Political contributions by corporation as criminal offense, see §§ 97-13-15, 97-13-17.

Recovery for discharge for employment in retaliation for filing workers’ compensation claim. 32 A.L.R.4th 1221.

Conduct or activities of employees during off-duty hours as misconduct barring unemployment compensation benefits. 35 A.L.R.4th 691.

Right of employee to injunction preventing employer from exposing employee to tobacco smoke in workplace. 37 A.L.R.4th 480.

Liability for discharge of employee from private employment on ground of political views or conduct. 38 A.L.R.5th 39.

What acts amount to violation of Hatch Act (5 USC §§ 1501-1503) prohibiting political activity of certain state and local employees. 8 A.L.R. Fed. 343.

Employer’s discharge of employee as unlawful employment practice in violation of § 704(a) of Civil Rights Act of 1964 (42 USCS § 2000e-3(a)) where basis for discharge is employee’s opposition to discriminatory conduct of co-worker. 49 A.L.R. Fed. 712.

What will be deemed a “written interpretation or opinion of the Commission” which employer can assert as defense under § 713(b) of the Equal Employment Opportunity Act (42 USCS § 2000e-12(b)(1)). 54 A.L.R. Fed. 868.

Prohibition of discrimination against, or discharge of, employee because of exercise of right afforded by Occupational Safety and Health Act, under § 11(c)(1) of the act (29 USCS § 660(c)(1)). 66 A.L.R. Fed. 650.

Dismissal of, or other adverse personnel action relating to, public employee for political patronage reasons as violative of First Amendment. 70 A.L.R. Fed. 371.

Preemption of state law wrongful discharge claim, not arising from whistleblowing, by § 541(A) of Employee Retirement Income Security Act of 1974 (29 U.S.C.S. § 1144(A)). 176 A.L.R. Fed. 433.

Franchises of corporation are (1) corporate or general franchises, which are franchises to exist as corporation; (2) special or secondary franchises, which are certain rights conferred on existing corporation. Gulf Refining Co. v. Cleveland Trust Co., 166 Miss. 759, 108 So. 158, 1926 Miss. LEXIS 488 (Miss. 1926).

Term “corporate franchise” ordinarily refers to primary franchise of corporation; that is, right and privilege granted by state of being corporation and doing such things as are authorized by its charter. Gulf Refining Co. v. Cleveland Trust Co., 166 Miss. 759, 108 So. 158, 1926 Miss. LEXIS 488 (Miss. 1926).

Stockholders’ rights to patent, copyright, or trademark owned by corporation on dissolution thereof. 30 A.L.R.2d 938.

Upon dissolution of oil corporation, all its assets became vested in the stockholders as tenants in common in proportion to their respective stockholdings. Urschel v. Stone, 198 Miss. 105, 21 So. 2d 466, 1945 Miss. LEXIS 172 (Miss. 1945).

A corporation, though insolvent, may prefer creditors by mortgage, sale or assignment, where there is no fraud. Sells v. Rosedale Grocery & Com. Co., 72 Miss. 590, 17 So. 236, 1895 Miss. LEXIS 9 (Miss. 1895).

Claimant who failed to assert tort claim against corporation pursuant to notice given creditors of corporation’s dissolution could, after dissolution distribution to stockholders of assets, and discharge of liquidator, sue corporation for adjudication of merits of claim, preliminary to taking steps against stockholders as distributees of corporation’s assets. Bates v. Mississippi Industrial Gas Co., 173 Miss. 361, 161 So. 133, 1935 Miss. LEXIS 208 (Miss. 1935).

Definitions of terms used in the Mississippi Business Corporation Act, see § 79-4-1.40.

Application of Mississippi Business Corporation Act to professional corporations, see § 79-10-3.

Applicability of Mississippi Business Corporation Act to trust companies, see § 81-27-4.107.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss L. J. 271, August, 1987.

A mutual fire insurance company empowered by its charter to insure its members only, and having no capital stock, cannot be authorized to carry on the business of insurance. Farmers' Mut. Fire Ins. Co. v. Cole, 90 Miss. 508, 43 So. 949, 1907 Miss. LEXIS 96 (Miss. 1907).

Section 79-4-16.21, referred to in (k)(3)(i), was repealed by Laws, 2012, ch. 481, § 48, effective January 1, 2013.

Requirement that Secretary of State file document that satisfies the requirements of this section, see § 79-4-1.25.

Definitions of certain terms used in this section, see § 79-4-1.40.

Requirements for filing documents by non profit corporation, see § 79-11-105.

Secretary of State may prescribe forms for use by nonprofit corporation, see § 79-11-107.

“SECTION 2. This act shall take effect and be in force from and after July 1, 2009.”

The first 2012 amendment (ch. 382), rewrote (a)(7) through (a)(9).

The 2014 amendment, in (2), substituted “[Reserved]” for “Application for use of indistinguishable name . . . 25.00”; in (5), substituted “[Reserved]” for “Application for registered name . . . 50.00”; and in (6), substituted “[Reserved]” for “Application for renewal of registered name . . . 50.00.”

The second 2012 amendment (ch. 481), effective January 1, 2013, deleted “except as provided in Sections 79-4-5.03 and 79-4-15.09” preceding “the Secretary of State shall deliver” in the last sentence of (b); substituted “ten (10)” for “five (5)” preceding “days after the document” in (c); and made minor stylistic changes.

Duty of Secretary of State to file nonprofit corporation documents, see § 79-11-115.

Appeal from Secretary of State’s refusal to file nonprofit corporation document, see § 79-11-117.

Evidentiary effect of copy of filed document, see § 79-4-1.27.

Application for and contents of certificate of existence for nonprofit corporation, see § 79-11-121.

Imposition of standard state assessment in addition to all court imposed fines or other penalties for any misdemeanor violation, see § 99-19-73.

Authority to commence proceeding to administratively dissolve corporation, see § 79-4-14.20.

36 Am. Jur. 2d, Foreign Corporations §§ 207, 288.

The 2007 amendment added (9AA).

Voluntary dissolution of corporation by incorporators, see § 79-4-14.01.

Incorporators under Mississippi Nonprofit Corporation Act, see § 79-11-135.

The 2016 amendment added (b)(6).

Articles of incorporation must set forth certain information regarding shares that the corporation is authorized to issue, see § 79-4-6.01.

Amendment of articles of incorporation generally, see §§ 79-4-10.01 et seq.

Restatement of articles of incorporation, see § 79-4-10.07.

Expiration of corporation’s period of duration stated in its articles of incorporation as ground for administrative dissolution, see § 79-4-14.20.

Copy of articles or restated articles of incorporation and all amendments to them currently in effect to be maintained at corporation’s principal office, see § 79-4-16.01.

Applicability of statutes regulating sale of assets or property of corporation as affected by purpose or character of corporation. 9 A.L.R.2d 1306.

Construction and effect of corporate articles, charter, or bylaws limiting duration or maturity of indebtedness. 55 A.L.R.2d 949.

Corporation: validity of charter provision for non-voting common stock. 52 A.L.R.3d 1131.

Charter restriction prohibiting the transfer of stock of a family corporation without consent of the shareholders was legitimate and reasonable insofar as it prohibited transfers of stock outside the family, but the prohibition against transfers within the family without the permission of each shareholder was unduly restrictive in that it served no reasonable purpose and was permissive to one dissenting shareholder thwarting the corporate business to the frustration of other shareholders by arbitrarily withholding consent, there being no charter or other provision for relief from such situation. Fayard v. Fayard, 293 So. 2d 421, 1974 Miss. LEXIS 1789 (Miss. 1974).

Evidence that a husband and wife, as majority stockholders, organized a corporation only a few days before the institution of an action against the husband, and the charter had neither been published in a newspaper nor recorded in the office of the chancery clerk, and no report of the corporation’s organization had been made to the secretary of state, and the husband and wife, after filing of the suit, transferred certain shares of stock to another as collateral for a loan, showed that the organization of the corporation was intended as a stand-by device to put the husband’s property beyond execution without the necessary good faith for the existence of a de facto corporation, so that the lien of the judgment creditor was superior to the corporation’s claim of ownership to an automobile, which had been transferred to it by the husband in exchange for stock shortly before the commencement of the suit. United Sewing Machine Distributors, Inc. v. Calhoun, 231 Miss. 390, 95 So. 2d 453, 1957 Miss. LEXIS 524 (Miss. 1957).

Change of corporation’s domicile from place stated in its charter by stockholders’ resolution, as authorized by charter, held matter of internal management not requiring charter amendment, in absence of statutory prohibition. Estes v. Bank of Walnut Grove, 172 Miss. 499, 159 So. 104, 1935 Miss. LEXIS 107 (Miss. 1935).

Chancery court of county from which domestic corporation, garnished as debtor of foreign bank in attachment suit against latter, moved its property, office, and place of stockholders’ meeting, as permitted by its charter, before issuance of process for it to sheriff of such county, had no territorial jurisdiction of such bank or garnishee. Estes v. Bank of Walnut Grove, 172 Miss. 499, 159 So. 104, 1935 Miss. LEXIS 107 (Miss. 1935).

Corporation advertising that it will make loans where its funds and its method of doing business made it impossible for it to comply with its promise, held to show an intention to defraud justifying revocation of its charter or an injunction against its doing business. Jackson Loan & Trust Co. v. State, 101 Miss. 440, 56 So. 293, 1911 Miss. LEXIS 93 (Miss. 1911).

The capital stock of a corporation, the charter not providing otherwise, may be paid for in property at its actual value. Ferguson v. Oxford Mercantile Co., 78 Miss. 65, 27 So. 877, 1900 Miss. LEXIS 68 (Miss. 1900).

Incorporation under Mississippi Nonprofit Corporation Act, see § 79-11-139.

This section [Code 1942, § 5343] does not require corporation authorized to do business by compliance with former statute to refile its charter and pay fees again. Power v. Calvert Mortg. Co., 112 Miss. 319, 73 So. 51, 1916 Miss. LEXIS 112 (Miss. 1916).

4 Am. Jur. Proof of Facts 1, Doing Business.

Emergency bylaws, see § 79-4-2.07.

Emergency bylaws, see § 79-4-2.07.

Amendment of bylaws, see §§ 79-4-10.20 et seq.

Bylaws under Mississippi Nonprofit Corporation Act, see § 79-11-145.

Conflict of laws as to validity and effect of corporate bylaw. 27 A.L.R.2d 435.

Construction and effect of corporate bylaws or articles relating to change in number of directors. 3 A.L.R.3d 623.

Bylaws, generally, see § 79-4-2.06.

Emergency bylaws under Mississippi Nonprofit Corporation Act, see § 79-11-147.

Emergency powers of board of directors of corporation, see § 79-4-3.03.

Corporation’s exceeding or abusing authority conferred upon it by law as grounds for judicial dissolution of corporation, see § 79-4-14.30.

Power of corporation or its officers with respect to payment of remuneration, bonus, and the like, to widow or family of deceased officer. 29 A.L.R.2d 1262.

Authority of corporate officers to mortgage or pledge corporate personal property. 62 A.L.R.2d 712.

Discovery and inspection: compelling party to disclose information in hands of affiliated or subsidiary corporation, or independent contractor, not made party to suit. 19 A.L.R.3d 1134.

Criminal liability of corporation for extortion, false pretenses or similar offenses. 49 A.L.R.3d 820.

What constitutes waiver of stockholder’s or corporation’s right to enforce first-option stock purchase agreement. 55 A.L.R.3d 723.

Corporation’s criminal liability for homicide. 45 A.L.R.4th 1021.

Corporation cannot surrender franchise with freedom of individual. Southern Electric Sec. Co. v. State, 91 Miss. 195, 44 So. 785, 1907 Miss. LEXIS 136 (Miss. 1907).

Laws 1912, ch. 162, does not affect right of corporation to acquire land for other than agricultural purposes. Middleton v. Georgetown Mercantile Co., 117 Miss. 134, 77 So. 956, 1918 Miss. LEXIS 157 (Miss. 1918).

Under Code 1880 and Laws 1882, p. 50, there is no public policy making a distinction between the rights of foreign and domestic corporations as to ownership of lands in this state; nor does comity authorize such a distinction. Taylor v. Alliance Trust Co., 71 Miss. 694, 15 So. 121, 1893 Miss. LEXIS 81 (Miss. 1893).

A conveyance of the land of an incorporated bank executed by its officers, where the purchase money is paid, passes the equitable title without the use of a corporate seal; whether the complete legal title passes by such a conveyance is not decided. McIver v. Abernathy, 66 Miss. 79, 5 So. 519, 1888 Miss. LEXIS 63 (Miss. 1888).

A stockholder in a corporation is bound by the act of a majority where due notice of a stockholders’ meeting was given him, although he was absent and unrepresented at the meeting. Hinds County v. Natchez J. & C. R. Co., 85 Miss. 599, 38 So. 189, 1904 Miss. LEXIS 111 (Miss. 1904).

Stock of domestic corporation held by foreign corporation cannot be voted except in this state. Southern Electric Sec. Co. v. State, 91 Miss. 195, 44 So. 785, 1907 Miss. LEXIS 136 (Miss. 1907).

Unsealed deed by corporation held not available in ejectment to support plaintiff’s title. Littelle v. Creek Lumber Co., 99 Miss. 241, 54 So. 841, 1911 Miss. LEXIS 199 (Miss. 1911).

Corporation receiving proceeds of purchase of property cannot defeat payment of note for price on ground that general manager had no authority to execute it. Watts Mercantile Co. v. Buchanan, 92 Miss. 540, 46 So. 66, 1908 Miss. LEXIS 204 (Miss. 1908).

Corporation held liable for slander of agent within scope of his employment, though without knowledge, approval, or ratification thereof. Rivers v. Yazoo & M. V. R. Co., 90 Miss. 196, 43 So. 471, 1907 Miss. LEXIS 69 (Miss. 1907).

An insolvent corporation may in good faith prefer a creditor. Ferguson v. Oxford Mercantile Co., 78 Miss. 65, 27 So. 877, 1900 Miss. LEXIS 68 (Miss. 1900).

Estoppel of stockholder to recover back or to secure restoration of compensation of corporate officers claimed to be exorbitant or unauthorized. 16 A.L.R.2d 467.

Power of particular officer or agent of business corporation to bind it by a donation to a charity or similar institution. 50 A.L.R.2d 447.

Authority of corporate officers to mortgage or pledge corporate personal property. 62 A.L.R.2d 712.

Liability of corporate officer or director for commission or compensation received from third person in connection with that person’s transaction with corporation. 47 A.L.R.3d 373.

Availability of sole shareholder’s Fifth Amendment privilege against self-incrimination to resist production of corporation’s books and records-modern status. 87 A.L.R. Fed. 177.

The defense of ultra vires cannot prevail against the doctrine of equitable estoppel where action was brought by receivers of an educational corporation seeking a recovery in connection with a completely executed purchase of stock. Pendleton v. Williams, 198 So. 2d 235, 1967 Miss. LEXIS 1255 (Miss. 1967).

Requirement that name of corporation applying for reinstatement after being administratively dissolved satisfy requirements of this section, see § 79-4-14.22.

Mississippi Nonprofit Corporation Act, see §§ 79-11-101 et seq.

Use of “family name” by corporation as unfair competition. 72 A.L.R.3d 8.

In granting corporate charter, state does not thereby adjudicate legal right of corporation to unlimited use of name chosen; and name, though derived through authority of state, may not be used in manner which will result in fraud or deception. Meridian Yellow Cab Co. v. City Yellow Cabs, 206 Miss. 812, 41 So. 2d 14, 1949 Miss. LEXIS 303 (Miss. 1949).

Requirement that corporate name of foreign corporation must be distinguishable from corporate name reserved under this section, see § 79-4-15.06.

Use of “family name” by corporation as unfair competition. 72 A.L.R.3d 8.

Subarticle A. Shares.

§79-4-6.01. Authorized shares.

The articles of incorporation must set forth any classes of shares and series of shares within a class, and the number of shares of each class and series, that the corporation is authorized to issue. If more than one (1) class or series of shares is authorized, the articles of incorporation must prescribe a distinguishing designation for each class or series and must describe, prior to the issuance of shares of a class or series, the terms, including the preferences, rights, and limitations of that class or series. Except to the extent varied as permitted by this section, all shares of a class or series must have terms, including preferences, rights and limitations that are identical with those of other shares of the same class or series.

The articles of incorporation must authorize:

1. One or more classes or series of shares that together have unlimited voting rights, and
2. One or more classes or series of shares (which may be the same class or classes as those with voting rights) that together are entitled to receive the net assets of the corporation upon dissolution.
3. Entitle the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative or partially cumulative; or
4. Have preference over any other class or series of shares with respect to distributions, including distributions upon the dissolution of the corporation.

The articles of incorporation may authorize one or more classes or series of shares that:

Have special, conditional or limited voting rights, or no right to vote, except to the extent otherwise provided by Section 79-4-1.01 et seq.;

Are redeemable or convertible as specified in the articles of incorporation (i) at the option of the corporation, the shareholder or another person or upon the occurrence of a specified event; (ii) for cash, indebtedness, securities or other property; and (iii) at prices and in amounts specified or determined in accordance with a formula;

Terms of shares may be made dependent upon facts objectively ascertainable outside the articles of incorporation in accordance with Section 79-4-1.20(k).

Any of the terms of shares may vary among holders of the same class or series so long as such variations are expressly set forth in the articles of incorporation.

The description of the preferences, rights and limitations of classes or series of shares in subsection (c) is not exhaustive.

HISTORY: Laws, 1987, ch. 486, § 6.01; Laws, 1988, ch. 368, § 4; Laws, 2001, ch. 435, § 1; Laws, 2004, ch. 495, § 4, eff from and after July 1, 2004.

Amendment Notes —

The 2001 amendment, in the second sentence of (a), inserted “terms, including the” preceding “preferences,” inserted “rights, and” preceding “limitations,” and deleted “and relative rights” following “limitations”; in the third sentence of (a), inserted “terms, including” preceding “preferences,” inserted “rights and” preceding “limitations,” deleted “and relative rights” following “limitations,” and inserted “this section or” preceding “Section 79-4-6.02”; and added (c)(5).

The 2004 amendment rewrote the section.

Cross References —

Applicability of this section to mandatory provisions of articles of incorporation, see § 79-4-2.02.

Authority of board of directors to determine preferences, limitations and relative rights of classes of shares, see § 79-4-6.02.

Fractional shares, see § 79-4-6.04.

Share dividends, see § 79-4-6.23.

Shareholder’s right to appraisal, see § 79-4-13.02.

Voluntary dissolution of corporation after issuance of shares, see § 79-4-14.02.

RESEARCH REFERENCES

ALR.

Construction and application of provisions of articles, bylaws, statutes, or agreements restricting alienation or transfer of corporate stock. 2 A.L.R.2d 745.

Statutory requirements respecting issuance of corporate stock as applicable to foreign corporations. 8 A.L.R.2d 1185.

Delay of stockholders in exercising their right to convert their stock into other class of stock or corporate obligations. 10 A.L.R.2d 587.

Enforcement of stock subscription after suit on note of subscriber is barred by statute of limitations. 11 A.L.R.2d 1380.

Validity of stock option plan under which selected personnel of corporation may acquire stock interest therein. 34 A.L.R.2d 852.

Validity of restrictions on alienation of corporate stock. 61 A.L.R.2d 1318.

Right or duty of corporation to refuse to transfer stock on presentation of properly indorsed certificate, because of conflicting rights or claims of one other than transferee. 75 A.L.R.2d 746.

Construction and effect of constitutional or statutory provisions precluding issuance of corporate stock in consideration of promissory notes. 78 A.L.R.2d 834.

Failure to issue stock as factor in disregard of corporate entity. 8 A.L.R.3d 1122.

Corporation’s delivery of stock certificate to stockholder as prerequisite of its issuance to him. 16 A.L.R.3d 1015.

Change in stock or corporate structure, or split or substitution of stock of corporation, as affecting bequest of stock. 46 A.L.R.3d 7.

Corporation: validity of charter provision for non-voting common stock. 52 A.L.R.3d 1131.

Validity and construction of provision restricting transfer of corporate stock, which conditions transfer upon consent of one other than shareholder, officer, or director of corporation. 53 A.L.R.3d 1272.

Valuation of corporate stock for purposes of state gift, inheritance or estate tax, as affected by predetermined price in buy-out or first option agreement among stockholders or with corporation. 58 A.L.R.3d 1104.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 355 et seq.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:624 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 61 et seq.

CJS.

18 C.J.S., Corporations §§ 254 et seq.

Law Reviews.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-111.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-111.

11. In general.

Incorporators who, following the issuance of a certificate of incorporation but prior to the payment into the treasury of the corporation of the required $1,000 as consideration for the issuance of shares, executed, as officers of the corporation, its note for $25,000, were not individually on the corporation’s note. In re Estate of Hardin, 218 So. 2d 889, 1969 Miss. LEXIS 1634 (Miss. 1969).

A deed to a corporation after its organization meeting is valid notwithstanding at the time the amount of capital stock required by this section [Code 1942, § 5311] had not been paid up. Allen v. Thompson, 248 Miss. 544, 158 So. 2d 503, 1963 Miss. LEXIS 406 (Miss. 1963).

§79-4-6.02. Terms of class or series determined by board of directors.

If the articles of incorporation so provide, the board of directors is authorized without shareholder approval, to:

1. Classify any unissued shares into one or more classes or into one or more series within a class;
2. Reclassify any unissued shares of any class into one or more classes or into one or more series within one or more classes; or
3. Reclassify any unissued shares of any series of any class into one or more classes or into one or more series within a class.

If the board of directors acts pursuant to subsection (a), it must determine the terms, including the preferences, rights and limitations, to the same extent permitted under Section 79-4-6.01 of:

Any class of shares before the issuance of any shares of that class, or

Any series within a class before the issuance of any shares of that series.

Before issuing any shares of a class or series created under this section, the corporation must deliver to the Secretary of State for filing articles of amendment setting forth the terms determined under subsection (a).

HISTORY: Laws, 1987, ch. 486, § 6.02; Laws, 2001, ch. 435, § 2; Laws, 2004, ch. 495, § 5, eff from and after July 1, 2004.

Amendment Notes —

The 2001 amendment rewrote the section.

The 2004 amendment rewrote the section.

Cross References —

Restrictions on board’s authority to determine preferences, limitations and relative rights of classes of shares, see § 79-4-6.01.

RESEARCH REFERENCES

ALR.

Validity of cancellation of accrued dividends on preferred corporate stock. 8 A.L.R.2d 893.

Overpayments of dividends on preferred stock as deductible in payment of dividends for later years. 10 A.L.R.2d 241.

Preferred stockholder’s rights, upon liquidation or dissolution, to dividends. 25 A.L.R.2d 788.

Rights of preferred stockholders as to past or accumulated dividends in going concern. 27 A.L.R.2d 1073.

Validity and construction of provision restricting transfer of corporate stock, which conditions transfer upon consent of one other than shareholder, officer, or director of corporation. 53 A.L.R.3d 1272.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 361, 363, 404.

18B Am. Jur. 2d, Corporations §§ 1079 et seq.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:654 et seq., 74:685 et seq.

CJS.

18 C.J.S., Corporations §§ 261, 288 et seq.

§79-4-6.03. Issued and outstanding shares.

A corporation may issue the number of shares of each class or series authorized by the articles of incorporation. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted or cancelled.

The reacquisition, redemption or conversion of outstanding shares is subject to the limitations of subsection (c) of this section and to Section 79-4-6.40.

At all times that shares of the corporation are outstanding, one or more shares that together have unlimited voting rights and one or more shares that together are entitled to receive the net assets of the corporation upon dissolution must be outstanding.

HISTORY: Laws, 1987, ch. 486, § 6.03, eff from and after January 1, 1988.

Cross References —

Shareholder’s right to appraisal, see § 79-4-13.02.

RESEARCH REFERENCES

ALR.

Validity and construction of provision restricting transfer of corporate stock, which conditions transfer upon consent of one other than shareholder, officer, or director of corporation. 53 A.L.R.3d 1272.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 187, 403-437, 617.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:653-74:690.

CJS.

18 C.J.S., Corporations, §§ 261-276.

§79-4-6.04. Fractional shares.

A corporation may:

1. Issue fractions of a share or pay in money the value of fractions of a share;
2. Arrange for disposition of fractional shares by the shareholders;
3. Issue scrip in registered or bearer form entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.

Each certificate representing scrip must be conspicuously labeled “scrip” and must contain the information required by Section 79-4-6.25(b).

The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them.

The board of directors may authorize the issuance of scrip subject to any condition considered desirable, including:

That the scrip will become void if not exchanged for full shares before a specified date; and

That the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.

HISTORY: Laws, 1987, ch. 486, § 6.04, eff from and after January 1, 1988.

Cross References —

Shareholder’s right to appraisal, see § 79-4-13.02.

Subarticle B. Issuance of Shares.

§79-4-6.20. Subscription for shares before incorporation.

A subscription for shares entered into before incorporation is irrevocable for six (6) months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation.

The board of directors may determine the payment terms of subscriptions for shares that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors must be uniform so far as practicable as to all shares of the same class or series, unless the subscription agreement specifies otherwise.

Shares issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration specified in the subscription agreement.

If a subscriber defaults in payment of money or property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as any other debt. Alternatively, unless the subscription agreement provides otherwise, the corporation may rescind the agreement and may sell the shares if the debt remains unpaid more than twenty (20) days after the corporation sends a written demand for payment to the subscriber.

A subscription agreement entered into after incorporation is a contract between the subscriber and the corporation subject to Section 79-4-6.21.

HISTORY: Laws, 1987, ch. 486, § 6.20; Laws, 2012, ch. 481, § 8, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, inserted “a” preceding “written demand for payment to the subscriber” at the end of (d).

Cross References —

Liability of purchaser from corporation of its own shares, see § 79-4-6.22.

RESEARCH REFERENCES

ALR.

Enforcement of stock subscription after suit on note of subscriber is barred by statute of limitations. 11 A.L.R.2d 1380.

Conversion by promoter of money paid for preincorporation subscription for stock shares as embezzlement. 84 A.L.R.2d 1100.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 480 et seq.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:85 et seq.

6B Am. Jur. Legal Forms 2d, Corporations §§ 74:1776 et seq.

7 Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 81 et seq.

CJS.

18 C.J.S., Corporations §§ 345 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-31.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-31.

11. In general.

Complainant induced by fraud to purchase stock did not ratify such purchase so as to preclude him setting it aside by transferring it before discovering the fraud. Jones v. Barnes, 107 Miss. 800, 66 So. 212, 1914 Miss. LEXIS 146 (Miss. 1914).

Complainant induced by fraud to purchase stock which he transferred to another held not required to return anything as condition precedent to his right to rescind upon both the assignee and the corporation becoming insolvent. Jones v. Barnes, 107 Miss. 800, 66 So. 212, 1914 Miss. LEXIS 146 (Miss. 1914).

Where maker of note for purchase-price of stock set up plea that payee bank had breached its agreement to furnish the corporation with sufficient capital to carry on business, thereby rendering the stock worthless, it was unnecessary to deny reception of the money by the maker. Merchants' & Farmers' Bank v. Smith, 107 Miss. 105, 64 So. 970, 1914 Miss. LEXIS 57 (Miss. 1914).

Subscription to capital stock of corporation to be organized may be withdrawn at any time before organization thereof. Wright Bros. v. Merchants' & Planters' Packet Co., 104 Miss. 507, 61 So. 550, 1913 Miss. LEXIS 57 (Miss. 1913).

Instruction authorizing recovery on written contract to subscribe for stock because of defendant’s attendance at meeting of prospective stockholders and participation therein, held erroneous. Wright Bros. v. Merchants' & Planters' Packet Co., 104 Miss. 507, 61 So. 550, 1913 Miss. LEXIS 57 (Miss. 1913).

Subscriber who has signed a promissory note to secure payment of his subscription for stock in corporation who afterwards acted as director therein and received a dividend, held estopped, when sued by receiver of the corporation on a separate cause of action, from demanding credit for the sum collected by the corporation on the note although the corporation held it only for collection and such collection was not made until the corporation had become insolvent and was disabled from issuing such subscriber a certificate for his stock. Allen v. Edwards, 93 Miss. 719, 47 So. 382, 1908 Miss. LEXIS 128 (Miss. 1908).

§79-4-6.21. Issuance of shares.

The powers granted in this section to the board of directors may be reserved to the shareholders by the articles of incorporation.

The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the corporation.

Before the corporation issues shares, the board of directors must determine that the consideration received or to be received for shares to be issued is adequate. That determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid and nonassessable.

When the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued therefor are fully paid and nonassessable.

The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid or the benefits received. If the services are not performed, the note is not paid or the benefits are not received, the shares escrowed or restricted and the distributions credited may be cancelled in whole or part.

HISTORY: Laws, 1987, ch. 486, § 6.21; Laws, 1988, ch. 368, § 5, eff from and after passage (approved April 18, 1988).

Cross References —

Applicability of this section to subscription agreement entered into after incorporation, see § 79-4-6.20.

Liability of purchaser from corporation of its own shares, see § 79-4-6.22.

Restriction on transfer or registration of transfer of shares, see § 79-4-6.27.

Shareholders’ preemptive rights, see § 79-4-6.30.

Purchaser of shares who, at the time of purchase, did not have knowledge of certain agreements authorized by § 79-4-7.32 entitled to rescission of the purchase, see § 79-4-7.32.

Procedure for adopting amendments to articles of incorporation once shares have been issued, see § 79-4-10.03.

RESEARCH REFERENCES

ALR.

Presumption as to value of corporate stock or bonds. 6 A.L.R.2d 189.

Meaning of “book value” of corporate stock. 51 A.L.R.2d 606.

Retroactive effect of statute fixing minimum value of corporate stock shares or otherwise affecting power of corporation to change par value of existing shares. 54 A.L.R.2d 1289.

What amounts to participation by corporate officer or agent in illegal issuance of security, in order to impose liability upon him under state securities regulations. 44 A.L.R.3d 588.

Valuation of corporate stock under “buy-out” or “first option” agreement giving option to or requiring corporation or other stockholders to purchase stock of deceased or withdrawing stockholders. 54 A.L.R.3d 790.

What constitutes waiver of stockholder’s or corporation’s right to enforce first-option stock purchase agreement. 55 A.L.R.3d 723.

Valuation of corporate stock for purposes of state gift, inheritance or estate tax, as affected by predetermined price in buy-out or first option agreement among stockholders or with corporation. 58 A.L.R.3d 1104.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity”. 16 A.L.R.4th 784.

Valuation of closely held stock for federal estate tax purposes under § 2031(b) of Internal Revenue Code of 1954 ( 26 USCS § 2031(b)) and implementing regulations. 22 A.L.R. Fed. 31.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 368- 371 et seq. Graves, Inc. v. Commissioner, 202 F.2d 286 (5th Cir. Miss. 1953), cert. denied, 346 U.S. 812, 74 S. Ct. 21, 98 L. Ed. 340 (1953).

6 Am. Jur. Legal Forms 2d, Corporations § 74:689.

2 Am. Jur. Proof of Facts 625, Book Value.

2 Am. Jur. Proof of Facts 2d 1, Valuation of Stock of Closely Held Corporations.

CJS.

18 C.J.S., Corporations §§ 304 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-35.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-35.

11. In general.

Stock may be paid for by an assignment, in good faith, of contract rights. Sterling Varnish Co. v. Sonom Co., 241 Miss. 810, 133 So. 2d 624, 1961 Miss. LEXIS 403 (Miss. 1961).

This section [Code 1942, § 5327] applies to additional stock, authorized and issued after the corporation has become a going concern, and regardless of whether note given for corporate stock is secured by collateral other than the stock itself. Graves, Inc. v. Commissioner, 202 F.2d 286, 1953 U.S. App. LEXIS 4209 (5th Cir. Miss.), cert. denied, 346 U.S. 812, 74 S. Ct. 21, 98 L. Ed. 340, 1953 U.S. LEXIS 1733 (U.S. 1953).

Intent of this section [Code 1942, § 5327] is that all stock must be fully and actually paid for, and that payee of a note given in purported payment of stock cannot recover thereon, nor can a purchaser with notice. Graves, Inc. v. Commissioner, 202 F.2d 286, 1953 U.S. App. LEXIS 4209 (5th Cir. Miss.), cert. denied, 346 U.S. 812, 74 S. Ct. 21, 98 L. Ed. 340, 1953 U.S. LEXIS 1733 (U.S. 1953).

This section [Code 1942, § 5327] does not indicate any legislative intention to restrict its application to stock issued by a corporation before it became a going concern, or that it should not apply to additional stock authorized and issued after it became a going concern, or that it does not apply where a note given for corporate stock is secured by collateral other than the stock itself. Merchants Bank & Trust Co. v. Walker, 192 Miss. 737, 6 So. 2d 107, 1942 Miss. LEXIS 15 (Miss. 1942).

This section [Code 1942, § 5327] is applicable to banking corporations. Merchants Bank & Trust Co. v. Walker, 192 Miss. 737, 6 So. 2d 107, 1942 Miss. LEXIS 15 (Miss. 1942).

Under statute providing that stockholder should be individually liable for debts of corporation contracted during ownership of stock for amount remaining unpaid on stock subscription Code 1942, § 5332, trustee in bankruptcy of corporation held entitled to maintain suit on notes executed by stockholders for balance due on subscriptions for additional stock. Frazier v. Zachariah, 174 Miss. 378, 164 So. 893, 1936 Miss. LEXIS 188 (Miss. 1936).

Cancellation and surrender of notes, given by stockholders for purchase of additional stock by president of corporation without authorization of board of directors while corporation was hopelessly insolvent and less than one month before filing of petition in bankruptcy, held ineffectual to discharge liability of stockholder for balance due on stock as against trustee in bankruptcy of corporation. Frazier v. Zachariah, 174 Miss. 378, 164 So. 893, 1936 Miss. LEXIS 188 (Miss. 1936).

Note given to corporation for stock subscription held enforceable by innocent holder for value paid before maturity, notwithstanding statute providing that note given by subscriber for stock shall not be considered payment therefor. Gordin v. Bank of Forest, 170 Miss. 56, 153 So. 375, 1934 Miss. LEXIS 90 (Miss. 1934).

Purchaser knowing notes were given for corporate stock in violation of statute could not recover thereon. Aldridge v. Rice, 161 Miss. 879, 138 So. 570, 1932 Miss. LEXIS 185 (Miss. 1932).

That maker, after plaintiff purchased notes given for stock, received dividend and attended stockholders’ meeting did not estop maker to set up defense that notes violated statute. Aldridge v. Rice, 161 Miss. 879, 138 So. 570, 1932 Miss. LEXIS 185 (Miss. 1932).

Payee of note given in payment of stock in a corporation cannot recover thereon, nor can a purchaser with notice. Ellis Jones Drug Co. v. Williams, 139 Miss. 170, 103 So. 810, 1925 Miss. LEXIS 126 (Miss. 1925).

Stock may be paid for in property if done in good faith and on a fair valuation unless the charter or a statutory provision forbids it. Lea v. Cutrer, 96 Miss. 355, 51 So. 808, 1909 Miss. LEXIS 64 (Miss. 1909).

Defaulting subscriber cannot set up this section [Code 1942, § 5327] as a bar to liability as a stockholder in an action on behalf of creditors of the corporation. Allen v. Edwards, 93 Miss. 719, 47 So. 382, 1908 Miss. LEXIS 128 (Miss. 1908).

All stock must be fully and actually paid for. Alford v. Laurel Imp. Co., 86 Miss. 375, 38 So. 548, 1905 Miss. LEXIS 62 (Miss. 1905); Graves, Inc. v. Commissioner, 202 F.2d 286, 1953 U.S. App. LEXIS 4209 (5th Cir. Miss.), cert. denied, 346 U.S. 812, 74 S. Ct. 21, 98 L. Ed. 340, 1953 U.S. LEXIS 1733 (U.S. 1953).

Subscriber who has not fully paid for his stock cannot maintain replevin to recover the certificate therefor although he has given a note to the corporation for the full amount. Alford v. Laurel Imp. Co., 86 Miss. 375, 38 So. 548, 1905 Miss. LEXIS 62 (Miss. 1905).

Where subscriber gave note for stock and the corporation retained the certificate as security, the fact that the capital was then doubled and another certificate written in name of the subscriber did not entitle him to possession of it. Alford v. Laurel Imp. Co., 86 Miss. 375, 38 So. 548, 1905 Miss. LEXIS 62 (Miss. 1905).

§79-4-6.22. Liability of shareholders.

A purchaser from a corporation of its own shares is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued (Section 79-4-6.21) or specified in the subscription agreement (Section 79-4-6.20).

A shareholder of a corporation is not personally liable for the acts or debts of the corporation except that he may become personally liable by reason of his own acts or conduct.

HISTORY: Laws, 1987, ch. 486, § 6.22, eff from and after January 1, 1988.

RESEARCH REFERENCES

ALR.

Statute of frauds: promise by stockholder, officer, or director to pay debt of corporation. 35 A.L.R.2d 906.

Enforceability in another jurisdiction of personal liability of stockholders for debts of corporation whose organization is incomplete or defective. 42 A.L.R.2d 659.

Right or duty of corporation to refuse to transfer stock on presentation of properly indorsed certificate, because of conflicting rights or claims of one other than transferee. 75 A.L.R.2d 746.

Liability of corporate directors or officers for negligence in permitting conversion of property of third persons by corporation. 29 A.L.R.3d 660.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

Controlling stockholder’s duty to investigate intent and motive of purchaser before selling stock. 77 A.L.R.3d 1005.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Personal liability of stockholder, officer, or agent for debt of foreign corporation doing business in the state. 27 A.L.R.4th 387.

Professional corporation stockholder’s nonmalpractice liability. 50 A.L.R.4th 1276.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 724, 732 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 261 et seq.

CJS.

18 C.J.S., Corporations §§ 679 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-47.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-47.

11. In general.

A holder of or subscriber to shares of a corporation shall be under no obligation to the corporation or its creditors with respect to such shares, other than the obligation to pay the corporation the full consideration for which its shares were issued or to be issued. Wood v. Gulf States Capital Corp., 217 So. 2d 257, 1968 Miss. LEXIS 1259 (Miss. 1968).

Stock may be paid for by an assignment, in good faith, of contract rights. Sterling Varnish Co. v. Sonom Co., 241 Miss. 810, 133 So. 2d 624, 1961 Miss. LEXIS 403 (Miss. 1961).

Under statute providing that stockholder should be individually liable for debts of corporation contracted during ownership of stock for amount remaining unpaid on stock subscription, trustee in bankruptcy of corporation held entitled to maintain suit on notes executed by stockholders for balance due on subscriptions for additional stock. Frazier v. Zachariah, 174 Miss. 378, 164 So. 893, 1936 Miss. LEXIS 188 (Miss. 1936).

Cancellation and surrender of notes, given by stockholders for purchase of additional stock by president of corporation without authorization of board of directors while corporation was hopelessly insolvent and less than one month before filing of petition in bankruptcy, held ineffectual to discharge liability of stockholder for balance due on stock as against trustee in bankruptcy of corporation. Frazier v. Zachariah, 174 Miss. 378, 164 So. 893, 1936 Miss. LEXIS 188 (Miss. 1936).

Stockholder held not liable for debts and liabilities of corporation; stockholder of bottling corporation held not liable for damages to buyers where he did not participate in actual bottling of drinks. Grapico Bottling Co. v. Ennis, 140 Miss. 502, 106 So. 97, 1925 Miss. LEXIS 285 (Miss. 1925).

President held entitled to recover against stockholders where corporation had repurchased its own stock rendering it insolvent. First Nat'l Bank v. Pearson, 109 Miss. 638, 68 So. 921, 1915 Miss. LEXIS 206 (Miss. 1915).

Such stockholders were liable to creditor after the corporation’s bankruptcy and trustee’s refusal to sue for him. First Nat'l Bank v. Pearson, 109 Miss. 638, 68 So. 921, 1915 Miss. LEXIS 206 (Miss. 1915).

Knowledge of bank that money loaned to corporation was to be used for an unauthorized purpose does not render it liable to stockholders for loss arising from misuse of such funds in the absence of fraud on its part. Beckett v. Planters' Compress & Bonded Warehouse Co., 107 Miss. 305, 65 So. 275, 1914 Miss. LEXIS 84 (Miss. 1914).

Stockholder’s liability for withdrawn capital necessary to pay debts is several. Kimbrough v. Davies, 104 Miss. 722, 61 So. 697, 1913 Miss. LEXIS 78 (Miss. 1913).

Bank permitting executrix to fraudulently appropriate and sell stock therein to the prejudice of creditors held not liable to creditors. Myers v. Martinez, 95 Miss. 104, 48 So. 291, 1909 Miss. LEXIS 206 (Miss. 1909).

Stockholder held not liable for payment of judgment for damages for infringement of a patent. B. F. Avery & Sons v. McClure, 94 Miss. 172, 47 So. 901, 1908 Miss. LEXIS 33 (Miss. 1908).

Every subscriber is liable for debts contracted during his ownership of stock and for one year after he transfers it, to the amount of his unpaid subscription. Allen v. Edwards, 93 Miss. 719, 47 So. 382, 1908 Miss. LEXIS 128 (Miss. 1908).

A creditor of a corporation may recover the amount of unpaid subscription of a stockholder to its capital stock, although he has given a note to the corporation for the same, payable on calls, and having died before payment, the note has not been probated against his estate within the time prescribed by law. Robinette v. Starling, 72 Miss. 652, 18 So. 421, 1895 Miss. LEXIS 50 (Miss. 1895).

In such case the right to sue does not rest upon the relation of debtor and creditor between the plaintiff and stockholder, but upon the statute giving creditors of the corporation a right of action against its delinquent stockholders. Robinette v. Starling, 72 Miss. 652, 18 So. 421, 1895 Miss. LEXIS 50 (Miss. 1895).

