its officers;
3. the names and addresses of its directors;
4. a copy of the resolution adopted authorizing the dissolution of the cooperative;
5. the date of the adoption of the resolution;
6. the number of member votes for and against the resolution;
7. if shareholders were authorized to vote on the resolution, the total number of authorized shareholder votes, the number of votes cast for and against the resolution, and the number of votes required by the articles for adoption.

History. (§ 50(4) ch 107 SLA 1959; am § 24 ch 65 SLA 1998)

Sec. 10.15.470. Filing statement of intent to dissolve.

1. Duplicate originals of the statement of intent to dissolve shall be filed and handled by the department in the manner provided in AS 10.06 (Alaska Corporations Code) with respect to business corporations.
2. The filing of a statement of intent to dissolve has the same effect as to the cooperative as is provided in AS 10.06 (Alaska Corporations Code) for business corporations.

History. (§ 51 ch 107 SLA 1959)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Sec. 10.15.475. Procedure after filing of statement of intent to dissolve.

After the filing by the department of a statement of intent to dissolve

1. the cooperative shall proceed to collect its assets, convey and dispose of the property not to be distributed in kind to its members or shareholders, pay, satisfy and discharge its liabilities and obligations and do all other acts required to liquidate its business and affairs, and, after paying or adequately providing for the payment of all its obligations, distribute the remainder of its assets, either in cash or in kind, among the persons entitled to them by law, the articles and the bylaws;
2. the cooperative, at any time during the liquidation of its business and affairs, may apply to a court within the state and judicial district in which the registered office or principal place of business of the cooperative is situated to have the liquidation continued under the supervision of the court as provided in this chapter;
3. any cooperative which has filed a statement of intent to dissolve that does not, within two years from the date of filing, carry the dissolution to a conclusion shall be involuntarily dissolved as provided in AS 10.06 (Alaska Corporations Code).

History. (§ 52 ch 107 SLA 1959; am § 24 ch 170 SLA 1976)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” in paragraph (3) to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Sec. 10.15.480. Revocation of voluntary dissolution proceedings by act of cooperative.

A cooperative, at any time prior to the issuance of a certificate of dissolution by the department, may revoke a voluntary dissolution proceeding by adoption of a resolution of revocation in the same manner and by the same vote of members and shareholders required by this chapter for adoption of a resolution to dissolve.

History. (§ 53 ch 107 SLA 1959)

Sec. 10.15.485. Execution and content of statement of revocation of voluntary dissolution proceedings.

Upon the adoption of the resolution of revocation, a statement of revocation of voluntary dissolution proceedings shall be executed in duplicate by the cooperative by its president or a vice-president and its secretary or an assistant secretary and must set out a copy of the adopted resolution and other pertinent information as required by AS 10.15.460 and 10.15.465 to be set out in a statement of intent to dissolve.

History. (§ 53(2) ch 107 SLA 1959; am § 25 ch 65 SLA 1998)

Sec. 10.15.490. Filing statement of revocation of voluntary dissolution proceedings.

1. Duplicate originals of the statement of revocation of voluntary dissolution proceedings shall be handled by the department in the same manner as provided by this chapter for filing of a statement of intent to dissolve.
2. Upon the filing by the department of the statement of revocation of voluntary dissolution proceedings, a revocation of the voluntary dissolution proceedings is effective and the cooperative may again carry on its business.

History. (§ 54 ch 107 SLA 1959)

Sec. 10.15.495. Articles of dissolution.

If voluntary dissolution proceedings have not been revoked, when all debts, liabilities, and obligations of the cooperative have been paid and discharged, or adequate provision has been made for their payment and discharge, and all of the remaining property and assets of the cooperative have been distributed to the persons entitled to them, articles of dissolution shall be executed in duplicate by the cooperative by its president or a vice-president and its secretary or an assistant secretary. The articles of dissolution must set out

1. the name of the cooperative;
2. that the department has filed a statement of intent to dissolve the cooperative and the date on which the statement was filed;
3. that all the property and assets of the cooperative remaining after payment or discharge, or adequate provision for payment or discharge of all debts, obligations, and liabilities of the cooperative, have been distributed to the persons entitled to them in accordance with their rights and interests;
4. that there are no suits pending against the cooperative in any court, or that adequate provision has been made for the satisfaction of any judgment, order, or decree that may be entered against it in a pending suit.

History. (§ 55 ch 107 SLA 1959; am § 26 ch 65 SLA 1998)

Sec. 10.15.500. Filing articles of dissolution and issuance of certificate of dissolution.

1. Duplicate originals of the articles of dissolution shall be filed and a certificate of dissolution shall be issued as provided in AS 10.06 (Alaska Corporations Code).
2. The certificate of dissolution together with the duplicate original of the articles of dissolution affixed to it by the department shall be returned to the representative of the dissolved cooperative.  Upon the issuance of the certificate of dissolution the existence of the cooperative ceases, except for the purpose of suits, other proceedings and appropriate corporate action by members, shareholders, directors and officers as provided in this chapter.

History. (§ 56 ch 107 SLA 1959)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” in subsection (a) to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Sec. 10.15.505. Involuntary dissolution and cancellation of corporate filings.

The provisions in AS 10.06 (Alaska Corporations Code) relating to involuntary dissolution of business corporations and to the cancellation of certain corporate filings apply to cooperatives.

History. (§ 57 ch 107 SLA 1959; am § 48 ch 123 SLA 1980)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Cross references. —

For involuntary dissolution, see AS 10.06.628 — 10.06.650 ; for provisions relating to cancellation of certificates and filings, see AS 10.06.865 .

Sec. 10.15.510. Jurisdiction of court to liquidate assets and business of cooperative.

In addition to any other instances in which the law provides the power, a court may liquidate the assets and business of a cooperative

1. in an action by a member or shareholder when it is established that the members are deadlocked in voting power, and 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 election of their successors; or the corporate assets are being misapplied or wasted;
2. in an action by a creditor when the claim of the creditor has been reduced to judgment and an execution has been returned unsatisfied and it is established that the cooperative is insolvent; or when the cooperative has admitted in writing that the claim of the creditor is due and owing and it is established that the cooperative is insolvent;
3. upon application by a cooperative which has filed a statement of intent to dissolve as provided in this chapter to have its liquidation continued under the supervision of the court;
4. when an action has been filed by the attorney general to dissolve a cooperative and it is established that liquidation of its business and affairs should precede the entry of a decree of dissolution.

History. (§ 58(1) ch 107 SLA 1959)

Sec. 10.15.515. Joinder of members or shareholders unnecessary.

It is not necessary to make members or shareholders parties to an action or proceeding under AS 10.15.510 unless relief is sought against them personally.

History. (§ 58(3) ch 107 SLA 1959)

Sec. 10.15.520. Deposit with department of amount due persons who cannot be found; unknown persons, or incompetent persons.

Upon the voluntary or involuntary dissolution of a cooperative, the portion of the assets distributable to a creditor, member, shareholder, or patron or other person unknown or who cannot be found, or who is under a disability with no person legally competent to receive the distributive portion, shall be reduced to cash and, within six months after the final dividend in the liquidation or winding up is payable, shall be deposited with the department. The receiver or other liquidating agent shall prepare in duplicate a statement containing the names and last known addresses of the persons entitled to the funds and shall file the statement with the department. The department shall handle the funds in accordance with AS 34.45.110 — 34.45.780 .

History. (§ 59 ch 107 SLA 1959; am § 3 ch 133 SLA 1986; am § 27 ch 65 SLA 1998)

Sec. 10.15.525. Rights, exemptions, and privileges of foreign cooperatives.

A foreign cooperative which has a member residing in the state, and which distributes its proceeds and savings according to this chapter or the law of the state where it is incorporated, is entitled to all rights, exemptions, and privileges of a cooperative organized under this chapter, if it is authorized to do business in the state as provided in AS 10.06 (Alaska Corporations Code).

History. (§ 60 ch 107 SLA 1959)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporations Act (AS 10.05)” to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Sec. 10.15.530. Biennial license fee.

Each cooperative not organized and operated for nonprofit religious, charitable, cemetery, or educational purposes shall pay to the department a biennial license fee. The fee shall be paid before July 2 of the reporting year.

History. (§ 61(1) ch 107 SLA 1959; am § 49 ch 123 SLA 1980; am § 10 ch 36 SLA 1990)

Secs. 10.15.535, 10.15.540. Determination of license fee for cooperative authorized to issue capital stock; valuation of no-par stock. [Repealed, § 92 ch 36 SLA 1990.]

Sec. 10.15.545. Amount of license fee.

The license fee of each cooperative shall be established by the department by regulation.

History. (§ 61(3) ch 107 SLA 1959; am § 26 ch 170 SLA 1976; am § 51 ch 123 SLA 1980; am § 17 ch 50 SLA 1989; am § 11 ch 36 SLA 1990)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.15.550. Penalty.

A cooperative that fails to pay the annual license fee before August 15 shall pay a penalty of $10 for each year or part of a year of delinquency.

History. (§ 61(4) ch 107 SLA 1959; am § 27 ch 170 SLA 1976)

Sec. 10.15.555. Miscellaneous fees and charges.