Under this section [Code 1942, § 5332], making a stockholder liable, to the amount of his unpaid stock, for corporate debts created during his ownership thereof, the liability to continue for one year after a transfer thereof, the year does not begin until a transfer in the manner provided by the said statute, namely, by indorsement and delivery of the stock certificate and registry of the transfer on the books of the corporation. Kriger v. Hanover Nat'l Bank, 72 Miss. 462, 16 So. 351, 1894 Miss. LEXIS 81 (Miss. 1894).

A stockholder in an insolvent corporation who has not paid the stock subscription is liable to the creditors of the corporation and may be sued therefor, and the debt so due by him may be subjected by garnishment as well as in a direct prosecution, and although the subscription is, by its terms, payable on the call of the directors, and no such call has been in fact made. Scott v. Windham, 73 Miss. 76, 16 So. 206, 1895 Miss. LEXIS 75 (Miss. 1895).

A subsequent judgment against the stockholders in favor of one creditor of the corporation is erroneous if it fails to provide that no execution shall issue against him until satisfaction of an earlier judgment against him in favor of another creditor of the corporation, and then only for so much, if anything, as may remain due on the subscription. Scott v. Windham, 73 Miss. 76, 16 So. 206, 1895 Miss. LEXIS 75 (Miss. 1895).

The liability of a stockholder to a creditor whose debt was contracted during the debtor’s ownership of the stock is not discharged by a release executed by the corporation when solvent. Vick v. Larochelle, 57 Miss. 602, 1880 Miss. LEXIS 12 (Miss. 1880).

In a suit by judgment creditors of an insolvent corporation to compel stockholders to pay up on subscriptions, all of the solvent stockholders within the jurisdiction of the court must be joined as defendants, except where there are so many as to justify the charge that they are too numerous to be all made parties. Vick v. Lane, Hazelhurst & Co., 56 Miss. 681, 1879 Miss. LEXIS 192 (Miss. 1879).

§79-4-6.23. Share dividends.

Unless the articles of incorporation provide otherwise, shares may be issued pro rata and without consideration to the corporation’s shareholders or to the shareholders of one or more classes or series. An issuance of shares under this subsection is a share dividend.

Shares of one class or series may not be issued as a share dividend in respect of shares of another class or series unless (1) the articles of incorporation so authorize, (2) a majority of the votes entitled to be cast by the class or series to be issued approve the issue, or (3) there are no outstanding shares of the class or series to be issued.

If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date the board of directors authorizes the share dividend.

HISTORY: Laws, 1987, ch. 486, § 6.23, eff from and after January 1, 1988.

Cross References —

Corporation’s acquisition of its own shares, see § 79-4-6.31.

Record date for distribution to shareholders, see § 79-4-6.40.

Record date for determining shareholders entitled to notice of meeting, to demand special meeting, to vote, or to take other action, see § 79-4-7.07.

RESEARCH REFERENCES

ALR.

Validity of cancelation of accrued dividends on preferred corporate stock. 8 A.L.R.2d 893.

Over-payments of dividends on preferred stock as deductible in payment of dividends for later years. 10 A.L.R.2d 241.

Rights of preferred stockholders as to passed or accumulated dividends in going concern. 27 A.L.R.2d 1073.

Dividend rights in surplus of new consolidated corporation resulting from reduction of capital stock of former constituent corporations. 28 A.L.R.2d 1177.

Jurisdiction of action involving dividends of foreign corporation. 72 A.L.R.2d 1211.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 998 et seq.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:750 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 393 et seq.

CJS.

18 C.J.S., Corporations §§ 559 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-87.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-87.

11. In general.

The receiver may bring such suit as representative of all the creditors. Metzger v. Joseph, 111 Miss. 385, 71 So. 645, 1916 Miss. LEXIS 309 (Miss. 1916).

Court of equity has jurisdiction of an action of a receiver of an insolvent bank to recover from directors a dividend disbursed in violation of this section [Code 1942, § 5328]. Metzger v. Joseph, 111 Miss. 385, 71 So. 645, 1916 Miss. LEXIS 309 (Miss. 1916).

Receiver, with court authority, may recover from stockholder dividends paid while bank was insolvent. Kretschmar v. Stone, 90 Miss. 375, 43 So. 177, 1907 Miss. LEXIS 45 (Miss. 1907).

Where declaration of receiver in such suit alleges authorization by chancery court to bring it, it is not demurrable on ground of want of jurisdiction. Kretschmar v. Stone, 90 Miss. 375, 43 So. 177, 1907 Miss. LEXIS 45 (Miss. 1907).

§79-4-6.24. Corporate issuance of rights, options and warrants; board may authorize officer or officers to designate recipients of rights, options and warrants.

A corporation may issue rights, options or warrants for the purchase of shares or other securities of the corporation. The board of directors shall determine (i) the terms upon which the rights, options or warrants are issued, and (ii) the terms, including the consideration for which the shares or other securities are to be issued. The authorization by the board of directors to issue such rights, options, or warrants constitutes authorization of the issuance of the shares or other securities for which the rights, options or warrants are exercisable.

The terms and conditions of such rights, options or warrants, including those outstanding on April 20, 2005, may include, without limitation, restrictions or conditions that preclude or limit the exercise, transfer or receipt of such rights, options or warrants by any person or persons owning or offering to acquire a specified number or percentage of the outstanding shares or other securities of the corporation, or by any transferee or transferees of any such person or persons, or that invalidate or void such rights, options or warrants held by any such person or persons or any such transferee or transferees.

The board of directors may authorize one or more officers to (1) designate the recipients of rights, options, warrants or other equity compensation awards that involve the issuance of shares, and (2) determine, within an amount and subject to any other limitations established by the board and, if applicable, the stockholders, the number of such rights, options, warrants or other equity compensation awards and the terms thereof to be received by the recipients, provided that an officer may not use such authority to designate either himself or herself or any other persons as the board of directors may specify as a recipient of such rights, options, warrants or other equity compensation awards.

HISTORY: Laws, 2005, ch; Laws, 2009, ch. 530, § 2, eff from and after July 1, 2009.

Editor’s Notes —

A former § 79-4-6.24 [Laws, 1987, ch. 486, § 6.24; Laws, 2001, ch. 435, § 3, eff from and after July 1, 2001; Repealed by Laws, 2004, ch. 495, § 6, eff from and after July 1, 2004] also contained provisions for the issuance of rights, options, and warrants.

Amendment Notes —

The 2009 amendment added (c).

RESEARCH REFERENCES

CJS.

18 C.J.S., Corporations §§ 358, 494.

§79-4-6.25. Form and content of certificate.

Shares may but need not be represented by certificates. Unless this act or another statute expressly provides otherwise, the rights and obligations of shareholders are identical whether or not their shares are represented by certificates.

At a minimum each share certificate must state on its face:

1. The name of the issuing corporation and that it is organized under the law of this state;
2. The name of the person to whom issued; and
3. The number and class of shares and the designation of the series, if any, the certificate represents.

If the issuing corporation is authorized to issue different classes of shares or different series within a class, the designations, relative rights, preferences and limitations applicable to each class and the variations in rights, preferences and limitations determined for each series (and the authority of the board of directors to determine variations for future series) must be summarized on the front or back of each certificate or the corporation must furnish the shareholder this information on request in writing and without charge.

Each share certificate (1) must be signed (either manually or in facsimile) by two (2) officers designated in the bylaws or by the board of directors, and (2) may bear the corporate seal or its facsimile.

If the person who signed (either manually or in facsimile) a share certificate no longer holds office when the certificate is issued, the certificate is nevertheless valid.

HISTORY: Laws, 1987, ch. 486, § 6.25; Laws, 1990, ch. 384, § 55, eff from and after July 1, 1990.

Cross References —

Applicability of this section to certificates representing “scrip,” see § 79-4-6.04.

Application of this section to requirements for issuing shares without certificates, see § 79-4-6.26.

RESEARCH REFERENCES

ALR.

Necessity of delivery of stock certificates to complete valid gift of stock. 23 A.L.R.2d 1171.

Validity, construction, and effect of articles of incorporation or stock certificates relating to call, redemption, or retirement of common stock. 48 A.L.R.2d 392.

Right or duty of corporation to refuse to transfer stock on presentation of properly indorsed certificate, because of conflicting rights or claims of one other than transferee. 75 A.L.R.2d 746.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 405, 406.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:1155 et seq.

CJS.

18 C.J.S., Corporations §§ 325 et seq.

§79-4-6.26. Authorization to issue shares without certificates.

Unless the articles of incorporation or bylaws provide otherwise, the board of directors of a corporation may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation.

Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement of the information required on certificates by Section 79-4-6.25(b) and (c), and if applicable, Section 79-4-6.27.

HISTORY: Laws, 1990 Ex Sess, ch. 47, § 1, eff from and after July 1, 1990.

Cross References —

Existence of certain shareholder agreements, specifically permitted although otherwise inconsistent with this chapter, to be noted on share certificate or on information statement required by this section, see § 79-4-7.32.

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations § 405.

CJS.

18 C.J.S., Corporations § 235.

§79-4-6.27. Restriction on transfer of shares and other securities.

The articles of incorporation, bylaws, an agreement among shareholders or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.

A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by Section 79-4-6.26(b). Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.

A restriction on the transfer or registration of transfer of shares is authorized:

1. To maintain the corporation’s status when it is dependent on the number or identity of its shareholders;
2. To preserve exemptions under federal or state securities law;
3. For any other reasonable purpose.
4. Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.

A restriction on the transfer or registration of transfer of shares may:

Obligate the shareholder first to offer the corporation or other persons (separately, consecutively or simultaneously) an opportunity to acquire the restricted shares;

Obligate the corporation or other persons (separately, consecutively or simultaneously) to acquire the restricted shares;

Require the corporation, the holders of any class of its shares or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable;

For purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.

HISTORY: Laws, 1987, ch. 486, § 6.27; Laws, 1990, ch. 384, § 56, eff from and after July 1, 1990.

Cross References —

Application of this section to requirements for issuing shares without certificates, see § 79-4-6.26.

RESEARCH REFERENCES

ALR.

Validity and construction of provision restricting transfer of corporate stock, which conditions transfer upon consent of one other than shareholder, officer, or director of corporation. 53 A.L.R.3d 1272.

What constitutes waiver of stockholder’s or corporation’s right to enforce first-option stock purchase agreement. 55 A.L.R.3d 723.

Valuation of corporate stock for purposes of state gift, inheritance or estate tax, as affected by predetermined price in buy-out or first option agreement among stockholders or with corporation. 58 A.L.R.3d 1104.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 172, 570-591.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:731-74:738, 74:1160, 74:1173.

7A Am. Jur. Pl & Pr Forms, Corporations, Form 101.

CJS.

18 C.J.S., Corporations § 478.

§79-4-6.28. Expenses of issue.

A corporation may pay the expenses of selling or underwriting its shares, and of organizing or reorganizing the corporation, from the consideration received for shares.

HISTORY: Laws, 1987, ch. 486, § 6.28 eff from and after January 1, 1988.

RESEARCH REFERENCES

Am. Jur.

6B Am. Jur. Legal Forms 2d, Corporations § 74:1787.

Subarticle C. Subsequent Acquisition of Shares by Shareholders and Corporation.

§79-4-6.30. Shareholders’ preemptive rights.

The shareholders of a corporation do not have a preemptive right to acquire the corporation’s unissued shares except to the extent the articles of incorporation so provide.

A statement included in the articles of incorporation that “the corporation elects to have preemptive rights” (or words of similar import) means that the following principles apply except to the extent the articles of incorporation expressly provide otherwise:

1. The shareholders of the corporation have a preemptive right granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation’s unissued shares upon the decision of the board of directors to issue them.
2. A shareholder may waive his preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
3. There is no preemptive right with respect to:
4. Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.
5. Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.
6. Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person for a period of one (1) year after being offered to shareholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one (1) year is subject to the shareholders’ preemptive rights.

Shares issued as compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;

Shares issued to satisfy conversion or option rights created to provide compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;

Shares authorized in articles of incorporation that are issued within six (6) months from the effective date of incorporation;

Shares sold otherwise than for money.

For purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.

HISTORY: Laws, 1987, ch. 486, § 6.30, eff from and after January 1, 1988.

RESEARCH REFERENCES

ALR.

What constitutes waiver of stockholder’s or corporation’s right to enforce first-option stock purchase agreement. 55 A.L.R.3d 723.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 438 et seq.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:696, 74:697.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Form 62.

3 Am. Jur. Proof of Facts 2d 379, Waiver of Right to Enforce “First Option” Stock Purchase Requirement, §§ 16 et seq.

CJS.

18 C.J.S., Corporations §§ 265, 277.

§79-4-6.31. Corporation’s acquisition of its own shares.

A corporation may acquire its own shares, and shares so acquired constitute authorized but unissued shares.

If the articles of incorporation prohibit the reissue of the acquired shares, the number of authorized shares is reduced by the number of shares acquired.

HISTORY: Laws, 1987, ch. 486, § 6.31; Laws, 2000, ch. 469, § 2, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment deleted “effective upon amendment of the articles of incorporation” following “shares acquired” in (b); and deleted former (c).

Cross References —

Board of directors authorized to adopt amendments to articles of incorporation to reflect reduction in authorized shares or to delete a class of changes as a result of the operation of this section without shareholder approval, see § 79-4-10.05.

RESEARCH REFERENCES

ALR.

Construction and operation of statute restricting corporation’s right to purchase its own stock to purchase from surplus. 61 A.L.R.3d 1049.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity”. 16 A.L.R.4th 784.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1775 et seq.

CJS.

19 C.J.S., Corporations § 1028.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II Under Former §79-3-9.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II Under Former § 79-3-9.

11. In general.

Where the trial court held that promissory notes of a corporation executed for the purchase of the corporation’s stock from the payees were good and valid obligations and no cross-appeal was taken from this finding, the question was not reviewable on appeal. Cooper v. Mississippi Land Co., 220 So. 2d 302, 1969 Miss. LEXIS 1451 (Miss. 1969).

The deed of an insolvent corporation, or of a corporation rendered insolvent by reason of its execution, by which it undertook to convey substantially all of its assets to persons who were all of its officers, directors, and stockholders is void; for insiders cannot prefer themselves in payment of pre-existing debts and thus deprive other creditors of the corporation of their claims; and such creditors had a lien upon the assets of the corporation superior to that of a mortgagee which held a deed of trust executed by the corporation’s grantees as to all property not covered by prior deeds of trust executed by the corporation. Cooper v. Mississippi Land Co., 220 So. 2d 302, 1969 Miss. LEXIS 1451 (Miss. 1969).

This section [Code 1942, § 5311], by clearest implication, permits a corporation to retire its stock at will unless in the process it renders the corporation insolvent, and it follows that where a particular transaction working a retirement of capital stock is attacked, the burden is on the moving party to show insolvency. Alcott Co. v. Raphael, 275 F.2d 551, 1960 U.S. App. LEXIS 5200 (5th Cir. Miss. 1960).

In order to set aside a conveyance of real estate by a bankrupt corporation to its stockholder, the trustee in bankruptcy must prove the insolvency of the corporation following, and as a result of, the transfer. Alcott Co. v. Raphael, 275 F.2d 551, 1960 U.S. App. LEXIS 5200 (5th Cir. Miss. 1960).

Subarticle D. Distributions.

§79-4-6.40. Distributions to shareholders.

A board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection (c).

If the board of directors does not fix the record date for determining shareholders entitled to a distribution (other than one involving a purchase, redemption or other acquisition of the corporation’s shares), it is the date the board of directors authorizes the distribution.

No distribution may be made if, after giving it effect:

1. The corporation would not be able to pay its debts as they become due in the usual course of business; or
2. The corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.
3. In all other cases, as of (i) the date the distribution is authorized if the payment occurs within one hundred twenty (120) days after the date of authorization, or (ii) the date the payment is made if it occurs more than one hundred twenty (120) days after the date of authorization.

The board of directors may base a determination that a distribution is not prohibited under subsection (c) either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.

Except as otherwise provided in subsection (g), the effect of a distribution under subsection (c) is measured;

In the case of distribution by purchase, redemption or other acquisition of the corporation’s shares, as of the earlier of (i) the date money or other property is transferred or debt incurred by the corporation, or (ii) the date the shareholder ceases to be a shareholder with respect to the acquired shares;

In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and

A corporation’s indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation’s indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.

Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (c) if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.

This section shall not apply to distributions in liquidation under Article 14 (Section 79-4-14.01 et seq.).

HISTORY: Laws, 1987, ch. 486, § 6.40; Laws, 1988, ch. 369, § 2; Laws, 2001, ch. 435, § 4, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment added (h).

Cross References —

Record date for determining shareholders entitled to notice of meeting, to demand special meeting, to vote, or to take other action, see § 79-4-1.07.

Applicability of this section to reacquisition, redemption or conversion of shares, see § 79-4-6.03.

Record date for determining shareholders entitled to a share dividend, see § 79-4-6.40.

Certain shareholder agreements as to authorization or making of distributions, although otherwise inconsistent with act, permitted subject to limitations in this section, see § 79-4-7.32.

Director’s liability for unlawful distributions, see § 79-4-8.33.

Applicability of this section to sale, lease, exchange or other disposition of all, or substantially all, property of corporation other then in regular course of business that constitutes a distribution, see § 79-4-12.02.

Payment by corporation, pursuant to order directing buyout of shareholder petitioning to dissolve corporation whose shares are not listed or regularly traded, as subject to provisions of this section, see § 79-4-14.34.

Distribution to shareholders during voluntary dissolution of corporation, see §§ 79-4-14.01 et seq.

RESEARCH REFERENCES

ALR.

Dividend rights in surplus of new consolidated corporation resulting from reduction of capital stock of former constituent corporations. 28 A.L.R.2d 1177.

Reduction of capital stock and distribution of capital assets on reduction. 35 A.L.R.2d 1149.

Modern status of rules governing allocations of stock dividends or splits between principal and income. 81 A.L.R.3d 876.

Am. Jur.

18B Am. Jur. 2d, Corporations § 1019.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Form 263.1 (complaint by judgment creditor against sole stockholder receiving distributions of corporate property causing corporation to become insolvent).

22 Am. Jur. Proof of Facts 2d 593, Wrongful Failure of Corporate Directors to Declare Dividend.

CJS.

18 C.J.S., Corporations §§ 543, 545.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-85.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-85.

11. In general.

In order to set aside a conveyance of real estate by a bankrupt corporation to its stockholder, the trustee in bankruptcy must prove the insolvency of the corporation following, and as a result of, the transfer. Alcott Co. v. Raphael, 275 F.2d 551, 1960 U.S. App. LEXIS 5200 (5th Cir. Miss. 1960).

Cancellation and surrender of notes, given by stockholders for purchase of additional stock, by president of corporation without authorization of the board of directors and while corporation was insolvent, less than one month before filing of petition in bankruptcy, was ineffectual to discharge liability of stockholder for balance due on stock as against trustee in bankruptcy. Frazier v. Zachariah, 174 Miss. 378, 164 So. 893, 1936 Miss. LEXIS 188 (Miss. 1936).

One year statute of limitations on suits for penalties does not bar action under this section [Code 1942, § 5328]. Metzger v. Joseph, 111 Miss. 385, 71 So. 645, 1916 Miss. LEXIS 309 (Miss. 1916).

This section [Code 1942, § 5328] is not penal but remedial. Metzger v. Joseph, 111 Miss. 385, 71 So. 645, 1916 Miss. LEXIS 309 (Miss. 1916).

State banking law did not repeal this section [Code 1942, § 5328] as applicable to banks. Metzger v. Joseph, 111 Miss. 385, 71 So. 645, 1916 Miss. LEXIS 309 (Miss. 1916).

Corporation’s capital cannot be withdrawn by stockholders until all debts are paid. Kimbrough v. Davies, 104 Miss. 722, 61 So. 697, 1913 Miss. LEXIS 78 (Miss. 1913).

Liability of stockholders for withdrawn capital necessary to pay creditors is several. Kimbrough v. Davies, 104 Miss. 722, 61 So. 697, 1913 Miss. LEXIS 78 (Miss. 1913).

This section [Code 1942, § 5328] does not prevent recovery of portion of corporation’s capital withdrawn for distribution among stockholders and necessary to pay debts. Kimbrough v. Davies, 104 Miss. 722, 61 So. 697, 1913 Miss. LEXIS 78 (Miss. 1913).

Article 7. Shareholders.

Subarticle A. Meetings.

§79-4-7.01. Annual meeting.

Unless directors are elected by written consent in lieu of an annual meeting as permitted by Section 79-4-7.04, a corporation shall hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws; provided, however, that if a corporation’s articles of incorporation authorize shareholders to cumulate their votes when electing directors pursuant to Section 79-4-7.28, directors may not be elected by less than unanimous written consent.

Annual shareholders’ meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation’s principal office.

The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action.

HISTORY: Laws, 1987, ch. 486, § 7.01; Laws, 2007, ch. 361, § 4, eff from and after July 1, 2007.

Amendment Notes —

The 2007 amendment rewrote (a) to revise election of directors at the annual meeting.

Cross References —

Special meeting, see § 79-4-7.02.

Right of shareholder who signed demand for special meeting to apply for court-ordered meeting of shareholders, see § 79-4-7.03.

Notice of meeting, see § 79-4-7.05.

Appointment of party to voting agreement as proxy as being an appointment coupled with an interest, see § 79-4-7.22.

Copies of minutes of shareholders’ meetings to be maintained at corporation’s principal office, see § 79-4-16.01.

RESEARCH REFERENCES

ALR.

Remedies to restrain or compel holding of stockholders’ meetings. 48 A.L.R.2d 615.

Holding directors’, officers’, stockholders’, or sales meetings or conventions in a state by foreign corporation as doing business or otherwise subjecting it to service of process and suit. 84 A.L.R.2d 412.

Corporations: casting of ballots after closing of polls. 41 A.L.R.3d 234.

Participation in meeting as waiver of compliance with notice requirement for shareholders’ meeting. 64 A.L.R.3d 358.

Right of corporation to discharge employee who asserts right as stockholder. 84 A.L.R.3d 1107.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 789 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:994 et seq.

6B Am. Jur. Legal Forms 2d, Corporations §§ 74:1642 et seq.

CJS.

18 C.J.S., Corporations §§ 635-678.

Law Reviews.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

JUDICIAL DECISIONS

1. In general.

Although the shareholders did not ratify the president’s act of terminating an attorney’s position as an employee until more than a year after the fact, the action was invalidated by the lack of yearly meeting under Miss. Code Ann. § 79-4-7.01 which applied to the corporation by Miss. Code Ann. § 79-10-3. Jowett v. Scruggs, 901 So. 2d 638, 2004 Miss. App. LEXIS 768 (Miss. Ct. App. 2004), cert. denied, 901 So. 2d 1273, 2005 Miss. LEXIS 312 (Miss. 2005).

§79-4-7.02. Special meeting.

A corporation shall hold a special meeting of shareholders:

1. On call of its board of directors or the person or persons authorized to do so by the articles of incorporation or bylaws; or
2. Unless the articles of incorporation provide otherwise, if shareholders having at least ten percent (10%) of all the votes entitled to be cast on an issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation one or more written demands for the meeting describing the purpose or purposes for which it is to be held. Unless otherwise provided in the articles of incorporation, a written demand for a special meeting may be revoked by a writing to that effect received by the corporation prior to the receipt by the corporation of demands sufficient in number to require the holding of a special meeting.

If not otherwise fixed under Section 79-4-7.03 or 79-4-7.07, the record date for determining shareholders entitled to demand a special meeting is the date the first shareholder signs the demand.

Special shareholders’ meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings shall be held at the corporation’s principal office.

Only business within the purpose or purposes described in the meeting notice required by Section 79-4-7.05(c) may be conducted at a special shareholders’ meeting.

HISTORY: Laws, 1987, ch. 486, § 7.02; Laws, 1997, ch. 418, § 49, eff from and after July 1, 1997.

Cross References —

Right of shareholder who signed demand for special meeting to apply for court-ordered meeting of shareholders, see § 79-4-7.03.

Timing of and information to be included in notice of special meeting, see § 79-4-7.05.

RESEARCH REFERENCES

ALR.

Remedies to restrain or compel holding of stockholders’ meeting. 48 A.L.R.2d 615.

Participation in meeting as waiver of compliance with notice requirement for shareholders’ meeting. 64 A.L.R.3d 358.

Am. Jur.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:995, 74:998.

6B Am. Jur. Legal Forms 2d, Corporations §§ 74:1642-74:1644, 74:1651, 74:1655, 74:1656, 74:1676.

CJS.

18 C.J.S., Corporations § 639.

§79-4-7.03. Court-ordered meeting.

The chancery court of the county where a corporation’s principal office is located, or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state, may summarily order a meeting to be held:

1. On application of any shareholder of the corporation entitled to participate in an annual meeting if an annual meeting was not held or action by written consent in lieu thereof did not become effective within the earlier of six (6) months after the end of the corporation’s fiscal year or fifteen (15) months after its last annual meeting or written consent in lieu thereof; or
2. On application of a shareholder who signed a demand for a special meeting valid under Section 79-4-7.02 if:

Notice of the special meeting was not given within thirty (30) days after the date the demand was delivered to the corporation’s secretary; or

The special meeting was not held in accordance with the notice.

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

HISTORY: Laws, 1987, ch. 486, § 7.03; Laws, 2007, ch. 361, § 5; Laws, 2012, ch. 382, § 26, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2007 amendment, in (a)(1), inserted “or action by written consent in lieu thereof did not become effective” and “or written consent in lieu thereof.”

The 2012 amendment, effective January 1, 2013, rewrote (a).

Cross References —

Record date for determining shareholders entitled to demand special meeting where date is not fixed under this section, see § 79-4-7.02.

Record date for determining shareholders entitled to take action without meeting where date is not otherwise determined under this section, see § 79-4-7.04.

Record date for determining shareholders entitled to notice of and to vote at annual or special shareholder’s meeting where date is not otherwise determined under this section, see § 79-4-7.05.

RESEARCH REFERENCES

ALR.

Participation in meeting as waiver of compliance with notice requirement for shareholders’ meeting. 64 A.L.R.3d 358.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 992-997.

CJS.

18 C.J.S., Corporations § 652.

§79-4-7.04. Action without meeting.

Action required or permitted by Section 79-4-1.01 et seq. to be taken at a shareholders’ meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action must be evidenced by one or more written consents describing the action taken, signed by all the shareholders entitled to vote on the action and delivered to the corporation for inclusion in the minutes or filing with the corporate records. A unanimous consent signed under this subsection is the act of the shareholders when consents signed by all shareholders have been delivered to the corporation.

The articles of incorporation may provide that any action required or permitted by Section 79-4-1.01 et seq. to be taken at a shareholder’s meeting may be taken without a meeting and without prior notice, if consents in writing setting forth the action so taken are signed by the holders of outstanding shares having not less than the minimum number of votes that would be required to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted. The written consent shall bear the date of signature of the shareholder who signs the consent and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.

If not otherwise fixed under Section 79-4-7.03 or 79-4-7.07, and if prior board action is not required respecting the action to be taken without a meeting, the record date for determining the shareholders entitled to take action without a meeting shall be the first date on which a signed written consent is delivered to the corporation. If not otherwise fixed under Section 79-4-7.03 or 79-4-7.07, and if prior board action is required respecting the action to be taken without a meeting, the record date shall be the close of business on the day the resolution of the board taking such prior action is adopted. No written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest date on which a consent delivered to the corporation as required by this section was signed, written consents signed by the holders of shares having sufficient votes to take the action have been delivered to the corporation. A written consent may be revoked by a writing to that effect delivered to the corporation before unrevoked written consents sufficient in number to take the corporation action are delivered to the corporation.

A consent signed pursuant to the provisions of this section has the effect of a vote taken at a meeting and may be described as such in any document. Unless the articles of incorporation, bylaws, or a resolution of the board of directors provides for a reasonable delay to permit tabulation of written consents, the action taken by less than unanimous written consent shall be effective when written consents signed by the holders of shares having sufficient votes to take the action are delivered to the corporation.

If Section 79-4-1.01 et seq. requires that notice of a proposed action be given to nonvoting shareholders and the action is to be taken by written consent of the voting shareholders, the corporation must give its nonvoting shareholders written notice of the action not more than ten (10) days after (i) written consents sufficient to take the action have been delivered to the corporation, or (ii) such later date that tabulation of consents is completed pursuant to an authorization under subsection (d). The notice must reasonably describe the action taken and contain or be accompanied by the same material that, under Section 79-4-1.01 et seq., would have been required to be sent to nonvoting shareholders in a notice of a meeting at which the proposed action would have been submitted to the shareholders for action.

If action is taken by less than unanimous written consent of the voting shareholders, the corporation must give its nonconsenting voting shareholders written notice of the action not more than ten (10) days after (i) written consents sufficient to take the action have been delivered to the corporation, or (ii) such later date that tabulation of consents is completed pursuant to an authorization under subsection (d). The notice must reasonably describe the action taken and contain or be accompanied by the same material that, under Section 79-4-1.01 et seq., would have been required to be sent to voting shareholders in a notice of a meeting at which the action would have been submitted to the shareholders for action.

The notice requirements in subsections (e) and (f) shall not delay the effectiveness of actions taken by written consent, and a failure to comply with such notice requirements shall not invalidate actions taken by written consent, provided that this subsection shall not be deemed to limit judicial power to fashion any appropriate remedy in favor of a shareholder adversely affected by a failure to give such notice within the required time period.

HISTORY: Laws, 1987, ch. 486, § 7.04; Laws, 2007, ch. 361, § 6; Laws, 2012, ch. 382, § 27; Laws, 2012, ch. 481, § 9, eff from and after Jan. 1, 2013.

Joint Legislative Committee Note —

Section 9 of Chapter 481, Laws of 2012, effective January 1, 2013 (approved April 24, 2012), amended this section. Section 27 of Chapter 382, Laws of 2012, effective January 1, 2013 (approved April 17, 2012), also amended this section. As set out above, this section reflects the language of Section 9 of Chapter 481, Laws of 2012, which contains language that specifically provides that it supersedes § 79-4-7.04 as amended by Laws of 2012, ch. 382.

Amendment Notes —

The 2007 amendment rewrote the section to revise action by written consent in lieu of a meeting.

The first 2012 amendment (ch. 382), deleted “at its registered office” preceding “or to the secretary of the corporation at its principal office” in (i).

The second 2012 amendment (ch. 481), effective January 1, 2013, deleted former (h) and (i) which read: “(h) An electronic transmission may be used to consent to an action, if the electronic transmission contains or is accompanied by information from which the corporation can determine the date on which the electronic transmission was signed and that the electronic transmission was authorized by the shareholder, the shareholder’s agent, or the shareholder’s attorney-in-fact. (i) Delivery of a written consent to the corporation under this section is delivery to the corporation’s registered agent at its registered office or to the secretary of the corporation at its principal office.”

RESEARCH REFERENCES

ALR.

Participation in meeting as waiver of compliance with notice requirement for shareholders’ meeting. 64 A.L.R.3d 358.

Am. Jur.

18A Am. Jur. 2d, Corporations § 790.

CJS.

18 C.J.S., Corporations § 539.

§79-4-7.05. Notice of meeting.

A corporation shall notify shareholders of the date, time and place of each annual and special shareholders’ meeting no fewer than ten (10) nor more than sixty (60) days before the meeting date. If the board of directors has authorized participation by means of remote communication pursuant to Section 79-4-7.09 for any class or series of shareholders, the notice of such class or series of shareholders shall describe the means of remote communication to be used. Unless Section 79-4-1.01 et seq. or the articles of incorporation require otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting.

Unless Section 79-4-1.01 et seq. or the articles of incorporation require otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called.

Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called.

If not otherwise fixed under Section 79-4-7.03 or 79-4-7.07, the record date for determining shareholders entitled to notice of and to vote at an annual or special shareholders’ meeting is the day before the first notice is delivered to shareholders.

Unless the bylaws require otherwise, if an annual or special shareholders’ meeting is adjourned to a different date, time or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under Section 79-4-7.07, however, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date.

HISTORY: Laws, 1987, ch. 486, § 7.05; Laws, 1988, ch. 369, § 3; Laws, 2012, ch. 481, § 10, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, added the second sentence in (a); and made a minor stylistic change.

Cross References —

Applicability of this section to business that may be conducted at special shareholders’ meeting, see § 79-4-7.02.

Waiver of notice, see § 79-4-7.06.

Shareholders’ list to be made available for inspection by shareholder beginning two business days after notice of shareholder’s meeting is given, see § 79-4-7.20.

Applicability of this section to notice of a shareholders’ meeting to consider amendments to articles of incorporation, see § 79-4-10.03.

Applicability of this section to notice of shareholders’ meeting to consider restatement of articles of incorporation, see § 79-4-10.07.

Applicability of this section to notice of shareholders’ meeting to consider plan of merger or share exchange, see § 79-4-11.04.

Applicability of this section to notice of shareholders’ meeting to consider sale, lease, exchange, or other disposition of all, or substantially all, property of corporation other than in regular course of business, see § 79-4-12.02.

Requirement that corporation notify each shareholder, whether or not entitled to vote, in accordance with this section, of shareholders’ meeting to consider proposed dissolution of the corporation, see § 79-4-14.02.

RESEARCH REFERENCES

ALR.

Participation in meeting as waiver of compliance with notice requirement for shareholders’ meeting. 64 A.L.R.3d 358.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 803 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:999, (bylaws – notice of meetings – to holders of stock not entitled to vote), 74:1000.

6B Am. Jur. Legal Forms 2d, Corporations §§ 74:1651-74:1656.

CJS.

18 C.J.S., Corporations § 640.

JUDICIAL DECISIONS

1. Proper notice.

Trial court did not err by finding that a corporation provided adequate notice of a special meeting to shareholders because the notice provided the location, time, date, and purpose of the shareholders meeting pursuant to Miss. Code Ann. § 79-4-7.05(a) and (c), and an attached proxy vote sheet setting forth the voting issues referenced the discussion of the issues in the minutes. Keene v. Brookhaven Acad., Inc., 28 So.3d 1285, 2010 Miss. LEXIS 107 (Miss. 2010).

§79-4-7.06. Waiver of notice.

A shareholder may waive any notice required by Sections 79-4-1.01 et seq., the articles of incorporation, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.

A shareholder’s attendance at a meeting:

1. Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting.
2. Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

HISTORY: Laws, 1987, ch. 486, § 7.06, eff from and after January 1, 1988.

RESEARCH REFERENCES

ALR.

Participation in meeting as waiver of compliance with notice requirement for shareholders’ meeting. 64 A.L.R.3d 358.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 817-820.

18B Am. Jur. 2d, Corporations § 1191.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1001, 74:1002.

6B Am. Jur. Legal Forms 2d, Corporations § 74:1668.

§79-4-7.07. Record date.

The bylaws may fix or provide the manner of fixing the record date for one or more voting groups in order to determine the shareholders entitled to notice of shareholders’ meeting, to demand a special meeting, to vote, or to take any other action. If the bylaws do not fix or provide for fixing a record date, the board of directors of the corporation may fix a future date as the record date.

A record date fixed under this section may not be more than seventy (70) days before the meeting or action requiring a determination of shareholders.

A determination of shareholders entitled to notice of or to vote at a shareholders’ meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred-twenty (120) days after the date fixed for the original meeting.

If a court orders a meeting adjourned to a date more than one hundred-twenty (120) days after the date fixed for the original meeting, it may provide that the original record date continues in effect or it may fix a new record date.

HISTORY: Laws, 1987, ch. 486, § 7.07, eff from and after January 1, 1988.

Cross References —

Record date for share dividends, see § 79-4-6.23.

Record date for determining shareholders entitled to demand special meeting where date is not fixed under this section, see § 79-4-7.02.

Record date for determining shareholders entitled to take action without meeting where date is not otherwise determined under this section, see § 79-4-7.04.

Record date for determining shareholders entitled to notice of and to vote at annual or special shareholder’s meeting where date is not otherwise determined under this section, see § 79-4-7.05.

Requirement of notice of adjourned meeting where new record date for meeting is or must be fixed under this section, see § 79-4-7.05.

RESEARCH REFERENCES

ALR.

Rights, duties, and liability of corporation in connection with transfer of stock of infant or incompetent. 3 A.L.R.2d 881.

Rights, duties, and liability in connection with transfer of stock of decedent. 7 A.L.R.2d 1240.

Remedy for refusal of corporation or its agent to register of effectuate transfer of stock. 22 A.L.R.2d 12.

Validity of restrictions on alienation or transfer of corporate stock. 61 A.L.R.2d 1318.

Right or duty of corporation to refuse to transfer stock on presentation of properly indorsed certificate, because of conflicting rights or claims of one other than transferee. 75 A.L.R.2d 746.

Validity and construction of provision restricting transfer of corporate stock, which conditions transfer upon consent of one other than shareholder, officer, or director of corporation. 53 A.L.R.3d 1272.

Construction and effect of “dilution” provision of employee’s stock option contract, dealing with rights where stock structure of corporation changes before option is exercised. 59 A.L.R.3d 1030.

Restrictions on transfer of corporate stock as applicable to testamentary dispositions thereof. 61 A.L.R.3d 1090.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 858 et seq., 914.

18B Am. Jur. 2d, Corporations §§ 1036, 1066.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1163, 74:1164.

§79-4-7.08. Appointment of chair to preside over meetings; duties of chair.

At each meeting of shareholders, a chair shall preside. The chair shall be appointed as provided in the bylaws, or, in the absence of such provision, by the board.

The chair, unless the articles of incorporation or bylaws provide otherwise, shall determine the order of business and shall have the authority to establish rules for the conduct of the meeting.

Any rules adopted for, and the conduct of, the meeting shall be fair to shareholders.

The chair of the meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls shall be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes nor any revocations or changes thereto may be accepted.

HISTORY: Laws, 1997, ch. 418, § 50, eff from and after July 1, 1997.

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations § 828.

§79-4-7.09. Promote participation in annual and special meetings.

Shareholders of any class or series may participate in any meeting of shareholders by means of remote communication to the extent the board of directors authorizes such participation for such class or series. Participation by means of remote communication shall be subject to such guidelines and procedures as the board of directors adopts, and shall be in conformity with subsection (b) of this section.

Shareholders participating in a shareholders’ meeting by means of remote communication shall be deemed present and may vote at such a meeting if the corporation has implemented reasonable measures:

1. To verify that each person participating remotely is a shareholder; and
2. To provide such shareholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to communicate, and to read or hear the proceedings of the meeting, substantially concurrently with such proceeding.

HISTORY: Laws, 2012, ch. 481, § 11, eff from and after Jan. 1, 2013.

Subarticle B. Voting.

§79-4-7.20. Shareholders’ list for meeting.

After fixing a record date for a meeting, a corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of a shareholders’ meeting. The list must be arranged by voting group (and within each voting group by class or series of shares) and show the address of and number of shares held by each shareholder.

The shareholders’ list must be available for inspection by any shareholder beginning two (2) business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation’s principal office or at a place identified in the meeting notice in the city where the meeting will be held. A shareholder, his agent or attorney is entitled on written demand to inspect and, subject to the requirements of Section 79-4-16.02(c), to copy the list during regular business hours and at his expense, during the period it is available for inspection.

The corporation shall make the shareholders’ list available at the meeting, and any shareholder, his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment.

If the corporation refuses to allow a shareholder, his agent or attorney to inspect the shareholders’ list before or at the meeting (or copy the list as permitted by subsection (b)), the chancery court of the county where a corporation’s principal office is located, or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state, on application of the shareholder, may summarily order the inspection or copying at the corporation’s expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete.

Refusal or failure to prepare or make available the shareholders’ list does not affect the validity of action taken at the meeting.

HISTORY: Laws, 1987, ch. 486, § 7.20; Laws, 2012, ch. 382, § 28, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, in (d), deleted “(or, if none in this state, its registered office)” preceding “is located”, and inserted “or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state” thereafter.

Cross References —

General rights of shareholders to inspect and copy certain corporate records, as not affecting shareholders’ right to inspect records under this section, see § 79-4-16.02.

RESEARCH REFERENCES

ALR.

Who may exercise voting power of corporate stock pending settlement of estate of deceased owner. 7 A.L.R.3d 629.

Right, as between pledgor and pledgee, to vote pledged stock. 68 A.L.R.3d 680.

Am. Jur.

18 Am. Jur. 2d, Corporations § 23.

18A Am. Jur. 2d, Corporations §§ 835 et seq., 850.

CJS.

18 C.J.S., Corporations §§ 644 et seq.

§79-4-7.21. Voting entitlement of shares.

Except as provided in subsections (b) and (c) or unless the articles of incorporation provide otherwise, each outstanding share, regardless of class, is entitled to one (1) vote on each matter voted on at a shareholders’ meeting. Only shares are entitled to vote.

Absent special circumstances, the shares of a corporation are not entitled to vote 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 directors of the second corporation.

Subsection (b) does not limit the power of a corporation to vote any shares, including its own shares, held by it in a fiduciary capacity.

Redeemable shares are not entitled to vote after notice of redemption is mailed to the holders and a sum sufficient to redeem the shares has been deposited with a bank, trust company or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the shares.

HISTORY: Laws, 1987, ch. 486, § 7.21, eff from and after January 1, 1988.

Cross References —

Shareholder’s right to appraisal, see § 79-4-13.02.

RESEARCH REFERENCES

ALR.

Who may exercise voting power of corporate stock pending settlement of estate of deceased owner. 7 A.L.R.3d 629.

Corporation: validity of charter provision for non-voting common stock. 52 A.L.R.3d 1131.

Right, as between pledgor and pledgee, to vote pledged stock. 68 A.L.R.3d 680.

Right of corporation to discharge employee who asserts right as stockholder. 84 A.L.R.3d 1107.

Validity of variations from one share-one vote rule under modern corporate law. 3 A.L.R.4th 1204.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 858 et seq., 876 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1015 et seq.

CJS.

18 C.J.S., Corporations §§ 645 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-63.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-63.

11. In general.

Court authority is not per se necessary to authorize an executrix with will annexed to exercise the estate’s stock voting rights in a closely held corporation. Harper v. Harper, 491 So. 2d 189, 1986 Miss. LEXIS 2508 (Miss. 1986).

§79-4-7.22. Proxies.