1. The department shall establish by regulation and charge and collect from a cooperative fees for filing
   1. articles of incorporation or articles of consolidation for a new cooperative;
   2. articles of amendment, restated articles, or articles of merger;
   3. statement of intent to dissolve;
   4. statement of revocation of voluntary dissolution proceedings;
   5. articles of dissolution;
   6. all other statements.
2. The department may by regulation charge each cooperative corporation subject to this chapter a fixed fee in place of charging cooperative corporations the various fees specified in this chapter and for routine administrative services rendered to the cooperative corporation by the department. Fixed fees established under this subsection must be based on the department’s actual cost of administering the activity or service for which the fee is charged.

History. (§ 62(1) ch 107 SLA 1959; am § 28 ch 170 SLA 1976; am § 52 ch 123 SLA 1980; am § 18 ch 50 SLA 1989; am § 12 ch 36 SLA 1990)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.15.560. Payment required for filing.

The department may not file a document until all fees and charges required to be paid have been paid or while the cooperative is in default in the payment of fees, charges or penalties provided in this chapter to be paid by or assessed against it.

History. (§ 62(2) ch 107 SLA 1959)

Sec. 10.15.563. Accounting and disposition of fees. [Repealed, § 28 ch 90 SLA 1991.]

Sec. 10.15.565. Failure to approve document.

If the department fails to approve articles of incorporation, amendment, merger, consolidation, or dissolution, or any other document required by this chapter to be approved before the document is filed, the procedure and remedies are those specified in AS 10.06 (Alaska Corporations Code) as to business corporations.

History. (§ 64 ch 107 SLA 1959)

Revisor’s notes. —

In 1988 “AS 10.06 (Alaska Corporations Code)” was substituted for “Alaska Business Corporation Act (AS 10.05)” to conform to the enactment of AS 10.06 and the repeal of AS 10.05 by ch. 166, SLA 1988.

Sec. 10.15.570. Declaration of public policy that cooperatives are not in restraint of trade.

It is the public policy of the state to encourage the efficient production and distribution of agricultural and other products derived from its natural resources or labor resources. Accordingly, a cooperative that operates in compliance with the provisions of this chapter and that does not, during its fiscal year, market products for nonmember patrons in an amount greater in value than the products marketed for its members is not a conspiracy or combination in restraint of trade, or an illegal monopoly. The contracts of a cooperative authorized by this chapter, whether or not required by the cooperative as a condition of membership or of doing business with the cooperative, may not be construed as an unlawful restraint of trade, or as part of a conspiracy or combination to accomplish an improper or illegal purpose or act.

History. (§ 65 ch 107 SLA 1959)

Sec. 10.15.575. Use of term “cooperative”.

1. A person other than a cooperative association incorporated under this chapter or a previous law of the state may not use the term “cooperative,” or any variation of the term, as part of its corporate or other business name or title. However, this section does not apply to cooperatives organized to generate and transmit electric energy and power or to furnish electric or telephone or related telecommunications service.
2. A cooperative may enjoin a violation of this section upon suit without a showing of damage to itself.

History. (§ 66 ch 107 SLA 1959; am § 2 ch 29 SLA 2020)

Effect of amendments. —

The 2020 amendment, effective April 30, 2020, in (a), added “or related telecommunications” near the end.

Sec. 10.15.578. Distinguishable name.

The name of a cooperative association must be distinguishable on the records of the department from the name of any other organized entity and from a reserved or registered name. The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this section. In this section, “organized entity” and “reserved or registered name” have the meanings given in AS 10.35.040 .

History. (§ 11 ch 50 SLA 1999)

Cross references. —

For applicability of this section, see § 36(a) and (b), ch. 50, SLA 1999 in the 1999 Temporary & Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.15.580. Powers of department.

The department has the power and authority reasonably necessary to administer this chapter efficiently and to perform the duties imposed by this chapter.

History. (§ 63 ch 107 SLA 1959)

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Sec. 10.15.585. Application of chapter.

This chapter applies to the fullest extent permitted by the laws and constitution of the United States and of the state to all existing cooperative associations incorporated under a previously existing law of the state relating to incorporation of cooperative associations. However, this section does not apply to cooperatives organized to generate and transmit electric energy and power or to furnish electric or telephone or related telecommunications service.

History. (§ 67 ch 107 SLA 1959; am § 3 ch 29 SLA 2020)

Effect of amendments. —

The 2020 amendment, effective April 30, 2020, added “or related telecommunications” near the end.

Sec. 10.15.590. Effect of amendment or repeal of chapter.

This chapter may be amended, repealed, or modified, but an amendment, repeal, or modification does not affect vested rights or take away or impair a remedy for a liability that has been previously incurred.

History. (§ 68 ch 107 SLA 1959)

Sec. 10.15.595. Definitions.

In this chapter, unless the context otherwise requires,

1. “articles” means articles of incorporation;
2. “board” means board of directors;
3. “commissioner” means the commissioner of commerce, community, and economic development;
4. “cooperative” means a cooperative corporation subject to the provisions of this chapter;
5. “corporation” means a corporation that is not a cooperative;
6. “court” means superior court;
7. “department” means the Department of Commerce, Community, and Economic Development;
8. “foreign cooperative” means a cooperative corporation organized under laws other than the laws of this state;
9. “member” means a person who has been qualified and accepted for membership in a cooperative;
10. “membership stock” means a class of stock, continuous ownership of which is required for membership in a cooperative;
11. “shareholder” means a holder of shares of capital stock of a cooperative other than membership stock.

History. (§ 2 ch 107 SLA 1959; am § 1 ch 48 SLA 1960; am § 69 ch 218 SLA 1976)

Revisor’s notes. —

In 1999, “commissioner of commerce and economic development” was changed to “commissioner of community and economic development” and “Department of Commerce and Economic Development” was changed to “Department of Community and Economic Development” in accordance with § 88, ch. 58, SLA 1999.

In 2004, “commissioner of community and economic development” was changed to “commissioner of commerce, community, and economic development” and “Department of Community and Economic Development” was changed to “Department of Commerce, Community, and Economic Development”, in accordance with § 3, ch. 47, SLA 2004.

Sec. 10.15.600. Short title.

This chapter may be cited as the Alaska Cooperative Corporation Act.

History. (§ 1 ch 107 SLA 1959)

Sec. 10.20.005. Purposes.

Corporations may be organized under this chapter for any lawful purpose, including, but not limited to, one or more of the following: charitable; religious; benevolent; eleemosynary; educational; civic; cemetery; patriotic; political; social; fraternal; literary; cultural; athletic; scientific; agricultural; horticultural; animal husbandry; and professional, commercial, industrial, or trade association purposes. Trade unions and other labor organizations may also be organized under this chapter, but cooperative corporations, electric and telephone cooperatives, and organizations subject to state insurance or banking laws may not be organized under this chapter.

History. (§ 1 ch 99 SLA 1968)

Opinions of attorney general. —

There is nothing in this chapter which would prevent a nonprofit corporation organized thereunder from owning a public utility which was not operated or managed as a cooperative. June 7, 1976, Op. Att’y Gen.

An electrical utility owned and operated by a regional electrical authority would continue to qualify for the broad exemption from the Alaska Public Utilities Commission Act, AS 42.05, available to political subdivisions under AS 42.05.711(b) once the regional electrical authority had completed its proposed organization as a nonprofit corporation pursuant to this chapter. June 7, 1976, Op. Att’y Gen.

Although there is no other express language in the Electric and Telephone Cooperative Act, AS 10.25, which purports to make it the exclusive means of organizing nonprofit cooperative associations for the development of utility services, this would certainly be a reasonable inference based upon AS 10.25.620 and upon the exclusionary language of this section which eliminates the nonprofit corporation as an alternative. June 7, 1976, Op. Att’y Gen.

A fish hatchery established as a nonprofit corporation can expand its business to other lawful purposes including processing fish harvested by others, provided that the profits from these activities are used for the business and are not distributed to members, directors or officers; for example, the money could be used to pay for the overall operations of the corporation and to establish reserves. June 11, 1984, Op. Att’y Gen.

Collateral references. —

18 Am. Jur. 2d, Corporations, § 27.

18 C.J.S., Corporations, § 53.

Sec. 10.20.007. Corporations organized under Alaska Native Claims Settlement Act.

A village corporation organized under 43 U.S.C. 1601 et seq. (Alaska Native Claims Settlement Act) may be incorporated under and subject to this chapter except the name of the corporation may not contain the word “village” or otherwise imply that the corporation is a municipal corporation; however, the name of a village may be used in the corporate name.

History. (§ 3 ch 193 SLA 1972; am § 16 ch 56 SLA 2005)

Cross references. —

For additional provisions relating to the relationship between this chapter and the Alaska Native Claims Settlement Act, see § 2, ch. 83, SLA 1973 in the Temporary and Special Acts.

Sec. 10.20.011. General powers.