A shareholder may vote his shares in person or by proxy.

A shareholder or his agent or attorney-in-fact may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form or by electronic transmission. An electronic transmission must contain or be accompanied by information from which the recipient can determine the date of the transmission, and that the transmission was authorized by the sender or the sender’s agent or attorney-in-fact.

An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the corporation authorized to tabulate votes. An appointment is valid for eleven (11) months unless a longer period is expressly provided in the appointment.

An appointment of a proxy is revocable unless the appointment form or electronic transmission states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include the appointment of:

1. A pledgee;
2. A person who purchased or agreed to purchase the shares;
3. A creditor of the corporation who extended it credit under terms requiring the appointment;
4. An employee of the corporation whose employment contract requires the appointment; or
5. A party to a voting agreement created under Section 79-4-7.31.

The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy’s authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment.

An appointment made irrevocable under subsection (d) is revoked when the interest with which it is coupled is extinguished.

A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if he did not know of its existence when he acquired the shares and the existence of the irrevocable appointment was not noted conspicuously on the certificate representing the shares or on the information statement for shares without certificates.

Subject to Section 79-4-7.24 and to any express limitation on the proxy’s authority stated in the appointment form or electronic transmission, a corporation is entitled to accept the proxy’s vote or other action as that of the shareholder making the appointment.

HISTORY: Laws, 1987, ch. 486, § 7.22; Laws, 1997, ch. 418, § 51; Laws, 2012, ch. 481, § 12, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, rewrote the last sentence in (b).

Cross References —

Corporation accepting or rejecting vote, consent, waiver or proxy appointment in accordance with § 79-4-7.24 or this section not liable in damages to shareholder for consequences of acceptance or rejection, see § 79-4-7.24.

Procedure by which beneficial owner of shares registered in name of nominee may be recognized as the shareholder, see § 79-4-23.

RESEARCH REFERENCES

ALR.

Expenses incurred by competing factions within corporation in soliciting proxies as charge against corporation. 51 A.L.R.2d 873.

Corporations: power of inspectors of election relating to irregular or conflicting proxies. 44 A.L.R.3d 1443.

Right, as between pledgor and pledgee, to vote pledged stock, 68 A.L.R.3d 680.

Misrepresentation in proxy solicitation-state cases. 20 A.L.R.4th 1287.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 944 et seq.

6B Am. Jur. Legal Forms 2d, Corporations §§ 74:1681-74:1694.

CJS.

18 C.J.S., Corporations § 647.

§79-4-7.23. Shares held by nominees.

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. The extent of this recognition may be determined in the procedure.

The procedure may set forth:

1. The types of nominees to which 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 for which selection of the procedure is effective; and
6. Other aspects of the rights and duties created.

HISTORY: Laws, 1987, ch. 486, § 7.23, eff from and after January 1, 1988.

RESEARCH REFERENCES

ALR.

Right, as between pledgor and pledgee, to vote pledged stock. 68 A.L.R.3d 680.

§79-4-7.24. Corporation’s acceptance of votes.

If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of the shareholder, the corporation, if acting in good faith, is entitled to accept the vote, consent, waiver or proxy appointment and give it effect as the act of the shareholder.

If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of its shareholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, consent, waiver or proxy appointment 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 vote, consent, waiver or proxy appointment;
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 vote, consent, waiver or proxy appointment;
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 of the signatory’s authority to sign for the shareholder has been presented with respect to the vote, consent, waiver or proxy appointment;
5. Two (2) or more persons are the shareholders as cotenants or fiduciaries and the name signed purports to be the name of at least one (1) of the co-owners and the person signing appears to be acting on behalf of all the co-owners.

The corporation is entitled to reject a vote, consent, waiver or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory’s authority to sign for the shareholder.

The corporation and its officer or agent who accepts or rejects a vote, consent, waiver or proxy appointment in good faith and in accordance with the standards of this section or Section 79-4-7.22(b) are not liable in damages to the shareholder for the consequences of the acceptance or rejection.

Corporate action based on the acceptance or rejection of a vote, consent, waiver or proxy appointment under this section or Section 79-4-7.22(b) is valid unless a court of competent jurisdiction determines otherwise.

HISTORY: Laws, 1987, ch. 486, § 7.24; Laws, 1997, ch. 418, § 52, eff from and after July 1, 1997.

Cross References —

Authority of corporation to accept proxy’s vote or other action as that of shareholder making appointment, see § 79-4-7.22.

RESEARCH REFERENCES

ALR.

Right, as between pledgor and pledgee, to vote pledged stock. 68 A.L.R.3d 680.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 846, 859, 864, 911.

CJS.

18 C.J.S., Corporations §§ 644, 645.

§79-4-7.25. Quorum and voting requirements for voting groups.

Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Unless the articles of incorporation or Sections 79-4-1.01 et seq. provide otherwise, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter.

Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.

If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or Sections 79-4-1.01 et seq. require a greater number of affirmative votes.

An amendment of articles of incorporation adding, changing or deleting a quorum or voting requirement for a voting group greater than specified in subsection (b) or (c) is governed by Section 79-4-7.27.

The election of directors is governed by Section 79-4-7.28.

HISTORY: Laws, 1987, ch. 486, § 7.25, eff from and after January 1, 1988.

Cross References —

Action by single and multiple voting groups, see § 79-4-7.26.

Articles of incorporation may provide for greater quorum or voting requirements for shareholders than provided for by this section, see § 79-4-7.27.

Applicability of this section to adoption of amendments to articles of incorporation, see § 79-4-10.03.

Shareholder’s right to appraisal, see § 79-4-13.02.

Deadlock among shareholders in electing directors as grounds for judicial dissolution of corporation, see § 79-4-14.30.

RESEARCH REFERENCES

ALR.

Who may exercise voting power of corporate stock pending settlement of estate of deceased owner. 7 A.L.R.3d 629.

Duty of pledgee of stocks, bonds or similar securities to protect their value during period of pledge, under UCC § 9-207. 68 A.L.R.3d 657.

Right, as between pledgor and pledgee, to vote pledged stock. 68 A.L.R.3d 680.

Validity of variations from one share-one vote rule under modern corporate law. 3 A.L.R.4th 1204.

Validity, construction, and effect of provision in charter or bylaw requiring supermajority vote. 80 A.L.R.4th 667.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 830 et seq., 840, 841, 850 et seq.

18B Am. Jur. 2d, Corporations §§ 1198, 1200.

CJS.

18 C.J.S., Corporations §§ 642-644, 650.

§79-4-7.26. Action by single and multiple voting groups.

If the articles of incorporation or Sections 79-4-1.01 et seq. provide for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group as provided in Section 79-4-7.25.

If the articles of incorporation or Sections 79-4-1.01 et seq. provide for voting by two (2) or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately as provided in Section 79-4-7.25. Action may be taken by one (1) voting group on a matter even though no action is taken by another voting group entitled to vote on the matter.

HISTORY: Laws, 1987, ch. 486, § 7.26, eff from and after January 1, 1988.

Cross References —

Applicability of this section to adoption of amendments to articles of incorporation, see § 79-4-10.03.

Deadlock among shareholders in electing directors as grounds for judicial dissolution of corporation, see § 79-4-14.30.

RESEARCH REFERENCES

ALR.

Validity of variations from one share-one vote rule under modern corporate law. 3 A.L.R.4th 1204.

Defamation of class or group as actionable by individual member. 52 A.L.R.4th 618.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 854-856, 868-875.

CJS.

18 C.J.S., Corporations §§ 644, 645.

§79-4-7.27. Greater quorum or voting requirements.

The articles of incorporation may provide for a greater quorum or voting requirement for shareholders (or voting groups of shareholders) than is provided for by Sections 79-4-1.01 et seq.

An amendment to the articles of incorporation that adds, changes or deletes a greater quorum or voting requirement must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever is greater.

HISTORY: Laws, 1987, ch. 486, § 7.27, eff from and after January 1, 1988.

Cross References —

General quorum and voting requirements for voting groups, see § 79-4-7.25.

Deadlock among shareholders in electing directors as grounds for judicial dissolution of corporation, see § 79-4-14.30.

RESEARCH REFERENCES

ALR.

Validity of variations from one share-one vote rule under modern corporate law. 3 A.L.R.4th 1204.

Validity, construction, and effect of provision in charter or bylaw requiring supermajority vote. 80 A.L.R.4th 667.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 832, 841.

CJS.

18 C.J.S., Corporations §§ 642, 643.

§79-4-7.28. Voting for directors; cumulative voting.

Unless otherwise provided in the articles of incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.

For corporations incorporated before July 1, 2002, shareholders shall have a right to cumulate their votes for directors unless the articles of incorporation provide otherwise. For corporations incorporated on or after July 1, 2002, shareholders do not have a right to cumulate their votes for directors unless the articles of incorporation provide otherwise.

A statement included in the articles of incorporation that “a designated voting group of shareholders is entitled to cumulate their votes for directors,” or words of similar import, means that the shareholders designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two (2) or more candidates.

HISTORY: Laws, 1987, ch. 486, § 7.28; Laws, 1988, ch. 368, § 6; Laws, 2001, ch. 435, § 5, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment, in (b), inserted “For corporations incorporated before July 1, 2002” in the first sentence, and added the second sentence.

Cross References —

General quorum and voting requirements for voting groups, see § 79-4-7.25.

Articles of incorporation may provide for greater quorum or voting requirements for shareholders than provided for by § 79-4-7.25, see § 79-4-7.27.

Appointment and duties of election inspectors, see § 79-4-7.29.

Shareholder’s right to appraisal, see § 79-4-13.02.

Deadlock among shareholders in electing directors as grounds for judicial dissolution of corporation, see § 79-4-14.30.

RESEARCH REFERENCES

ALR.

Validity of variations from one share-one vote rule under modern corporate law. 3 A.L.R.4th 1204.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1205 et seq.

CJS.

18 C.J.S., Corporations §§ 645, 646.

§79-4-7.29. Appointment of election inspectors; duties of inspectors.

A corporation having any shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association shall, and any other corporation may, appoint one or more inspectors to act at a meeting of shareholders and make a written report of the inspectors’ determinations. Each inspector shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector’s ability.

The inspectors shall:

1. Ascertain the number of shares outstanding and the voting power of each;
2. Determine the shares represented at a meeting;
3. Determine the validity of proxies and ballots;
4. Count all votes; and
5. Determine the result.

An inspector may be an officer or employee of the corporation.

HISTORY: Laws, 1997, ch. 418, § 53, eff from and after July 1, 1997.

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations § 843 et seq., 911 et seq.

Subarticle C. Voting Trusts and Agreements.

§79-4-7.30. Voting trusts.

One or more shareholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust (which may include anything consistent with its purpose) and transferring their shares to the trustee. When a voting trust agreement is signed, the trustee shall prepare a list of the names and addresses of all owners of beneficial interests in the trust, together with the number and class of shares each transferred to the trust, and deliver copies of the list and agreement to the corporation’s principal office.

A voting trust becomes effective on the date the first shares subject to the trust are registered in the trustee’s name. A voting trust is valid for the period specified in the trust agreement.

All or some of the parties to a voting trust may extend it for additional terms by signing an extension agreement and obtaining the voting trustee’s written consent to the extension. An extension is valid for the period specified in the extension agreement. The voting trustee must deliver copies of the extension agreement and list of beneficial owners to the corporation’s principal office. An extension agreement binds only those parties signing it.

HISTORY: Laws, 1987, ch. 486, § 7.30; Laws, 2017, ch. 369, § 1, eff from and after July 1, 2017.

Amendment Notes —

The 2017 amendment rewrote the second sentence of (b), which read: “A voting trust is valid for not more than ten (10) years after its effective date unless extended under subsection (c)”; and in (c), deleted “of not more than ten (10) years each” following “additional terms” in the first sentence, and rewrote the second sentence, which read: “An extension is valid for ten (10) years from the date the first shareholder signs the extension agreement.”

Cross References —

Inapplicability of provisions of this section to voting agreements, see § 79-4-7.31.

RESEARCH REFERENCES

ALR.

Validity of provision of voting trust against transfer of beneficiary’s interest. 11 A.L.R.2d 1000.

Removal of trustee of voting trust. 34 A.L.R.2d 1136.

Validity and effect of agreement controlling the vote of corporate stock. 45 A.L.R.2d 799.

Validity of voting trust or other similar agreement for control of voting power of corporate stock. 98 A.L.R.2d 376.

Right, as between pledgor and pledgee, to vote pledged stock. 68 A.L.R.3d 680.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Validity of voting trust created by will. 77 A.L.R.4th 1194.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 956 et seq.

6B Am. Jur. Legal Forms 2d, Corporations §§ 74:1713, 74:1735 (discharge of voting trustees on termination of voting trust agreement).

CJS.

18 C.J.S., Corporations § 649.

§79-4-7.31. Voting agreements.

Two (2) or more shareholders may provide for the manner in which they will vote their shares by signing an agreement for that purpose. A voting agreement created under this section is not subject to the provisions of Section 79-4-7.30.

A voting agreement created under this section is specifically enforceable.

HISTORY: Laws, 1987, ch. 486, § 7.31, eff from and after January 1, 1988.

Cross References —

Appointment of party to voting agreement created under this section as appointment coupled with an interest, see § 79-4-22.

RESEARCH REFERENCES

ALR.

Validity and effect of agreement controlling the vote of corporate stock. 45 A.L.R.2d 799.

Right, as between pledgor and pledgee, to vote pledged stock. 68 A.L.R.3d 680.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 944 et seq.

6B Am. Jur. Legal Forms 2d, Corporations § 74:1735 (discharge of voting trustees on termination of voting trust agreement).

CJS.

18 C.J.S., Corporations § 648.

Law Reviews.

Kruger, Corporate pooling agreements and restriction-of-directors agreements. 10 Anglo-American Law Review 73, 1981.

§79-4-7.32. Certain agreements among shareholders, otherwise inconsistent with chapter, permitted; conditions.

An agreement among the shareholders of a corporation that complies with this section is effective among the shareholders and the corporation even though it is inconsistent with one or more other provisions of this chapter in that it:

1. Eliminates the board of directors or restricts the discretion or powers of the board of directors;
2. Governs the authorization or making of distributions whether or not in proportion to ownership of shares, subject to the limitations in Section 79-4-6.40;
3. Establishes who shall be directors or officers of the corporation, or their terms of office or manner of selection or removal;
4. Governs, in general or in regard to specific matters, the exercise or division of voting power by or between the shareholders and directors or by or among any of them, including use of weighted voting rights or director proxies;
5. Establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between the corporation and any shareholder, director, officer or employee of the corporation or among any of them;
6. Transfers to one or more shareholders or other persons all or part of the authority to exercise the corporate powers or to manage the business and affairs of the corporation, including the resolution of any issue about which there exists a deadlock among directors or shareholders;
7. Requires dissolution of the corporation at the request of one or more of the shareholders or upon the occurrence of a specified event or contingency; or
8. Otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship among the shareholders, the directors and the corporation, or among any of them, and is not contrary to public policy.

An agreement authorized by this section shall be:

Set forth (A) in the articles of incorporation or bylaws and approved by all persons who are shareholders at the time of the agreement, or (B) in a written agreement that is signed by all persons who are shareholders at the time of the agreement and is made known to the corporation;

Subject to amendment only by all persons who are shareholders at the time of the amendment, unless the agreement provides otherwise; and

Valid for ten (10) years, unless the agreement provides otherwise.

The existence of an agreement authorized by this section shall be noted conspicuously on the front or back of each certificate for outstanding shares or on the information statement required by Section 79-4-6.26(b). If at the time of the agreement the corporation has shares outstanding represented by certificates, the corporation shall recall the outstanding certificates and issue substitute certificates that comply with this subsection. The failure to note the existence of the agreement on the certificate or information statement shall not affect the validity of the agreement or any action taken pursuant to it. Any purchaser of shares who, at the time of purchase, did not have knowledge of the existence of the agreement shall be entitled to rescission of the purchase. A purchaser shall be deemed to have knowledge of the existence of the agreement if its existence is noted on the certificate or information statement for the shares in compliance with this subsection (c) and, if the shares are not represented by a certificate, the information statement is delivered to the purchaser at or prior to the time of purchase of the shares. An action to enforce the right of rescission authorized by this subsection (c) must be commenced within the earlier of ninety (90) days after discovery of the existence of the agreement or two (2) years after the time of purchase of the shares.

An agreement authorized by this section shall cease to be effective when the corporation becomes a public corporation. If the agreement ceases to be effective for any reason, the board of directors may, if the agreement is contained or referred to in the corporation’s articles of incorporation or bylaws, adopt an amendment to the articles of incorporation or bylaws, without shareholder action, to delete the agreement and any references to it.

An agreement authorized by this section that limits the discretion or powers of the board of directors shall relieve the directors of, and impose upon the person or persons in whom such discretion or powers are vested, liability for acts or omissions imposed by law on directors to the extent that the discretion or powers of the directors are limited by the agreement.

The existence or performance of an agreement authorized by this section shall not be a ground for imposing personal liability on any shareholder for the acts or debts of the corporation even if the agreement or its performance treats the corporation as if it were a partnership or results in failure to observe the corporate formalities otherwise applicable to the matters governed by the agreement.

Incorporators or subscribers for shares may act as shareholders with respect to an agreement authorized by this section if no shares have been issued when the agreement is made.

HISTORY: Laws, 1993, ch. 368, § 1; Laws, 1994, ch. 417, § 2; Laws, 2006, ch. 429, § 3, eff from and after July 1, 2006.

Amendment Notes —

The 2006 amendment substituted “chapter” for “act” following provisions of this” in (a); and substituted “when the corporation becomes a public corporation” for “when shares of the corporation are listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association” in (d).

Cross References —

Requirement for and duties of Board of Directors, generally, see § 79-4-8.01.

RESEARCH REFERENCES

Am. Jur.

18-19 Am. Jur. 2d, Corporations §§ 1 et seq.

CJS.

18-19 C.J.S., Corporations §§ 1 et seq.

Subarticle D. Derivative Procedures.

§79-4-7.40. Meaning of “derivative proceeding”, “shareholder” in subarticle.

In Sections 79-4-7.41 through 79-4-7.47:

1. “Derivative proceeding” means a civil suit in the right of a domestic corporation or, to the extent provided in Section 79-4-7.47, in the right of a foreign corporation.
2. “Shareholder” includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the beneficial owner’s behalf.

HISTORY: Laws, 1987, ch. 486, § 7.40; Laws, 1993, ch. 368, § 3, eff from and after July 1, 1993.

RESEARCH REFERENCES

ALR.

Allowance of punitive damages in stockholder’s derivative action. 67 A.L.R.3d 350.

Right of corporation to discharge employee who asserts right as stockholder. 84 A.L.R.3d 1107.

Negligence, nonfeasance, or ratification of wrongdoing as excusing demand on directors as prerequisite to bringing of stockholder’s derivative suit on behalf of corporation. 99 A.L.R.3d 1034.

Propriety of termination of properly initiated derivative action by “independent committee” appointed by board of directors whose actions (or inaction) are under attack. 22 A.L.R.4th 1206.

Construction, as to terms and conditions, of state statute or rule providing for voluntary dismissal without prejudice upon such terms and conditions as state court deems proper. 34 A.L.R.4th 778.

Attorneys’ fees: cost of services provided by paralegals or the like as compensable element of award in state court. 73 A.L.R.4th 938.

Notice to shareholders and court approval of dismissal or compromise of derivative actions, under Rule 23.1 of Federal Rules of Civil Procedure.26 A.L.R. Fed. 465.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 1934, 1935 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 161 et seq., 191 et seq., 201 et seq., 221 et seq., 354, 441.

11A Am. Jur. Pl & Pr Forms (Rev), Federal Practice and Procedure, Forms 2051 et seq.

CJS.

18 C.J.S., Corporations §§ 612-627.

Law Reviews.

DuBose, Whose corporation is it, anyway? Abolishing the futility exception in derivative litigation. 12 Miss. C. L. Rev. 197, Fall, 1991.

JUDICIAL DECISIONS

I. Under Current Law.

1. Derivative claim versus individual recovery.

2.-10. [Reserved for future use.]

II. Under Former §79-3-93.

11. In general.

I. Under Current Law.

1. Derivative claim versus individual recovery.

Chancellor erred by failing to transfer a dispute over contractual obligations to a circuit court because a former member did not bring most of the claims derivatively under Miss. Code Ann. § 79-4-7.40 since he was seeking a personal recovery, and the proper procedures were not followed; moreover, the parties would have been deprived of the right to a jury trial if transfer was not obtained. ERA Franchise Sys. v. Mathis, 931 So. 2d 1278, 2006 Miss. LEXIS 337 (Miss. 2006).

2.-10. [Reserved for future use.]

II. Under Former § 79-3-93.

11. In general.

In an action by a savings and loan association against a former vice-president and members of the board of directors for $26 million dollars in damages for alleged breach of fiduciary duty in the management of the association, the trial court properly rejected the defendants’ contention that the suit was barred due to the acquisition of the association by a successor corporation where the written bill of sale and assignment had the effect of transferring and assigning unto the successor corporation all properties, assets and choses in action of every kind and nature, including the present action. Liberty Sav. & Loan Asso. v. Mitchell, 398 So. 2d 208, 1981 Miss. LEXIS 2003 (Miss. 1981).

§79-4-7.41. Who may commence or maintain derivative proceeding.

A shareholder may not commence or maintain a derivative proceeding unless the shareholder:

1. Was a shareholder of the corporation at the time of the act or omission complained of or became a shareholder through transfer by operation of law from one who was a shareholder at that time; and
2. Fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.

HISTORY: Laws, 1993, ch. 368, § 4, eff from and after July 1, 1993.

Cross References —

Derivative proceeding defined for purposes of this subarticle, see § 79-4-7.40.

JUDICIAL DECISIONS

1. Standing.

Son lacked standing to bring suit on behalf of closely held corporations because the injury for which he sought relief pertained to the corporations only; the son’s objection to the closing of the decedent’s estate was a shareholder derivative claim because the son was seeking solely to enforce a putative corporate right, and the son failed to satisfy the statutory conditions required of shareholder derivative actions. Ware v. Ware (In re Estate of Ware), 238 So.3d 613, 2018 Miss. LEXIS 86 (Miss. 2018).

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2007 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 161 et seq. (complaints and other forms, shareholders’ derivative actions).

§79-4-7.42. Prerequisites to commencing derivative proceeding.

No shareholder may commence a derivative proceeding until:

1. A written demand has been made upon the corporation to take suitable action; and
2. Ninety (90) days have expired from the date delivery of the demand was made unless the shareholder has earlier been notified that the demand has been rejected by the corporation or unless irreparable injury to the corporation would result by waiting for the expiration of the ninety-day period.

HISTORY: Laws, 1993, ch. 368, § 5; Laws, 2012, ch. 481, § 13, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, added “delivery of” preceding “the demand was made unless the shareholder” in (2).

Cross References —

Derivative proceeding defined for purposes of this subarticle, see § 79-4-7.40.

RESEARCH REFERENCES

ALR.

Negligence, nonfeasance, or ratification of wrongdoing as excusing demand on directors as prerequisite to bringing of stockholder’s derivative suit on behalf of corporation. 99 A.L.R.3d 1034.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 1959 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 161 et seq. (complaints and other forms, shareholders’ derivative actions).

JUDICIAL DECISIONS

0.5.Standing. Son lacked standing to bring suit on behalf of closely held corporations because the injury for which he sought relief pertained to the corporations only; the son’s objection to the closing of the decedent’s estate was a shareholder derivative claim because the son was seeking solely to enforce a putative corporate right, and the son failed to satisfy the statutory conditions required of shareholder derivative actions. Ware v. Ware (In re Estate of Ware), 238 So.3d 613, 2018 Miss. LEXIS 86 (Miss. 2018).

1. No futility exception.

2. Suit demand not required.

3. Standing.

1. No futility exception.

Miss. Code Ann. § 79-4-7.42 is unambiguous and does not contain an exception for futility. Speetjens v. Malaco Inc., 929 So. 2d 303, 2006 Miss. LEXIS 269 (Miss. 2006).

Shareholders alleged that a corporation’s directors breached their fiduciary duties, usurped corporate opportunities, and awarded themselves excessive salaries and extravagant bonuses; their derivative suit against the corporation and directors was properly dismissed because, before filing suit, they failed to make a written demand on the corporation to take suitable action, as required by Miss. Code Ann. § 79-4-7.42, and that statute did not contain an exception for futility. Speetjens v. Malaco Inc., 929 So. 2d 303, 2006 Miss. LEXIS 269 (Miss. 2006).

2. Suit demand not required.

Sister had standing to assert corporate claims because (1) the subject corporations were closely held, (2) the sister’s accounting and dissolution claims were direct actions, and (3) the sister’s fiduciary breach claims were properly considered as direct actions, since no creditors were prejudiced, there was no risk of multiple suits, and the claims did not interfere with the fair distribution of a recovery. Scafidi v. Hille, 180 So.3d 634, 2015 Miss. LEXIS 603 (Miss. 2015).

3. Standing.

Son lacked standing to bring suit on behalf of closely held corporations because the injury for which he sought relief pertained to the corporations only; the son’s objection to the closing of the decedent’s estate was a shareholder derivative claim because the son was seeking solely to enforce a putative corporate right, and the son failed to satisfy the statutory conditions required of shareholder derivative actions. Ware v. Ware (In re Estate of Ware), 238 So.3d 613, 2018 Miss. LEXIS 86 (Miss. 2018).

§79-4-7.43. Stay of proceeding when corporation inquires into allegations.

If the corporation commences an inquiry into the allegations made in the demand or complaint, the court may stay any derivative proceeding for such period as the court deems appropriate.

HISTORY: Laws, 1993, ch. 368, § 6, eff from and after July 1, 1993.

Cross References —

This section, not foreign law, to govern matters arising hereunder in derivative proceeding involving foreign corporation, see § 79-4-7.47.

§79-4-7.44. Determination by independent directors or independent persons whether maintenance of proceeding is in best interests of corporation.

A derivative proceeding shall be dismissed by the court on motion by the corporation if one of the groups specified in subsection (b) or (f) has determined in good faith, after conducting a reasonable inquiry upon which its conclusions are based, that the maintenance of the derivative proceeding is not in the best interests of the corporation.

Unless a panel is appointed pursuant to subsection (e), the determination in subsection (a) shall be made by:

1. A majority vote of qualified directors present at a meeting of the board of directors if the qualified directors constitute a quorum; or
2. A majority vote of a committee consisting of two (2) or more qualified directors appointed by majority vote of qualified directors present at a meeting of the board of directors, regardless of whether such qualified directors constitute a quorum.

If a derivative proceeding is commenced after a determination has been made rejecting a demand by a shareholder, the complaint shall allege with particularity facts establishing either (1) that a majority of the board of directors did not consist of qualified directors at the time the determination was made or (2) that the requirements of subsection (a) have not been met.

If a majority of the board of directors consisted of qualified directors at the time the determination was made, the plaintiff shall have the burden of proving that the requirements of subsection (a) have not been met; if not, the corporation shall have the burden of proving that the requirements of subsection (a) have been met.

Upon motion by the corporation, the court may appoint a panel of one or more individuals to make a determination whether the maintenance of the derivative proceeding is in the best interests of the corporation. In such case, the plaintiff shall have the burden of proving that the requirements of subsection (a) have not been met.

HISTORY: Laws, 1993, ch. 368, § 7; Laws, 2006, ch. 429, § 4, eff from and after July 1, 2006.

Editor’s Notes —

In subsection (a) there is a reference to “subsection (b) or (f)” although there is no subsection (f) in this section. The section is set out above as enacted by Section 8 of Chapter 368, Laws of 1993.

Amendment Notes —

The 2006 amendment substituted “qualified directors” for “independent directors” throughout the section; substituted “regardless of whether such qualified directors constitute a quorum” for “whether or not such independent directors constituted a quorum” in (b)(2); repealed former (c), which read: “(c) None of the following shall by itself cause a director to be considered not independent for purposes of this section: (1) The nomination or election of the director by persons who are defendants in the derivative proceeding or against whom action is demanded; (2) The naming of the director as a defendant in the derivative proceeding or as a person against whom action is demanded; or (3) The approval by the director of the act being challenged in the derivative proceeding or demand if the act resulted in no personal benefit to the director.”; redesignated former (d) through (f) as (c) through (e); rewrote (d); in the first sentence in (e), added “Upon motion by the corporation” at the beginning, and substituted “appoint a panel of one or more individuals” for “appoint a panel of one or more independent persons upon motion by the corporation”; and made minor stylistic changes.

Cross References —

Qualified director defined, see § 79-4-1.43.

Derivative proceeding defined for purposes of this subarticle, see § 79-4-7.40.

RESEARCH REFERENCES

ALR.

Propriety of termination of properly initiated derivative action by “independent committee” appointed by board of directors whose actions (or inaction) are under attack. 22 A.L.R.4th 1206.

JUDICIAL DECISIONS

1. Burden of proof.

2. Special committee.

1. Burden of proof.

Plaintiff bears the burden, pursuant to Miss. Code Ann. § 79-4-7.44(d), of establishing, pursuant to § 79-4-7.44(a), that a special committee’s determination that the maintenance of the derivative proceeding was not in the best interests of the corporation was not made in good faith after it conducted a reasonable inquiry upon which its conclusions were based. If the plaintiff fails to demonstrate lack of good faith after a reasonable inquiry upon which the special committee’s conclusions were based, then the derivative proceeding must be dismissed. Burgess v. Patterson, 188 So.3d 537, 2016 Miss. LEXIS 154 (Miss. 2016).

Plaintiff failed to demonstrate that a special committee’s decision that the maintenance of the derivative suit was not in the best interests of the corporation was not made in good faith after it had conducted a reasonable inquiry. Therefore, the circuit court was not in error for granting dismissal to the corporation Burgess v. Patterson, 188 So.3d 537, 2016 Miss. LEXIS 154 (Miss. 2016).

2. Special committee.

Because plaintiff did not allege with particularity facts establishing that the members of a special committee were not qualified, dismissal of plaintiff’s derivative action was appropriate. Burgess v. Patterson, 188 So.3d 537, 2016 Miss. LEXIS 154 (Miss. 2016).

§79-4-7.45. Court approval for settlement or discontinuance.

A derivative proceeding may not be discontinued or settled without the court’s approval. If the court determines that a proposed discontinuance or settlement will substantially affect the interests of the corporation’s shareholders or a class of shareholders, the court shall direct that notice be given to the shareholders affected.

HISTORY: Laws, 1993, ch. 368, § 8, eff from and after July 1, 1993.

Cross References —

Derivative proceeding defined for purposes of this subarticle, see § 79-4-7.40.

This section, not foreign law, to govern matters arising hereunder in derivative proceeding involving foreign corporation, see § 79-4-7.47.

RESEARCH REFERENCES

ALR.

Notice to shareholders and court approval of dismissal or compromise of derivative actions, under Rule 23.1 of Federal Rules of Civil Procedure.26 A.L.R. Fed. 465.

Am. Jur.

19 Am. Jur. 2d, Corporations § 2127.

§79-4-7.46. Expenses and attorney fees.

On termination of the derivative proceeding the court may:

1. Order the corporation to pay the plaintiff’s reasonable expenses (including attorney fees) incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the corporation; or
2. Order the plaintiff to pay any defendant’s reasonable expenses (including attorney fees) incurred in defending the proceeding if it finds that the proceeding was commenced or maintained without reasonable cause or for an improper purpose.

HISTORY: Laws, 1993, ch. 368, § 9, eff from and after July 1, 1993.

Cross References —

Derivative proceeding defined for purposes of this subarticle, see § 79-4-7.40.

This section, not foreign law, to govern matters arising hereunder in derivative proceeding involving foreign corporation, see § 79-4-7.47.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2147 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 221 et seq. (petition, notice, motion, affidavit and order, for attorney’s fees).

JUDICIAL DECISIONS

1. In general.

Although a shareholder may bring suit against other shareholders in the name of the corporation, there is no authority whereby the suit can be prosecuted at the cost of the corporation unless the action is successful. Wyssbrod v. Wittjen, 798 So. 2d 352, 2001 Miss. LEXIS 23 (Miss. 2001).

The statute does not provide authority to order an attorney to disgorge corporate funds improperly paid as attorney’s fees. Wyssbrod v. Wittjen, 798 So. 2d 352, 2001 Miss. LEXIS 23 (Miss. 2001).

§79-4-7.47. Law applicable in derivative proceedings involving foreign corporations.

In any derivative proceeding in the right of a foreign corporation, the matters covered by this subchapter shall be governed by the laws of the jurisdiction of incorporation of the foreign corporation except for Sections 79-4-7.43, 79-4-7.45 and 79-4-7.46.

HISTORY: Laws, 1993, ch. 368, § 10, eff from and after July 1, 1993.

Cross References —

Derivative proceeding defined for purposes of this subarticle, see § 79-4-7.40.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations § 2052.

§79-4-7.48. Shareholder action to appoint custodian or receiver.

The chancery court of the county where a corporation’s principal office is located, or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state, may appoint one or more persons to be custodians, or, if the corporation is insolvent, to be receivers, of and for a corporation in a proceeding by a shareholder where it is established that:

1. The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered; or
2. The directors or those in control of the corporation are acting fraudulently and irreparable injury to the corporation is threatened or being suffered.
3. Has jurisdiction over the corporation and all of its property, wherever located.

The court:

May issue injunctions, appoint a temporary custodian or temporary receiver with all the powers and duties the court directs, take other action to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing is held;

Shall hold a full hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a custodian or receiver; and

The court may appoint an individual or domestic or foreign corporation (authorized to transact business in this state) as a custodian or receiver and may require the custodian or receiver to post bond, with or without sureties, in an amount the court directs.

The court shall describe the powers and duties of the custodian or receiver in its appointing order, which may be amended from time to time. Among other powers,

A custodian may exercise all of the powers of the corporation, through or in place of its board of directors, to the extent necessary to manage the business and affairs of the corporation; and

A receiver (i) may dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court; and (ii) may sue and defend in the receiver’s own name as receiver in all courts of this state.

The court during a custodianship may redesignate the custodian a receiver, and during a receivership may redesignate the receiver a custodian, if doing so is in the best interests of the corporation.

The court from time to time during the custodianship or receivership may order compensation paid and expense disbursements or reimbursements made to the custodian or receiver from the assets of the corporation or proceeds from the sale of its assets.

HISTORY: Laws, 2007, ch. 361, § 7; Laws, 2012, ch. 382, § 29, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, rewrote (a).

Article 8. Directors and Officers.

Subarticle A. Board of Directors.

§79-4-8.01. Requirement for Board of Directors; exception; duties of Board.

Except as provided in Section 79-4-7.32, each corporation must have a board of directors.

All corporate powers shall be exercised by or under the authority of the board of directors of the corporation, and the business and affairs of the corporation shall be managed by or under the direction, and subject to the oversight, of its board of directors, subject to any limitation set forth in the articles of incorporation or in an agreement authorized under Section 79-4-7.32.

HISTORY: Laws, 1987, ch. 486, § 8.01; Laws, 1988, ch. 368, § 7; Laws, 1993, ch. 368, § 2; Laws, 2001, ch. 435, § 6; Laws, 2012, ch. 481, § 14, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2001 amendment inserted “by or” following “managed” in (b).

The 2012 amendment, effective January 1, 2013, in (b), inserted “the board of directors of the corporation” preceding “and the business and affairs of the corporation”, inserted “shall be” thereafter, and “and subject to the oversight” preceding “of its board of directors.”

Cross References —

Authority of committees to exercise authority of board of directors under this section, see § 79-4-8.25.

Voluntary dissolution of corporation by board of directors and shareholders, see § 79-4-14.02.

Revocation of dissolution, see § 79-4-14.04.

Deadlock among shareholders in electing directors as grounds for judicial dissolution of corporation, see § 79-4-14.30.

Director of corporation entitled to inspect and copy the books, records and documents of the corporation, see § 79-4-16.05.

Requirement for and duties of board of directors under Mississippi Nonprofit Corporation Act, see § 79-11-231.

RESEARCH REFERENCES

ALR.

Provision authorizing directors to fill vacancies as applicable to newly created directorships. 6 A.L.R.2d 174.

Purchase of claims against corporation by officer or director thereof. 13 A.L.R.2d 1172.

Corporation as necessary or proper party defendant in proceedings to determine validity of election or appointment of corporate director or officer. 21 A.L.R.2d 1048.

Validity of security for contemporaneous loan to corporation by officer, director, or stockholder. 31 A.L.R.2d 663.

Validity of contract between corporations as affected by directors or officers in common. 33 A.L.R.2d 1060.

Statute of frauds: promise by stockholder, officer, or director to pay debt of corporation. 35 A.L.R.2d 906.

Allowance, as taxable costs, of witness fees and mileage of stockholders, directors, officers, and employees of corporate litigant. 57 A.L.R.2d 1243.

Personal liability of one who signs or indorses without qualification commercial paper of corporation. 82 A.L.R.2d 424.

Construction and effect of corporate bylaws or articles relating to change in number of directors. 3 A.L.R.3d 623.

Duty and liability of closely held corporation, its directors, officers, or majority stockholders, in acquiring stock of minority shareholder. 7 A.L.R.3d 500.

Validity of agreement, in conjunction with sale of corporate shares that majority of directors will be replaced by purchaser’s designees. 13 A.L.R.3d 361.

Liability of corporate directors for negligence in permitting mismanagement or defalcations by officers or employees. 25 A.L.R.3d 941.

Liability of corporate directors or officers for negligence in permitting conversion of property of third persons by corporation. 29 A.L.R.3d 660.

Persons liable under statutes imposing, upon directors, officers, or trustees of a corporation, personal liability for its debts on account of their failure to file or publish reports, required by law, as to corporate matters. 39 A.L.R.3d 428.

Liability of corporate officer or director for commission or compensation received from third person in connection with that person’s transaction with corporation. 47 A.L.R.3d 373.

Who has possession, custody, or control of corporate books or records for purposes of order to produce. 47 A.L.R.3d 676.

Personal liability of officers or directors or corporation on corporate checks issued against insufficient funds. 47 A.L.R.3d 1250.

Insurance: construction of policy or bond indemnifying directors or officers of corporations for expenses incurred in defending actions brought against them in their capacity as such. 49 A.L.R.3d 1250.

Test in stockholders’ actions as to reasonableness of compensation of corporate officers who as directors determine own compensation. 53 A.L.R.3d 358.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Personal liability of stockholder, officer, or agent for debt of foreign corporation doing business in the state. 27 A.L.R.4th 387.

Liability of corporate director, officer, or employee for tortious interference with corporation’s contract with another. 72 A.L.R.4th 492.

Time for bringing suit to recover insider short-swing profits under sec. 16(b) of the Securities Exchange Act of 1934 ( 15 USCS sec. 78p(b)). 67 A.L.R. Fed. 849.

Proper measure and elements of recovery for insider short-swing transaction. 86 A.L.R. Fed. 16.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1166 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1051 et seq., 74:1353 et seq.

9 Am. Jur. Proof of Facts 2d 57, Corporate Officer or Director as Alter Ego of Corporation.

CJS.

19 C.J.S., Corporations §§ 822 et seq.

Law Reviews.

Transactions between a corporation and its directors: Where does Mississippi stand? 52 Miss. L. J. 877, December, 1982.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

JUDICIAL DECISIONS

I. Under Current Law.

1. In general.

2. Dealing by director in own stock.

3.-10. [Reserved for future use.]

II. Under Former §79-3-67.

11. In general.

I. Under Current Law.

1. In general.

In a close corporation where a majority stockholder stands to benefit as a controlling stockholder, the majority’s action must be “intrinsically fair” to the minority interest. Thus, stockholders in close corporations must bear towards each other the same relationship of trust and confidence which prevails in partnerships, rather than resort to statutory defenses. This does not mean that directors, executive officers and stockholders are not required to adhere to the corporate statutes; rather, blind adherence to corporate statutes may not be used to circumvent the corporation’s by-laws, charter or various agreements, such as a stock redemption agreement, because of the “intrinsically fair” standard that is now adopted. Fought v. Morris, 543 So. 2d 167, 1989 Miss. LEXIS 221 (Miss. 1989).

2. Dealing by director in own stock.

Generally, a director violates no duty by dealing in his or her own stock on his or her own account. This rule is not applicable, however, when there is a showing that a closely-held corporation has a practice of purchasing its own stock, or that it ever contemplated doing so, as evidenced by a stock redemption agreement, in order to maintain proportionate control of the corporation. Fought v. Morris, 543 So. 2d 167, 1989 Miss. LEXIS 221 (Miss. 1989).

3.-10. [Reserved for future use.]

II. Under Former § 79-3-67.

11. In general.

The management of a corporation is vested in its board of directors and not the stockholders. Harper v. Harper, 491 So. 2d 189, 1986 Miss. LEXIS 2508 (Miss. 1986).

If owners of stock in a restaurant were also directors of the corporation, they may have had the power to obtain a loss payable clause in an insurance policy on the restaurant, such clause naming them as payees of insurance proceeds to the extent of the amount of their actual interest in the restaurant. Cherokee Ins. Co. v. Koenenn, 536 F.2d 585, 1976 U.S. App. LEXIS 7720 (5th Cir. Miss. 1976).

A director of a corporation occupies a fiduciary position toward creditors, having a better knowledge of the condition of the company than have other creditors, and should not be permitted to use that position to benefit himself at their expense or to grant himself preferences or advantages in the payment of his claims over other creditors. Cooper v. Mississippi Land Co., 220 So. 2d 302, 1969 Miss. LEXIS 1451 (Miss. 1969).

§79-4-8.02. Qualifications of directors.

The articles of incorporation or bylaws may prescribe qualifications for directors. A director need not be a resident of this state or a shareholder of the corporation unless the articles of incorporation or bylaws so prescribe.

HISTORY: Laws, 1987, ch. 486, § 8.02; Laws, 1988, ch. 368, § 8, eff from and after passage (approved April 18, 1988).

Cross References —

Qualifications of directors under Mississippi Nonprofit Corporation Act, see § 79-11-231.