A corporation may

1. have perpetual succession by its corporate name unless its duration is limited by its articles of incorporation;
2. sue and be sued, complain and defend, in its corporate name;
3. adopt and use a corporate seal or a facsimile thereof, which may be altered at pleasure, and which may be impressed or affixed or in any manner reproduced;
4. purchase, take, receive, lease, take by gift, devise or bequest, or otherwise acquire, own, hold, improve, use and otherwise deal in and with real or personal property, or any interest in the property, wherever situated;
5. sell, convey, mortgage, pledge, lease, exchange, transfer and otherwise dispose of all or any part of its property and assets;
6. lend money to its employees other than its officers and directors and otherwise assist its employees, officers and directors;
7. purchase, take, receive, subscribe to, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign corporations, whether for profit or not for profit, associations, partnerships or individuals, or direct or indirect obligations of the United States, or of any other government, state, territory, governmental district or municipality or of any instrumentality thereof;
8. make contracts, incur liabilities, borrow money at rates of interests the corporation may determine, issue its notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its property, franchises and income;
9. lend money for its corporate purposes, invest and reinvest its funds, and take and hold real and personal property as security for the payment of funds so loaned or invested;
10. transact its business, carry on its operations, have offices and exercise the powers granted by this chapter in any state, territory, district, or possession of the United States, or in any foreign country;
11. elect or appoint officers and agents of the corporation, who may be directors or members, define their duties and fix their compensation;
12. make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of the state, for the administration and regulation of the affairs of the corporation;
13. make donations for public welfare or for charitable, scientific or educational purposes; and in time of war make donations in aid of war activities;
14. indemnify a director, officer or former director or officer of the corporation, or a person who has served at its request as a director or officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and reasonably incurred by that person in connection with the defense of any action, suit or proceeding, civil or criminal, in which that person is made a party by reason of being or having been a director or officer, except in relation to matters in which that person was adjudged, in the action, suit or proceeding, to be liable for negligence or misconduct in the performance of corporate duties; and to make any other indemnification authorized by the articles of incorporation or bylaws, or resolution adopted after notice by the members entitled to vote;
15. pay pensions and establish pension plans or pension trusts for its directors, officers and employees;
16. cease its corporate activities and surrender its corporate franchise;
17. have and exercise all powers necessary or convenient to effect the purposes for which the corporation is organized.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.016. Defense of ultra vires.

1. An act of a corporation and a conveyance or transfer of real or personal property to or by a corporation is not invalid because the corporation did not have capacity or power to perform the act or to convey or receive the property. However, lack of capacity or power may be asserted as provided in this section.
2. The assertion may be made in a proceeding by a member or director against the corporation to enjoin the performance of an act or the transfer of real or personal property by or to the corporation.  If the unauthorized act or transfer sought to be enjoined is being or is to be performed or made under a contract to which the corporation is a party, the court may, if the parties to the contract are parties to the proceeding and if the court considers it equitable, set aside and enjoin the performance of the contract.  In so doing the court may allow compensation to the corporation or to the other parties to the contract for the loss or damage sustained by either of them resulting from the action of the court in setting aside and enjoining the performance of the contract.  The court may not award anticipated profits to be derived from the performance of the contract as a loss or damage sustained.
3. The assertion may be made in a proceeding by the corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through members in a representative suit, against the incumbent or former officers or directors of the corporation.
4. The assertion may be made in a proceeding by the attorney general to dissolve the corporation, or to enjoin the corporation from the transaction of unauthorized business.

History. (§ 1 ch 99 SLA 1968)

Revisor’s notes. —

In 1989, this section was reorganized to conform to the style of the Alaska Statutes. The former introductory paragraph was designated as subsection (a) and minor word changes were made to reflect the reorganization. Former paragraphs (1) — (3) were redesignated as subsections (b) — (d) respectively.

Sec. 10.20.021. Corporate name.

1. The name of a corporation may not contain a word or phrase that indicates or implies that it is organized for a purpose other than one or more of the purposes contained in the articles of incorporation of the corporation.
2. The name of the corporation must be distinguishable on the records of the department from the name of any other organized entity and from a reserved or registered name. The department may adopt regulations under AS 44.62 (Administrative Procedure Act) to implement this subsection. In this subsection, “organized entity” and “reserved or registered name” have the meanings given in AS 10.35.040 .

History. (§ 1 ch 99 SLA 1968; am § 29 ch 170 SLA 1976; am § 12 ch 50 SLA 1999)

Cross references. —

For applicability of amendment to this section made by § 12, ch. 50, SLA 1999, see § 36(a) and (b), ch. 50, SLA 1999 in the 1999 Temporary & Special Acts.

Administrative Code. —

For corporations, partnerships, and other business organizations, see 3 AAC 16.

Collateral references. —

18A Am. Jur. 2d, Corporations, § 222 et seq.

18 C.J.S. Corporations, § 132 et seq.

Sec. 10.20.026. Registered office and registered agent.

A corporation shall continuously maintain in the state a registered office which may be, but need not be, the same as its place of business, and a registered agent. The registered agent may be either an individual resident of the state whose business office is the same as the registered office, or a domestic or foreign corporation authorized to transact business in the state whose business office is the same as the registered office.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.031. Filing list of corporations.

The department shall file a list of the name of each corporation, the address of the registered office and the name and address of the registered agent with each clerk of the superior court. The department shall provide a periodic supplement to the list indicating additions, deletions and changes at least once every six months. The commissioner shall make the list available to the public for a fee prescribed by the commissioner.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.036. Change of registered office or agent.

1. A corporation, domestic or foreign, may change its registered office, agent, or both, by filing with the department a statement signed by the president or the vice-president setting out
   1. the name of the corporation;
   2. the address of its registered office;
   3. the address of its new registered office if the registered office is to be changed;
   4. the name of its registered agent;
   5. the name of its new registered agent if its registered agent is to be changed;
   6. that the change is authorized by resolution of its board of directors.
2. Upon finding that the statement complies with this chapter, the commissioner shall file it in the commissioner’s office. The change becomes effective when the statement is filed.

History. (§ 1 ch 99 SLA 1968; am § 70 ch 218 SLA 1976; am § 28 ch 65 SLA 1998)

Sec. 10.20.041. Change of location or resignation of registered agent.

1. If the registered agent of a corporation, domestic or foreign, changes the location of an office from one address to another within a city or town, or from one city or town in the state to another, the agent may change the registered office for each corporation for whom the agent is acting as registered agent by filing in the office of the commissioner a statement setting out
   1. the name of the agent;
   2. the address of the office before change;
   3. the address to which the office is changed; and
   4. a list of corporations for whom the agent is furnishing a registered office.
2. The statement in (a) of this section shall be executed by the registered agent in the agent’s individual name and, if the agent is a corporation, domestic or foreign, it shall be executed by its president or a vice-president. The statement shall be delivered to the commissioner who, upon finding that it complies with this chapter, shall file it in the commissioner’s office. The change becomes effective when the statement is filed.
3. A registered agent may resign by filing a written notice, executed in duplicate, with the commissioner.  The commissioner shall immediately mail a copy of the notice to the corporation at its registered office.  The appointment of the agent terminates 30 days after receipt of the notice by the commissioner.

History. (§ 1 ch 99 SLA 1968; am § 29 ch 65 SLA 1998)

Sec. 10.20.046. Service on corporation.

1. The registered agent of a corporation is an agent upon whom process, notice or demand required or permitted by law to be served upon the corporation may be served.
2. Whenever a corporation fails to appoint or maintain a registered agent in the state, the commissioner is an agent of the corporation upon whom the process, notice, or demand may be served.  Service is made upon the commissioner as agent by leaving with the commissioner, or with a clerk having charge of the corporation department of the commissioner’s office, duplicate copies of the process, notice or demand.  When process, notice or demand is served on the commissioner, the commissioner shall immediately forward a copy of it by registered mail to the corporation at its registered office. Service on the commissioner is returnable in not less than 30 days.
3. The commissioner shall keep a record of processes, notices, and demands served on the commissioner.  The record must show the time of service and the commissioner’s action with reference to the service.
4. This chapter does not limit or affect the right to serve process, notice or demand required or permitted by law to be served upon a corporation in any other manner permitted by law.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.051. Members and liability of directors, officers, employees, and members.

1. A corporation may have one or more classes of members or may have no members.  If the corporation has one or more classes of members, the designation of the class or classes, the manner of election or appointment, and the qualifications and rights of the members of each class shall be set out in the articles of incorporation or the bylaws. If the corporation has no members, that fact shall be set out in the articles of incorporation or the bylaws. A corporation may issue certificates evidencing membership.
2. The directors, officers, employees, and members of the corporation are not, as such, liable on its obligations.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.056. Bylaws.

The board of directors shall adopt the initial bylaws of a corporation. The power to adopt, alter, amend or repeal bylaws is vested in the board of directors unless it is reserved to the members by the articles of incorporation. The bylaws may contain provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of incorporation.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.061. Meetings of members.

1. Meetings of members may be held at a place, either inside or outside the state, which may be provided in the bylaws.  In the absence of such a provision, all meetings shall be held at the registered office of the corporation in the state.
2. An annual meeting of the members shall be held at a time provided in the bylaws.  Failure to hold the annual meeting at the designated time does not work a forfeiture or dissolution of the corporation.
3. Special meetings of the members may be called by the president or by the board of directors.  Special meetings of the members may also be called by such other officers, persons or number or proportion of members as may be provided in the articles of incorporation or bylaws.  In the absence of a provision fixing the number or proportion of members entitled to call a meeting, a special meeting of members may be called by members having one-twentieth of the votes entitled to be cast at the meeting.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.066. Notice of meetings.

Unless otherwise provided in the articles of incorporation or bylaws, written notice stating the manner, place, if the meeting is to be held at a designated place, day, and hour of the meeting, and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officers or persons calling the meeting, to each member entitled to vote at the meeting. If mailed, the notice shall be considered to be delivered when deposited in the United States mail addressed to the member at the member’s address as it appears on the records of the corporation, with postage prepaid.