RESEARCH REFERENCES

ALR.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1176 et seq.

6AAm. Jur. Legal Forms 2d, Corporations §§ 74:1055 et seq.

§79-4-8.03. Number and election of directors.

A board of directors must consist of one or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws.

The number of directors may be increased or decreased, from time to time, by amendment to, or in the manner provided in, the articles of incorporation or the bylaws.

Directors are elected at the first annual shareholders’ meeting and at each annual meeting thereafter unless their terms are staggered under Section 79-4-8.06.

HISTORY: Laws, 1987, ch. 486, § 8.03; Laws, 2001, ch. 435, § 7, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment rewrote (b); deleted former (c); and redesignated former (d) as present (c).

Cross References —

Number and election of directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-235, 79-11-237.

RESEARCH REFERENCES

ALR.

Corporation as necessary or proper party defendant in proceedings to determine validity of election or appointment of corporate director or officer. 21 A.L.R.2d 1048.

Construction, application, and effect of constitutional provisions or statutes relating to cumulative voting of stock for corporate directors. 43 A.L.R.2d 1322.

Construction and effect of corporate bylaws or articles relating to change in number of directors. 3 A.L.R.3d 623.

Validity of agreement in conjunction with sale of corporate shares that majority of directors will be replaced by purchaser’s designees. 13 A.L.R.3d 361.

Corporations: casting ballots after closing of polls. 41 A.L.R.3d 234.

Corporations: power of inspectors of election relating to irregular or conflicting proxies. 44 A.L.R.3d 1443.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1174, 1175, 1183 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1051-74:1053, 74:1353-74:1354, 74:1357-74:1361.

CJS.

19 C.J.S., Corporations §§ 797 et seq.

§79-4-8.04. Election of directors by authorized classes of shares.

If the articles of incorporation authorize dividing the shares into classes, the articles may also authorize the election of all or a specified number of directors by the holders of one or more authorized classes of shares. Each class (or classes) of shares entitled to elect one or more directors is a separate voting group for purposes of the election of directors.

HISTORY: Laws, 1988, ch. 368, § 12, eff from and after passage (approved April 18, 1988).

Cross References —

Authorizing shares generally, see § 79-4-6.01.

Election of directors generally, see § 79-4-8.03.

Number and election of directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-235, 79-11-237.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1184, 1185, 1187 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1015-74:1018, 74:1061.

§79-4-8.05. Terms of directors generally.

The terms of the initial directors of a corporation expire at the first shareholders’ meeting at which directors are elected.

The terms of all other directors expire at the next, or if their terms are staggered in accordance with Section 79-4-8.06, at the applicable second or third, annual shareholders’ meeting following their election.

A decrease in the number of directors does not shorten an incumbent director’s term.

The term of a director elected to fill a vacancy expires at the next shareholders’ meeting at which directors are elected.

Despite the expiration of a director’s term, he continues to serve until his successor is elected and qualifies or until there is a decrease in the number of directors.

HISTORY: Laws, 1987, ch. 486, § 8.05; Laws, 2012, ch. 481, § 15, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, rewrote (b).

Cross References —

Vacancy on board generally, see § 79-4-8.10.

Terms of office of directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-239, 79-11-241.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1212-1217.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1064, 74:1065.

CJS.

19 C.J.S., Corporations §§ 811-814.

§79-4-8.06. Staggered terms for directors.

The articles of incorporation may provide for staggering the terms of directors by dividing the total number of directors into two (2) or three (3) groups, with each group containing one-half (1/2) or one-third (1/3) of the total, as near as may be practicable. In that event, the terms of directors in the first group expire at the first annual shareholders’ meeting after their election, the terms of the second group expire at the second annual shareholders’ meeting after their election, and the terms of the third group, if any, expire at the third annual shareholders’ meeting after their election. At each annual shareholders’ meeting held thereafter, directors shall be chosen for a term of two (2) years or three (3) years, as the case may be, to succeed those whose terms expire.

HISTORY: Laws, 1987, ch. 486, § 8.06; Laws, 2001, ch. 435, § 8; Laws, 2012, ch. 481, § 16, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2001 amendment deleted “If there are nine (9) or more directors” at the beginning, and substituted “the terms of directors” for “their terms” following “staggering.”

The 2012 amendment, effective January 1, 2013, added “practicable” at the end of the first sentence.

Cross References —

Election of directors whose terms of office are not staggered pursuant to this section, see § 79-4-8.03.

Terms of directors whose terms of office are not staggered pursuant to this section, see § 79-4-8.05.

Terms of office of directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-239, 79-11-241.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1215, 1216.

§79-4-8.07. Resignation of directors.

A director may resign at any time by delivering written notice to the board of directors, or its chair or to the secretary of the corporation.

A resignation is effective when the notice is delivered unless the notice specifies a later effective date.

HISTORY: Laws, 1987, ch. 486, § 8.07; Laws, 2012, ch. 481, § 17, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, substituted “or its chair or to the secretary of the corporation” for “its chairmen or to the corporation” at the end of (a).

Cross References —

Term of director elected to fill vacancy, see § 79-4-8.05.

Authority to fill vacancy that will occur at specified later date before vacancy occurs, see § 79-4-8.10.

Resignation of director under Mississippi Nonprofit Corporation Act, see § 79-11-243.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1233-1240.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1070, 74:1380-74:1386.

CJS.

19 C.J.S., Corporations § 815.

§79-4-8.08. Removal of directors by shareholders.

The shareholders may remove one or more directors with or without cause unless the articles of incorporation provide that directors may be removed only for cause.

If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove him.

If cumulative voting is authorized, a director may not be removed if the number of votes sufficient to elect him under cumulative voting is voted against his removal. If cumulative voting is not authorized, a director may be removed only if the number of votes cast to remove him exceeds the number of votes cast not to remove him.

A director may be removed by the shareholders only at a meeting called for the purpose of removing him and the meeting notice must state that the purpose, or one (1) of the purposes, of the meeting is removal of the director.

HISTORY: Laws, 1987, ch. 486, § 8.08; Laws, 1988, ch. 368, § 9, eff from and after passage (approved April 18, 1988).

Cross References —

Voting groups, see §§ 79-4-7.25, 79-4-7.26.

Cumulative voting generally, see § 79-4-7.28.

Removal of director by judicial proceeding, see § 79-4-8.09.

Removal of directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-245 through 79-11-249.

RESEARCH REFERENCES

ALR.

Validity of agreement in conjunction with sale of corporate shares that majority of directors will be replaced by purchaser’s designees. 13 A.L.R.3d 361.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1247 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1071, 74:1372-74:1373.

CJS.

19 C.J.S., Corporations § 817.

Law Reviews.

Corporations. 25 SC L Rev 422.

§79-4-8.09. Removal of directors by judicial proceeding.

The chancery court of the county where a corporation’s principal office is located, or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state, may remove a director of the corporation from office in a proceeding commenced either by the corporation or by its shareholders holding at least ten percent (10%) of the outstanding shares of any class if the court finds that (1) the director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation, and (2) removal is in the best interest of the corporation.

The court that removes a director may bar the director from reelection for a period prescribed by the court.

If shareholders commence a proceeding under subsection (a), they shall make the corporation a party defendant.

HISTORY: Laws, 1987, ch. 486, § 8.09; Laws, 2012, ch. 382, § 30, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, in (a), deleted “(or, if none in this state, its registered office)” preceding “is located” and added “or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state” thereafter.

Cross References —

Term of director elected to fill vacancy, see § 79-4-8.05.

Removal of director by shareholders, see § 79-4-8.08.

Removal of directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-245 through 79-11-249.

RESEARCH REFERENCES

ALR.

Relief other than by dissolution in cases of intracorporate deadlock or dissension. 34 A.L.R.4th 13.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1247-1253.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1371-74:1373.

CJS.

19 C.J.S., Corporations § 817.

§79-4-8.10. Vacancy on board.

Unless the articles of incorporation provide otherwise, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors:

1. The shareholders may fill the vacancy;
2. The board of directors may fill the vacancy; or
3. If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.

If the vacant office was held by a director elected by a voting group of shareholders, only the holders of shares of that voting group are entitled to fill the vacancy if it is filled by the shareholders and only the directors elected by that voting group are entitled to fill the vacancy if it is filled by the director.

A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date under Section 79-4-8.07(b) or otherwise) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.

HISTORY: Laws, 1987, ch. 486, § 8.10; Laws, 1988, ch. 368, § 10; Laws, 2012, ch. 481, § 18, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, added “and only the directors elected by that voting group are entitled to fill the vacancy if it is filled by the director” at the end of (b).

Cross References —

Voting groups, see §§ 79-4-7.25, 79-4-7.26.

Election of directors whose terms of office are not staggered, see § 79-4-8.03.

Term of director elected to fill vacancy, see § 79-4-8.05.

Staggered terms of directors, see § 79-4-8.06.

Committees created by board of directors not authorized to fill vacancies on the board of directors, see § 79-4-8.25.

Filling vacancy on board under Mississippi Nonprofit Corporation Act, see § 79-11-251.

RESEARCH REFERENCES

ALR.

Provision authorizing directors to fill vacancies as applicable to newly created directorships. 6 A.L.R.2d 174.

Am. Jur.

18B Am. Jur. 2d, Corporations § 1218.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1075-74:1077.

CJS.

19 C.J.S., Corporations § 797.

§79-4-8.11. Compensation of directors.

Unless the articles of incorporation or bylaws provide otherwise, the board of directors may fix the compensation of directors.

HISTORY: Laws, 1987, ch. 486, § 8.11, eff from and after January 1, 1988.

Cross References —

Compensation of directors under Mississippi Nonprofit Corporation Act, see § 79-11-253.

RESEARCH REFERENCES

ALR.

Reasonableness of compensation paid to officers or employees, so as to warrant deduction thereof in computing employer’s income tax. 10 A.L.R.3d 125.

Test of stockholders’ actions as to reasonableness of compensation of corporate officers who as directors determine own compensation. 53 A.L.R.3d 358.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1655 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1135-74:1138, 74:1550.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 351 et seq.

4 Am. Jur. Proof of Facts 2d 425, Reasonableness of Corporate Officer’s Compensation.

Subarticle B. Meetings and Action of the Board.

§79-4-8.20. Meetings.

The board of directors may hold regular or special meetings in or out of this state.

Unless the articles of incorporation or bylaws provide otherwise, the board of directors may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

HISTORY: Laws, 1987, ch. 486, § 8.20, eff from and after January 1, 1988.

Cross References —

Applicability of this section to committees of board of directors and their members, see § 79-4-8.25.

Deadlock among directors as grounds for judicial dissolution of corporation, see § 79-4-14.30.

Meetings and actions of the board under Mississippi Nonprofit Corporation Act, see §§ 79-11-255 through 79-11-265.

RESEARCH REFERENCES

ALR.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1274, 1275.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1108 et seq.

9 Am. Jur. Proof of Facts 2d 57, Corporate Officer or Director as Alter Ego of Corporation.

CJS.

19 C.J.S., Corporations § 826.

§79-4-8.21. Action without meeting.

Action required or permitted by Section 79-4-1.01 et seq. to be taken by the board of directors may be taken without a meeting if each director signs a consent describing the action taken and delivers it to the corporation.

Action taken under this section is the act of the board of directors when one or more consents signed by all the directors are delivered to the corporation. The consent may specify the time at which the action taken thereunder is to be effective. A consent may be withdrawn by a revocation signed by the director and received by the corporation prior to receipt by the corporation of unrevoked written consents signed by all the directors.

A consent signed under this section has the effect of action taken at a meeting of the board of directors and may be described as such in any document.

HISTORY: Laws, 1987, ch. 486, § 8.21; Laws, 2001, ch. 435, § 9, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment rewrote (a) and (b); and substituted “action taken at a meeting of the board of directors” for “a meeting vote” in (c).

Cross References —

Applicability of this section to committees of board of directors and their members, see § 79-4-8.25.

Meetings and actions of the board under Mississippi Nonprofit Corporation Act, see §§ 79-11-255 through 79-11-265.

RESEARCH REFERENCES

ALR.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1256-1260.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1114, 74:1117.

9 Am. Jur. Proof of Facts 2d 57, Corporate Officer or Director as Alter Ego of Corporation.

CJS.

19 C.J.S., Corporations § 825.

JUDICIAL DECISIONS

1. In general.

One member of the board of directors of a corporation did not have authority to hire an attorney and pay for his services from corporate funds where the record contained no documentation of a determination or resolution that an action be filed on behalf of the corporation, whether in the form of minutes from a directors’ meeting or written consents signed by the members of the board. Wyssbrod v. Wittjen, 798 So. 2d 352, 2001 Miss. LEXIS 23 (Miss. 2001).

§79-4-8.22. Notice of meeting.

Unless the articles of incorporation or bylaws provide otherwise, regular meetings of the board of directors may be held without notice of the date, time, place or purpose of the meeting.

Unless the articles of incorporation or bylaws provide for a longer or shorter period, special meetings of the board of directors must be preceded by at least two (2) days’ notice of the date, time and place of the meeting. The notice need not describe the purpose of the special meeting unless required by the articles of incorporation or bylaws.

HISTORY: Laws, 1987, ch. 486, § 8.22, eff from and after January 1, 1988.

Cross References —

Applicability of this section to committees of board of directors and their members, see § 79-4-8.25.

Meetings and actions of the board under Mississippi Nonprofit Corporation Act, see §§ 79-11-255 through 79-11-265.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1262 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1521 et seq.

CJS.

19 C.J.S., Corporations § 827.

§79-4-8.23. Waiver of notice.

A director may waive any notice required by Sections 79-4-1.01 et seq., the articles of incorporation or bylaws before or after the date and time stated in the notice. Except as provided by subsection (b), the waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or corporate records.

A director’s attendance at or participation in a meeting waives any required notice to him of the meeting unless the director at the beginning of the meeting (or promptly upon his arrival) objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

HISTORY: Laws, 1987, ch. 486, § 8.23, eff from and after January 1, 1988.

Cross References —

Meetings and actions of the board under Mississippi Nonprofit Corporation Act, see §§ 79-11-255 through 79-11-265.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1267-1269.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1110-74:1112, 74:1122 (attendance by directors as waiver of notice of meeting), 74:1525-74:1527.

CJS.

19 C.J.S., Corporations § 827.

§79-4-8.24. Quorum and voting.

Unless the articles of incorporation or bylaws require a greater number or unless otherwise specifically provided in this chapter, a quorum of a board of directors consists of:

1. A majority of the fixed number of directors if the corporation has a fixed board size; or
2. A majority of the number of directors prescribed, or if no number is prescribed, the number in office immediately before the meeting begins, if the corporation has a variable-range size board.

The articles of incorporation or bylaws may authorize a quorum of a board of directors to consist of no fewer than one-third (1/3) of the fixed or prescribed number of directors determined under subsection (a).

If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the articles of incorporation or bylaws require the vote of a greater number of directors.

A director who is present at a meeting of the board of directors or a committee of the board of directors when corporate action is taken is deemed to have assented to the action taken unless: (1) the director objects at the beginning of the meeting (or promptly upon his arrival) to holding it or transacting business at the meeting; (2) the dissent or abstention from the action taken is entered in the minutes of the meeting; or (3) the director delivers written notice of the director’s dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.

HISTORY: Laws, 1987, ch. 486, § 8.24; Laws, 1996, ch. 459, § 2; Laws, 2012, ch. 481, § 19, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, substituted “the director” for “he” in (d)(1) and (3); and made minor stylistic changes.

Cross References —

Applicability of this section to committees of board of directors and their members, see § 79-4-8.25.

Deadlock among directors as grounds for judicial dissolution of corporation, see § 79-4-14.30.

Meetings and actions of the board under Mississippi Nonprofit Corporation Act, see §§ 79-11-255 through 79-11-265.

RESEARCH REFERENCES

ALR.

Construction, application, and effect of constitutional provisions or statutes relating to cumulative voting of stock for corporate directors. 43 A.L.R.2d 1322.

Liability of corporate director, officer, or employee for tortious interference with corporation’s contract with another. 72 A.L.R.4th 492.

Validity, construction, and effect of provision in charter or bylaw requiring supermajority vote. 80 A.L.R.4th 667.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1278 et seq.

CJS.

19 C.J.S., Corporations §§ 801, 834, 835.

§79-4-8.25. Committees.

Unless this chapter, the articles of incorporation or the bylaws provide otherwise, a board of directors may create one or more committees and appoint one or more members of the board of directors to serve on any such committee.

Unless this chapter otherwise provides, the creation of a committee and appointment of members to it must be approved by the greater of (1) a majority of all the directors in office when the action is taken or (2) the number of directors required by the articles of incorporation or bylaws to take action under Section 79-4-8.24.

Sections 79-4-8.20 through 79-4-8.24 apply both to committees of the board and their members.

To the extent specified by the board of directors or in the articles of incorporation or bylaws, each committee may exercise the powers of the board of directors under Section 79-4-8.01.

A committee may not, however:

1. Authorize or approve distributions, except according to a formula or method or within limits prescribed by the board of directors;
2. Approve or propose to shareholders action that Section 79-4-1.01 et seq. requires to be approved by shareholders;
3. Fill vacancies on the board of directors, or subject to subsection (g), on any of its committees; or
4. Adopt, amend or repeal bylaws.

The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in Section 79-4-8.30.

The board of directors may appoint one or more directors as alternate members of any committee to replace any absent or disqualified member during the member’s absence or disqualification. Unless the articles of incorporation or the bylaws or the resolution creating the committee provide otherwise, in the event of the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, unanimously, may appoint another director to act in place of the absent or disqualified member.

HISTORY: Laws, 1987, ch. 486, § 8.25; Laws, 2001, ch. 435, § 10, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment, in (a), inserted “this chapter” following “unless,” inserted “the” preceding “bylaws,” inserted “one or more” preceding “members,” and deleted the last sentence; in the first sentence of (b), inserted “Unless this chapter otherwise provides”; rewrote (c); substituted “powers” for “authority” in (d); in (e), rewrote (1) and (3), deleted former (4) and redesignated former (5) as present (4), and deleted (6), (7), and (8); and added (g).

Cross References —

Meetings and actions of the board under Mississippi Nonprofit Corporation Act, see §§ 79-11-255 through 79-11-265.

RESEARCH REFERENCES

ALR.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1310 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1100-74:1102.

9 Am. Jur. Proof of Facts 2d 57, Corporate Officer or Director as Alter Ego of Corporation.

CJS.

19 C.J.S., Corporations § 847.

§79-4-8.26. Submission of matters for shareholder vote.

A corporation may agree to submit a matter to a vote of its shareholders even if, after approving the matter, the board of directors determines it no longer recommends the matter.

HISTORY: Laws, 2012, ch. 481, § 20, eff from and after Jan. 1, 2013.

Subarticle C. Standards of Conduct.

§79-4-8.30. General standards for directors.

Each member of the board of directors, when discharging the duties of a director, shall act:

1. In good faith, and
2. In a manner the director reasonably believes to be in the best interests of the corporation.
3. A committee of the board of directors of which the director is not a member if the director reasonably believes the committee merits confidence.
4. The long-term as well as short-term interests of the corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the corporation.

The members of the board of directors or a committee of the board, when becoming informed in connection with their decision-making function or devoting attention to their oversight function, shall discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.

In discharging board or committee duties a director, who does not have knowledge that makes reliance unwarranted, is entitled to rely on the performance by any of the persons specified in subsection (e)(1) or subsection (e)(3) to whom the board may have delegated, formally or informally by course of conduct, the authority or duty to perform one or more of the board’s functions that are delegable under applicable law.

In discharging board or committee duties a director, who does not have knowledge that makes reliance unwarranted, is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by any of the persons specified in subsection (e).

A director is entitled to rely, in accordance with subsection (c) or (d), on:

One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the functions performed or the information, opinions, reports or statements provided;

Legal counsel, public accountants, or other persons retained by the corporation as to matters involving skills or expertise the director reasonably believes are matters (i) within the particular person’s professional or expert competence or (ii) as to which the particular person merits confidence; or

For purposes of this section, a director, in determining what he reasonably believes to be in the best interests of the corporation, shall consider the interests of the corporation’s shareholders and, in his discretion, may consider any of the following:

The interests of the corporation’s employees, suppliers, creditors and customers;

The economy of the state and nation;

Community and societal considerations;

HISTORY: Laws, 1987, ch. 486, § 8.30; Laws, 1990, ch. 538, § 5; Laws, 1999, ch. 471, § 1, eff from and after July 1, 1999.

Amendment Notes —

The 1999 amendment rewrote the section.

Cross References —

Creation of, delegation of authority to, or action by a committee as not constituting compliance by director with standards of conduct described in § 79-4-8.30, see § 79-4-8.25.

Liability of director who votes for or assents to unlawful distribution without complying with applicable standards of conduct described in § 79-4-8.30, see § 79-4-8.33.

Provisions governing directors’ conflicts of interest, see § 79-4-8.60 through 79-4-8.63.

Dissolution of corporation as not subjecting corporation’s directors and officers to standards of conduct different from those prescribed in this article, see § 79-4-14.05.

Misapplication or waste of corporate assets as ground for judicial dissolution of corporation, see § 79-4-14.30.

Directors acting in manner that is illegal, oppressive or fraudulent as grounds for judicial dissolution of corporation, see § 79-4-14.30.

General standards for directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-267 through 79-11-270.

RESEARCH REFERENCES

ALR.

Duty and liability of closely held corporation, its directors, officers, or majority stockholders, in acquiring stock of minority shareholder. 7 A.L.R.3d 500.

Liability of corporate directors for negligence in permitting mismanagement or defalcation by officers or employees. 25 A.L.R.3d 941.

Persons liable under statutes imposing, upon directors, officers, or trustees of a corporation, personal liability for its debts on account of their failure to file or publish reports, required by law, as to corporate matters. 39 A.L.R.3d 428.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

What business opportunities are in “line of business” of corporation for purposes of determining whether a corporate opportunity was presented. 77 A.L.R.3d 961.

Duty to disclose material facts to stock purchaser. 80 A.L.R.3d 13.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Liability of corporate director, officer, or employee for tortious interference with corporation’s contract with another. 72 A.L.R.4th 492.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1455 et seq.

9 Am. Jur. Proof of Facts 2d 57, Corporate Officer or Director as Alter Ego of Corporation.

CJS.

19 C.J.S., Corporations §§ 848 et seq.

Law Reviews.

Smith, Recognition of the fiduciary duties of corporate directors and officers defending against change of control by tender offer. 7 Miss. C. L. Rev. 117, Spring, 1987.

Transactions between a corporation and its directors: Where does Mississippi stand? 52 Miss L. J. 877, December, 1982.

Robertson, The Law of Corporate Governance: Coming of Age in Mississippi? 65 Miss. L. J. 477.

JUDICIAL DECISIONS

1. In general.

2. Dealing by director in own stock.

1. In general.

In a close corporation where a majority stockholder stands to benefit as a controlling stockholder, the majority’s action must be “intrinsically fair” to the minority interest. Thus, stockholders in close corporations must bear towards each other the same relationship of trust and confidence which prevails in partnerships, rather than resort to statutory defenses. This does not mean that directors, executive officers and stockholders are not required to adhere to the corporate statutes; rather, blind adherence to corporate statutes may not be used to circumvent the corporation’s by-laws, charter or various agreements, such as a stock redemption agreement, because of the “intrinsically fair” standard that is now adopted. Fought v. Morris, 543 So. 2d 167, 1989 Miss. LEXIS 221 (Miss. 1989).

2. Dealing by director in own stock.

Generally, a director violates no duty by dealing in his or her own stock on his or her own account. This rule is not applicable, however, when there is a showing that a closely held corporation has a practice of purchasing its own stock, or that it ever contemplated doing so, as evidenced by a stock redemption agreement, in order to maintain proportionate control of the corporation. Fought v. Morris, 543 So. 2d 167, 1989 Miss. LEXIS 221 (Miss. 1989).

§79-4-8.31. Standards of liability for directors.

A director shall not be liable to the corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, as a director, unless the party asserting liability in a proceeding establishes that:

1. No defense by the director based on (i) any provision in the articles of incorporation authorized by Section 79-4-2.02(b)(4) or the protection afforded by Section 79-4-8.61 for action taken in compliance with Section 79-4-8.62 or 79-4-8.63, or (ii) the protection afforded by Section 79-4-8.70, precludes liability; and
2. The challenged conduct consisted or was the result of:
3. For other money payment under an equitable remedy, such as profit recovery by or disgorgement to the corporation, shall also have whatever persuasion burden may be called for to establish that the equitable remedy sought is appropriate in the circumstances.

Action not in good faith; or

A decision:

Which the director did not reasonably believe to be in the best interests of the corporation; or

As to which the director was not informed to an extent the director reasonably believed appropriate in the circumstances; or

A lack of objectivity due to the director’s familial, financial or business relationship with, or a lack of independence due to the director’s domination or control by, another person having a material interest in the challenged conduct:

Which relationship or which domination or control could reasonably be expected to have affected the director’s judgment respecting the challenged conduct in a manner adverse to the corporation; and

After a reasonable expectation to such effect has been established, the director shall not have established that the challenged conduct was reasonably believed by the director to be in the best interests of the corporation; or

A sustained failure of the director to devote attention to ongoing oversight of the business and affairs of the corporation, or a failure to devote timely attention, by making (or causing to be made) appropriate inquiry, when particular facts and circumstances of significant concern materialize that would alert a reasonably attentive director to the need therefor; or

Receipt of a financial benefit to which the director was not entitled or any other breach of the director’s duties to deal fairly with the corporation and its shareholders that is actionable under applicable law.

The party seeking to hold the director liable:

For money damages, shall also have the burden of establishing that:

Harm to the corporation or its shareholders has been suffered; and

The harm suffered was proximately caused by the director’s challenged conduct; or

For other money payment under a legal remedy, such as compensation for the unauthorized use of corporate assets, shall also have whatever persuasion burden may be called for to establish that the payment sought is appropriate in the circumstances; or

Nothing contained in this section shall (1) in any instance where fairness is at issue, such as consideration of the fairness of a transaction to the corporation under Section 79-4-8.61(b)(3), alter the burden of proving the fact or lack of fairness otherwise applicable, (2) alter the fact or lack of liability of a director under another section of this act, such as the provisions governing the consequences of an unlawful distribution under Section 79-4-8.33 or a transactional interest under Section 79-4-8.61, or (3) affect any rights to which the corporation or a shareholder may be entitled under another statute of this state or the United States.

HISTORY: Laws, 1999, ch. 471, § 2; Laws, 2012, ch. 481, § 21, eff from and after Jan. 1, 2013.

Editor’s Notes —

A prior § 79-4-8.31 [Laws, 1987, ch. 486, § 8.31, eff from and after January 1, 1988] was repealed by Laws, 1990, ch. 538, § 10, eff from and after July 1, 1990. That section pertained to director’s conflicts of interests. For provisions governing directors’ conflicts of interest, see §§ 79-4-8.60 through 79-4-8.63.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, in (a)(1), added “No defense by the director based on (i)” to the beginning and substituted “or (ii) the protection afforded by Section 79-4-8.70, precludes” for “if interposed as a bar to the proceeding by the director, does not preclude” at the end; and rewrote (a)(2)(iv).

Cross References —

Limit on liability of directors for acts or omissions imposed by law, see § 79-4-7.32.

General standards for directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-267 through 79-11-270.

§79-4-8.33. Liability for unlawful distributions.

A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to Section 79-4-6.40(a) or 79-4-14.09(a) is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating Section 79-4-6.40(a) or 79-4-14.09(a) if the party asserting liability establishes that when taking the action the director did not comply with Section 79-4-8.30.

A director held liable under subsection (a) for an unlawful distribution is entitled to:

1. Contribution from every other director who could be held liable under subsection (a) for the unlawful distribution; and
2. Recoupment from each shareholder of the pro rata portion of the amount of the unlawful distribution the shareholder accepted, knowing the distribution was made in violation of Section 79-4-6.40(a) or 79-4-14.09(a).

A proceeding to enforce:

The liability of a director under subsection (a) is barred unless it is commenced within two (2) years after the date (i) on which the effect of the distribution was measured under Section 79-4-6.40(e) or (g); (ii) as of which the violation of Section 79-4-6.40(a) occurred as the consequence of disregard of a restriction in the articles of incorporation; or (iii) on which the distribution of assets to shareholders under Section 79-4-14.09(a) was made; or

Contribution or recoupment under subsection (b) is barred unless it is commenced within one (1) year after the liability of the claimant has been finally adjudicated under subsection (a).

HISTORY: Laws, 1987, ch. 486, § 8.33; Laws, 1988, ch. 369, § 4; Laws, 1999, ch. 471, § 3; Laws, 2001, ch. 435, § 11, eff from and after July 1, 2001.

Amendment Notes —

The 1999 amendment rewrote the section.

The 2001 amendment inserted “or 79-4-14.09(a)” following “Section 79-4-6.40(a)” twice in (a) and once in (b)(2); and in (c)(1), inserted “(i)” following “after the date” and “(ii)” following “or (g),” and added the language following “or (iii).”

Cross References —

Liability for unlawful distributions under this section excepted from requirment that articles of incorporation set forth a provision eliminating or limiting liability of director or shareholders for money damages and a provision permitting or making obligatory indemnification of director for liability as defined in § 79-4-8.50(4), see § 79-4-2.02.

Directors acting in manner that is illegal, oppressive or fraudulent as grounds for judicial dissolution of corporation, see § 79-4-14.30.

Misapplication or waste of corporate assets as ground for judicial dissolution of corporation, see § 79-4-14.30.

Payment of claims and distribution of assets of dissolved corporations, see § 79-4-14.09.

General standards for directors under Mississippi Nonprofit Corporation Act, see §§ 79-11-267 through 79-11-270.

RESEARCH REFERENCES

ALR.

Personal liability of one who signs or indorses without qualification commercial paper of corporation. 82 A.L.R.2d 424.

Duty and liability of closely held corporation, its directors, officers, or majority stockholders, in acquiring stock of minority shareholder. 7 A.L.R.3d 500.

Liability of corporate directors for negligence in permitting mismanagement or defalcation by officers or employees. 25 A.L.R.3d 941.

Liability of corporate directors or officers for negligence in permitting conversion of property of third persons by corporation. 29 A.L.R.3d 660.

Persons liable under statutes imposing, upon directors, officers, or trustees of a corporation, personal liability for its debts on account of their failure to file or publish reports, required by law, as to corporate matters. 39 A.L.R.3d 428.

What amounts to participation by corporate officer or agent in illegal issuance of security, in order to impose liability upon him under state securities regulations. 44 A.L.R.3d 588.

Liability of corporate officer or director for commission or compensation received from third person in connection with that person’s transaction with corporation. 47 A.L.R.3d 373.

Personal liability of officer or directors of corporation on corporate checks issued against insufficient funds. 47 A.L.R.3d 1250.

Test in stockholders’ actions as to reasonableness of compensation of corporate officers who as directors determine their own compensation. 53 A.L.R.3d 358.

Liability of director or dominant shareholder for enforcing debt legally owed him by corporation. 56 A.L.R.3d 212.

Personal civil liability of officer or director of corporation for negligence of subordinate employee causing personal injury or death of third person. 90 A.L.R.3d 916.

Validity of stockholders’ agreement allegedly infringing on directors’ management powers – modern cases. 15 A.L.R.4th 1078.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Personal liability of stockholder, officer, or agent for debt of foreign corporation doing business in the state. 27 A.L.R.4th 387.

Time for bringing suit to recover insider short-swing profits under sec. 16(b) of the Securities Exchange Act of 1934 ( 15 USCS sec. 78p(b)). 67 A.L.R. Fed. 849.

Proper measure and elements of recovery for insider short-swing transaction. 86 A.L.R. Fed. 16.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1455 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 162 et seq., 263.1 (complaint by judgment creditor against sole stockholder receiving distributions of corporate property causing corporation to become insolvent), 312 et seq.

8 Am. Jur. Proof of Facts 2d 193, Personal Liability of Corporate Officer on Promissory Note.

CJS.

19 C.J.S., Corporations §§ 848 et seq.

Law Reviews.

Smith, Recognition of the fiduciary duties of corporate directors and officers defending against change of control by tender offer. 7 Miss. C. L. Rev. 117, Spring, 1987.

Transactions between a corporation and its directors: Where does Mississippi stand? 52 Miss L. J. 877, December, 1982.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-91.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-91.

11. In general.

The fact that a direct remedy is given the creditors by the statute is not intended to deprive the corporation itself of the right to hold an officer to account for breach of his duty to it. In re Dalton Electric Co., 7 F. Supp. 465, 1934 U.S. Dist. LEXIS 1642 (D. Miss. 1934).

Bill in chancery against directors of insolvent bank charging them with liability for making a loan in excess of one-fifth of the bank’s capital to a director after his resignation, on the grounds that the notes representing the loan were either signed or delivered while he was director, or that the loan had been agreed upon while he was director and the notes subsequently executed, was insufficient to show liability under former enactment of this section (§ 922, Code 1906), since bill affirmatively showed that borrower was not a director at the time the loan was made. Bramlette v. Joseph, 111 Miss. 379, 71 So. 643, 1916 Miss. LEXIS 307 (Miss. 1916).

Subarticle D. Officers.

§79-4-8.40. Required offices.

A corporation has the offices described in its bylaws or designated by the board of directors in accordance with the bylaws.

The board of directors may elect individuals to fill one or more offices of the corporation. A duly authorized officer may appoint one or more officers if authorized by the bylaws or the board of directors.

The bylaws or the board of directors shall delegate to one (1) of the officers responsibility for preparing minutes of the directors’ and shareholders’ meetings and for maintaining and authenticating records of the corporation.

The same individual may simultaneously hold more than one (1) office in a corporation.

HISTORY: Laws, 1987, ch. 486, § 8.40; Laws, 1991, ch. 320 § 1; Laws, 2001, ch. 435, § 12, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment, in (a), substituted “offices” for “officers” and “designated” for “appointed”; in (b), added the first sentence, substituted “authorized officer” for “appointed officer,” and deleted “or assistant officers”; and in (c), inserted “maintaining and” preceding “authenticating.”

Cross References —

Definition of “secretary” see § 79-4-1.40.

Officers of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-271 through 79-11-279.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1166-1169.

6 & 6A Am. Jur. Legal Forms 2d, Corporations §§ 74:61, 74:976, 74:1062.

CJS.

19 C.J.S., Corporations §§ 796, 838-844.

§79-4-8.41. Duties of officers.

Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent consistent with the bylaws, the duties prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties of other officers.

HISTORY: Laws, 1987, ch. 486, § 8.41, eff from and after January 1, 1988.

Cross References —

Officers of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-271 through 79-11-279.

RESEARCH REFERENCES

ALR.

Power of president of corporation to have litigation instituted by it where board of directors has failed or refused to grant permission. 10 A.L.R.2d 701.

Purchase of claims against corporation by officer or director thereof. 13 A.L.R.2d 1172.

Purposes for which stockholder or officer may exercise right to examine corporate books and records. 15 A.L.R.2d 11.

Estoppel of stockholder to recover back or to secure restoration of compensation of corporate officers claimed to be exorbitant or unauthorized. 16 A.L.R.2d 467.

Right of corporate officer to purchase corporate assets from corporation. 24 A.L.R.2d 71.

Power of corporate officer to hire employees for life. 28 A.L.R.2d 929.

Validity of contract between corporations as affected by directors or officers in common. 33 A.L.R.2d 1060.

Authority of officer or agent to bind corporation as guarantor or surety. 34 A.L.R.2d 290.

Authority of agent to indorse and transfer commercial paper. 37 A.L.R.2d 453.

Construction of “net profits,” “earnings,” or the like, in provision for profit-sharing bonus for corporate officers or employees. 49 A.L.R.2d 1129.

Power of particular officer or agent of business corporation to bind it by a donation to a charity or similar institution. 50 A.L.R.2d 447.

Authority of president to subordinate corporation’s claim, assignment, lien, or the like. 53 A.L.R.2d 1421.

Authority of corporate officers to mortgage or pledge corporate personal property. 62 A.L.R.2d 712.

Power of secretary or treasurer of corporation to institute litigation for it. 64 A.L.R.2d 900.

Power of president of corporation to commence or to carry on arbitration proceedings. 65 A.L.R.2d 1321.

Right of corporate officer to recover compensation for period between original improper discharge and subsequent legal discharge. 82 A.L.R.2d 965.

Recovery back by employer of compensation paid to employee as result of mistake or the employee’s fraud. 88 A.L.R.2d 1437.

Power and authority of president of business corporation to execute commercial paper. 96 A.L.R.2d 549.

Duty and liability of closely held corporation, its directors, officers, or majority stockholders, in acquiring stock of minority shareholder. 7 A.L.R.3d 500.

Liability of corporate directors for negligence in permitting mismanagement or defalcations by officers or employees. 25 A.L.R.3d 941.

Liability of corporate directors or officers for negligence in permitting conversion of property of third persons by corporation. 29 A.L.R.3d 660.

Persons liable under statutes imposing, upon directors, officers, or trustees of a corporation, personal liability for its debts on account of their failure to file or publish reports, required by law, as to corporate matters. 39 A.L.R.3d 428.

What amounts to participation by corporate officer or agent in illegal issuance of security, in order to impose liability upon him under state securities regulations. 44 A.L.R.3d 588.

Liability of corporate officer or director for commission or compensation received from third person in connection with that person’s transaction with corporation. 47 A.L.R.3d 373.

Insurance: construction of policy or bond indemnifying directors or officers of corporation for expenses incurred in defending actions brought against them in their capacity as such. 49 A.L.R.3d 1250.

Test in stockholders’ actions as to reasonableness of compensation of corporate officers who as directors determine their own compensation. 53 A.L.R.3d 358.

Payment of premiums by corporation on corporate officer’s life insurance as affecting right to policy. 56 A.L.R.3d 1086.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Personal liability of stockholder, officer, or agent for debt of foreign corporation doing business in the state. 27 A.L.R.4th 387.

Liability of corporate director, officer, or employee for tortious interference with corporation’s contract with another. 72 A.L.R.4th 492.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1176, 1177, 1183, 1316 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1057, 74:1086 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 312 et seq.

9 Am. Jur. Proof of Facts 2d 57, Corporate Officer or Director as Alter Ego of Corporation.

CJS.

19 C.J.S., Corporations §§ 796, 807, 838 et seq.

Law Reviews.

Smith, Recognition of the fiduciary duties of corporate directors and officers defending against change of control by tender offer. 7 Miss. C. L. Rev. 117, Spring, 1987.

JUDICIAL DECISIONS

1. In general.

A corporate officer’s duties of care and loyalty extend to pledgees of corporate shares as well as to shareholders. Gibson v. Manuel, 534 So. 2d 199, 1988 Miss. LEXIS 543 (Miss. 1988).

§79-4-8.42. Standards of conduct for officers.

An officer, when performing in such capacity, shall act:

1. In good faith;
2. With the care that a person in a like position would reasonably exercise under similar circumstances; and
3. In a manner the officer reasonably believes to be in the best interests of the corporation.

In discharging those duties an officer, who does not have knowledge that makes reliance unwarranted, is entitled to rely on:

The performance of properly delegated responsibilities by one or more employees of the corporation whom the officer reasonably believes to be reliable and competent in performing the responsibilities delegated; or

Information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by one or more employees of the corporation whom the officer reasonably believes to be reliable and competent in the matters presented or by legal counsel, public accountants, or other persons retained by the corporation as to matters involving skills or expertise the officer reasonably believes are matters (i) within the particular person’s professional or expert competence or (ii) as to which the particular person merits confidence.

An officer shall not be liable to the corporation or its shareholders for any decision to take or not to take action, or any failure to take any action, as an officer, if the duties of the office are performed in compliance with this section. Whether an officer who does not comply with this section shall have liability will depend in such instance on applicable law, including those principles of Section 79-4-8.31 that have relevance.

HISTORY: Laws, 1987, ch. 486, § 8.42; Laws, 1999, ch. 471, § 4, eff from and after July 1, 1999.

Amendment Notes —

The 1999 amendment rewrote the section.

Cross References —

Indemnification of officers, see § 79-4-8.56.

Dissolution of corporation as not subjecting corporation’s directors and officers to standards of conduct different from those prescribed in this article, see § 79-4-14.05.

Misapplication or waste of corporate assets as ground for judicial dissolution of corporation, see § 79-4-14.30.

Officers of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-271 through 79-11-279.

Bank officer and director standard of care, see § 81-5-105.

RESEARCH REFERENCES

ALR.

Duty and liability of closely held corporation, its directors, officers, or majority stockholders, in acquiring stock of minority shareholder. 7 A.L.R.3d 500.

Liability of corporate directors for negligence in permitting mismanagement or defalcation by officers or employees. 25 A.L.R.3d 941.

What amounts to participation by corporate officer or agent in illegal issuance of security, in order to impose liability upon him under state securities regulations. 44 A.L.R.3d 588.

Payment of premiums by corporation on corporate officer’s life insurance as affecting right to policy. 56 A.L.R.3d 1086.

What business opportunities are in “line of business” of corporation for purposes of determining whether a corporate opportunity was presented. 77 A.L.R.3d 961.

Duty to disclose material facts to stock purchaser. 80 A.L.R.3d 13.

Financial inability of corporation to take advantage of business opportunity as affecting determination whether “corporate opportunity” was presented. 16 A.L.R.4th 185.

Purchase of shares of corporation by director or officer as usurpation of “corporate opportunity.” 16 A.L.R.4th 784.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Liability of corporate director, officer, or employee for tortious interference with corporation’s contract with another. 72 A.L.R.4th 492.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1455 et seq.

9 Am. Jur. Proof of Facts 2d 57, Corporate Officer or Director as Alter Ego of Corporation.

22 Am. Jur. Proof of Facts 2d 593, Wrongful Failure of Corporate Directors to Declare Dividend, §§ 14 et seq.

CJS.

19 C.J.S., Corporations §§ 848 et seq.

Law Reviews.

Smith, Recognition of the fiduciary duties of corporate directors and officers defending against change of control by tender offer. 7 Miss. C. L. Rev. 117, Spring, 1987.

Robertson, The Law of Corporate Governance: Coming of Age in Mississippi? 65 Miss. L. J. 477.

JUDICIAL DECISIONS

1. In general.

2. Duties where close corporation.

1. In general.

Alleged contributory negligence of other bank officers was not defense to branch bank’s loan officer’s breach of duty of care to bank. Omnibank of Mantee v. United Southern Bank, 607 So. 2d 76, 1992 Miss. LEXIS 446 (Miss. 1992).

Alleged inexperience or lack of skill and training of branch bank’s loan officer did not protect him from liability to parent for breach of fiduciary duties in making loans. Omnibank of Mantee v. United Southern Bank, 607 So. 2d 76, 1992 Miss. LEXIS 446 (Miss. 1992).

Chief operating official at branch bank who had substantial discretionary authority was “officer” of bank, although bank’s board of directors had not elected him. Omnibank of Mantee v. United Southern Bank, 607 So. 2d 76, 1992 Miss. LEXIS 446 (Miss. 1992).

Under “business judgment rule” director or officer who makes business judgment in good faith fulfills duty of care if director or officer: is not interested in subject of business judgment to extent director or officer reasonably believes to be appropriate under circumstances; and rationally believes that business judgment is in best interests of corporation. Omnibank of Mantee v. United Southern Bank, 607 So. 2d 76, 1992 Miss. LEXIS 446 (Miss. 1992).

Person charging corporate officer with breach of his or her duty of care has burden of production and persuasion on issues of breach, cause, and damage to corporation. Omnibank of Mantee v. United Southern Bank, 607 So. 2d 76, 1992 Miss. LEXIS 446 (Miss. 1992).

A corporate officer’s duties of care and loyalty extend to pledgees of corporate shares as well as to shareholders. Gibson v. Manuel, 534 So. 2d 199, 1988 Miss. LEXIS 543 (Miss. 1988).

2. Duties where close corporation.

In a close corporation where a majority stockholder stands to benefit as a controlling stockholder, the majority’s action must be “intrinsically fair” to the minority interest. Thus, stockholders in close corporations must bear towards each other the same relationship of trust and confidence which prevails in partnerships, rather than resort to statutory defenses. This does not mean that directors, executive officers and stockholders are not required to adhere to the corporate statutes; rather, blind adherence to corporate statutes may not be used to circumvent the corporation’s by-laws, charter or various agreements, such as a stock redemption agreement, because of the “intrinsically fair” standard that is now adopted. Fought v. Morris, 543 So. 2d 167, 1989 Miss. LEXIS 221 (Miss. 1989).

§79-4-8.43. Resignation and removal of officers.

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

An officer may be removed at any time with or without cause by: (i) the board of directors; (ii) the officer who appointed such officer, unless the bylaws or the board of directors provide otherwise; or (iii) any other officer if authorized by the bylaws or the board of directors.

In this section, “appointing officer” means the officer (including any successor to that officer) who appointed the officer resigning or being removed.

HISTORY: Laws, 1987, ch 486, § 8.43; Laws, 2001, ch. 435, § 13, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment substituted “time” for “date” five times in (a); in the third sentence of (a), substituted “board or the appointing officer” for “corporation” and “the board or the appointing officer” for “it”; rewrote (b); and added (c).

Cross References —

Officer’s contract rights-effect of officer’s removal or resignation, see § 79-4-8.44.

Officers of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-271 through 79-11-279.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1218, 1241 et seq.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:1070, 74:1072, 74:1373.

CJS.

19 C.J.S., Corporations §§ 811-817.

Law Reviews.

Smith, Recognition of the fiduciary duties of corporate directors and officers defending against change of control by tender offer. 7 Miss. C. L. Rev. 117, Spring, 1987.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-97.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-97.

11. In general.

While a bylaw or statute may empower the board of directors to strip an officer of his title and corporate authority, it does not follow that the board is also empowered to disregard contractual obligations with impunity. Short v. Columbus Rubber & Gasket Co., 535 So. 2d 61, 1988 Miss. LEXIS 570 (Miss. 1988).

§79-4-8.44. Contract rights of officers.

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

An officer’s removal does not affect the officer’s contract rights, if any, with the corporation. An officer’s resignation does not affect the corporation’s contract rights, if any, with the officer.

HISTORY: Laws, 1987, ch. 486, § 8.44, eff from and after January 1, 1988.

Cross References —

Officers of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-271 through 79-11-279.

RESEARCH REFERENCES

ALR.

Payment of premiums by corporation on corporate officer’s life insurance as affecting right to policy. 56 A.L.R.3d 1086.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1244, 1254.

6 Am. Jur. Legal Forms 2d, Corporations § 74:1410.

CJS.

19 C.J.S., Corporations §§ 804, 811.

Subarticle E. Indemnification.

§79-4-8.50. Subarticle definitions.

In this subarticle:

1. “Corporation” includes any domestic or foreign predecessor entity of a corporation in a merger.
2. “Director” or “officer” means an individual who is or was a director or officer, respectively, of a corporation or who, while a director or officer of the corporation, is or was serving at the corporation’s request as a director, officer, manager, partner, trustee, employee or agent of another entity or employee benefit plan. A director or officer is considered to be serving an employee benefit plan at the corporation’s request if the individual’s duties to the corporation also impose duties on, or otherwise involve services by, the individual to the plan or to participants in or beneficiaries of the plan. “Director” or “officer” includes, unless the context requires otherwise, the estate or personal representative of a director or officer.
3. “Expenses” means reasonable expenses of any kind that are incurred in connection with a matter.
4. “Liability” means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding.
5. “Official capacity” means: (i) when used with respect to a director, the office of director in a corporation; and (ii) when used with respect to an officer, as contemplated in Section 79-4-8.56, the office in a corporation held by the officer. “Official capacity” does not include service for any other domestic or foreign corporation or any partnership, joint venture, trust, employee benefit plan or other entity.
6. “Party” means an individual who was, is, or is threatened to be made a defendant or respondent in a proceeding.
7. “Proceeding” means any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative and whether formal or informal.

HISTORY: Laws, 1987, ch. 486, § 8.50; Laws, 1996, ch. 459, § 3; Laws, 2006, ch. 429, § 5; Laws, 2012, ch. 481, § 22, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2006 amendment repealed former (3), which read: “(3) ‘Disinterested director’ means a director who, at the time of a vote referred to in Section 79-4-8.53(c) or a vote or selection referred to in Section 79-4-8.55(b) or (c), is not: (i) A party to the proceeding; or (ii) An individual having a familial, financial, professional or employment relationship with the director whose indemnification or advance for expenses is the subject of the decision being made, which relationship would, in the circumstances, reasonably be expected to exert an influence on the director’s judgment when voting on the decision being made.”; redesignated former (4) through (8) as present (3) through (7); and made gender neutralization changes.

The 2012 amendment, effective January 1, 2013, rewrote the first sentence in (2); and rewrote (3).

Cross References —

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

ALR.

Attorneys’ fees: cost of services provided by paralegals or the like as compensable element of award in state court. 73 A.L.R.4th 938.

§79-4-8.51. Authority to indemnify.

Except as otherwise provided in subsection (d) of this section, a corporation may indemnify an individual who is a party to a proceeding because he is a director against liability incurred in the proceeding if:

1. 1. He conducted himself in good faith; and
      1. He reasonably believed:
         1. In the case of conduct in his official capacity, that his conduct was in the best interests of the corporation; and
         2. In all other cases, that his conduct was at least not opposed to the best interests of the corporation; and
      2. In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful; or
2. He engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation as authorized by Section 79-4-2.02(b)(5).

A director’s conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interest of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection (a)(1)(ii)(B).

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

Unless ordered by a court under Section 79-4-8.54(a)(3), a corporation may not indemnify a director under this section:

In connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection (a); or

In connection with any proceeding with respect to conduct for which he was adjudged liable on the basis that he received a financial benefit to which he was not entitled, whether or not involving action in his official capacity.

HISTORY: Laws, 1987, ch. 486, § 8.51; Laws, 1996, ch. 459, § 4, eff from and after January 1, 1997.

Joint Legislative Committee Note —

In 2009, a typographical error in subsection (a)(2) was corrected at the direction of the co-counsel for the Joint Legislative Committee on Compilation, Revision and Publication of Legislation by inserting the word “for” following “He engaged in conduct...” The correction was ratified by the Joint Committee at its July 22, 2010, meeting.

Cross References —

Corporation’s authority to pay for or reimburse reasonable expenses incurred by director who was party to proceeding in advance of final disposition, see § 79-4-8.53.

Court-ordered indemnification of director, see § 79-4-8.54.

Determination of and authorization for indemnification, see § 79-4-8.55.

Authority for corporation to purchase indemnification insurance to cover situations not covered by §§ 79-4-8.51 or 79-4-8.52, see § 79-4-8.57.

Requirement that corporation report to shareholders if corporation indemnifies or advances expenses to director under this section, see § 79-4-16.21.

Indemnification of nonprofit corporation director officer, employee or agent, see § 79-11-281.

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1644 et seq.

6A Am. Jur. Legal Forms 2d, Corporations § 74:1141.

CJS.

19 C.J.S., Corporations §§ 1063, 1230-1232.

§79-4-8.52. Mandatory indemnification.

A corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.

HISTORY: Laws, 1987, ch. 486, § 8.52; Laws, 1996, ch. 459, § 5, eff from and after January 1, 1997.

Cross References —

Court-ordered indemnification of director, see § 79-4-8.54.

Mandatory indemnification of officers of corporation who are not directors, see § 79-4-8.56.

Authority for corporation to purchase indemnification insurance to cover situations not covered by §§ 79-4-8.51 or 79-4-8.52, see § 79-4-8.57.

Requirement that corporation report to shareholders if corporation indemnifies or advances expenses to director under this section, see § 79-4-16.21.

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations § 1654.

§79-4-8.53. Advance for expenses.

A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred in connection with the proceeding by an individual who is a party to the proceeding because that individual is a member of the board of directors if the director delivers to the corporation:

1. A signed written affirmation of the director’s good faith belief that the relevant standard of conduct described in Section 79-4-8.51 has been met by the director or that the proceeding involves conduct for which liability has been eliminated under a provision of the articles of incorporation as authorized by Section 79-4-2.02(b)(4); and
2. A signed written undertaking of the director to repay any funds advanced if the director is not entitled to mandatory indemnification under Section 79-4-8.52 and it is ultimately determined under Section 79-4-8.54 or Section 79-4-8.55 that the director has not met the relevant standard of conduct described in Section 79-4-8.51.

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

Authorizations under this section shall be made:

By the board of directors:

If there are two (2) or more qualified directors, by a majority vote of all the qualified directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two (2) or more qualified directors appointed by such a vote; or

If there are fewer than two (2) qualified directors, by the vote necessary for action by the board in accordance with Section 79-4-8.24(c), in which authorization directors who are not qualified directors may participate; or

By the shareholders, but shares owned by or voted under the control of a director who at the time is not a qualified director may not be voted on the authorization.

HISTORY: Laws, 1987, ch. 486, § 8.53; Laws, 1996, ch. 459, § 6; Laws, 2006, ch. 429, § 6; Laws, 2012, ch. 481, § 23, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2006 amendment rewrote the introductory paragraph of (a); substituted “written affirmation of the director’s good faith belief that the relevant standard of conduct described in Section 79-4-8.51 has been met by the director” for “written affirmation of his good faith belief that he has met the relevant standard of conduct described in Section 79-4-8.51” in (a)(1); substituted “A written undertaking of the director to repay any funds advanced if the director is not entitled” for “His written undertaking, to repay any funds advanced if he is not entitled” in (a)(2); in (c), deleted “in the manner specified in Section 79-4-8.55” from the end of the introductory paragraph, substituted “directors who are not qualified directors” for “directors who do not qualify as disinterested directors” near the end of (1)(ii), substituted “director who at the time is not a qualified director” for “director who at the time does not qualify as a disinterested director” in (2) and substituted “qualified directors” for “disinterested directors” throughout; and made gender neutralization changes.

The 2012 amendment, effective January 1, 2013, added “signed” preceding “written” at the beginning of (a)(1) and (2).

Cross References —

Qualified director defined, see § 79-4-1.43.

Court ordered advance for expenses, see § 79-4-8.54.

Indemnification of nonprofit corporation director, officer, employee, agent, see § 79-11-281.

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

ALR.

Insurance: construction of policy or bond indemnifying directors or officers of corporation for expenses incurred in defending actions brought against them in their capacity as such. 49 A.L.R.3d 1250.

Am. Jur.

18B Am. Jur. 2d, Corporations § 1651.

§79-4-8.54. Court-ordered indemnification.

A director who is a party to a proceeding because he is a director may apply for indemnification or an advance for expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application, and after giving any notice it considers necessary, the court shall:

1. Order indemnification if the court determines that the director is entitled to mandatory indemnification under Section 79-4-8.52;
2. Order indemnification or advance for expenses if the court determines that the director is entitled to indemnification or advance for expenses pursuant to a provision authorized by Section 79-4-8.58(a); or
3. Order indemnification or advance for expenses if the court determines, in view of all the relevant circumstances, that it is fair and reasonable:

To indemnify the director; or

To advance expenses to the director, even if he has not met the relevant standard of conduct set forth in Section 79-4-8.51(a), failed to comply with Section 79-4-8.53 or was adjudged liable in a proceeding referred to in subsection 79-4-8.51(d)(1) or (d)(2), but if he was adjudged so liable his indemnification shall be limited to reasonable expenses incurred in connection with the proceeding.

If the court determines that the director is entitled to indemnification under subsection (a)(1) or to indemnification or advance for expenses under subsection (a)(2), it shall also order the corporation to pay the director’s reasonable expenses incurred in connection with obtaining court-ordered indemnification or advance for expenses. If the court determines that the director is entitled to indemnification or advance for expenses under subsection (a)(3), it may also order the corporation to pay the director’s reasonable expenses to obtain court-ordered indemnification or advance for expenses.

HISTORY: Laws, 1987, ch. 486, § 8.54; Laws, 1996, ch. 459, § 7, eff from and after January 1, 1997.

Cross References —

Exceptions to indemnification of director under § 79-4-8.51 unless ordered by a court under subsection (a)(3) of this section, see § 79-4-8.51.

Advance for expenses, see § 79-4-8.53.

Court-ordered indemnification of officer of corporation who is not a director, see § 79-4-8.56.

Requirement that corporation report to shareholders if corporation indemnifies or advances expenses to director under this section, see § 79-4-16.21.

Indemnification of nonprofit corporation director, officer, employee, agent, see § 79-11-281.

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

ALR.

Power of court, in absence of statute, to require corporate surety on fiduciary bond in probate proceeding. 82 A.L.R.2d 926.

Causes of action governed by limitations period in UCC § 2-725. 49 A.L.R.5th 1.

Am. Jur.

18B Am. Jur. 2d, Corporations § 1650.

§79-4-8.55. Determination and authorization of indemnification.

A corporation may not indemnify a director under Section 79-4-8.51 unless authorized for a specific proceeding after a determination has been made that indemnification is permissible because the director has met the relevant standard of conduct set forth in Section 79-4-8.51.

The determination shall be made:

1. If there are two (2) or more qualified directors, by the board of directors by a majority vote of all the qualified directors (a majority of whom shall for such purpose constitute a quorum), or by a majority of the members of a committee of two (2) or more qualified directors appointed by such a vote;
2. By special legal counsel:
3. By the shareholders, but shares owned by or voted under the control of a director who at the time is not a qualified director may not be voted on the determination.

Selected in the manner prescribed in subdivision (1); or

If there are fewer than two (2) qualified directors, selected by the board of directors (in which selection directors who are not qualified directors may participate); or

Authorization of indemnification shall be made in the same manner as the determination that indemnification is permissible, except that if there are fewer than two (2) qualified directors, or if the determination is made by special legal counsel, authorization of indemnification shall be made by those entitled to select special legal counsel under subsection (b)(2)(ii).

HISTORY: Laws, 1987, ch. 486, § 8.55; Laws, 1996, ch. 459, § 8; Laws, 2006, ch. 429, § 7, eff from and after July 1, 2006.

Amendment Notes —

The 2006 amendment substituted “indemnification is permissible because the director” for “indemnification of the director is permissible because he” in (a); in (b)(2)(ii), substituted “selected by the board of directors (in which selection directors who are not qualified” for “elected by the board of directors (in which selection directors who do not qualify as”; in (b)(3), substituted “director who at the time is not a” for “director who at the time does not qualify as a”; rewrote (c); and substituted “qualified director” and “qualified directors” for “disinterested director” and “disinterested directors” throughout.

Cross References —

Qualified director defined, see § 79-4-1.43.

Applicability of this section to payment of expenses to director in advance of final disposition of proceeding, see § 79-4-8.53.

Applicability of this section to determinations of further indemnity, see § 79-4-8.58.

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

ALR.

Right of corporation to indemnity for civil or criminal liability incurred by employee’s violation of antitrust laws. 37 A.L.R.3d 1355.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1644 et seq.

§79-4-8.56. Indemnification of officers.

A corporation may indemnify and advance expenses under this subarticle to an officer of the corporation who is a party to a proceeding because he is an officer of the corporation:

1. To the same extent as to a director; and
2. If he is an officer but not a director, to such further extent as may be provided by the articles of incorporation, the bylaws, a resolution of the board of directors or contract except for (A) liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses incurred in connection with the proceeding or (B) liability arising out of conduct that constitutes (i) receipt by him of a financial benefit to which he is not entitled, (ii) an intentional infliction of harm on the corporation or the shareholders, or (iii) an intentional violation of criminal law.

The provisions of subsection (a)(2) shall apply to an officer who is also a director if the basis on which he is made a party to the proceeding is an act or omission solely as an officer.

An officer of a corporation who is not a director is entitled to mandatory indemnification under Section 79-4-8.52, and may apply to a court under Section 79-4-8.54 for indemnification or an advance for expenses, in each case to the same extent to which a director may be entitled to indemnification or advance for expenses under those provisions.

HISTORY: Laws, 1987, ch. 486, § 8.56; Laws, 1996, ch. 459, § 9, eff from and after January 1, 1997.

Joint Legislative Committee Note —

Pursuant to Section 1-1-109, the Joint Legislative Committee on Compilation, Revision and Publication of Legislation corrected a publishing error in the section heading. The words “employees and agents” were deleted from the end. The Joint Committee ratified the correction at its May 16, 2002 meeting.

Cross References —

Definition of “official capacity”, see § 79-4-8.50.

Indemnification of nonprofit corporation director, officer, employee, agent, see § 79-11-281.

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

ALR.

Who is “executive officer” of insured within liability insurance policy. 1 A.L.R.5th 132.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1644 et seq.

6A Am. Jur. Legal Forms 2d, Corporations § 74:1141.

§79-4-8.57. Insurance.

A corporation may purchase and maintain insurance on behalf of an individual who is a director or officer of the corporation, or who, while a director or officer of the corporation, serves at the corporation’s request as a director, officer, partner, trustee, employee or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan or other entity, against liability asserted against or incurred by him in that capacity or arising from his status as a director or officer, whether or not the corporation would have power to indemnify or advance expenses to him against the same liability under this subarticle.

HISTORY: Laws, 1987, ch. 486, § 8.57; Laws, 1996, ch. 459, § 10, eff from and after January 1, 1997.

Cross References —

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

RESEARCH REFERENCES

ALR.

Insurance: construction of policy or bond indemnifying directors or officers of corporation for expenses incurred in defending actions brought against them in their capacity as such. 49 A.L.R.3d 1250.

Who is “executive officer” of insured within liability insurance policy. 1 A.L.R.5th 132.

Am. Jur.

18B Am. Jur. 2d, Corporations § 1649.

§79-4-8.58. Application of subarticle.

A corporation may, by a provision in its articles of incorporation or bylaws or in a resolution adopted or a contract approved by its board of directors or shareholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in accordance with Section 79-4-8.51 or advance funds to pay for or reimburse expenses in accordance with Section 79-4-8.53. Any such provision that obligates the corporation to provide indemnification to the fullest extent permitted by law shall be deemed to obligate the corporation to advance funds to pay for or reimburse expenses in accordance with Section 79-4-8.53 to the fullest extent permitted by law, unless the provision specifically provides otherwise.

A right of indemnification or to advances for expenses created by this subarticle or under subsection (a) that is in effect at the time of an act or omission shall not be eliminated or impaired with respect to the act or omission by an amendment of the articles of incorporation or bylaws or a resolution of the directors or shareholders adopted after the occurrence of the act or omission, unless, in the case of a right created under subsection (a), the provision creating the right that is in effect at the time of the act or omission explicitly authorizes elimination or impairment after the act or omission has occurred.

Any provision pursuant to subsection (a) shall not obligate the corporation to indemnify or advance expenses to a director of a predecessor of the corporation, pertaining to conduct with respect to the predecessor, unless otherwise specifically provided. Any provision for indemnification or advance for expenses in the articles of incorporation, bylaws, or a resolution of the board of directors or shareholders of a predecessor of the corporation in a merger or in a contract to which the predecessor is a party, existing at the time the merger takes effect, shall be governed by Section 79-4-11.06(a)(3).

Subject to subsection (b), a corporation may, by a provision in its articles of incorporation, limit any of the rights to indemnification or advance for expenses created by or pursuant to this subarticle.

This subarticle does not limit a corporation’s power to pay or reimburse expenses incurred by a director or an officer in connection with his appearance as a witness in a proceeding at a time when he is not a party.

This subarticle does not limit a corporation’s power to indemnify, advance expenses to or provide or maintain insurance on behalf of an employee or agent.

HISTORY: Laws, 1987, ch. 486, § 8.58; Laws, 1996, ch. 459, § 11; Laws, 2012, ch. 481, § 24, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, added (b); and redesignated former (b) through (e) as (c) through (f); and added “Subject to subsection (b)” to the beginning of (d).

Cross References —

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

§79-4-8.59. Subarticle to be controlling.

A corporation may provide indemnification or advance expenses to a director or an officer only as permitted by this subarticle.

HISTORY: Laws, 1996, ch. 459, § 12, eff from and after January 1, 1997.

Cross References —

Indemnification of directors, officers, employees, agents under Mississippi Nonprofit Corporation Act, see § 79-11-281.

Subarticle F. Director’s Conflicts of Interest.

§79-4-8.60. Definitions.

In Sections 79-4-8.60 through 79-4-8.63 and Section 79-4-8.70:

1. “Director’s conflicting interest transaction” means a transaction effected or proposed to be effected by the corporation (or by an entity controlled by the corporation):
2. “Control” (including the term “controlled by”) means (i) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing body of an entity, whether through the ownership of voting shares or interests, by contract, or otherwise, or (ii) being subject to a majority of the risk of loss from the entity’s activities or entitled to receive a majority of the entity’s residual returns.
3. “Relevant time” means (i) the time at which directors’ actions respecting the transaction are taken in compliance with Section 79-4-8.62, or (ii) if the transaction is not brought before the board of directors of the corporation (or its committee) for action under Section 79-4-8.62, at the time the corporation (or an entity controlled by the corporation) becomes legally obligated to consummate the transaction.
4. “Material financial interest” means a financial interest in a transaction that would reasonably be expected to impair the objectivity of the director’s judgment when participating in action on the authorization of the transaction.
5. “Related person” means:
6. “Fair to the corporation” means, for purposes of Section 79-4-8.61(b) (3), that the transaction as a whole was beneficial to the corporation, taking into appropriate account whether it was (i) fair in terms of the director’s dealings with the corporation, and (ii) comparable to what might have been obtainable in an arms’ length transaction, given the consideration paid or received by the corporation.
7. “Required disclosure” means disclosure of (i) the existence and nature of the director’s conflicting interest, and (ii) all facts known to the director respecting the subject matter of the transaction that a director free of such conflicting interest would reasonably believe to be material in deciding whether to proceed with the transaction.

To which, at the relevant time, the director is a party; or

Respecting which, at the relevant time, the director had knowledge and a material financial interest known to the director; or

Respecting which, at the relevant time, the director knew that a related person was a party or had a material financial interest.

The director’s spouse;

A child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsiblings, half-siblings, aunt, uncle, niece or nephew (or spouse of any thereof) of the director or of the director’s spouse;

An individual living in the same home as the director;

An entity (other than the corporation or an entity controlled by the corporation) controlled by the director or any person specified in this paragraph (5);

A domestic or foreign (A) business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the director is a director, (B) unincorporated entity of which the director is a general partner or a member of the governing body, or (C) individual, trust or estate for whom or of which the director is a trustee, guardian, personal representative or like fiduciary; or

A person that is, or an entity that is controlled by, an employer of the director.

HISTORY: Laws, 1990, ch. 538, § 1; Laws, 2006, ch. 429, § 8; Laws, 2012, ch. 481, § 25, eff from and after Jan. 1, 2013.

Joint Legislative Committee Note —

In 2009, a typographical error in paragraph (3) was corrected at the direction of the co-counsel for the Joint Legislative Committee on Compilation, Revision and Publication of Legislation by substituting “(i) the time at which directors’ actions respecting the transaction are taken...” for “(i) the time at which directors’ actions respecting the transaction is taken...” The correction was ratified by the Joint Committee at its July 22, 2010, meeting.

Amendment Notes —

The 2006 amendment rewrote the section to revise definitions dealing with a director’s conflicts of interest.

The 2012 amendment, effective January 1, 2013, inserted “stepsiblings, half-siblings, aunt, uncle, niece or nephew” following “sibling” in (5)(ii).

Cross References —

Director’s conflict of interest under Mississippi Nonprofit Corporation Act, see § 79-11-269.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1500 et seq.

16 Am. Jur. Proof of Facts 3d 583, Corporate Director’s Breach of Fiduciary Duty to Creditors.

CJS.

19 C.J.S., Corporations §§ 870 et seq.

Law Reviews.

Transactions Between a Corporation and Its Directors: Where Does Mississippi Stand? 52 Miss. L. J. 877.

§79-4-8.61. When director’s actions not sanctionable.

A transaction effected or proposed to be effected by the corporation or by an entity controlled by the corporation may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder or by or in the right of the corporation, on the ground that the director has an interest respecting the transaction, if it is not a director’s conflicting interest transaction.

A director’s conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director of the corporation, in a proceeding by a shareholder or by or in the right of the corporation on the ground that the director has an interest respecting the transaction, if:

1. Directors’ action respecting the transaction was taken in compliance with Section 79-4-8.62 at any time; or
2. Shareholders’ action respecting the transaction was taken in compliance with Section 79-4-8.63 at any time; or
3. The transaction, judged according to the circumstances at the relevant time, is established to have been fair to the corporation.

HISTORY: Laws, 1990, ch. 538, § 2; Laws, 1991, ch. 320 § 2; Laws, 2006, ch. 429, § 9, eff from and after July 1, 2006.

Amendment Notes —

The 2006 amendment rewrote the section to clarify when a director’s actions are not sanctionable.

Cross References —

Director’s conflicting interest transaction defined, see § 79-4-8.60.

Effectiveness of director’s action for purposes of § 79-4-8.61, see § 79-4-8.62.

Effectiveness of transaction for purposes of § 79-4-8.61 when shareholders approve, see § 79-4-8.63.

Shareholders’ action respecting a business opportunity taken in compliance with § 79-4-8.63 not sanctionable, see § 79-4-8.70.

Director’s conflict of interest under Mississippi Nonprofit Corporation Act, see § 79-11-269.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1500 et seq.

CJS.

19 C.J.S., Corporations §§ 870 et seq.

Law Reviews.

Transactions Between a Corporation and Its Directors: Where Does Mississippi Stand? 52 Miss. L. J. 877.

Robertson, The Law of Corporate Governance: Coming of Age in Mississippi? 65 Miss. L. J. 477.

§79-4-8.62. Effectiveness of directors’ action; disclosure.

Directors’ action respecting a director’s conflicting interest transaction is effective for purposes of Section 79-4-8.61(b)(1)if the transaction has been authorized by the affirmative vote of a majority (but no fewer than two (2)) of the qualified directors who voted on the transaction, after required disclosure by the conflicted director of information not already known by such qualified directors or after modified disclosure in compliance with subsection (b), provided that:

1. The qualified directors have deliberated and voted outside the presence of and without the participation by any other director; and
2. Where the action has been taken by a committee, all members of the committee were qualified directors, and either (i) the committee was composed of all the qualified directors on the board of directors, or (ii) the members of the committee were appointed by the affirmative vote of a majority of the qualified directors on the board.
3. The nature of the conflicted director’s duty not to disclose the confidential information.

Notwithstanding subsection (a), when a transaction is a director’s conflicting interest transaction only because a related person described in Section 79-4-8.60(5)(v) or (vi) is a party to or has material financial interest in the transaction, the conflicted director is not obligated to make required disclosure to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director discloses to the qualified directors voting on the transaction:

All information required to be disclosed that is not so violative;

The existence and nature of the director’s conflicting interest; and

A majority (but no fewer than two (2)) of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with this section.

Where directors’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws, or provision of law, independent action to satisfy those authorization requirements must be taken by the board of directors or a committee, in which action directors who are not qualified directors may participate.

HISTORY: Laws, 1990, ch. 538, § 3; Laws, 2006, ch. 429, § 10, eff from and after July 1, 2006.

Amendment Notes —

The 2006 amendment rewrote the section to clarify disclosure required of a director concerning a conflicting interest.

Cross References —

Qualified director defined, see § 79-4-1.43.

Director’s conflicting interest transaction defined, see § 79-4-8.60.

Directors’ action respecting transaction taken in compliance with § 79-4-8.62 not sanctionable, see § 79-4-8.61.

Directors’ action respecting a business opportunity taken in compliance with § 79-4-8.62 not sanctionable, see § 79-4-8.70.

Director’s conflict of interest under Mississippi Nonprofit Corporation Act, see § 79-11-269.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1500 et seq.

CJS.

19 C.J.S., Corporations §§ 870 et seq.

Law Reviews.

Transactions Between a Corporation and Its Directors: Where Does Mississippi Stand? 52 Miss. L. J. 877.

§79-4-8.63. Shareholder approval of director’s conflicting interest transaction.

Shareholders’ action respecting a director’s conflicting interest transaction is effective for purposes of Section 79-4-8.61(b)(2) if a majority of the votes cast by the holders of all qualified shares are in favor of the transaction after (1) notice to shareholders describing the action to be taken respecting the transaction, (2) provision to the corporation of the information referred to in subsection (b), and (3) communication to the shareholders entitled to vote on the transaction of the information that is the subject of required disclosure, to the extent the information is not known by them.

A director who has a conflicting interest respecting the transaction shall, before the shareholders’ vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director knows are not qualified shares under subsection (c), and the identity of the holders of those shares.

For purposes of this section, (1) “holder” means, and “held by” refers to shares held by, both a record shareholder (as defined in Section 79-4-13.01(7)) and a beneficial shareholder (as defined in Section 79-4-13.01(2)); and (2) “qualified shares” means all shares entitled to be voted with respect to the transaction except for shares that the secretary (or other officer or agent of the corporation authorized to tabulate votes) either knows, or under subsection (b) is notified, are held by (A) a director who has a conflicting interest respecting the transaction, or (B) a related person of the director (excluding a person described in Section 79-4-8.60(5)(vi)).

A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to the provisions of subsection (e), shareholders’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares.

If a shareholders’ vote does not comply with subsection (a) solely because of a director’s failure to comply with subsection (b), and if the director establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, the court may take such action respecting the transaction and the director, and may give such effect, if any, to the shareholders’ vote, as the court considers appropriate in the circumstances.

Where shareholders’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the transaction by reason of the articles of incorporation, the bylaws or a provision of law, independent action to satisfy those authorization requirements must be taken by the shareholders, in which action shares that are not qualified shares may participate.

HISTORY: Laws, 1990, ch. 538, § 4; Laws, 2006, ch. 429, § 11, eff from and after July 1, 2006.

Amendment Notes —

The 2006 amendment rewrote the section to revise requirements necessary for shareholder approval of a director’s conflicting interest transaction.

Cross References —

Director’s conflicting interest transaction defined, see § 79-4-8.60.

Shareholders’ action respecting transaction taken in compliance with § 79-4-8.63 as not sanctionable, see § 79-4-8.61.

Director’s conflict of interest under Mississippi Nonprofit Corporation Act, see § 79-11-269.

RESEARCH REFERENCES

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1500 et seq.

CJS.

19 C.J.S., Corporations §§ 870 et seq.

Law Reviews.

Transactions Between a Corporation and Its Directors: Where Does Mississippi Stand? 52 Miss. L. J. 877.

§79-4-8.70. Business opportunities.

A director’s taking advantage, directly or indirectly, of a business opportunity may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against the director, in a proceeding by or in the right of the corporation on the ground that such opportunity should have first been offered to the corporation, if before becoming legally obligated respecting the opportunity the director brings it to the attention of the corporation and:

1. Action by qualified directors disclaiming the corporation’s interest in the opportunity is taken in compliance with the procedures set forth in Section 79-4-8.62, as if the decision being made concerned a director’s conflicting interest transaction; or
2. Shareholders’ action disclaiming the corporation’s interest in the opportunity is taken in compliance with the procedures set forth in Section 79-4-8.63, as if the decision being made concerned a director’s conflicting interest transaction;

   except that, rather than making “required disclosure” as defined in Section 79-4-8.60, in each case the director shall have made prior disclosure to those acting on behalf of the corporation of all material facts concerning the business opportunity that are then known to the director.

In any proceeding seeking equitable relief or other remedies based upon an alleged improper taking advantage of a business opportunity by a director, the fact that the director did not employ the procedure described in subsection (a) before taking advantage of the opportunity shall not create an inference that the opportunity should have been first presented to the corporation or alter the burden of proof otherwise applicable to establish that the director breached a duty to the corporation in the circumstances.

HISTORY: Laws, 2006, ch. 429, § 12, eff from and after July 1, 2006.

Cross References —

Qualified director defined, see § 79-4-1.43.

Director’s conflicting interest transaction defined, see § 79-4-8.60.

Director’s conflict of interest under Mississippi Nonprofit Corporation Act, see § 79-11-269.

JUDICIAL DECISIONS

1. No breach found.

Fifty-percent shareholder in a company and related parties did not breach their corporate fiduciary duties to company and divert certain corporate opportunities of company because company was completely dysfunctional due to a stalemate with the other shareholder and could not take advantage of opportunities that were allegedly usurped or diverted. Mandrella v. East (In re East Sys.), 2012 Bankr. LEXIS 5929 (Bankr. N.D. Miss. Dec. 28, 2012).

Article 10. Amendment of Articles of Incorporation and Bylaws.

Subarticle A. Amendment of Articles of Incorporation.

§79-4-10.01. Authority to amend.

A corporation may amend its articles of incorporation at any time to add or change a provision that is required or permitted in the articles of incorporation as of the effective date of the amendment or to delete a provision that is not required to be contained in the articles of incorporation.

A shareholder of the corporation does not have a vested property right resulting from any provision in the articles of incorporation, including provisions relating to management, control, capital structure, dividend entitlement or purpose or duration of the corporation.

HISTORY: Laws, 1987, ch. 486, § 10.01; Laws, 2000, ch. 469, § 3, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote (a).

Cross References —

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

RESEARCH REFERENCES

ALR.

Provision authorizing directors to fill vacancies as applicable to newly created directorships. 6 A.L.R.2d 174.

Reduction of capital stock and distribution of capital assets upon reduction. 35 A.L.R.2d 1149.

Retroactive effect of statute fixing minimum value of corporate stock shares or otherwise affecting power of corporation to change par value of existing shares. 54 A.L.R.2d 1289.

Power of corporation to change existing redemption rights of common stock shareholders. 70 A.L.R.2d 843.

Change in stock or corporate structure, or split or substitution of stock of corporation, as affecting bequest of stock. 46 A.L.R.3d 7.

Am. Jur.

18 Am. Jur. 2d, Corporations §§ 96 et seq.

6 Am. Jur. Legal Forms 2d, Corporations §§ 74:783 (amendment of articles of incorporation – amendment of article concerning capitalization), 74:884 et seq.

CJS.

18 C.J.S., Corporations §§ 81, 112-117.

Law Reviews.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-115.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-115.

11. In general.

Under Miss. Const. Art. 4, § 88 a bank organized with an authorized capital stock of $35,000 may by a majority vote of its stockholders, as provided for amendments, reduce its capital stock to $25,000. Perry v. Bank of Commerce, 116 Miss. 838, 77 So. 812, 1917 Miss. LEXIS 365 (Miss. 1917).

§79-4-10.02. Amendment before issuance of shares.

If a corporation has not yet issued shares, its board of directors, or its incorporators, if it has no board of directors, may adopt one or more amendments to the corporation’s articles of incorporation.

HISTORY: Former 1972 Code §79-4-10.02 [Laws, 1987, ch. 486, § 10.02; Laws, 1988, ch. 368, § 11] renumbered as §79-4-10.05 by Laws, 2000, ch. 469, § 7. Former 1972 Code §79-4-10.05 [Laws, 1987, ch. 486, § 10.05] amended and renumbered as §79-4-10.02 by Laws, 2000, ch. 469, § 4, eff from and after July 1, 2000.

Editor’s Notes —

This section, formerly appearing as § 79-4-10.05, was amended and renumbered as present § 79-4-10.02 by Laws of 2000, ch. 469, § 4. Former § 79-4-10.02 was amended and renumbered as present § 79-4-10.05 by Laws of 2000, ch. 469, § 7.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

Cross References —

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

RESEARCH REFERENCES

Am. Jur.

18 Am. Jur. 2d, Corporations §§ 84-99.

18A Am. Jur. 2d, Corporations § 179.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:894, 74:896, 74:897, 74:902.

§79-4-10.03. Amendment by board of directors and shareholders.

If a corporation has issued shares, an amendment to the articles of incorporation shall be adopted in the following manner:

The proposed amendment must be adopted by the board of directors.

Except as provided in Sections 79-4-10.05, 79-4-10.07, and 79-4-10.08, after adopting the proposed amendment the board of directors must submit the amendment to the shareholders for their approval. The board of directors must also transmit to the shareholders a recommendation that the shareholders approve the amendment, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must transmit to the shareholders the basis for that determination.

The board of directors may condition its submission of the amendment to the shareholders on any basis.

If the amendment is required to be approved by the shareholders and the approval is to be given at a meeting, the corporation must notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the amendment is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the amendment and must contain or be accompanied by a copy of the amendment.

Unless the articles of incorporation or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater number of shares to be present, approval of the amendment requires the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast on the amendment exists, and, if any class or series of shares is entitled to vote as a separate group on the amendment, except as provided in Section 79-4-10.04(c), the approval of each such separate voting group at a meeting at which a quorum of the voting group consisting of at least a majority of the votes entitled to be cast on the amendment by that voting group exists.

HISTORY: Laws, 1987, ch. 486, § 10.03; Laws, 2000, ch. 469, § 5, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote the section.

Cross References —

Applicability of this section to restatement of articles of incorporation, see § 79-4-10.07.

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

RESEARCH REFERENCES

Am. Jur.

18 Am. Jur. 2d, Corporations § 99.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Form 153.5 (complaint, petition, or declaration – stockholders’ individual action – for declaratory and injunctive relief barring amendment to Articles of Incorporation).

CJS.

18 C.J.S., Corporations §§ 81, 112-117.

§79-4-10.04. Voting on amendments by voting groups.

If a corporation has more than one (1) class of shares outstanding, the holders of the outstanding shares of a class are entitled to vote as a separate voting group, if shareholder voting is otherwise required by the Mississippi Business Corporation Act, on a proposed amendment to the articles of incorporation if the amendment would:

1. Effect an exchange or reclassification of all or part of the shares of the class into shares of another class;
2. Effect an exchange or reclassification, or create the right of exchange, of all or part of the shares of another class into shares of the class;
3. Change the rights, preferences or limitations of all or part of the shares of the class;
4. Change the shares of all or part of the class into a different number of shares of the same class;
5. Create a new class of shares having rights or preferences with respect to distributions or to dissolution that are prior or superior to the shares of the class;
6. Increase the rights, preferences or number of authorized shares of any class that, after giving effect to the amendment, have rights or preferences with respect to distributions or to dissolution that are prior or superior to the shares of the class;
7. Limit or deny an existing preemptive right of all or part of the shares of the class; or
8. Cancel or otherwise affect rights to distributions that have accumulated but not yet been authorized on all or part of the shares of the class.

If a proposed amendment would affect a series of a class of shares in one or more of the ways described in subsection (a), the holders of shares of that series are entitled to vote as a separate voting group on the proposed amendment.

If a proposed amendment that entitles the holders of two (2) or more classes or series of shares to vote as separate voting groups under this section would affect those two (2) or more classes or series in the same or a substantially similar way, the holders of shares of all the classes or series so affected must vote together as a single voting group on the proposed amendment, unless otherwise provided in the articles of incorporation or required by the board of directors.

A class or series of shares is entitled to the voting rights granted by this section although the articles of incorporation provide that the shares are nonvoting shares.

The provisions of subsection (a)(6) shall not apply to preferred stock issued by a public utility subject to the provisions of the Public Utility Holding Company Act, 15 United States Code, Section 79 et seq., where the issuance of its securities is regulated by an agency of the United States.

HISTORY: Laws, 1987, ch. 486, § 10.04; Laws, 2000, ch. 469, § 6, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment, in (a), substituted “If a corporation has more than one (1) class of shares outstanding” for “Except as otherwise provided in subsection (e),” substituted “the Mississippi Business Corporation Act” for “Sections 79-4-1.01 et seq,” and inserted “to the articles of incorporation”; deleted former (a)(1) and redesignated the remaining subsections accordingly; deleted “designation” following “Change the” in (a)(3); substituted “prior or superior to” for “prior, superior or substantially equal to” in (a)(5) and (6); deleted “or dividends” following “distributions” and substituted “authorized” for “declared” in (a)(8); inserted “holders of” in (b); rewrote (c); and substituted “subsection (a)(6)” for “subsections (a)(1) and (a)(7)” in (e).

Cross References —

Mississippi Business Corporation Act, see §§ 79-4-1.01 et seq.