History. (§ 1 ch 99 SLA 1968; am § 21 ch 1 SLA 2021)

Cross references. —

For a savings clause declaring that the 2021 amendment to this section does not affect a court action or court proceeding begun or to a right accrued before April 1, 2021, see sec. 29, ch. 1, SLA 2021, in the 2021 Temporary and Special Acts.

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in the first sentence, substituted “stating the manner, place, if the meeting is to be held at a designated place, day, and hour of the meeting,” for “stating the place, day and hour of the meeting” following “written notice”.

Editor’s notes —

Section 30, ch. 1, SLA 2021 makes the 2021 amendment to this section retroactive to March 11, 2020.

Sec. 10.20.071. Voting; quorum.

1. The right of the members, or any class or classes of members, to vote may be limited, enlarged, or denied to the extent specified in the articles of incorporation or the bylaws. Unless limited, enlarged, or denied, each member, regardless of class, is entitled to one vote on each matter submitted to a vote of members.
2. A member entitled to vote may vote in person or, unless the articles of incorporation or the bylaws otherwise provide, may vote by remote communication, by proxy executed in writing by the member or by the attorney-in-fact for the member, or by proxy executed by electronic transmission by the member or by the authorized attorney-in-fact of the member. A proxy is not valid after 11 months from the date of its execution, unless otherwise provided in the proxy. If directors or officers are to be elected by members, the bylaws may provide that the elections may be conducted by mail.
3. The articles of incorporation or the bylaws may provide that in all elections for directors every member entitled to vote shall have the right to cumulate the member’s vote and to give one candidate a number of votes equal to the member’s vote multiplied by the number of directors to be elected, or by distributing the votes on the same principle among any number of the candidates.
4. If a corporation has no members or its members have no right to vote, the directors shall have sole voting power.
5. The articles of incorporation or the bylaws may provide the number or percentage of members entitled to vote represented in person, by remote communication, or by proxy, or the number or percentage of votes represented in person, by remote communication, or by proxy, which constitute a quorum at a meeting of members. In the absence of any such provision, members holding one- tenth of the votes entitled to be cast on the matter to be voted on represented in person, by remote communication, or by proxy constitute a quorum. A majority of the votes entitled to be cast on a matter to be voted on by the members present or represented by proxy at a meeting at which the quorum is present is necessary for adoption unless a greater proportion is required by this chapter, the articles of incorporation or the bylaws.
6. A proxy executed by electronic transmission must
   1. be directed to the person who will be the holder of the proxy or to a proxy solicitation person, including a proxy support service organization or similar agent that is authorized by the person who will be the holder of the proxy to receive the transmission; and
   2. include information that demonstrates that the stockholder authorized the transmission.
7. In this section, “electronic transmission” has the meaning given in AS 10.06.990 .

History. (§ 1 ch 99 SLA 1968; am §§ 22 — 24 ch 1 SLA 2021)

Cross references. —

For a saving clause declaring that the 2021 amendments to (b) and (e) of this section and the 2021 enactment of (f) and (g) of this section do not affect a court action or court proceeding begun or a right accrued before April 1, 2021, see sec. 29, ch. 1, SLA 2021, in the 2021 Temporary and Special Acts.

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in the first sentence of (b), inserted “remote communication, by” following “may vote by”, and added “, or by proxy executed by electronic transmission by the member or by the authorized attorney-in-fact of the member” at the end; in (e), inserted “, by remote communication,” three times following “represented in person” and made stylistic changes; added (f) and (g).

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendments to (b) and (e) of this section and the 2021 enactment of (f) and (g) of this section retroactive to March 11, 2020.

Sec. 10.20.076. Quorum of members.

Unless otherwise provided in the articles of incorporation or the bylaws, members holding one-tenth of the votes entitled to be cast, represented in person, by remote communication, or by proxy, constitute a quorum at a meeting of members. However, in no event may a quorum consist of less than one-tenth of the votes entitled to vote at a meeting. If a quorum is present, the affirmative vote of a majority of the votes represented at the meeting and entitled to vote on the subject matter is the act of the members, unless the vote of a greater number is required by this chapter or the articles of incorporation or the bylaws.

History. (§ 1 ch 99 SLA 1968; am § 25 ch 1 SLA 2021)

Cross references. —

For a saving clause declaring that the 2021 amendment to this section does not affect a court action or court proceeding begun or a right accrued before April 1, 2021, see sec. 29, ch.. 1, SLA 2021, in the 2021 Temporary and Special Acts.

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, in the first sentence, inserted “, by remote communication,” following “represented in person”.

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to this section retroactive to March 11, 2020.

Sec. 10.20.081. Board of directors.

The affairs of a corporation shall be managed by a board of directors. Directors need not be residents of the state or members of the corporation unless the articles of incorporation or the bylaws so require. The articles of incorporation or the bylaws may prescribe other qualifications for directors.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.086. Number of directors.