Applicability of voting by voting groups as provided in this section to adoption of plan of merger, see § 79-4-11.04.

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

Federal Aspects—

The Public Utility Holding Company Act is codified as 15 USCS §§ 79 et seq.

RESEARCH REFERENCES

Am. Jur.

18 Am. Jur. 2d, Corporations § 99.

6A Am. Jur. Legal Forms 2d, Corporations § 74:919.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Form 153.5 (complaint, petition, or declaration – stockholders’ individual action – for declaratory and injunctive relief barring amendment to Articles of Incorporation).

CJS.

18 C.J.S., Corporations § 113.

§79-4-10.05. Amendment by board of directors.

Unless the articles of incorporation provide otherwise, a corporation’s board of directors may adopt amendments to the corporation’s articles of incorporation without shareholder approval:

1. To extend the duration of the corporation if it was incorporated at a time when limited duration was required by law;
2. To delete the names and addresses of the initial directors;
3. To change the information required by Section 79-35-5(a);
4. If the corporation has only one (1) class of shares outstanding:
   1. To change each issued and unissued authorized share of the class into a greater number of whole shares of that class; or
   2. To increase the number of authorized shares of the class to the extent necessary to permit the issuance of shares as a share dividend;
5. To change the corporate name by substituting the word “corporation,” “incorporated,” “company,” “limited” or the abbreviation “corp.,” “inc.,” “co.” or “ltd.” for a similar word or abbreviation in the name, or by adding, deleting or changing a geographical attribution for the name;
6. To reflect a reduction in authorized shares, as a result of the operation of Section 79-4-6.31(b), when the corporation has acquired its own shares and the articles of incorporation prohibit the reissue of the acquired shares;
7. To delete a class of shares from the articles of incorporation, as a result of the operation of Section 79-4-6.31(b), when there are no remaining shares of the class because the corporation has acquired all shares of the class and the articles of incorporation prohibit the reissue of the acquired shares; or
8. To make any change expressly permitted by Section 79-4-6.02(a) or (b) to be made without shareholder approval.

HISTORY: Former 1972 Code §79-4-10.05 [Laws, 1987, ch. 486, § 10.05] renumbered as §79-4-10.02 by Laws, 2000, ch. 469, § 4. Former 1972 Code §79-4-10.02 [Laws, 1987, ch. 486, § 10.02; Laws, 1988, ch. 368, § 11] amended and renumbered as §79-4-10.05 by Laws, 2000, ch. 469, § 7; Laws, 2004, ch. 495, § 7; Laws, 2012, ch. 382, § 31, eff from and after Jan. 1, 2013.

Editor’s Notes —

This section, formerly appearing as § 79-4-10.02, was amended and renumbered as present § 79-4-10.05 by Laws, 2000, ch. 469, § 7. Former § 79-4-10.05 was amended and renumbered as present § 79-4-10.02 by Laws, 2000, ch. 469, § 4.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

The 2004 amendment substituted “79-4-6.02(a) or (b)” for “79-4-6.02(d)” in (8).

The 2012 amendment, effective January 1, 2013, rewrote (3).

Cross References —

Lack of authority for committees to amend articles of incorporation pursuant to this section, see § 79-4-8.25.

No necessity for action by shareholders of surviving corporation on plan of merger if articles of incorporation will not differ except for amendments enumerated in § 79-4-10.05, see § 79-4-11.04.

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

RESEARCH REFERENCES

Am. Jur.

18 Am. Jur. 2d, Corporations §§ 84-99.

18A Am. Jur. 2d, Corporations § 179.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:898-74:901.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Form 153.5.

CJS.

18 C.J.S., Corporations § 81.

§79-4-10.06. Articles of amendment.

After an amendment to the articles of incorporation has been adopted and approved in the manner required by the Mississippi Business Corporation Act and by the articles of incorporation, the corporation shall deliver to the Secretary of State, for filing, articles of amendment, which shall set forth:

1. The name of the corporation;
2. The text of each amendment adopted, or the information required by Section 79-4-1.20(k)(5);
3. If an amendment provides for an exchange, reclassification or cancellation of issued shares, provisions for implementing the amendment (if not contained in the amendment itself), which may be made dependent upon facts objectively ascertainable outside the articles of amendment in accordance with Section 79-4-1.20(k);
4. The date of each amendment’s adoption; and
5. If an amendment:
   1. Was adopted by the incorporators or board of directors without shareholder approval, a statement that the amendment was duly approved by the incorporators or by the board of directors, as the case may be, and that shareholder approval was not required;
   2. Required approval by the shareholders, a statement that the amendment was duly approved by the shareholders in the manner required by the Mississippi Business Corporation Act and by the articles of incorporation; or
   3. Is being filed pursuant to Section 79-4-1.20(k)(5), a statement to that effect.

HISTORY: Laws, 1987, ch. 486, § 10.06; Laws, 1993, ch. 368, § 17; Laws, 2000, ch. 469, § 8; Laws, 2004, ch. 495, § 8, eff from and after July 1, 2004.

Amendment Notes —

The 2000 amendment rewrote the introductory paragraph; rewrote (5); and deleted former (6).

The 2004 amendment added “or the information required by Section 79-4-1.20(k)(5)” to the end of (2); added “which may be made dependent upon facts objectively ascertainable outside the articles of amendment in accordance with Section 79-4-1.20(k)” to the end of (3); added (5)(c); and made other minor changes.

Cross References —

Mississippi Business Corporation Act, see §§ 79-4-101 et seq.

Applicability of § 79-4-10.06 to requirements for filing certificate of restated articles of incorporation, see § 79-4-10.07.

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

RESEARCH REFERENCES

Am. Jur.

18 Am. Jur. 2d, Corporations §§ 84-99.

18A Am. Jur. 2d, Corporations § 179.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:877, 74:937, 74:938-74:940.

CJS.

18 C.J.S., Corporations § 81.

§79-4-10.07. Restated articles of incorporation.

A corporation’s board of directors may restate its articles of incorporation at any time, with or without shareholder approval, to consolidate all amendments into a single document.

If the restated articles include one or more new amendments that require shareholder approval, the amendments must be adopted and approved as provided in Section 79-4-10.03.

A corporation that restates its articles of incorporation shall deliver to the Secretary of State for filing articles of restatement setting forth the name of the corporation and the text of the restated articles of incorporation, together with a certificate which states that the restated articles consolidate all amendments into a single document and, if a new amendment is included in the restated articles, which also includes the statements required under Section 79-4-10.06.

Duly adopted restated articles of incorporation supersede the original articles of incorporation and all amendments thereto.

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

HISTORY: Laws, 1987, ch. 486, § 10.07; Laws, 2000, ch. 469, § 9, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment substituted “shareholder approval to consolidate all amendments into a single document” for “shareholder action” in (a); rewrote (b); deleted former (c) and (d) and redesignated the remaining subsections accordingly; substituted “that restates” for “restating” and “which states that the restated . . .” for “setting forth” in (c); substituted “thereto” for “to them” in (d); substituted “subsection (c)” for “subsection (d)” in (e); and made minor punctuation changes throughout.

Cross References —

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

RESEARCH REFERENCES

Am. Jur.

6A Am. Jur. Legal Forms 2d, Corporations § 74:885.

§79-4-10.08. Amendment pursuant to reorganization.

A corporation’s articles of incorporation may be amended without action by the board of directors or shareholders to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under the authority of a law of the United States.

The individual or individuals designated by the court shall deliver to the Secretary of State for filing articles of amendment setting forth:

1. The name of the corporation;
2. The text of each amendment approved by the court;
3. The date of the court’s order or decree approving the articles of amendment;
4. The title of the reorganization proceeding in which the order or decree was entered; and
5. A statement that the court had jurisdiction of the proceeding under federal statute.

This section does not apply after entry of a final decree in the reorganization proceeding even though the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the reorganization plan.

HISTORY: Laws, 1987, ch. 486, § 10.08; Laws, 2000, ch. 469, § 10, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment substituted “the authority of a law of the United States” for “federal statute if the articles of incorporation after amendment contain only provisions required or permitted by Section 79-4-2.02” in (a); deleted former (c) and redesignated former (d) as present (c).

Cross References —

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations § 2309.

CJS.

19 C.J.S., Corporations § 1584.

§79-4-10.09. Effect of amendment.

An amendment to the articles of incorporation does not affect a cause of action existing against or in favor of the corporation, a proceeding to which the corporation is a party, or the existing rights of persons other than shareholders of the corporation. An amendment changing a corporation’s name does not abate a proceeding brought by or against the corporation in its former name.

HISTORY: Laws, 1987, ch. 486, § 10.09; Laws, 2000, ch. 469, § 11, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment inserted “the” following “An amendment to.”

Cross References —

Amendment of articles of incorporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-295 through 79-11-311.

JUDICIAL DECISIONS

3. Illustrative cases.

Arbitrator was the proper arbitrator, and it had jurisdiction, because the arbitrator’s name change did not negate the validity of an arbitration agreement, Wells Fargo Advisors, LLC v. Runnels, 126 So.3d 137, 2013 Miss. App. LEXIS 781 (Miss. Ct. App. 2013).

Subarticle B. Amendment of Bylaws.

§79-4-10.20. Amendment by board of directors or shareholders.

A corporation’s shareholders may amend or repeal the corporation’s bylaws.

A corporation’s board of directors may amend or repeal the corporation’s bylaws unless:

1. The articles of incorporation or Section 79-4-10.21 reserve that power exclusively to the shareholders in whole or part; or
2. The shareholders in amending, repealing, or adopting a bylaw expressly provide that the board of directors may not amend, repeal, or reinstate that bylaw.

HISTORY: Laws, 1987, ch. 486, § 10.20; Laws, 2000, ch. 469, § 12, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote the section.

Cross References —

Amendment of bylaws under Mississippi Nonprofit Corporation Act, see §§ 79-11-313 through 79-11-317.

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 263, 266, 272-275.

6A Am. Jur. Legal Forms 2d, Corporations §§ 74:797, 74:798, 74:976, 74:1190-74:1192.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Form 153.

CJS.

18 C.J.S., Corporations § 252.

§79-4-10.21. Bylaw increasing quorum or voting requirement for directors.

A bylaw that increases a quorum or voting requirement for the board of directors may be amended or repealed:

1. If adopted by the shareholders, only by the shareholders, unless the bylaw otherwise provides;
2. If adopted by the board of directors, either by the shareholders or by the board of directors.

A bylaw adopted or amended by the shareholders that increases a quorum or voting requirement for the board of directors may provide that it can be amended or repealed only by a specified vote of either the shareholders or the board of directors.

Action by the board of directors under subsection (a) to amend or repeal a bylaw that changes the quorum or voting requirement for the board of directors must meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.

HISTORY: Laws, 1987, ch. 486, § 10.21; Laws, 2000, ch. 469, § 13, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote the section.

Cross References —

Amendment of bylaws under Mississippi Nonprofit Corporation Act, see §§ 79-11-313 through 79-11-317.

RESEARCH REFERENCES

ALR.

Validity, construction, and effect of provision in charter or bylaw requiring supermajority vote. 80 A.L.R.4th 667.

Am. Jur.

18A Am. Jur. 2d, Corporations § 832.

CJS.

18 C.J.S., Corporations §§ 642, 643.

§79-4-10.22. Repealed.

Repealed by Laws, 2000, ch. 469, eff from and after July 1, 2000.

[Laws, 1987, ch. 486, § 10.22, eff from and after January 1, 1988]

Editor’s Notes —

Former § 79-4-10.22 provided for bylaws increasing quorum or voting requirements for directors. For present provisions, see § 79-4-10.21.

Cross References —

Amendment of bylaws under Mississippi Nonprofit Corporation Act, see §§ 79-11-313 through 79-11-317.

Article 11. Merger and Share Exchange.

§79-4-11.01. Definitions.

As used in this chapter:

“Merger” means a business combination pursuant to Section 79-4-11.02.

“Organizational documents” means the basic document or documents that create, or determine the internal governance of, an eligible entity.

“Party to a merger” or “party to a share exchange” means any domestic or foreign corporation or eligible entity that will:

1. Merge under a plan of merger;
2. Acquire shares or eligible interests of another corporation or eligible entity in a share exchange; or
3. Have all of its shares or eligible interests or all of one or more classes or series of its shares or eligible interests acquired in a share exchange.

“Share exchange” means a business combination pursuant to Section 79-4-11.03.

“Survivor” in a merger means the corporation or eligible entity into which one or more other corporations or eligible entities are merged. A survivor of a merger may preexist the merger or be created by the merger.

HISTORY: Laws, 2000, ch. 469, § 15; Laws, 2012, ch. 481, § 26, eff from and after Jan. 1, 2013.

Editor’s Notes —

Laws, 2000, ch. 469, § 16, renumbered and amended former § 79-4-11.01 as present § 79-4-11.02.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, deleted former definitions (a) and (d), “Interests” and “Other entity,” and redesignated the remaining paragraphs accordingly; substituted “eligible” for “other” preceding “entity” throughout the section; and made a minor stylistic change.

§79-4-11.02. Merger.

One or more domestic corporations may merge with a domestic or foreign corporation or eligible entity pursuant to a plan of merger.

A foreign corporation, or a domestic or foreign eligible entity, may be a party to the merger, or may be created by the terms of the plan of merger, only if:

1. The merger is permitted by the laws under which the corporation or eligible entity is organized or by which it is governed; and
2. In effecting the merger, the corporation or eligible entity complies with such laws and with its articles of incorporation or organizational documents.
3. The manner and basis of converting the shares of each merging corporation and eligible interest of each merging eligible entity into shares or other securities, eligible interests, obligations, rights to acquire shares or other securities, cash, other property, or any combination of the foregoing;
4. The articles of incorporation of any corporation, or the organizational documents of any eligible entity to be created by the merger, or if a new corporation or eligible entity is not to be created by the merger, any amendments to the survivor’s articles of incorporation, or organizational documents; and
5. Any other provisions required by the laws under which any party to the merger is organized or by which it is governed, or by the articles of incorporation or organizational documents of any such party.

The plan of merger must include:

The name of each corporation or eligible entity that will merge and the name of the corporation or eligible entity that will be the survivor of the merger;

The terms and conditions of the merger;

Terms of a plan of merger may be made dependent on facts objectively ascertainable outside the plan in accordance with Section 79-4-1.20(k).

The plan of merger may also include a provision that the plan may be amended prior to filing the articles of merger with the Secretary of State, provided that if the shareholders of a domestic corporation that is a party to the merger are required or permitted to vote on the plan, the plan must provide that subsequent to approval of the plan by such shareholders the plan may not be amended to:

Change the amount or kind of shares or other securities, eligible interests, obligations, rights to acquire shares or other securities, cash, or other property to be received by the shareholders of or owners of interests in any party to the merger upon conversion of their shares or interests under the plan;

Change the articles of incorporation of any corporation or the organizational documents of any eligible entity, that will survive or be created as a result of the merger, except for changes permitted by Section 79-4-10.05 or by comparable provisions of the laws under which the foreign corporation or eligible entity is organized or governed; or

Change any of the other terms or conditions of the plan if the change would adversely affect such shareholders in any material respect.

Liability from a merger shall be limited as provided in Sections 79-33-1 through 79-33-9.

HISTORY: Former 1972 Code §79-4-11.02 [Laws, 1987, ch. 486, § 11.02] renumbered as §79-4-11.03 by Laws, 2000, ch. 469, § 17. Former 1972 Code §79-4-11.01 [Laws, 1987, ch. 486, § 11.01] amended and renumbered as §79-4-11.02 by Laws, 2000, ch. 469, § 16; Laws, 2004, ch. 353, § 7; Laws, 2004, ch. 495, § 9; Laws, 2012, ch. 481, § 27, eff from and after Jan. 1, 2013.

Joint Legislative Committee Note —

Section 7 of ch. 353, Laws of 2004, effective from and after passage (approved April 20, 2004), amended this section. Section 9 of ch. 495, Laws of 2004, effective from and after July 1, 2004, also amended this section. As set out above, this section reflects the language of Section 9 of ch. 495, Laws of 2004, pursuant to Section 1-3-79 which provides that whenever the same section of law is amended by different bills during the same legislative session, the amendment with the latest effective date shall supersede all other amendments to the same section effective on an earlier date.

Editor’s Notes —

This section, formerly appearing as § 79-4-11.01, was amended and renumbered as present § 79-4-11.02 by Laws, 2000, ch. 469, § 16. Former § 79-4-11.02 was amended and renumbered as present § 79-4-11.03 by Laws, 2000, ch. 469, § 17.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

The first 2004 amendment (ch. 353) added (f).

The second 2004 amendment (ch. 495) rewrote (d); and added (f).

The 2012 amendment, effective January 1, 2013, substituted “eligible” for “other” preceding “entity” and “interests” throughout the section.

Cross References —

Merger of corporations under Mississippi Nonprofit Corporation Act, see §§ 79-11-319 through 79-11-327.

Merger of one or more foreign business or nonprofit corporations with one or more domestic nonprofit corporations, see § 79-11-327.

Acquisition of control shares pursuant to a merger under this article as not constituting control share acquisition, see § 79-27-5.

RESEARCH REFERENCES

ALR.

Similarity of ownership or control as basis for charging corporation acquiring assets of another with liability for former owner’s debts. 49 A.L.R.3d 881.

Products liability: liability of successor corporation for injury or damage caused by product issued by predecessor. 66 A.L.R.3d 824.

Liability of successor corporation for punitive damages for injury caused by predecessor’s product. 55 A.L.R.4th 166.

Sufficiency, under § 14 of Securities Exchange Act of 1934 ( 15 USCS § 78n) and implementing regulations, of proxy or information statement incident to merger of corporation. 4 A.L.R. Fed. 1021.

Who acquires rights under patent license owned by constituent corporation in case of corporate merger or consolidation. 49 A.L.R. Fed. 890.

What constitutes violation of § 208 of Employee Retirement Income Security Act (ERISA) ( 29 USCS § 1058), prohibiting certain mergers, consolidations, and transfers involving pension plans. 103 A.L.R. Fed. 390.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2239 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 401 et seq. (consolidation and merger).

20 Am. Jur. Proof of Facts 2d 609, De Facto Merger of Two Corporations.

CJS.

19 C.J.S., Corporations §§ 1617 et seq.

Law Reviews.

Clarke, The fiduciary obligations of lenders in leveraged buyouts. 54 Miss. L. J. 423, Sept.-Dec., 1984.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-141.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-141.

11. In general.

Documentary evidence was not required to show the existence of a merger of two corporations. Although it may have been preferable to have introduced the certificate of merger, the testimony of an officer of one of the corporations was sufficient to prove the existence of the merger. Weeks v. Cal-Maine Foods, Inc., 522 So. 2d 725, 1987 Miss. LEXIS 2970 (Miss. 1987).

In the absence of proof of the existence of a de facto merger, or of any bona fide or colorable attempt to comply with the statutory requirements for corporate mergers, a creditor cannot maintain a joint and several action against two corporations for debts incurred only by one. Jac See Packing Co. v. C. & F. Packing House Market, Inc., 215 So. 2d 704, 1968 Miss. LEXIS 1373 (Miss. 1968).

§79-4-11.03. Share exchange.

Through a share exchange:

1. A domestic corporation may acquire all of the shares of one or more classes or series of shares of another domestic or foreign corporation, or all of the interests of one or more classes or series of interests of a domestic or foreign eligible entity, in exchange for shares or other securities, interests, obligations, rights to acquire shares or other securities, cash, other property, or any combination of the foregoing, pursuant to a plan of share exchange; or
2. All of the shares of one or more classes or series of shares of a domestic corporation may be acquired by another domestic or foreign corporation or eligible entity, in exchange for shares or other securities, interests, obligations, rights to acquire shares or other securities, cash, other property, or any combination of the foregoing, pursuant to a plan of share exchange.
3. The manner and basis of exchanging shares of a corporation or interests in an eligible entity whose shares or interests will be acquired under the share exchange into shares or other securities, interests, obligations, rights to acquire shares or other securities, cash, other property, or any combination of the foregoing; and
4. Any other provisions required by the laws under which any party to the share exchange is organized or by the articles of incorporation or organizational documents of any such party.

A foreign corporation, or a domestic or foreign eligible entity, may be a party to the share exchange only if:

The share exchange is permitted by the laws under which the corporation or eligible entity is organized or by which it is governed; and

In effecting the share exchange, the corporation or eligible entity complies with such laws and with its articles of incorporation or organizational documents.

The plan of share exchange must include:

The name of each corporation or eligible entity whose shares or interests will be acquired and the name of the corporation or eligible entity that will acquire those shares or interests;

The terms and conditions of the share exchange;

Terms of a plan of share exchange may be made dependent on facts objectively ascertainable outside the plan in accordance with Section 79-4-1.20(k).

The plan of share exchange may also include a provision that the plan may be amended prior to filing of the articles of share exchange with the Secretary of State, provided that if the shareholders of a domestic corporation that is a party to the share exchange are required or permitted to vote on the plan, the plan must provide that subsequent to approval of the plan by such shareholders the plan may not be amended to:

Change the amount or kind of shares or other securities, interests, obligations, rights to acquire shares or other securities, cash, or other property to be issued by the corporation or to be received by the shareholders of or owners of interests in any party to the share exchange in exchange for their shares or interests under the plan; or

Change any of the terms or conditions of the plan if the change would adversely affect such shareholders in any material respect.

Section 79-4-11.03 does not limit the power of a domestic corporation to acquire shares of another corporation or interests in another entity in a transaction other than a share exchange.

HISTORY: Former 1972 Code §79-4-11.03 [Laws, 1987, ch. 486, § 11.03] renumbered as §79-4-11.04 by Laws, 2000, ch. 469, § 18. Former 1972 Code §79-4-11.02 [Laws, 1987, ch. 486, § 11.02] amended and renumbered as §79-4-11.03 by Laws, 2000, ch. 469, § 17; Laws, 2004, ch. 495, § 10; Laws, 2012, ch. 481, § 28, eff from and after Jan. 1, 2013.

Editor’s Notes —

This section, formerly appearing as § 79-4-11.02, was amended and renumbered as present § 79-4-11.03 by Laws of 2000, ch. 469, § 17. Former § 79-4-11.03 was amended and renumbered as present § 79-4-11.04 by Laws of 2000, ch. 469, § 18.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

The 2004 amendment rewrote (d).

The 2012 amendment, effective January 1, 2013, substituted “eligible” for “other” preceding “entity” throughout the section.

Cross References —

Shareholder’s right to appraisal, see § 79-4-13.02.

Merger of corporations under Mississippi Nonprofit Corporation Act, see §§ 79-11-319 through 79-11-327.

RESEARCH REFERENCES

ALR.

Products liability: liability of successor corporation for injury or damage caused by product issued by predecessor. 66 A.L.R.3d 824.

Liability of successor corporation for punitive damages for injury caused by predecessor’s product. 55 A.L.R.4th 166.

Who acquires rights under patent license owned by constituent corporation in case of corporate merger or consolidation. 49 A.L.R. Fed. 890.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2239 et seq.

CJS.

19 C.J.S., Corporations §§ 1617 et seq.

§79-4-11.04. Action on a plan of merger or share exchange.

In the case of a domestic corporation that is a party to a merger or share exchange:

The plan of merger or share exchange must be adopted by the board of directors.

Except as provided in subsection (g) and in Section 79-4-11.05, after adopting the plan of merger, the board of directors must submit the plan to the shareholders for their approval. After adopting the plan of share exchange, the board of directors of the corporation whose shares will be acquired in the share exchange must submit the plan to the shareholders for their approval. The board of directors must also transmit to the shareholders a recommendation that the shareholders approve the plan of merger or share exchange, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors must transmit to the shareholders the basis for that determination.

The board of directors may condition its submission of the plan of merger or share exchange to the shareholders on any basis.

If the plan of merger or share exchange is required to be approved by the shareholders, and if the approval is to be given at a meeting, the corporation must notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the plan is to be submitted for approval. The notice must state that the purpose, or one (1) of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. If the corporation is to be merged into an existing corporation or eligible entity, the notice shall also include or be accompanied by a copy or summary of the articles of incorporation or organizational documents of that corporation or eligible entity. If the corporation is to be merged into a corporation or eligible entity that is to be created pursuant to the merger, the notice shall include or be accompanied by a copy or a summary of the articles of incorporation or organizational documents of the new corporation or eligible entity.

Unless the articles of incorporation, or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater number of votes to be present, the approval of the plan of merger or share exchange shall require the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast on the plan exists, and, if any class or series of shares is entitled to vote as a separate group on the plan of merger or share exchange, the approval of each such separate voting group at a meeting at which a quorum of the voting group consisting of at least a majority of the votes entitled to be cast on the merger or share exchange by that voting group is present.

Separate voting by voting groups is required:

1. On a plan of merger, by each class or series of shares that (A) are to be converted, pursuant to the provisions of the plan of merger, into shares or other securities, interests, obligations, rights to acquire shares or other securities, cash, other property, or any combination of the foregoing, or (B) would have a right to vote as a separate group on a provision of the plan that, if contained in a proposed amendment to articles of incorporation, would require action by separate voting groups under Section 79-4-10.04;
2. On a plan of share exchange, by each class or series of shares included in the exchange, with each class or series constituting a separate voting group; and
3. On a plan of merger or share exchange, if the voting group is entitled under the articles of incorporation to vote as a voting group to approve a plan of merger or share exchange.
4. The number of voting shares outstanding immediately after the merger, plus the number of voting shares issuable as a result of the merger (either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger), will not exceed by more than twenty percent (20%) the total number of voting shares of the surviving corporation outstanding immediately before the merger; and
5. The number of participating shares outstanding immediately after the merger, plus the number of participating shares issuable as a result of the merger (either by the conversion of securities issued pursuant to the merger or the exercise of rights and warrants issued pursuant to the merger), will not exceed by more than twenty percent (20%) the total number of participating shares outstanding immediately before the merger.

Unless the articles of incorporation otherwise provide, approval by the corporation’s shareholders of a plan of merger is not required if:

The corporation will survive the merger; and

Except for amendments permitted by Section 79-4-10.05, its articles of incorporation will not be changed; and

Each shareholder of the corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical preferences, limitations, and relative rights, immediately after the effective date of change; and

As used in subsection (g):

“Participating shares” means shares that entitle their holders to participate without limitation in distributions.

“Voting shares” means shares that entitle their holders to vote unconditionally in elections of directors.

If as a result of a merger or share exchange one or more shareholders of a domestic corporation would become subject to personal liability for the obligations or liabilities of any other person or entity, approval of the plan of merger shall require the execution, by each such shareholder, of a separate written consent to become subject to such personal liability.

HISTORY: Former 1972 Code §79-4-11.04 [Laws, 1987, ch. 486, § 11.04] renumbered as §79-4-11.05 by Laws, 2000, ch. 469, § 19. Former 1972 Code §79-4-11.03 [Laws, 1987, ch. 486, § 11.03] amended and renumbered as §79-4-11.04 by Laws, 2000, ch. 469, § 18; Laws, 2012, ch. 481, § 29, eff from and after Jan. 1, 2013.

Editor’s Notes —

This section, formerly appearing as § 79-4-11.03, was amended and renumbered as present § 79-4-11.04 by Laws of 2000, ch. 469, § 18. Former § 79-4-11.04 was amended and renumbered as present § 79-4-11.05 by Laws of 2000, ch. 469, § 19.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

The 2012 amendment, effective January 1, 2013, substituted “eligible” for “other” preceding “entity” throughout (d).

Cross References —

Voting groups generally, see §§ 79-4-7.25, 79-4-7.26.

Voting on amendments by voting groups generally, see § 79-4-10.04.

Authorization for corporations to merge, see § 79-4-11.02.

Authorization for corporation to participate in share exchange, see § 79-4-11.03.

Effect of merger or share exchange, see § 79-4-11.07.

Abandonment of merger or share exchange, see § 79-4-11.08.

Shareholder’s right to appraisal, see § 79-4-13.02.

Merger of corporations under Mississippi Nonprofit Corporation Act, see §§ 79-11-319 through 79-11-327.

Action on plan of merger under Revised Limited Liability Company Act, see § 79-29-223.

RESEARCH REFERENCES

ALR.

Products liability: liability of successor corporation for injury or damage caused by product issued by predecessor. 66 A.L.R.3d 824.

Who acquires rights under patent license owned by constituent corporation in case of corporate merger or consolidation. 49 A.L.R. Fed. 890.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2242, 2246.

20 Am. Jur. Proof of Facts 2d 609, De Facto Merger of Two Corporations.

CJS.

19 C.J.S., Corporations § 1611.

§79-4-11.05. Merger between parent and subsidiary or between subsidiaries.

A domestic parent corporation that owns shares of a domestic or foreign subsidiary corporation that carry at least ninety percent (90%) of the voting power of each class and series of the outstanding shares of the subsidiary that have voting power may merge the subsidiary into itself or into another such subsidiary, or merge itself into the subsidiary, without the approval of the board of directors or shareholders of the subsidiary unless the articles of incorporation of any of the corporations otherwise provide, and unless, in the case of a foreign subsidiary, approval by the subsidiary’s board of directors or shareholders is required by the laws under which the subsidiary is organized.

If under subsection (a) approval of a merger by the subsidiary’s shareholders is not required, the parent corporation shall, within ten (10) days after the effective date of the merger, notify each of the subsidiary’s shareholders that the merger has become effective.

Except as provided in subsections (a) and (b), a merger between a parent and a subsidiary shall be governed by the provisions of Title 79, Chapter 4, Article 11 applicable to mergers generally.

HISTORY: Former 1972 Code §79-4-11.05 [Laws, 1987, ch. 486, § 11.05] renumbered as §79-4-11.06 by Laws, 2000, ch. 469, § 20. Former 1972 Code §79-4-11.04 [Laws, 1987, ch. 486, § 11.04] amended and renumbered as §79-4-11.05 by Laws, 2000, ch. 469, § 19, eff from and after July 1, 2000.

Editor’s Notes —

This section, formerly appearing as § 79-4-11.04, was amended and renumbered as present § 79-4-11.05 by Laws of 2000, ch. 469, § 19. Former § 79-4-11.05 was amended and renumbered as present § 79-4-11.06 by Laws of 2000, ch. 469, § 20.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

Cross References —

Shareholder’s right to appraisal, see § 79-4-13.02.

Requirement that parent corporation, in a merger pursuant to this section, notify all record shareholders of the subsidiary who are entitled to assert appraisal rights that the corporate action became effective, see § 79-4-13.20.

Materials to be included in notice to record shareholders required by § 79-4-13.20, see § 79-4-13.22.

Merger of corporations under Mississippi Nonprofit Corporation Act, see §§ 79-11-319 through 79-11-327.

RESEARCH REFERENCES

ALR.

Liability of corporation for contracts of subsidiary. 38 A.L.R.3d 1102.

Similarity of ownership or control as basis for charging corporation acquiring assets of another with liability for former owner’s debts. 49 A.L.R.3d 881.

Products liability: liability of successor corporation for injury or damage caused by product issued by predecessor. 66 A.L.R.3d 824.

Liability of successor corporation for punitive damages for injury caused by predecessor’s product. 55 A.L.R.4th 166.

Who acquires rights under patent license owned by constituent corporation in case of corporate merger or consolidation. 49 A.L.R. Fed. 890.

Am. Jur.

19 Am. Jur. 2d, Corporations § 2243.

20 Am. Jur. Proof of Facts 2d 609, De Facto Merger of Two Corporations.

§79-4-11.06. Articles of merger or share exchange.

After a plan of merger or share exchange has been adopted and approved as required by the Mississippi Business Corporation Act, articles of merger or share exchange shall be signed on behalf of each party to the merger or share exchange by any officer or other duly authorized representative. The articles shall set forth:

1. The names of the parties to the merger or share exchange and the date on which the merger or share exchange occurred or is to be effective;
2. If the articles of incorporation of the survivor of a merger are amended, or if a new corporation is created as a result of a merger, the amendments to the survivor’s articles of incorporation or the articles of incorporation of the new corporation;
3. If the plan of merger or share exchange required approval by the shareholders of a domestic corporation that was a party to the merger or share exchange, a statement that the plan was duly approved by the shareholders and, if voting by any separate voting group was required, by each such separate voting group, in the manner required by the Mississippi Business Corporation Act and the articles of incorporation;
4. If the plan of merger or share exchange did not require approval by the shareholders of a domestic corporation that was a party to the merger or share exchange, a statement to that effect; and
5. As to each foreign corporation and each eligible entity that was a party to the merger or share exchange, a statement that the plan and the performance of its terms were duly authorized by all action required by the laws under which the corporation or eligible entity is organized or by which it is governed, and by its articles of incorporation or organizational documents.

Articles of merger or share exchange shall be delivered to the Secretary of State for filing by the survivor of the merger or the acquiring corporation in a share exchange and shall take effect on the effective date.

HISTORY: Former 1972 Code §79-4-11.06 [Laws, 1987, ch. 486, § 11.06] renumbered as §79-4-11.07 by Laws, 2000, ch. 469, § 21. Former 1972 Code §79-4-11.05 [Laws, 1987, ch. 486, § 11.05] amended and renumbered as §79-4-11.06 by Laws, 2000, ch. 469, § 20; Laws, 2012, ch. 481, § 30, eff from and after Jan. 1, 2013.

Editor’s Notes —

This section, formerly appearing as § 79-4-11.05, was amended and renumbered as present § 79-4-11.06 by Laws of 2000, ch. 469, § 20. Former § 79-4-11.06 was amended and renumbered as present § 79-4-11.07 by Laws of 2000, ch. 469, § 21.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

The 2012 amendment, effective January 1, 2013, substituted “signed” for “executed” preceding “on behalf” in (a); and substituted “eligible” for “other” twice in (a)(5).

Cross References —

Mississippi Business Corporation Act, see §§ 79-4-1.01 et seq.

Action on plan of merger or share exchange, see § 79-4-11.04.

Effect of merger or share exchange, see § 79-4-11.07.

Merger of corporations under Mississippi Nonprofit Corporation Act, see §§ 79-11-319 through 79-11-327.

Certificate of merger under Limited Liability Company Act, see § 79-29-211.

Effect of merger or consolidation of domestic stock insurance company with another domestic or foreign stock insurance company is as provided in this section, see § 83-19-119.

RESEARCH REFERENCES

ALR.

Products liability: liability of successor corporation for injury or damage caused by product issued by predecessor. 66 A.L.R.3d 824.

Who acquires rights under patent license owned by constituent corporation in case of corporate merger or consolidation. 49 A.L.R. Fed. 890.

§79-4-11.07. Effect of merger or share exchange.

When a merger becomes effective:

1. The corporation or eligible entity that is designated in the plan of merger as the survivor continues or comes into existence, as the case may be;
2. The separate existence of every corporation or eligible entity that is merged into the survivor ceases;
3. All property owned by, and every contract right possessed by, each corporation or eligible entity that merges into the survivor is vested in the survivor without reversion or impairment;
4. All liabilities of each corporation or eligible entity that is merged into the survivor are vested in the survivor subject to the limitations as provided in Sections 79-33-1 through 79-33-9;
5. The name of the survivor may, but need not be, substituted in any pending proceeding for the name of any party to the merger whose separate existence ceased in the merger;
6. The articles of incorporation or organizational documents of the survivor are amended to the extent provided in the plan of merger;
7. The articles of incorporation or organizational documents of a survivor that is created by the merger become effective; and
8. The shares of each corporation that is a party to the merger, and the interests in an eligible entity that is a party to a merger, that are to be converted under the plan of merger into shares, interests, obligations, rights to acquire securities, other securities, cash, other property, or any combination of the foregoing, are converted and the former holders of such shares or interests are entitled only to the rights provided to them in the plan of merger or to any rights they may have under Title 79, Chapter 4, Article 13.

When a share exchange becomes effective, the shares of each domestic corporation that are to be exchanged for shares or other securities, interests, obligations, rights to acquire shares or securities, other securities, cash, other property, or any combination of the foregoing, are entitled only to the rights provided to them in the plan of share exchange or to any rights they may have under Title 79, Chapter 4, Article 13.

Any shareholder of a domestic corporation that is a party to a merger or share exchange who, prior to the merger or share exchange, was liable for the liabilities or obligations of such corporation, shall not be released from such liabilities or obligations by reason of the merger or share exchange.

Upon a merger becoming effective, a foreign corporation, or a foreign eligible entity, that is the survivor of the merger is deemed to:

Agree that service of process in a proceeding to enforce the rights of shareholders of each domestic corporation that is a party to the merger who exercise appraisal rights, may be made in the manner provided in Section 79-35-13; and

Agree that it will promptly pay the amount, if any, to which such shareholders are entitled under Title 79, Chapter 4, Article 13.

HISTORY: Former 1972 Code §79-4-11.07 [Laws, 1987, ch. 486, § 11.07] deleted by Laws, 2000, ch. 469, § 21. Former 1972 Code §79-4-11.06 [Laws, 1987, ch. 486, § 11.06] amended and renumbered as §79-4-11.07 by Laws, 2000, ch. 469, § 21; Laws, 2004, ch. 353, § 8; Laws, 2012, ch. 382, § 32; Laws, 2012, ch. 481, § 31, eff from and after Jan. 1, 2013.

Joint Legislative Committee Note —

Section 31 of Chapter 481, Laws of 2012, effective January 1, 2013 (approved April 24, 2012), amended this section. Section 32 of Chapter 382, Laws of 2012, effective January 1, 2013 (approved April 17, 2012), also amended this section. As set out above, this section reflects the language of Section 31 of Chapter 481, Laws of 2012, which contains language that specifically provides that it supersedes § 79-4-11.07 as amended by Laws of 2012, ch. 382.

Editor’s Notes —

This section, formerly appearing as § 79-4-11.06, was amended and renumbered as present § 79-4-11.07 by Laws of 2000, ch. 469, § 21.

A former § 79-4-11.07 [Laws, 1987, ch. 486, § 11.07, eff from and after January 1, 1988] pertaining to merger or share exchange with foreign corporations was deleted by Laws of 2000, ch. 469, § 21, effective from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

The 2004 amendment added “subject to the limitations as provided in §§ 79-33-1 et seq.” at the end of (a)(4).

The first 2012 amendment (ch. 382), effective January 1, 2013, rewrote (d)(1); and made minor stylistic changes.

The second 2012 amendment (ch. 481), effective January 1, 2013, rewrote (d)(1); and substituted “eligible” for “other” preceding “entity” throughout the section.

Cross References —

“Other entity” defined, see § 79-4-11.01.

Abandonment of merger or share exchange, see § 79-4-11.08.

Appraisal rights, Title 79, Chapter 4, Article 13, see §§ 79-4-13.01 through 79-4-13.40.

Merger of corporations under Mississippi Nonprofit Corporation Act, see §§ 79-11-319 through 79-11-327.

RESEARCH REFERENCES

ALR.

Tax liabilities as within agreement for assumption or payment of another’s obligations. 4 A.L.R.2d 1314.

Dividend rights in surplus of new consolidated corporation resulting from reduction of capital stock of former constituent corporations. 28 A.L.R.2d 1177.

Merger or consolidation of corporation as terminating charitable trust of which corporation is beneficiary. 34 A.L.R.3d 749.

Dominant shareholder’s accountability to minority for profit, bonus, or the like, received on sale of stock to outsiders. 38 A.L.R.3d 738.

Timeliness and sufficiency of dissenting stockholder’s notice of his objection to consolidation or merger and of his demand for payment for his shares. 40 A.L.R.3d 260.

Products liability: liability of successor corporation for injury or damage caused by product issued by predecessor. 66 A.L.R.3d 824.

Merger or consolidation of corporate lessee as breach of clause in lease prohibiting, conditioning, or restricting assignment or sublease. 39 A.L.R.4th 879.

Who acquires rights under patent license owned by constituent corporation in case of corporate merger or consolidation. 49 A.L.R. Fed. 890.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2249 et seq.

CJS.

19 C.J.S., Corporations §§ 1626 et seq.

JUDICIAL DECISIONS

1. In general.

A corporate obligor and those who control it may not with impunity dissolve the corporation in a debt avoidance maneuver and cause its assets to be transferred to a new successor corporation. This is so whether the debt arises in contract, quasi-contract, or tort. Where a corporation unsuccessfully sought to avoid liability on a contract with a former shareholder by dissolving the corporation and transferring assets to a newly formed corporation, the shareholder’s rights against the new corporation were limited to the extent that the new corporation acquired assets of the contracting corporation without paying fair value therefor. Morris v. Macione, 546 So. 2d 969, 1989 Miss. LEXIS 319 (Miss. 1989).

§79-4-11.08. Abandonment of merger or share exchange.

Unless otherwise provided in a plan of merger or share exchange or in the laws under which a foreign corporation or a domestic or foreign eligible entity that is a party to a merger or a share exchange is organized or by which it is governed, after the plan has been adopted and approved as required by this article, and at any time before the merger or share exchange has become effective, it may be abandoned by any party thereto without action by the party’s shareholders or owners of interests, in accordance with any procedures set forth in the plan of merger or share exchange or, if no such procedures are set forth in the plan, in the manner determined by the board of directors, subject to any contractual rights of other parties to the merger or share exchange.

If a merger or share exchange is abandoned under subsection (a) after articles of merger or share exchange have been filed with the Secretary of State but before the merger or share exchange has become effective, a statement that the merger or share exchange has been abandoned in accordance with this section, signed on behalf of a party to the merger or share exchange by an officer or other duly authorized representative, shall be delivered to the Secretary of State for filing prior to the effective date of the merger or share exchange. Upon filing, the statement shall take effect and the merger or share exchange shall be deemed abandoned and shall not become effective.

HISTORY: Laws, 2000, ch. 469, § 22; Laws, 2012, ch. 481, § 32, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, in (a), substituted “eligible” for “other” preceding “entity”, and deleted “of a corporation, or the managers of an other entity” following “board of directors” near the end; and substituted signed” for “executed” preceding “on behalf” in (b).

Cross References —

“Other entity” defined, see § 79-4-11.01.

Merger of corporations under Mississippi Nonprofit Corporation Act, see §§ 79-11-319 through 79-11-327.

Abandonment of merger under Limited Liability Company Act, see § 79-29-213.

Article 12. Sale of Assets.

§79-4-12.01. Disposition of assets not requiring shareholder approval.

No approval of the shareholders of a corporation is required, unless the articles of incorporation otherwise provide:

1. To sell, lease, exchange, or otherwise dispose of any or all of the corporation’s assets in the usual and regular course of business;
2. To mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse) or otherwise encumber any or all of the corporation’s assets, whether or not in the usual and regular course of business;
3. To transfer any or all of the corporation’s assets to one or more corporations or other entities all of the shares or interests of which are owned by the corporation; or
4. To distribute assets pro rata to the holders of one or more classes or series of the corporation’s shares.

HISTORY: Laws, 1987, ch. 486, § 12.01; Laws, 2000, ch. 469, § 23, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote the section.

Cross References —

Disposition of assets requiring shareholder approval, see § 79-4-12.02.

Disposition of corporation assets under Mississippi Nonprofit Corporation Act, see §§ 79-11-329, 79-11-331.

RESEARCH REFERENCES

ALR.

Applicability of statutes regulating sale of assets or property of corporation as affected by purpose or character of corporation. 9 A.L.R.2d 1306.

Right of corporate officer to purchase corporate assets from corporation. 24 A.L.R.2d 71.

Who may assert invalidity of sale, mortgage, or other disposition of corporate property without approval of stockholders. 58 A.L.R.2d 784.

Right or duty of corporation to refuse to transfer stock on presentation of properly indorsed certificate, because of conflicting rights or claims of one other than transferee. 75 A.L.R.2d 746.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1791, 1792.

16 Am. Jur. Legal Forms 2d, Sale of Business §§ 226:202 et seq. (sale of corporate assets).

CJS.

19 C.J.S., Corporations § 1102.

Law Reviews.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-155.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-155.

11. In general.

Deeds of trust and security agreement, taken together, and which mortgaged to plaintiff all or substantially all of the property of the corporation were invalid under Mississippi law where: (1) they were not made in the regular corporation course of business; (2) the mortgage was not a purchase money mortgage except as to supplies subsequently delivered; (3) corporation was not in the business of buying and selling real estate or business equipment; (4) no notice of the mortgage was given to the shareholders; and (5) there was no meeting of the stockholders authorizing or consenting to the mortgage. In re James Calvin Belk Constr. Co., 4 B.R. 132, 1980 Bankr. LEXIS 5278 (Bankr. N.D. Miss. 1980).

§79-4-12.02. Disposition of assets requiring shareholder approval.

A sale, lease, exchange, or other disposition of assets, other than a disposition described in Section 79-4-12.01, requires approval of the corporation’s shareholders if the disposition would leave the corporation without a significant continuing business activity. If a corporation retains a business activity that represented at least twenty-five percent (25%) of total assets at the end of the most recently completed fiscal year, and twenty-five (25%) of either income from continuing operations before taxes or revenues from continuing operations for that fiscal year, in each case of the corporation and its subsidiaries on a consolidated basis, the corporation will conclusively be deemed to have retained a significant continuing business activity.

A disposition that requires approval of the shareholders under subsection (a) shall be initiated by a resolution by the board of directors authorizing the disposition. After adoption of such a resolution, the board of directors shall submit the proposed disposition to the shareholders for their approval. The board of directors shall also transmit to the shareholders a recommendation that the shareholders approve the proposed disposition, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors shall transmit to the shareholders the basis for that determination.

The board of directors may condition its submission of a disposition to the shareholders under subsection (b) on any basis.

If a disposition is required to be approved by the shareholders under subsection (a), and if the approval is to be given at a meeting, the corporation shall notify each shareholder, whether or not entitled to vote, of the meeting of shareholders at which the disposition is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the disposition and shall contain a description of the disposition, including the terms and conditions thereof and the consideration to be received by the corporation.

Unless the articles of incorporation or the board of directors acting pursuant to subsection (c) require a greater vote, or a greater number of votes to be present, the approval of a disposition by the shareholders shall require the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast on the disposition exists.

After a disposition has been approved by the shareholders under subsection (b), and at any time before the disposition has been consummated, it may be abandoned by the corporation without action by the shareholders, subject to any contractual rights of other parties to the disposition.

A disposition of assets in the course of dissolution under Title 79, Chapter 4, Article 14 is not governed by this section.

The assets of a direct or indirect consolidated subsidiary shall be deemed the assets of the parent corporation for the purposes of this section.

HISTORY: Laws, 1987, ch. 486, § 12.02; Laws, 2000, ch. 469, § 24, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote the section.

Cross References —

Disposition of assets not requiring shareholder approval, see § 79-4-12.01.

Dissolution generally, Title 79, Chapter 4, Article 14, see §§ 79-4-14.01 through 79-4-14.40.

Shareholder’s right to appraisal, see § 79-4-13.02.

Disposition of corporation assets under Mississippi Nonprofit Corporation Act, see §§ 79-11-329, 79-11-331.

RESEARCH REFERENCES

ALR.

Applicability of statutes regulating sale of assets or property of corporation as affected by purpose or character of corporation. 9 A.L.R.2d 1306.

Right of corporate officer to purchase corporate assets from corporation. 24 A.L.R.2d 71.

Who may assert invalidity of sale, mortgage, or other disposition of corporate property without approval of stockholders. 58 A.L.R.2d 784.

Validity of agreement in conjunction with sale of corporate shares that majority of directors will be replaced by purchaser’s designees. 13 A.L.R.3d 361.

Am. Jur.

18B Am. Jur. 2d, Corporations §§ 1791 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 441 et seq.

5 Am. Jur. Proof of Facts 505, Good Will.

CJS.

19 C.J.S., Corporations § 1102.

JUDICIAL DECISIONS

I. Under Current Law.

1. In general.

2.-10. [Reserved for future use.]

II. Under Former §79-3-157.

11. In general.

I. Under Current Law.

1. In general.

A corporate obligor and those who control it may not with impunity dissolve the corporation in a debt avoidance maneuver and cause its assets to be transferred to a new successor corporation. This is so whether the debt arises in contract, quasi-contract, or tort. Where a corporation unsuccessfully sought to avoid liability on a contract with a former shareholder by dissolving the corporation and transferring assets to a newly formed corporation, the shareholder’s rights against the new corporation were limited to the extent that the new corporation acquired assets of the contracting corporation without paying fair value therefor. Morris v. Macione, 546 So. 2d 969, 1989 Miss. LEXIS 319 (Miss. 1989).

2.-10. [Reserved for future use.]

II. Under Former § 79-3-157.

11. In general.

Deeds of trust and security agreement, taken together, and which mortgaged to plaintiff all or substantially all of the property of the corporation were invalid under Mississippi law where: (1) they were not made in the regular corporation course of business; (2) the mortgage was not a purchase money mortgage except as to supplies subsequently delivered; (3) corporation was not in the business of buying and selling real estate or business equipment; (4) no notice of the mortgage was given to the shareholders; and (5) there was no meeting of the stockholders authorizing or consenting to the mortgage. In re James Calvin Belk Constr. Co., 4 B.R. 132, 1980 Bankr. LEXIS 5278 (Bankr. N.D. Miss. 1980).

Article 13. Appraisal Rights.

Subarticle A. Right to Appraisal and Payment for Shares.

§79-4-13.01. Definitions.

In this article:

1. “Affiliate” means a person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with another person or is a senior executive thereof.For purposes of Section 79-4-13.02(b)(5), a person is deemed to be an affiliate of its senior executives.
2. “Beneficial shareholder” means a person who is the beneficial owner of shares held in a voting trust or by a nominee on the beneficial owner’s behalf.
3. “Corporation” means the issuer of the shares held by a shareholder demanding appraisal and, for matters covered in Sections 79-4-13.22 through 79-4-13.31, includes the surviving entity in a merger.
4. “Fair value” means the value of the corporation’s shares determined:
5. “Interest” means interest from the effective date of the corporate action until the date of payment, at the rate of interest on judgments in this state on the effective date of the corporate action.

   (5.1) “Interested transaction” means a corporate action described in Section 79-4-13.02(a), other than a merger pursuant to Section 79-4-11.05, involving an interested person in which any of the shares or assets of the corporation are being acquired or converted.As used in this definition:

6. “Preferred shares” means a class or series of shares whose holders have preference over any other class or series with respect to distributions.
7. “Record shareholder” means the person in whose name shares are registered in the records of the corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with the corporation.
8. “Senior executive” means the chief executive officer, chief operating officer, chief financial officer, and anyone in charge of a principal business unit or function.
9. “Shareholder” means both a record shareholder and a beneficial shareholder.

Immediately before the effectuation of the corporate action to which the shareholder objects;

Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal; and

Without discounting for lack of marketability or minority status except, if appropriate, for amendments to the articles pursuant to Section 79-4-13.02(a)(5).

“Interested person” means a person, or an affiliate of a person, who at any time during the one-year period immediately preceding approval by the board of directors of the corporate action:(A) was the beneficial owner of twenty percent (20%) or more of the voting power of the corporation, excluding any shares acquired pursuant to an offer for all shares having voting power if the offer was made within one (1) year prior to the corporate action for consideration of the same kind and of a value equal to or less than that paid in connection with the corporate action; (B) had the power, contractually or otherwise to cause the appointment or election of twenty-five percent (25%) or more of the directors to the board of directors of the corporation; or (C) was a senior executive or director of the corporation or a senior executive of any affiliate thereof, and that senior executive or director will receive, as a result of the corporate action, a financial benefit not generally available to other shareholders as such, other than:(1) employment, consulting, retirement, or similarbenefits established separately and not as part of, or in contemplation of, the corporate action; or (2) employment, consulting, retirement, or similar benefits established in contemplation of or as part of the corporate action that are not more favorable than those existing before the corporate action or, if more favorable, that have been approved on behalf of the corporation in the same manner as is provided in Section 79-4-8.62; or (3) in the case of a director of the corporation who will, in the corporate action become a director of the acquiring entity in the corporate action, or one of its affiliates, rights and benefits as a director that are provided on the same basis as those afforded by the acquiring entity generally to other directors of such entity or such affiliate.

“Beneficial owner” means any person who, directly or indirectly, through any contract, arrangement, or understanding, other than a revocable proxy, has or shares the power to vote, or to direct the voting of, shares; except that a member of a national securities exchange is not deemed to be a beneficial owner of securities held directly or indirectly by it on behalf of another person solely because the member is the record holder of the securities if the member is precluded by the rules of the exchange from voting without instruction on contested matters or matters that may affect substantially the rights or privileges of the holders of the securities to be voted.When two (2) or more persons agree to act together for the purpose of voting their shares of the corporation, each member of the group formed thereby is deemed to have acquired beneficial ownership, as of the date of the agreement, of all voting shares of the corporation beneficially owned by any member of the group.

HISTORY: Laws, 1987, ch. 486, § 13.01; Laws, 1988, ch. 369, § 5; Laws, 2000, ch. 469, § 28; Laws, 2002, ch. 333, § 1; Laws, 2007, ch. 361, § 8, eff from and after July 1, 2007.

Amendment Notes —

The 2000 amendment rewrote the section.

The 2002 amendment, substituted “79-4-13.02(b)(5)” for “79-4-13.02(b)(4)” in (1).

The 2007 amendment added (5.1).

Cross References —

Interest on judgments and decrees, see § 75-17-7.

Requirement that plan of reorganization of stock savings bank to ownership by holding company contain dissenters’ rights as provided under §§ 79-4-13.01 et seq., see § 81-14-401.

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 682, 683 et seq.

Law Reviews.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

§79-4-13.02. Right to appraisal.

A shareholder is entitled to appraisal rights, and to obtain payment of the fair value of that shareholder’s shares, in the event of any of the following corporate actions:

1. Consummation of a merger to which the corporation is a party (i) if shareholder approval is required for the merger by Section 79-4-11.04 and the shareholder is entitled to vote on the merger, except that appraisal rights shall not be available to any shareholder of the corporation with respect to shares of any class or series that remain outstanding after consummation of the merger, or (ii) if the corporation is a subsidiary and the merger is governed by Section 79-4-11.05;
2. Consummation of a share exchange to which the corporation is a party as the corporation whose shares will be acquired if the shareholder is entitled to vote on the exchange, except that appraisal rights shall not be available to any shareholder of the corporation with respect to any class or series of shares of the corporation that is not exchanged;
3. Consummation of a disposition of assets pursuant to Section 79-4-12.02 if the shareholder is entitled to vote on the disposition;
4. An amendment of the articles of incorporation with respect to a class or series of shares that reduces the number of shares of a class or series owned by the shareholder to a fraction of a share if the corporation has the obligation or right to repurchase the fractional share so created;
5. Any other amendment to the articles of incorporation, merger, share exchange or disposition of assets to the extent provided by the articles of incorporation, bylaws or a resolution of the board of directors;
6. Consummation of a domestication if the shareholder does not receive shares in the foreign corporation resulting from the domestication that have terms as favorable to the shareholder in all material respects, and represent at least the same percentage interest of the total voting rights of the outstanding shares of the corporation, as the shares held by the shareholder before the domestication; or
7. Consummation of a conversion of the corporation to a different form of entity under the Mississippi Entity Conversion and Domestication Act.

Notwithstanding subsection (a), the availability of appraisal rights under subsection (a)(1), (2), (3), (4) and (6) shall be limited in accordance with the following provisions:

Appraisal rights shall not be available to any shareholder of the constituent corporations in a corporate reorganization transaction otherwise covered by subsection (a)(1) or (2) if: (i) the shareholders of an existing corporation exchange shares of such corporation for shares of a newly formed corporation and receive, after the reorganization, the same proportionate share interest in the new corporation and the rights and interests of the shareholders in the newly formed corporation are substantially the same as those in the existing corporation prior to the transaction; (ii) the newly formed corporation has no significant assets other than the shares of the existing corporation; (iii) after the reorganization the newly formed corporation and its subsidiaries have substantially the same assets and liabilities, on a consolidated basis, as those of the existing corporation prior to the transaction; (iv) fractional shares are neither created nor eliminated as a result of the transaction; (v) the existing corporation and the newly formed corporation are the only constituent corporations to such reorganization; (vi) the existing corporation and the newly formed corporation are corporations of this state; (vii) the directors of the existing corporation become the directors of the newly formed corporation upon the effective time of the corporate reorganization; (viii) the existing corporation becomes a direct wholly owned subsidiary of the newly formed corporation; and (ix) the shareholders of the existing corporation do not recognize gain or loss for United States federal income tax purposes as determined by the board of directors of the existing corporation.

Appraisal rights shall not be available for the holders of shares of any class or series of shares which is:

Listed on the New York Stock Exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc.; or

Not so listed or designated, but has at least two thousand (2,000) shareholders and the outstanding shares of such class or series has a market value of at least Twenty Million Dollars ($20,000,000.00) (exclusive of the value of such shares held by its subsidiaries, senior executives, directors and beneficial shareholders owning more than ten percent (10%) of such shares).

The applicability of subsection (b)(2) shall be determined as of:

The record date fixed to determine the shareholders entitled to receive notice of, and to vote at, the meeting of shareholders to act upon the corporate action requiring appraisal rights; or

The day before the effective date of such corporate action if there is no meeting of shareholders.

Subsection (b)(2) shall not be applicable and appraisal rights shall be available pursuant to subsection (a) for the holders of any class or series of shares who are required by the terms of the corporate action requiring appraisal rights to accept for such shares anything other than cash or shares of any class or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in subsection (b)(2) at the time the corporate action becomes effective.

Subsection (b)(2) shall not be applicable and appraisal rights shall be available pursuant to subsection (a) for the holders of any class or series of shares where the corporate action is an interested transaction.

Notwithstanding any other provision of this section, the articles of incorporation as originally filed or any amendment thereto may limit or eliminate appraisal rights for any class or series of preferred shares, but any such limitation or elimination contained in an amendment to the articles of incorporation that limits or eliminates appraisal rights for any of such shares that are outstanding immediately prior to the effective date of such amendment or that the corporation is or may be required to issue or sell thereafter pursuant to any conversion, exchange or to other right existing immediately before the effective date of such amendment shall not apply to any corporate action that becomes effective within one (1) year of that date if such action would otherwise afford appraisal rights.

HISTORY: Laws, 1987, ch. 486, § 13.02; Laws, 1990, ch. 411, § 7; Laws, 2000, ch. 469, § 29; Laws, 2001, ch. 435, § 14; Laws, 2007, ch. 361, § 9; Laws, 2014, ch. 399, § 36, eff from and after Jan. 1, 2015.

Joint Legislative Committee Note —

Pursuant to Section 1-1-109, the Joint Legislative Committee on Compilation, Revision and Publication of Legislation corrected an error in a statutory reference in (b)(1) by substituting “subsection (a)(1) or (2)” for “Section 79-4-13.02(a)(1) or (2).” The Joint Committee ratified the correction at its August 1, 2013, meeting.

Editor’s Notes —

Laws of 1990, ch. 411, § 8, provides as follows:

“SECTION 8. The provisions of this act are severable. If any provision is invalid, or if its application to any person or circumstance is invalid, such invalidity shall not affect other provisions or applications which can be given effect without the invalid provision or application.”

Subsection (c) contained an error in a statutory reference. At the direction of the co-counsel for the Joint Legislative Committee on Compilation, Revision and Publication of Legislation, the error has been corrected by substituting “Notwithstanding any other provision of this section” for “Notwithstanding any other provision of Section 79-4-13.02.”

Amendment Notes —

The 2000 amendment rewrote the section.

The 2001 amendment, in (b), inserted (1) and redesignated the remaining paragraphs in (b) accordingly, made punctuation changes in (b)(5)(ii)(A), substituted “paragraph (5)” for “paragraph (4)” in (b)(6), and substituted “(b)(2)” for “(b)(1)” throughout.

The 2007 amendment added “the corporate action is an interested transaction” to the end of (b)(5); deleted former (b)(5)(i) through (b)(6); and deleted former (d).

The 2014 amendment, effective January 1, 2015, deleted “or” following “fractional share so created” at the end of (a)(4) and “or the American Stock Exchange” following “New York Stock Exchange” at the beginning of (b)(2)(i); inserted (a)(6) and (a)(7); substituted a comma for “and” and inserted “and (6)” in (b); and made minor punctuation changes.

Cross References —

Rights of former holders of shares of corporation that is party to merger or share exchange, which shares are to be converted into other shares, obligations, securities or cash or property, see § 79-4-11.07.

Requirement that surviving foreign corporation of merger and acquiring foreign corporation of share exchange agree to give appraisal rights to shareholders of domestic corporations party to merger or share exchange, pursuant to Article 13, see § 79-4-11.07.

Legality of proposed or completed action described in this section maybe contested and action enjoined, set aside or rescinded after shareholder approval of the action under certain circumstances, see § 79-4-13.40.

Mississippi Control Share Act, see §§ 79-27-1 et seq.

RESEARCH REFERENCES

ALR.

Dominant shareholder’s accountability to minority for profit, bonus, or the like, received on sale of stock to outsiders. 38 A.L.R.3d 738.

Timeliness and sufficiency of dissenting stockholder’s notice of his objection to consolidation or merger and of his demand for payment for his shares. 40 A.L.R.3d 260.

Right of corporation to discharge employee who asserts rights as stockholder. 84 A.L.R.3d 1107.

Propriety of applying minority discount to value of shares purchased by corporation or its shareholders from minority shareholders. 13 A.L.R.5th 840.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 683, 684.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 411 et seq.

CJS.

18 C.J.S., Corporations §§ 612-627.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-161.

11. In general.

12. Determination of fair value.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-161.

11. In general.

The fair value of stock is a purely factual question, and it was within the province of the chancellor, as the trier of fact, to evaluate the evidence, resolve any conflict, and to ascertain the fair value of stock to be paid by a corporation to those shareholders who dissented to a merger. Cal-Maine Foods, Inc. v. Duvic, 264 So. 2d 383, 1972 Miss. LEXIS 1353 (Miss. 1972).

12. Determination of fair value.

Under circumstances of instant case, trial court did not err in finding fair value of dissenting stockholders’ shares of bank to be $100 per share, notwithstanding dissenting stockholders’ contention that court resorted to wrong methodology when it computed both market value and investment value of shares. Hernando Bank v. Huff, 796 F.2d 803, 1986 U.S. App. LEXIS 28054 (5th Cir. Miss. 1986).

Statutory prohibition against consideration of appreciation or depreciation in anticipation of corporate merger does not exclude consideration of purchase offers made for comparable corporations; in case of offer for comparable company, relevance of purchase offer is not diminished due to consummation of sale; minority discount is proper in determining fair value of stock of dissenters; in determining fair value of stock, court considers market value, asset value, and investment or earnings value; costs and expenses of proceeding which are assessed against corporation where dissenting shareholders were justified in not accepting offer do not include fees of counsel, although fees and expenses of experts may be allowed if court determines that fair value of shares as determined materially exceeds offer of corporation; interest on award accrues from date on which vote was taken on proposed corporate action, and court uses rate of return in effect for one-year certificate of deposit of that date. Hernando Bank v. Huff, 609 F. Supp. 1124, 1985 U.S. Dist. LEXIS 19880 (N.D. Miss. 1985), aff'd, 796 F.2d 803, 1986 U.S. App. LEXIS 28054 (5th Cir. Miss. 1986).

§79-4-13.03. Assertion of appraisal rights by nominees and beneficial owners.

A record shareholder may assert appraisal rights as to fewer than all the shares registered in the record shareholder’s name but owned by a beneficial shareholder only if the record shareholder objects with respect to all shares of the class or series owned by the beneficial shareholder and notifies the corporation in writing of the name and address of each beneficial shareholder on whose behalf appraisal rights are being asserted. The rights of a record shareholder who asserts appraisal rights for only part of the shares held of record in the record shareholder’s name under this subsection shall be determined as if the shares as to which the record shareholder objects and the record shareholder’s other shares were registered in the names of different record shareholders.

A beneficial shareholder may assert appraisal rights as to shares of any class or series held on behalf of the shareholder only if such shareholder:

1. Submits to the corporation the record shareholder’s written consent to the assertion of such rights no later than the date referred to in Section 79-4-13.22(b)(2)(ii); and
2. Does so with respect to all shares of the class or series that are beneficially owned by the beneficial shareholder.

HISTORY: Laws, 1987, ch. 486, § 13.03; Laws, 2000, ch. 469, § 30, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote the section.

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 683, 684.

Subarticle B. Procedure for Exercise of Appraisal Rights.

§79-4-13.20. Notice of appraisal rights.

Where any corporate action specified in Section 79-4-13.02(a) is to be submitted to a vote at a shareholders’ meeting, the meeting notice must state that the corporation has concluded that the shareholders are, are not or may be entitled to assert appraisal rights under this article. If the corporation concludes that appraisal rights are or may be available, a copy of this article must accompany the meeting notice sent to those record shareholders entitled to exercise appraisal rights.

In a merger pursuant to Section 79-4-11.05, the parent corporation must notify in writing all record shareholders of the subsidiary who are entitled to assert appraisal rights that the corporate action became effective. Such notice must be sent within ten (10) days after the corporate action became effective and include the materials described in Section 79-4-13.22.

Where any corporate action specified in Section 79-4-13.02(a) is to be approved by written consent of the shareholders pursuant to Section 79-4-7.04:

1. Written notice that appraisal rights are, are not or may be available must be sent to each record shareholder from whom a consent is solicited at the time consent of such shareholder is first solicited and, if the corporation has concluded that appraisal rights are or may be available, must be accompanied by a copy of this article; and
2. Written notice that appraisal rights are, are not or may be available must be delivered together with the notice to nonconsenting and nonvoting shareholders required by Section 79-4-7.04(e) and (f), may include the materials described in Section 79-4-13.22 and, if the corporation has concluded that appraisal rights are or may be available, must be accompanied by a copy of this article.

HISTORY: Laws, 1987, ch. 486, § 13.20; Laws, 2000, ch. 469, § 31; Laws, 2007, ch. 361, § 10; Laws, 2012, ch. 481, § 33, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2000 amendment rewrote the section.

The 2007 amendment substituted “Where any corporate action specified” for “If proposed corporate action described” in the first sentence in (a); added (c); and made a minor stylistic change.

The 2012 amendment, effective January 1, 2013, substituted “sent” for “given” preceding “to each record shareholder from whom a consent is solicited” in (c)(1).

Cross References —

Assessment of court costs and expenses in appraisal proceeding against corporation for failure to substantially comply with this section, see § 79-4-13.131.

§79-4-13.21. Notice of intent to demand payment and consequences of voting or consenting.

If a corporate action specified in Section 79-4-13.02(a) is submitted to a vote at a shareholders’ meeting, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares:

1. Must deliver to the corporation, before the vote is taken, written notice of the shareholder’s intent to demand payment if the proposed action is effectuated; and
2. Must not vote, or cause or permit to be voted, any shares of such class or series in favor of the proposed action.

If a corporate action specified in Section 79-4-13.02(a) is to be approved by less than unanimous written consent, a shareholder who wishes to assert appraisal rights with respect to any class or series of shares must not sign a consent in favor of the proposed action with respect to that class or series of shares.

A shareholder who fails to satisfy the requirements of subsection (a) or (b) is not entitled to payment under this article.

HISTORY: Laws, 1987, ch. 486, § 13.21; Laws, 2000, ch. 469, § 32; Laws, 2007, ch. 361, § 11; Laws, 2012, ch. 481, § 34, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2000 amendment redesignated former (a) as present (a), (a)(1) and (a)(2); substituted “requiring appraisal” for ‘creating dissenters” and “appraisal” for “dissenters,” and added “with respect to any class or series of shares” in (a); substituted “the shareholder’s” for “his” and deleted “for his shares” following “payment” in (a)(1); substituted “or cause or permit to be voted, any shares of such class or series” for “his shares” in (a)(2); and deleted “for his shares” following “payment” in (b).

The 2007 amendment in (a), substituted “a corporate” for “proposed corporate” and “specified in” for “requiring appraisal rights under”; added (b) and redesignated former (b) as present (c); in (c), substituted “fails to satisfy” for “does not satisfy,” and inserted “or (b)”; and made minor stylistic changes.

The 2012 amendment, effective January 1, 2013, substituted “sign” for “execute” preceding “a consent in favor of the proposed action” near the end of (b).

RESEARCH REFERENCES

ALR.

Dominant shareholder’s accountability to minority for profit, bonus, or the like, received on sale of stock to outsiders. 38 A.L.R.3d 738.

Timeliness and sufficiency of dissenting stockholder’s notice of his objection to consolidation or merger and of his demand for payment for his shares. 40 A.L.R.3d 260.

Valuation of stock of dissenting stockholders in case of consolidation or merger of corporation, sale of its assets, or the like. 48 A.L.R.3d 430.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 691-697.

§79-4-13.22. Appraisal notice and form.

If proposed corporate action requiring appraisal rights under Section 79-4-13.02(a) becomes effective, the corporation must send a written appraisal notice and the form required by subsection (b)(1) to all shareholders who satisfied the requirements of Section 79-4-13.21(a) or Section 79-4-13.21(b). In the case of a merger under Section 79-4-11.05, the parent must deliver an appraisal notice and form to all record shareholders who may be entitled to assert appraisal rights.

The appraisal notice must be delivered no earlier than the date the corporate action specified in Section 79-4-13.02(a) became effective and no later than ten (10) days after such date, and must:

1. Supply a form that (i) specifies the date of the first announcement to shareholders of the principal terms of the proposed corporate action, if any, and (ii) if such announcement was made, requires the shareholder asserting appraisal rights to certify whether beneficial ownership of those shares for which appraisal rights are asserted was acquired before that date and that, as to those shares, the shareholder did not vote for or consent to the transaction;
2. State:
3. Be accompanied by a copy of this article.

Where the form must be sent and where certificates for certificated shares must be deposited and the date by which those certificates must be deposited, which date may not be earlier than the date for receiving the required form under subsection (2)(ii);

A date by which the corporation must receive the form, which date may not be fewer than forty (40) nor more that sixty (60) days after the date the subsection (a) appraisal notice is sent, and state that the shareholder shall have waived the right to demand appraisal with respect to the shares unless the form is received by the corporation by such specified date;

The corporation’s estimate of the fair value of the shares;

That, if requested in writing, the corporation will provide, to the shareholder so requesting, within ten (10) days after the date specified in subsection (2) (ii) the number of shareholders who return the forms by the specified date and the total number of shares owned by them; and

The date by which the notice to withdraw under Section 79-4-13.23 must be received, which date must be within twenty (20) days after the date specified in subsection (2)(ii); and

HISTORY: Laws, 1987, ch. 486, § 13.22; Laws, 2000, ch. 469, § 33; Laws, 2007, ch. 361, § 12; Laws, 2012, ch. 481, § 35, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2000 amendment rewrote the section.

The 2007 amendment substituted “Section 79-4-13.21(a) or Section 79-4-13.21(b)” for “Section 79-4-13-21” at the end of the first sentence in (a); inserted “specified in Section 79-4-13.02(a)” in (b); and substituted “earlier than” for “earlier that” in (2)(i).

The 2012 amendment, effective January 1, 2013, substituted “send” for “deliver” preceding “a written appraisal” in the first sentence of (a); substituted “delivered” for “sent” in (b); and made minor stylistic changes throughout.

Cross References —

Assessment of court costs and expenses in appraisal proceeding against corporation for failure to substantially comply with this section, see § 79-4-13.131.

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 698-699.

§79-4-13.23. Perfection of rights; right to withdraw.

A shareholder who receives notice pursuant to Section 79-4-13.22 and who wishes to exercise appraisal rights must sign and return on the form sent by the corporation and, in the case of certificated shares, deposit the shareholder’s certificates in accordance with the terms of the notice by the date referred to in the notice pursuant to Section 79-4-13.22(b)(2)(ii).In addition, if applicable, the shareholder must certify on the form whether the beneficial owner of such shares acquired beneficial ownership of the shares before the date required to be set forth in the notice pursuant to Section 79-4-13.22(b)(1).If a shareholder fails to make this certification, the corporation may elect to treat the shareholder’s shares as after-acquired shares under Section 79-4-13.25. Once a shareholder deposits that shareholder’s certificates or, in the case of uncertificated shares, returns the signed forms, that shareholder loses all rights as a shareholder, unless the shareholder withdraws pursuant to subsection (b).

A shareholder who has complied with subsection (a) may nevertheless decline to exercise appraisal rights and withdraw from the appraisal process by so notifying the corporation in writing by the date set forth in the appraisal notice pursuant to Section 79-4-13.22(b)(2)(v). A shareholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the corporation’s written consent.

A shareholder who does not sign and return the form and, in the case of certificated shares, deposit that shareholder’s share certificates where required, each by the date set forth in the notice described in Section 79-4-13.22(b), shall not be entitled to payment under this article.

HISTORY: Laws, 1987, ch. 486, § 13.23; Laws, 2000, ch. 469, § 34; Laws, 2007, ch. 361, § 13, eff from and after July 1, 2007.

Amendment Notes —

The 2000 amendment rewrote the section.

The 2007 amendment rewrote (a); and substituted “sign” for “execute” in (c).

RESEARCH REFERENCES

ALR.

Dominant shareholder’s accountability to minority for profit, bonus, or the like, received on sale of stock to outsiders. 38 A.L.R.3d 738.

Timeliness and sufficiency of dissenting stockholder’s notice of his objection to consolidation or merger and of his demand for payment for his shares. 40 A.L.R.3d 260.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 691-697.

§79-4-13.24. Payment.

Except as provided in Section 79-4-13.25, within thirty (30) days after the form required by Section 79-4-13.22(b)(2)(ii) is due, the corporation shall pay in cash to those shareholders who complied with Section 79-4-13.23(a) the amount the corporation estimates to be the fair value of their shares, plus interest.

The payment to each shareholder pursuant to subsection (a) must be accompanied by:

1. Financial statements of the corporation that issued the shares to be appraised, consisting of a balance sheet as of the end of a fiscal year ending not more than sixteen (16) months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any;
2. A statement of the corporation’s estimate of the fair value of the shares, which estimate must equal or exceed the corporation’s estimate given pursuant to Section 79-4-13.22(b)(2)(iii); and
3. A statement that shareholders described in subsection (a) have the right to demand further payment under Section 79-4-13.26 and that if any such shareholder does not do so within the time period specified therein, such shareholder shall be deemed to have accepted such payment in full satisfaction of the corporation’s obligations under this chapter.

HISTORY: Former 1972 Code §79-4-13.24 [Laws, 1987, ch. 486, § 13.24] deleted by Laws, 2000, ch. 469, § 35. Former 1972 Code §79-4-13.25 [Laws, 1987, ch. 486, § 13.25] amended and renumbered as §79-4-13.24 by Laws, 2000, ch. 469, § 35, eff from and after July 1, 2000.

Editor’s Notes —

This section, formerly appearing as § 79-4-13.25, was amended and renumbered as present § 79-4-13.24 by Laws of 2000, ch. 469, § 35.

A former § 79-4-13.24 [Laws, 1987, ch. 486, § 13.24, eff from and after January 1, 1988], pertaining to share restrictions, was deleted by Laws of 2000, ch. 469, § 35, effective from and after July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

Cross References —

Procedure if shareholder dissatisfied with payment or after made pursuant to this section or § 79-4-13.25, see § 79-4-13.26.

Assessment of court costs and expenses in appraisal proceeding against corporation for failure to substantially comply with this section, see § 79-4-13.131.

RESEARCH REFERENCES

ALR.

Valuation of stock of dissenting stockholders in case of consolidation or merger of corporation, sale of its assets, or the like. 48 A.L.R.3d 430.

Construction and operation of statute restricting corporation’s right to purchase its own stock to purchase from surplus. 61 A.L.R.3d 1049.

Propriety of applying minority discount to value of shares purchased by corporation or its shareholders from minority shareholders. 13 A.L.R.5th 840.

Am. Jur.

18A Am. Jur. 2d, Corporations § 699.

§79-4-13.25. After-acquired shares.

A corporation may elect to withhold payment required by Section 79-4-13.24 from any shareholder who was required to, but did not certify that beneficial ownership of all of the shareholder’s shares for which appraisal rights are asserted was acquired before the date set forth in the appraisal notice sent pursuant to Section 79-4-13.22(b)(1).

If the corporation elected to withhold payment under subsection (a), it must, within thirty (30) days after the form required by Section 79-4-13.22(b)(2)(ii) is due, notify all shareholders who are described in subsection (a):

1. Of the information required by Section 79-4-13.24(b)(1);
2. Of the corporation’s estimate of fair value pursuant to Section 79-4-13.24(b)(2);
3. That they may accept the corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under Section 79-4-13.26;
4. That those shareholders who wish to accept such offer must so notify the corporation of their acceptance of the corporation’s offer within thirty (30) days after receiving the offer; and
5. That those shareholders who do not satisfy the requirements for demanding appraisal under Section 79-4-13.26 shall be deemed to have accepted the corporation’s offer.

Within ten (10) days after receiving the shareholder’s acceptance pursuant to subsection (b), the corporation must pay in cash the amount it offered under subsection (b)(2) to each shareholder who agreed to accept the corporation’s offer in full satisfaction of the shareholder’s demand.

Within forty (40) days after sending the notice described in subsection (b), the corporation must pay in cash the amount it offered to pay under subsection (b)(2) to each shareholder described in subsection (b)(5).

HISTORY: Former 1972 Code §79-4-13.25 [Laws, 1987, ch. 486, § 13.25] renumbered as §79-4-13.24 by Laws, 2000, ch. 469, § 35. Former 1972 Code §79-4-13.27 [Laws, 1987, ch. 486, § 13.27] amended and renumbered as §79-4-13.25 by Laws, 2000, ch. 469, § 36; Laws, 2007, ch. 361, § 14, eff from and after July 1, 2007.

Editor’s Notes —

This section, formerly appearing as § 79-4-13.27, was amended and renumbered as present § 79-4-13.25 by Laws of 2000, ch. 469, § 36. Former § 79-4-13.25 was amended and renumbered as present § 79-4-13.24 by Laws of 2000, ch. 469, § 35.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

The 2007 amendment inserted “was required to, but” following “any shareholder who” in (a).

Cross References —

Procedure if shareholder dissatisfied with payment or after made pursuant to this section or § 79-4-13.25, see § 79-4-13.26.

Court action to determine fair value of shares of shareholder’s after-acquired shares for which corporation elected to withhold payment under this section, see § 79-4-13.30.

Assessment of court costs and expenses in appraisal proceeding against corporation for failure to substantially comply with this section, see § 79-4-13.131.

§79-4-13.26. Procedure if shareholder dissatisfied with payment or offer.

A shareholder paid pursuant to Section 79-4-13.24 who is dissatisfied with the amount of the payment must notify the corporation in writing of that shareholder’s estimate of the fair value of the shares and demand payment of that estimate plus interest (less any payment under Section 79-4-13.24). A shareholder offered payment under Section 79-4-13.25 who is dissatisfied with that offer must reject the offer and demand payment of the shareholder’s stated estimate of the fair value of the shares plus interest.

A shareholder who fails to notify the corporation in writing of that shareholder’s demand to be paid the shareholder’s stated estimate of the fair value plus interest under subsection (a) within thirty (30) days after receiving the corporation’s payment or offer of payment under Section 79-4-13.24 or Section 79-4-13.25, respectively, waives the right to demand payment under this section and shall be entitled only to the payment made or offered pursuant to those respective sections.

HISTORY: Former 1972 Code §79-4-13.26 [Laws, 1987, ch. 486, § 13.26] deleted by Laws, 2000, ch. 469, § 37. Former 1972 Code §79-4-13.28 [Laws, 1987, ch. 486, § 13.28] amended and renumbered as §79-4-13.26 by Laws, 2000, ch. 469, § 37, eff from and after July 1, 2000.

Editor’s Notes —

This section, formerly appearing as § 79-4-13.28, was amended and renumbered as present § 79-4-13.26 by Laws of 2000, ch. 469, § 37.

A former § 79-4-13.26 [Laws, 1987, ch. 486, § 13.26, eff from and after January 1, 1988], pertaining to failure to take action, was deleted by Laws of 2000, ch. 469, § 37, effective July 1, 2000.

Amendment Notes —

The 2000 amendment rewrote and renumbered the section.

Cross References —

Commencement of court proceeding by corporation to determine fair value of shares and accrued interest if demand for payment under this section remains unsettled, see § 79-4-13.30.

Assessment of costs of appraisal proceeding against corporation, see § 79-4-13.31.

RESEARCH REFERENCES

ALR.

Dominant shareholder’s accountability to minority for profit, bonus, or the like, received on sale of stock to outsiders. 38 A.L.R.3d 738.

Timeliness and sufficiency of dissenting stockholder’s notice of his objection to consolidation or merger and of his demand for payment for his shares. 40 A.L.R.3d 260.

Propriety of applying minority discount to value of shares purchased by corporation or its shareholders from minority shareholders.

§79-4-13.27. Renumbered.

Renumbered as §79-4-13.25 by Laws, 2000, ch. 469, § 36.

Editor’s Notes —

Laws of 2000, ch. 469, § 36, renumbered and amended former § 79-4-13.27 as present § 79-4-13.25.

§79-4-13.28. Renumbered.

Renumbered as §79-4-13.26 by Laws, 2000, ch. 469, § 37.

Editor’s Notes —

Laws of 2000, ch. 469, § 37, renumbered and amended former § 79-4-13.28 as present § 79-4-13.26.

Subarticle C. Judicial Appraisal of Shares.

§79-4-13.30. Court action.

If a shareholder makes demand for payment under Section 79-4-13.26 which remains unsettled, the corporation shall commence a proceeding within sixty (60) days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the sixty-day period, it shall pay in cash to each shareholder the amount the shareholder demanded pursuant to Section 79-4-13.26 plus interest.

The corporation shall commence the proceeding in the appropriate court of the county where the corporation’s principal office is located, or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state. If the corporation is a foreign corporation, it shall commence the proceeding in the county in this state where the principal office of the domestic corporation merged with the foreign corporation was located or, if the domestic corporation did not have its principal office in this state at the time of the transaction, in Chancery Court of the First Judicial District of Hinds County, Mississippi.

The corporation shall make all shareholders (whether or not residents of this state) whose demands remain unsettled parties to the proceeding as in an action against their shares, and all parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.

The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the powers described in the order appointing them, or in any amendment to it. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There shall be no right to a jury trial.

Each shareholder made a party to the proceeding is entitled to judgment (i) for the amount, if any, by which the court finds the fair value of the shareholder’s shares, plus interest, exceeds the amount paid by the corporation to the shareholder for such shares or (ii) for the fair value, plus interest, of the shareholder’s shares for which the corporation elected to withhold payment under Section 79-4-13.25.

HISTORY: Laws, 1987, ch. 486, § 13.30; Laws, 2000, ch. 469, § 38; Laws, 2012, ch. 382, § 33, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2000 amendment rewrote the section.

The 2012 amendment, effective January 1, 2013, rewrote (b).

Cross References —

Procedure for shareholder assertion of appraisal rights, see § 79-4-13.21.

Appraisal notice and form, see § 79-4-13.22.

Assessment of all costs of appraisal proceeding commenced under this section against corporation, see § 79-4-13.31.

RESEARCH REFERENCES

ALR.

Construction and operation of statute restricting corporation’s right to purchase its own stock to purchase from surplus. 61 A.L.R.3d 1049.

Place where corporation is doing business for purposes of state venue statute. 42 A.L.R.5th 221.

Am. Jur.

18A Am. Jur. 2d, Corporations §§ 700 et seq.

§79-4-13.31. Court costs and expenses.

The court in an appraisal proceeding commenced under Section 79-4-13.30 shall determine all court costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court.The court shall assess the court costs against the corporation, except that the court may assess court costs against all or some of the shareholders demanding appraisal, in amounts which the court finds equitable, to the extent the court finds such shareholders acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by this article.

The court in an appraisal proceeding may also assess the expenses of the respective parties in amounts the court finds equitable:

1. Against the corporation and in favor of any or all shareholders demanding appraisal if the court finds the corporation did not substantially comply with the requirements of Section 79-4-13.20, 79-4-13.22, 79-4-13.24 or 79-4-13.25; or
2. Against either the corporation or a shareholder demanding appraisal, in favor of any other party, if the court finds that the party against whom the expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by this article.