1. The number of directors of a corporation shall be at least three.  The number of directors shall be fixed by the bylaws, except that the number constituting the initial board of directors shall be fixed by the articles of incorporation.
2. The number of directors may be increased or decreased from time to time by amendment to the bylaws, but a decrease may not have the effect of shortening the term of an incumbent director.
3. In the absence of a bylaw fixing the number of directors, the number shall be the same as that stated in the articles of incorporation.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.091. Membership and term of office of first board of directors.

The names and addresses of the members of the first board of directors shall be stated in the articles of incorporation. Each member holds office until the first annual election of directors or for the period specified in the articles of incorporation. If no term of office is specified, a director’s term is one year.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.096. Election and terms of directors.

At the first annual election of directors and at each annual meeting thereafter the members shall elect directors to hold office for the terms provided in the bylaws. Each director holds office for the term for which elected and until a successor is elected and qualified. The terms of office of directors may be staggered.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.101. Vacancies.

A vacancy occurring in the board of directors and a directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of a majority of the remaining directors, though less than a quorum of the board of directors, unless the articles of incorporation or the bylaws provide that a vacancy or directorship so created shall be filled in some other manner. A director elected or appointed to fill a vacancy shall be elected or appointed for the unexpired term of the director’s predecessor in office. A directorship to be filled by reason of an increase in the number of directors shall be filled by the board of directors for a term of office which continues only until the next election of directors. In no case may a vacancy continue for longer than six months or until the next annual meeting of the members, whichever occurs first.

History. (§ 1 ch 99 SLA 1968; am § 30 ch 170 SLA 1976)

Sec. 10.20.106. Quorum of directors.

A majority of the number of directors fixed by the bylaws, or, in the absence of a bylaw fixing the number of directors, the number stated in the articles of incorporation, constitutes a quorum for the transaction of business unless a greater number is required by the articles of incorporation or the bylaws. The act of the majority of the directors present at a meeting at which a quorum is present is the act of the board of directors, unless the act of a greater number is required by the articles of incorporation or the bylaws.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.111. Executive committee.

If the articles of incorporation or the bylaws so provide, the board of directors, by resolution adopted by a majority of the number of directors fixed by the bylaws, or, in the absence of a bylaw fixing the number of directors, the number stated in the articles of incorporation, may designate two or more directors to constitute an executive committee, which, to the extent provided in the resolution or in the articles of incorporation or the bylaws of the corporation, may exercise the authority of the board of directors in the management of the corporation. The designation of the executive committee and the delegation of authority to it do not relieve the board of directors or any member of the board from responsibility imposed by law.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.116. Place and notice of directors’ meetings.

1. Regular or special meetings of the board of directors may be held at a designated place, by remote communication, or at a designated place and by remote communication. The designated place may be inside or outside the state.
2. Regular meetings of the board of directors may be held with or without notice as prescribed in the bylaws. Special meetings of the board of directors shall be held after the notice which shall be prescribed in the bylaws. Attendance of a director at a meeting constitutes a waiver of notice of the meeting, except when a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.  The business to be transacted or the purpose of a regular or special meeting of the board of directors need not be specified in the notice of the meeting unless required by the bylaws.

History. (§ 1 ch 99 SLA 1968; am § 26 ch 1 SLA 2021)

Cross references. —

For a saving clause declaring that the 2021 amendment to (a) of this section does not affect a court action or court proceeding begun or a right accrued before April 1, 2021, see sec. 29, ch. 1, SLA 2021, in the 2021 Temporary and Special Acts.

Effect of amendments. —

The 2021 amendment, effective April 1, 2021, rewrote (a), which read, “Regular or special meetings of the board of directors may be held either inside or outside the state.”

Editor’s notes. —

Section 30, ch. 1, SLA 2021, makes the 2021 amendment to (a) of this section retroactive to March 1, 2020.

Sec. 10.20.121. Officers.

1. The officers of a corporation consist of a president, one or more vice presidents as prescribed by the bylaws, a secretary, and a treasurer.  Each of the officers shall be elected by the board of directors at the time and in the manner prescribed by the bylaws.  Other necessary officers and assistant officers and agents may be elected or appointed by the board of directors or chosen in the manner prescribed by the bylaws. Two or more offices may be held by the same person, except the offices of president and secretary.
2. The articles of incorporation or bylaws may provide that an officer is an ex officio member of the board of directors.
3. An officer may be designated by additional titles as provided in the articles of incorporation or bylaws.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.126. Removal of officers.

An officer or agent may be removed by the board of directors, or by the executive committee, whenever in its judgment the best interests of the corporation will be served. Removal is without prejudice to the contract rights of the person removed. Election or appointment of an officer or agent does not of itself create contract rights.

History. (§ 1 ch 99 SLA 1968)

Sec. 10.20.131. Books and records; inspection.