If the court in an appraisal proceeding finds that the expenses incurred by any shareholder were of substantial benefit to other shareholders similarly situated, and that such expenses should not be assessed against the corporation, the court may direct that such expenses be paid out of the amounts awarded the shareholders who were benefited.

To the extent the corporation fails to make a required payment pursuant to Section 79-4-13.24, 79-4-13.25 or 79-4-13.26, the shareholder may sue directly for the amount owed and, to the extent successful, shall be entitled to recover from the corporation all expenses of the suit.

HISTORY: Laws, 1987, ch. 486, § 13.31; Laws, 2000, ch. 469, § 39; Laws, 2007, ch. 361, § 15, eff from and after July 1, 2007.

Amendment Notes —

The 2000 amendment, in (a), substituted “shareholders demanding appraisal” for “dissenters,” “such shareholders” for “the dissenters,” and “with respect to the rights provided by this article” for “in demanding payment under Section 79-4-13.28”; inserted “in an appraisal proceeding” in (b); substituted “shareholders demanding appraisal” for “dissenters” and “Sections 79-4-13.20, 79-4-13.22, 79-4-13.24 or 79-4-13.25” for “Sections 79-4-13.20 through 79-4-13.28” in (b)(1); substituted “shareholder demanding appraisal” for “dissenter” in (b)(2); rewrote (c); and added (d).

The 2007 amendment inserted “court” preceding “costs” throughout (a); substituted “assess the expenses of the respective parties” for “assess the fees and expenses of counsel and experts for the respective parties” in (b); deleted “fees and” proceeding “expenses” in (b)(2); in (c), substituted “expenses incurred by” for “services of counsel for,” “such expenses” for “the fees,” and “direct that such expenses” for “award to such counsel reasonable fees”; and substituted “all expenses of the suit” for “all costs and expenses of the suit, including counsel fees” at the end of (d).

RESEARCH REFERENCES

Am. Jur.

18A Am. Jur. 2d, Corporations § 705.

Subarticle D. Other Remedies.

§79-4-13.40. Other remedies limited.

The legality of a proposed or completed corporate action described in Section 79-4-13.02(a) may not be contested, nor may the corporate action be enjoined, set aside or rescinded, in a legal or equitable proceeding by a shareholder after the shareholders have approved the corporate action.

Subsection (a) does not apply to a corporate action that:

1. Was not authorized and approved in accordance with the applicable provisions of:
2. Was procured as a result of fraud, a material misrepresentation, or an omission of a material fact necessary to make statements made, in light of the circumstances in which they were made, not misleading;
3. Is an interested transaction, unless it has been recommended by the board of directors in the same manner as is provided in Section 79-4-8.62 and has been approved by the shareholders in the same manner as is provided in Section 79-4-8.63 as if the interested transaction were a director’s conflicting interest transaction; or
4. Is approved by less than unanimous consent of the voting shareholders pursuant to Section 79-4-7.04 if:

Article 9, 10, 11 or 12,

The articles of incorporation or bylaws, or

The resolution of the board of directors authorizing the corporate action;

The challenge to the corporate action is brought by a shareholder who did not consent and as to whom notice of the approval of the corporate action was not effective at least ten (10) days before the corporate action was effected; and

The proceeding challenging the corporate action is commenced within ten (10) days after notice of the approval of the corporation action is effective as to the shareholder bringing the proceeding.

HISTORY: Laws, 2007, ch. 361, § 16, eff from and after July 1, 2007.

Article 14. Dissolution.

Subarticle A. Voluntary Dissolution.

§79-4-14.01. Dissolution by incorporators or initial directors.

A majority of the incorporators or initial directors of a corporation that has not issued shares or has not commenced business may dissolve the corporation by delivering to the Secretary of State for filing articles of dissolution that set forth:

1. The name of the corporation;
2. The date of its incorporation;
3. Either (i) that none of the corporation’s shares has been issued, or (ii) that the corporation has not commenced business;
4. That no debt of the corporation remains unpaid;
5. That the net assets of the corporation remaining after winding up have been distributed to the shareholders, if shares were issued; and
6. That a majority of the incorporators or initial directors authorized the dissolution.

HISTORY: Laws, 1987, ch. 486, § 14.01 eff from and after January 1, 1988.

Cross References —

Disposition of assets in the cause of dissolution under this article not governed by § 79-4-12.02, disposition of assets requiring shareholder approval, see § 79-4-12.02.

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

RESEARCH REFERENCES

ALR.

Dissolving or winding up affairs of corporation domiciled in another state. 19 A.L.R.3d 1279.

What amounts to “oppressive” conduct under statute authorizing dissolution of corporation at suit of minority stockholders. 56 A.L.R.3d 358.

Dissolution of corporation on ground of intracorporate deadlock or dissension. 83 A.L.R.3d 458.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2348 et seq.

CJS.

19 C.J.S., Corporations §§ 1684 et seq.

Law Reviews.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

§79-4-14.02. Dissolution by board of directors and shareholders.

A corporation’s board of directors may propose dissolution for submission to the shareholders.

For a proposal to dissolve to be adopted:

1. The board of directors must recommend dissolution to the shareholders unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the shareholders; and
2. The shareholders entitled to vote must approve the proposal to dissolve as provided in subsection (e).

The board of directors may condition its submission of the proposal for dissolution on any basis.

The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders’ meeting. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.

Unless the articles of incorporation or the board of directors acting pursuant to subsection (c) require a greater vote, a greater number of shares to be present, or a vote by voting groups, adoption of the proposal to dissolve shall require the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast exists.

HISTORY: Laws, 1987, ch. 486, § 14.02; Laws, 2000, ch. 469, § 25, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment deleted “in accordance with Section 79-4-7.05” following “shareholders’ meeting” in (d); and rewrote (e).

Cross References —

Filing of notice to adopt articles of dissolution pursuant to this section as affecting elective buyout of shareholder petitioning to dissolve corporation shares of which are not listed or regularly traded, see § 79-4-14.34.

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2360 et seq.

CJS.

19 C.J.S., Corporations §§ 1684 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former §79-3-165.

12. Under former §79-3-167.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former § 79-3-165.

Although it is the general rule that there is no legal dissolution or surrender of the charter of a nonstock corporation until so decreed pursuant to this section [Code 1942, § 5352], a court of equity may in a proper case treat the corporation as dissolved, even though in a legal sense no dissolution has occurred, and a dissolution may be implied as by consent of all the members when the meetings are voluntarily discontinued and activity of members of such comes to an end. Woodville Lodge, Grand United Order of Odd Fellows v. Poole, 190 Miss. 798, 1 So. 2d 780, 1941 Miss. LEXIS 98 (Miss. 1941).

An agreement between the existing members of a local lodge of a fraternal society to abandon the lodge as such and to discontinue its corporate functions, to divide up the personal property, together with an arrangement to rent the property and share in the rent thereof, was effective to determine the status of the parties thereto as tenants in common as would have been their status after formal surrender, notwithstanding there was no legal dissolution. Woodville Lodge, Grand United Order of Odd Fellows v. Poole, 190 Miss. 798, 1 So. 2d 780, 1941 Miss. LEXIS 98 (Miss. 1941).

Under the law and pursuant to the notice to creditors if any there were, one would be entitled, if in fact he was a creditor, to appear and establish his claim and have the same fixed as a charge against the assets of the corporation in the hands of such persons to whom the same would pass upon a dissolution thereof. Ex parte Woodville Lodge, Grand United Order of Odd Fellows, 186 Miss. 490, 191 So. 89, 1939 Miss. LEXIS 227 (Miss. 1939).

A demurrer by an alleged creditor confessed the allegation of fact in a petition to dissolve a corporation to the effect that there were no debts owing by the corporation and that hence there were no creditors. Ex parte Woodville Lodge, Grand United Order of Odd Fellows, 186 Miss. 490, 191 So. 89, 1939 Miss. LEXIS 227 (Miss. 1939).

One alleging to be a creditor of a corporation seeking dissolution was not entitled to bring into issue by demurrer the allegation of the petition for dissolution that there were no debts, nor could such one challenge the legal sufficiency of the petition as to whether certain persons were alone entitled to share in the corporate assets as the sole remaining stockholders without first obtaining leave of the court, upon a proper showing, to intervene as a party, or to appear as amicus curiae. Ex parte Woodville Lodge, Grand United Order of Odd Fellows, 186 Miss. 490, 191 So. 89, 1939 Miss. LEXIS 227 (Miss. 1939).

12. Under former § 79-3-167.

An agreement for the merger of corporations was not invalid merely because it did not contain any reference to preference to preferred shareholders of the corporation being acquired, since, assuming that all preferred shareholders were opposed to dissolution, it could be fairly implied by the terms of the agreement that they would be paid their interest in cash as dissenting shareholders, as required by Mississippi law. Mid-Continent Tel. Corp. v. Home Tel. Co., 319 F. Supp. 1176, 1970 U.S. Dist. LEXIS 10081 (N.D. Miss. 1970).

§79-4-14.03. Articles of dissolution.

At any time after dissolution is authorized, the corporation may dissolve by delivering to the Secretary of State for filing articles of dissolution setting forth:

1. The name of the corporation;
2. The date dissolution was authorized; and
3. If dissolution was approved by the shareholders, a statement that the proposal to dissolve was duly approved by the shareholders in the manner required by the Mississippi Business Corporation Act and by the articles of incorporation.

A corporation is dissolved upon the effective date of its articles of dissolution.

For purposes of this subarticle, “dissolved corporation” means a corporation whose articles of dissolution have become effective and includes a successor entity to which the remaining assets of the corporation are transferred subject to its liabilities for purposes of liquidation.

HISTORY: Laws, 1987, ch. 486, § 14.03; Laws, 2000, ch. 469, § 26; Laws, 2001, ch. 435, § 15, eff from and after July 1, 2001.

Amendment Notes —

The 2000 amendment rewrote (a)(3); and deleted former (a)(4).

The 2001 amendment added (c).

Cross References —

Requirement that articles of revocation of dissolution set forth the information required by this section, see § 79-4-14.04.

Filing of notice to adopt articles of dissolution pursuant to this section as affecting elective buyout of shareholder petitioning to dissolve corporation whose shares are not listed or regularly traded, see § 79-4-14.34.

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

§79-4-14.04. Revocation of dissolution.

A corporation may revoke its dissolution within one hundred twenty (120) days of its effective date.

Revocation of dissolution must be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation by action of the board of directors alone, in which event the board of directors may revoke the dissolution without shareholder action.

After the revocation of dissolution is authorized, the corporation may revoke the dissolution by delivering to the Secretary of State for filing articles of revocation of dissolution, together with a copy of its articles of dissolution, that set forth:

1. The name of the corporation;
2. The effective date of the dissolution that was revoked;
3. The date that the revocation of dissolution was authorized;
4. If the corporation’s board of directors (or incorporators) revoked the dissolution, a statement to that effect;
5. If the corporation’s board of directors revoked a dissolution authorized by the shareholders, a statement that revocation was permitted by action by the board of directors alone pursuant to that authorization; and
6. If shareholder action was required to revoke the dissolution, the information required by Section 79-4-14.03(a)(3).

Unless a delayed effective date is specified, revocation of dissolution is effective upon the effective date of the articles of revocation of dissolution are filed.

When the revocation of dissolution is effective, it relates back to and takes effect as of the effective date of the dissolution and the corporation resumes carrying on its business as if dissolution had never occurred.

HISTORY: Laws, 1987, ch. 486, § 14.04; Laws, 2000, ch. 469, § 27, eff from and after July 1, 2000.

Amendment Notes —

The 2000 amendment inserted “of” following “revocation by action” in (b); deleted “or (4)” following “Section 79-4-14.03(a)(3)” in (c)(6); and substituted “upon the effective date of the” for “when” in (d).

Cross References —

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

§79-4-14.05. Effect of dissolution.

A dissolved corporation continues its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs, including:

1. Collecting its assets;
2. Disposing of its properties that will not be distributed in kind to its shareholders;
3. Discharging or making provision for discharging its liabilities;
4. Distributing its remaining property among its shareholders according to their interests; and
5. Doing every other act necessary to wind up and liquidate its business and affairs.
6. Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
7. Terminate the authority of the registered agent of the corporation.

Dissolution of a corporation does not:

Transfer title to the corporation’s property;

Prevent transfer of its shares of securities, although the authorization to dissolve may provide for closing the corporation’s share transfer records;

Subject its directors and officers to standards of conduct different from those prescribed in Article 8;

Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation or removal of its directors or officers or both; or change provisions for amending its bylaws;

Prevent commencement of a proceeding by or against the corporation in its corporate name;

HISTORY: Laws, 1987, ch. 486, § 14.05, eff from and after January 1, 1988.

Cross References —

Applicability of § 79-4-14.05 to corporation which has been administratively dissolved by Secretary of State, see § 79-4-14.21.

Application of § 79-4-14.05 to winding up and liquidation of corporation’s business and affairs after judicial dissolution, see § 79-4-14.33.

Effect of dissolution, according to provisions of § 79-4-14.05, on order directing buyout of shareholder petitioning to dissolve corporation whose shares are not listed or regularly traded, see § 79-4-14.34.

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

RESEARCH REFERENCES

ALR.

Liability of shareholders, directors, and officers where corporate business is continued after its dissolution. 72 A.L.R.4th 419.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2348-2351, 2474 et seq.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 451 et seq.

CJS.

19 C.J.S., Corporations §§ 1727-1741.

JUDICIAL DECISIONS

1. In general.

2. Capacity to bring action.

1. In general.

Administratively dissolved corporation is not precluded from liquidation under chapter 11 bankruptcy, even if the corporation is not eligible for reinstatement, since Miss. Code. Ann. § 79-4-14.05(a)(5) provides the dissolved corporation broad discretion to wind up and liquidate its business affairs. In re Superior Boat Works, Inc., 438 B.R. 878, 2010 Bankr. LEXIS 2733 (Bankr. N.D. Miss. 2010).

While a corporation had been administratively dissolved and such dissolution occurred prior to a wrongful death action being filed against the corporation, it was still amenable to suit under the authority of Miss. Code Ann. § 79-4-14.05(b)(5). Schustz v. Buccaneer, Inc., 850 So. 2d 209, 2003 Miss. App. LEXIS 637 (Miss. Ct. App. 2003).

A corporate obligor and those who control it may not with impunity dissolve the corporation in a debt avoidance maneuver and cause its assets to be transferred to a new successor corporation. This is so whether the debt arises in contract, quasi-contract, or tort. Where a corporation unsuccessfully sought to avoid liability on a contract with a former shareholder by dissolving the corporation and transferring assets to a newly formed corporation, the shareholder’s rights against the new corporation were limited to the extent that the new corporation acquired assets of the contracting corporation without paying fair value therefor. Morris v. Macione, 546 So. 2d 969, 1989 Miss. LEXIS 319 (Miss. 1989).

2. Capacity to bring action.

When plaintiffs corporation and principal sued defendant supplier, the corporation was properly dismissed because it was administratively dissolved under Miss. Code Ann. § 79-4-14.21(b) (2013), so, under Miss. Code Ann. § 79-4-14.22(a)(4) (2013), it could not maintain its claim, it did not seek voluntary or judicial dissolution, so it could not maintain its suit to wind up its business, and it was not defending a suit. Wayne Johnson Elec. Inc. v. Robinson Elec. Supply Co., 266 So.3d 643, 2019 Miss. LEXIS 122 (Miss. 2019).

§79-4-14.06. Known claims against dissolved corporation.

A dissolved corporation may dispose of the known claims against it by notifying its known claimants in writing of the dissolution at any time after its effective date.

The written notice must:

1. Describe information that must be included in a claim;
2. Provide a mailing address where a claim may be sent;
3. State the deadline, which may not be fewer than one hundred twenty (120) days from the effective date of the written notice, by which the dissolved corporation must receive the claim; and
4. State that the claim will be barred if not received by the deadline.

A claim against the dissolved corporation is barred:

If a claimant who was given written notice under subsection (b) does not deliver the claim to the dissolved corporation by the deadline; or

If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety (90) days from the effective date of the rejection notice.

For purposes of this section, “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.

HISTORY: Laws, 1987, ch. 486, § 14.06; Laws, 2001, ch. 435, § 16, eff from and after July 1, 2001.

Amendment Notes —

The 2001 amendment rewrote (a) and (b); and inserted “or” at the end of (c)(1).

Cross References —

Effective date of dissolution, see § 79-4-14.03.

Barring of claim of claimant, who did not receive written notice under this section, when corporation publishes notice of its dissolution in newspaper, see § 79-4-14.07.

Applicability of § 79-4-14.06 to corporation which has been administratively dissolved by Secretary of State, see § 79-4-14.21.

Application of § 79-4-14.06 to winding up and liquidation of corporation’s business and affairs after judicial dissolution see § 79-4-14.33.

Effect of dissolution, according to provisions of § 79-4-14.06, on order directing buyout of shareholder petitioning to dissolve corporation whose shares are not listed or regularly traded, see § 79-4-14.34.

Deposit of assets of dissolved corporation with State Treasurer for safe keeping until creditor, claimant or shareholder furnishes proof of entitlement to such assets, see § 79-4-14.40.

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

RESEARCH REFERENCES

ALR.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Liability of shareholders, directors, and officers where corporate business is continued after its dissolution. 72 A.L.R.4th 419.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2419, 2420, 2450-2458.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 482, 494, 495.

CJS.

19 C.J.S., Corporations §§ 1763-1766, 1772, 1780.

JUDICIAL DECISIONS

I. Under Current Law.

1. In general.

2.-10. [Reserved for future use.]

II. Under Former §79-3-209.

11. In general.

I. Under Current Law.

1. In general.

A corporate obligor and those who control it may not with impunity dissolve the corporation in a debt avoidance maneuver and cause its assets to be transferred to a new successor corporation. This is so whether the debt arises in contract, quasi-contract, or tort. Where a corporation unsuccessfully sought to avoid liability on a contract with a former shareholder by dissolving the corporation and transferring assets to a newly formed corporation, the shareholder’s rights against the new corporation were limited to the extent that the new corporation acquired assets of the contracting corporation without paying fair value therefor. Morris v. Macione, 546 So. 2d 969, 1989 Miss. LEXIS 319 (Miss. 1989).

2.-10. [Reserved for future use.]

II. Under Former § 79-3-209.

11. In general.

A products liability action against a dissolved corporation could be maintained where the liability of the defendant was incurred at the time the machine at issue was manufactured and placed on the market. Naugher v. Fox River Tractor Co., 446 F. Supp. 1281, 1977 U.S. Dist. LEXIS 12435 (N.D. Miss. 1977).

Judgment rendered against road contractor and his foreign corporate surety held not void because when rendered surety had been dissolved and was in hands of receiver. Rawlings v. American Oil Co., 173 Miss. 683, 161 So. 851, 1935 Miss. LEXIS 236 (Miss. 1935).

This section [Code 1942, § 5353] applies to foreign corporations doing business in state, as well as to domestic corporations. Rawlings v. American Oil Co., 173 Miss. 683, 161 So. 851, 1935 Miss. LEXIS 236 (Miss. 1935).

Foreign corporation dissolved in domicile of its origin may be deemed alive in foreign state, so far as to afford remedies to its own citizens against property within its jurisdiction. Rawlings v. American Oil Co., 173 Miss. 683, 161 So. 851, 1935 Miss. LEXIS 236 (Miss. 1935).

Persons asserting claims against corporation after final decree for corporation’s liquidation was entered and liquidator discharged were not required to obtain permission of chancery court to sue corporation, and suit against liquidator was no longer proper. Bates v. Mississippi Industrial Gas Co., 173 Miss. 361, 161 So. 133, 1935 Miss. LEXIS 208 (Miss. 1935).

Claimant who failed to assert tort claim against corporation pursuant to notice given creditors of corporation’s dissolution could, after dissolution distribution to stockholders of assets, and discharge of liquidator, sue corporation for adjudication of merits of claim, preliminary to taking steps against stockholders as distributees of corporation’s assets. Bates v. Mississippi Industrial Gas Co., 173 Miss. 361, 161 So. 133, 1935 Miss. LEXIS 208 (Miss. 1935).

Failure of creditor of corporation receiving notice of dissolution thereof to file claim does not result in canceling or barring claim. Bates v. Mississippi Industrial Gas Co., 173 Miss. 361, 161 So. 133, 1935 Miss. LEXIS 208 (Miss. 1935).

Corporation’s existence as debtor is continued after dissolution only for purposes of suit against it for adjudication of debt or demand upon its merits, and creditor, upon obtaining judgment against corporation, may pursue stockholders to whom corporation’s assets have been distributed. Bates v. Mississippi Industrial Gas Co., 173 Miss. 361, 161 So. 133, 1935 Miss. LEXIS 208 (Miss. 1935).

Express reservation by statute of rights of creditors of corporation after dissolution carries with it necessarily reasonable means for enforcement of rights so preserved. Bates v. Mississippi Industrial Gas Co., 173 Miss. 361, 161 So. 133, 1935 Miss. LEXIS 208 (Miss. 1935).

Statute making “debts” due from corporation a charge upon its property after dissolution includes tort demands. Bates v. Mississippi Industrial Gas Co., 173 Miss. 361, 161 So. 133, 1935 Miss. LEXIS 208 (Miss. 1935).

§79-4-14.07. Unknown claims against dissolved corporation.

A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the dissolved corporation present them in accordance with the notice.

The notice must:

1. Be published one (1) time in a newspaper of general circulation in the county where the dissolved corporation’s principal office is or was located, or in Hinds County if the corporation does not have a principal office in this state;
2. Describe the information that must be included in a claim and provide a mailing address where the claim may be sent; and
3. State that a claim against the dissolved corporation will be barred unless a proceeding to enforce the claim is commenced within three (3) years after the publication of the notice.

If the dissolved corporation publishes a newspaper notice in accordance with subsection (b), the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within the lesser of three (3) years after the publication date of the newspaper notice, or any other applicable limitations period established by applicable law:

A claimant who was not given written notice under Section 79-4-14.06;

A claimant whose claim was timely sent to the dissolved corporation but not acted on;

A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.

A claim that is not barred by Section 79-4-14.06(c) or subsection (c) of this section may be enforced:

Against the dissolved corporation, to the extent of its undistributed assets; or

Except as provided in Section 79-4-14.08(d), if the assets have been distributed in liquidation, against a shareholder of the dissolved corporation to the extent of the shareholder’s pro rata share of the claim or the corporate assets distributed to the shareholder in liquidation, whichever is less, but a shareholder’s total liability for all claims under this section may not exceed the total amount of assets distributed to the shareholder.

HISTORY: Laws, 1987, ch. 486, § 14.07; Laws, 1990, ch. 538, § 6; Laws, 2001, ch. 435, § 17; Laws, 2004, ch. 495, § 11; Laws, 2012, ch. 382, § 34, eff from and after Jan. 1, 2013.

Joint Legislative Committee Note —

Pursuant to Section 1-1-109, the Joint Legislative Committee on Compilation, Revision and Publication of Legislation corrected an error in a statutory reference in (d) by substituting “subsection (c) of this section” for “Section 79-4-14.07(c).” The Joint Committee ratified the correction at its August 1, 2013, meeting.

Amendment Notes —

The 2001 amendment, in (a), inserted “dissolved” preceding “corporation”; in (b)(3), inserted “dissolved” preceding “corporation,” and substituted “three (3) years” for “five (5) years”; in (c), substituted “three (3) years” for “five (5) years”; in (c)(1), substituted “was not given” for “did not receive”; rewrote (d); in (d)(2), inserted “Except as provided in Section 79-4-14.08(d),” and substituted “the shareholder’s” for “his” preceding “pro rata,” “the shareholder” for “him” preceding “in liquidation” and “the shareholder” for “him” following “distributed to.”

The 2004 amendment rewrote (d).

The 2012 amendment, effective January 1, 2013, rewrote (b)(1).

Cross References —

Applicability of § 79-4-14.07 to corporation that has been administratively dissolved by Secretary of State, see § 79-4-14.21.

Application of § 79-4-14.07 to winding up and liquidation of corporation’s business and affairs after judicial dissolution, see § 79-4-14.33.

Effect of dissolution, according to provisions of § 79-4-14.07, on order directing buyout of shareholder petitioning to dissolve corporation whose shares are not listed or regularly traded, see § 79-4-14.34.

Deposit of assets of dissolved corporation with State Treasurer for safe keeping until creditor, claimant or shareholder furnishes proof of entitlement to such assets, see § 79-4-14.40.

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

RESEARCH REFERENCES

ALR.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Liability of shareholders, directors, and officers where corporate business is continued after its dissolution. 72 A.L.R.4th 419.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2421, 2489-2497.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 491 et seq.

CJS.

19 C.J.S., Corporations §§ 1763, 1766, 1772-1780.

§79-4-14.08. Dissolved corporations — chancery court proceedings for security payment of claims; notice; guardian ad litem; satisfaction of claim.

A dissolved corporation that has published a notice under Section 79-4-14.07 may file an application with the chancery court of the county where the dissolved corporation’s principal office is located, or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state, for a determination of the amount and form of security to be provided for payment of claims that are contingent or have not been made known to the dissolved corporation or that are based on an event occurring after the effective date of dissolution but that, based on the facts known to the dissolved corporation, are reasonably estimated to arise after the effective date of dissolution. Provision need not be made for any claim that is or is reasonably anticipated to be barred under Section 79-4-14.07(c).

Within ten (10) days after the filing of the application, notice of the proceeding shall be given by the dissolved corporation to each claimant holding a contingent claim whose contingent claim is shown on the records of the dissolved corporation.

The court may appoint a guardian ad litem to represent all claimants whose identities are unknown in any proceeding brought under this section. The reasonable fees and expenses of such guardian, including all reasonable expert witness fees, shall be paid by the dissolved corporation.

Provision by the dissolved corporation for security in the amount and the form ordered by the court under subsection (a) of this section shall satisfy the dissolved corporation’s obligations with respect to claims that are contingent, have not been made known to the dissolved corporation or are based on an event occurring after the effective date of dissolution, and such claims may not be enforced against a shareholder who received assets in liquidation.

HISTORY: Laws, 2001, ch. 435, § 18; Laws, 2012, ch. 382, § 35, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, in (a), deleted “(or, if none in this state, its registered office)” preceding “is located” and added “or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state” thereafter.

Cross References —

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

§79-4-14.09. Payment of claims and distribution of assets of dissolved corporations; liability.

Directors shall cause the dissolved corporation to discharge or make reasonable provision for the payment of claims and make distributions of assets to shareholders after payment or provision for claims.

Directors of a dissolved corporation which has disposed of claims under Section 79-4-14.06, 79-4-14.07 or 79-4-14.08 shall not be liable for breach of subsection (a) of this section with respect to claims against the dissolved corporation that are barred or satisfied under Section 79-4-14.06, 79-4-14.07 or 79-4-14.08.

HISTORY: Laws, 2001, ch. 435, § 19, eff from and after July 1, 2001.

Joint Legislative Committee Note —

Pursuant to Section 1-1-109, the Joint Legislative Committee on Compilation, Revision and Publication of Legislation corrected an error in a statutory reference in (b) by substituting “subsection (a) of this section” for “Section 79-4-14.09(a).” The Joint Committee ratified the correction at its August 1, 2013, meeting.

Cross References —

Liability for unlawful distribution, see § 79-4-8.33.

Voluntary dissolution of corporation under Mississippi Nonprofit Corporation Act, see §§ 79-11-333 through 79-11-345.

Subarticle B. Administrative Dissolution.

§79-4-14.20. Grounds for administrative dissolution.

The Secretary of State may commence a proceeding under Section 79-4-14.21 to administratively dissolve a corporation if:

1. The corporation does not pay within sixty (60) days after they are due any franchise taxes or penalties imposed by Sections 79-4-1.01 et seq. or other law;
2. The corporation does not deliver its annual report to the Secretary of State within sixty (60) days after it is due;
3. The corporation is without a registered agent in this state for sixty (60) days or more;
4. The corporation does not notify the Secretary of State within sixty (60) days that its registered agent has been changed, or that its registered agent has resigned;
5. The corporation’s period of duration stated in its articles of incorporation expires; or
6. An incorporator, director, officer or agent of the corporation signed a document he knew was false in any material respect with intent that the document be delivered to the Secretary of State for filing.

HISTORY: Laws, 1987, ch. 486, § 14.20; Laws, 2012, ch. 382, § 36, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, deleted “or registered office” following “registered agent” in (3) and (4) deleted “or that its registered office has been discontinued” at the end of (4); added (6); and made minor stylistic changes.

Cross References —

Procedures for, and effect of, administrative dissolution, see § 79-4-14.21.

Administrative dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-347 through 79-11-353.

RESEARCH REFERENCES

ALR.

What amounts to “oppressive” conduct under statute authorizing dissolution of corporation at suit of minority stockholders. 56 A.L.R.3d 358.

Dissolution of corporation on ground of intracorporate deadlock or dissension. 83 A.L.R.3d 458.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2391 et seq.

CJS.

19 C.J.S., Corporations §§ 1647 et seq.

Law Reviews.

1984 Mississippi Supreme Court Review: Corporate, Contract and Commercial Law. 55 Miss. L. J. 65, March, 1985.

JUDICIAL DECISIONS

I. Under Current Law.

1. President’s liability.

2.-10. [Reserved for future use.]

II. Under Former §79-3-189.

11. In general.

I. Under Current Law.

1. President’s liability.

Liability for corporate debt was limited to those officers and directors who were actively involved in the control and management of the corporation, and the president’s testimony at trial made it clear he was involved in the control and management of the corporation; however, where there was no proof of any assignment to the president by the corporation of any chose in action as contemplated under Miss. Code § 11-7-7, the president had no standing to pursue the action on behalf of the corporation. Consequently, although the president, individually, could have been held liable for the corporate torts committed by the corporation, he had no authority to sue on a contract that belonged to the corporation; accordingly, all claims brought by the corporation and the president were dismissed. 4 H Constr. Corp. v. Superior Boat Works, Inc., 659 F. Supp. 2d 774, 2009 U.S. Dist. LEXIS 83183 (N.D. Miss. 2009), aff'd, 579 Fed. Appx. 278, 2014 U.S. App. LEXIS 16558 (5th Cir. Miss. 2014).

2.-10. [Reserved for future use.]

II. Under Former § 79-3-189.

11. In general.

The owner and operator of an incorporated sole proprietorship was personally liable, under former § 79-3-285, for corporate debts to a creditor who dealt with the corporation as a sole proprietorship which were incurred while the corporation was suspended from doing business, pursuant to former § 79-3-189, for failing to file an annual report. Carolina Transformer Co. v. Anderson, 341 So. 2d 1327, 1977 Miss. LEXIS 2303 (Miss. 1977).

§79-4-14.21. Procedure for and effect of administrative dissolution.

If the Secretary of State determines that one or more grounds exist under Section 79-4-14.20 for dissolving a corporation, he shall serve the corporation with written notice of his determination, except that such determination may be served by first-class mail.

If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the Secretary of State that each ground determined by the Secretary of State does not exist within sixty (60) days after service of the notice is perfected, the Secretary of State shall administratively dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. The Secretary of State shall file the original of the certificate and serve a copy on the corporation, except that such certificate may be served by first-class mail.

A corporation that has been administratively dissolved continues its corporate existence but may not carry on any business except as necessary to wind up and liquidate its business and affairs under Section 79-4-14.05 and notify claimants under Sections 79-4-14.06 and 79-4-14.07.

The administrative dissolution of a corporation does not terminate the authority of its registered agent.

The administrative dissolution of a corporation shall not impair the validity of any contract, deed, mortgage, security interest, lien, or act of the corporation or prevent the corporation from defending any action, suit or proceeding in any court of this state.

A corporation that has been administratively dissolved may not maintain any action, suit or proceeding in any court of this state until the corporation is reinstated.

HISTORY: Laws, 1987, ch. 486, § 14.21; Laws, 1991, ch. 509, § 2; Laws, 2012, ch. 382, § 37; Laws, 2012, ch. 481, § 36; Laws, 2017, ch. 369, § 2, eff from and after July 1, 2017.

Joint Legislative Committee Note —

Section 36 of Chapter 481 Laws of 2012, effective January 1, 2013 (approved April 24, 2012), amended this section. Section 37 of Chapter 382, Laws of 2012, effective January 1, 2013 (approved April 17, 2012), also amended this section. As set out above, this section reflects the language of Section 36 of Chapter 481, Laws of 2012, which contains language that specifically provides that it supersedes § 79-4-14.22 as amended by Laws of 2012, ch. 382.

Amendment Notes —

The first 2012 amendment (ch. 382), deleted “under Section 79-4-5.04” preceding “except that such determination” in (a); in (b), deleted “under Section 79-4-5.04” following “notice is perfected” in the first sentence, and deleted “under Section 79-4-5.04” preceding “except that such certificate may be served” in the last sentence.

The second 2012 amendment (ch. 481), effective January 1, 2013, deleted “under Section 79-4-5.04” following “written notice of his determination” in (a); in (b), deleted “under Section 79-4-5.04” following “notice is perfected” in the first sentence, and preceding “except that such certificate” in the last sentence; rewrote (c); and added (e) and (f).

The 2017 amendment added (c), which had previously been set out as reserved.

Cross References —

Authority for Secretary of State to commence proceeding under § 79-4-14.21 to administratively dissolve corporation, and grounds therefor, see § 79-4-14.20.

Rights of corporation administratively dissolved under § 79-4-14.21 to apply for reinstatement, and procedures therefor, see § 79-4-14.22.

Administrative dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-347 through 79-11-353.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2391 et seq.

CJS.

19 C.J.S., Corporations §§ 1647 et seq.

JUDICIAL DECISIONS

1. Standing to enter into contracts.

2. Standing to bring action.

1. Standing to enter into contracts.

Pursuant to Miss. Code Ann. § 79-4-14.21(c) the corporate existence of the corporation continued, but it was not authorized to carry on any business except that necessary to wind up and liquidate its business and affairs. Because the corporation failed to comply with the process under § 79-4-14.22(a) to reinstate the corporation, the court found that during the period relevant to the present litigation, the corporation was not a viable entity and thus did not have standing to enter into the contracts at issue; therefore, it followed that the corporation’s claims for breach of contract, misrepresentation, and quantum meruit were moot and had to be dismissed. 4 H Constr. Corp. v. Superior Boat Works, Inc., 659 F. Supp. 2d 774, 2009 U.S. Dist. LEXIS 83183 (N.D. Miss. 2009), aff'd, 579 Fed. Appx. 278, 2014 U.S. App. LEXIS 16558 (5th Cir. Miss. 2014).

2. Standing to bring action.

When plaintiffs corporation and principal sued defendant supplier, the corporation was properly dismissed because it was administratively dissolved under Miss. Code Ann. § 79-4-14.21(b) (2013), so, under Miss. Code Ann. § 79-4-14.22(a)(4) (2013), it could not maintain its claim, it did not seek voluntary or judicial dissolution, so it could not maintain its suit to wind up its business, and it was not defending a suit. Wayne Johnson Elec. Inc. v. Robinson Elec. Supply Co., 266 So.3d 643, 2019 Miss. LEXIS 122 (Miss. 2019).

Dissolved corporation could not bring an action against a school district because it had administratively dissolved, pursuant this section; the action was not related to the winding down of the corporation, and it was initiated by a profit corporation, a status that the dissolved corporation did not enjoy. Columbus Cheer Co. v. City of Columbus, 155 So.3d 744, 2014 Miss. LEXIS 532 (Miss. 2014).

§79-4-14.22. Reinstatement following administrative dissolution.

A corporation administratively dissolved under Section 79-4-14.21 may apply to the Secretary of State for reinstatement at any time after the effective date of dissolution. The applicant must:

1. Recite the name of the corporation and the effective date of its administrative dissolution;
2. State that the ground or grounds for dissolution either did not exist or have been eliminated;
3. State that the corporation’s name satisfies the requirements of Section 79-4-4.01; and
4. Contain a certificate from the Mississippi Department of Revenue reciting that all taxes owed by the corporation have been paid.

If the Secretary of State determines that the application contains the information required by subsection (a) and that the information is correct, he shall cancel the certificate of dissolution and prepare a certificate of reinstatement that recites his determination and the effective date of reinstatement, file the original of the certificate and serve a copy on the corporation.

When the reinstatement is effective:

The reinstatement relates back to and takes effect as of the effective date of the administrative dissolution;

Any liability incurred by the corporation, director, officer or a shareholder after the administrative dissolution and before the reinstatement shall be determined as if the administrative dissolution had never occurred; and

The corporation may resume carrying on its business as if the administrative dissolution had never occurred.

HISTORY: Laws, 1987, ch. 486, § 14.22; Laws, 1993, ch. 368, § 13; Laws, 2009, ch. 527, § 1; Laws, 2009, ch. 530, § 3; Laws, 2012, ch. 382, § 38; Laws, 2012, ch. 481, § 37, eff from and after Jan. 1, 2013.

Joint Legislative Committee Note —

Section 1 of ch. 527, Laws of 2009, effective from and after July 1, 2009 (approved April 13, 2009), amended this section. Section 3 of ch. 530, Laws of 2009, effective from and after July 1, 2009 (approved April 14, 2009), also amended this section. As set out above, this section reflects the language of Section 1 of ch. 527, Laws of 2009, which contains language that specifically provides that it supersedes § 79-4-14.22 as amended by chapter 530, Laws of 2009.

Section 37 of Chapter 481 Laws of 2012, effective January 1, 2013 (approved April 24, 2012), amended this section. Section 38 of Chapter 382, Laws of 2012, effective January 1, 2013 (approved April 17, 2012), also amended this section. As set out above, this section reflects the language of Section 37 of Chapter 481, Laws of 2012, which contains language that specifically provides that it supersedes § 79-4-14.22 as amended by Laws of 2012, ch. 382.

Amendment Notes —

The first 2009 amendment (ch. 527) substituted “at any time” for “within five (5) years” in the first sentence of the introductory language of (a).

The second 2009 amendment (ch. 530) substituted “at any time” for “within five (5) years” in the first sentence of the introductory language of (a).

The first 2012 amendment (ch. 382), substituted “Department of Revenue” for “State Tax Commission” in (a)(4); and deleted “under Section 79-4-5.04” following “copy on the corporation” at the end of (b).

The second 2012 amendment (ch. 481), effective January 1, 2013, substituted “Department of Revenue” for “State Tax Commission” preceding “reciting that all taxes owed by the corporation” in (a)(4); and deleted “under Section 79-4-5.04” following “copy on the corporation” at the end of (b); and rewrote (c).

Cross References —

Administrative dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-347 through 79-11-353.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2499 et seq.

CJS.

19 C.J.S., Corporations § 1741.

JUDICIAL DECISIONS

1. Failure to comply with reinstatement process.

2. Capacity to bring action.

1. Failure to comply with reinstatement process.

Pursuant to Miss. Code Ann. § 79-4-14.21(c) the corporate existence of the corporation continued, but it was not authorized to carry on any business except that necessary to wind up and liquidate its business and affairs. Because the corporation failed to comply with the process under § 79-4-14.22(a) to reinstate the corporation, the court found that during the period relevant to the present litigation, the corporation was not a viable entity and thus did not have standing to enter into the contracts at issue; therefore, it followed that the corporation’s claims for breach of contract, misrepresentation, and quantum meruit were moot and had to be dismissed. 4 H Constr. Corp. v. Superior Boat Works, Inc., 659 F. Supp. 2d 774, 2009 U.S. Dist. LEXIS 83183 (N.D. Miss. 2009), aff'd, 579 Fed. Appx. 278, 2014 U.S. App. LEXIS 16558 (5th Cir. Miss. 2014).

2. Capacity to bring action.

When plaintiffs corporation and principal sued defendant supplier, the corporation was properly dismissed because it was administratively dissolved under Miss. Code Ann. § 79-4-14.21(b) (2013), so, under Miss. Code Ann. § 79-4-14.22(a)(4) (2013), it could not maintain its claim, it did not seek voluntary or judicial dissolution, so it could not maintain its suit to wind up its business, and it was not defending a suit. Wayne Johnson Elec. Inc. v. Robinson Elec. Supply Co., 266 So.3d 643, 2019 Miss. LEXIS 122 (Miss. 2019).

§79-4-14.23. Appeal from denial of reinstatement.

If the Secretary of State denies a corporation’s application for reinstatement following administrative dissolution, he shall serve the corporation with a written notice that explains the reason or reasons for denial.

The corporation may appeal the denial of reinstatement to the Chancery Court of the First Judicial District of Hinds County or the chancery court of the county where the corporation’s principal office is located or where the corporation is domiciled within thirty (30) days after service of the notice of denial is perfected. The corporation appeals by petitioning the court to set aside the dissolution and attaching to the petition copies of the Secretary of State’s certificate of dissolution, the corporation’s application for reinstatement and the Secretary of State’s notice of denial.

The court may summarily order the Secretary of State to reinstate the dissolved corporation or may take other action the court considers appropriate.

The court’s final decision may be appealed as in other civil proceedings.

HISTORY: Laws, 1987, ch. 486, § 14.23; Laws, 2009, ch. 527, § 2; Laws, 2012, ch. 382, § 39, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2009 amendment inserted “or the chancery court of the county where the corporation is domiciled” in (b).

The 2012 amendment, effective January 1, 2013, deleted “under Section 79-4-5.04” following “shall serve the corporation” in (a); in (b), deleted “Mississippi” following “Hinds County” and inserted “corporation’s principal office is located or where the” preceding “corporation is domiciled within thirty (30) days” in the first sentence.

Cross References —

Administrative dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-347 through 79-11-353.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2499-2507.

7A Am. Jur. Pl & Pr Forms (Rev), Corporations, Forms 500, 501.

CJS.

19 C.J.S., Corporations § 1741.

Subarticle C. Judicial Dissolution.

§79-4-14.30. Grounds for judicial dissolution.

The chancery court may dissolve a corporation:

1. In a proceeding by the Attorney General if it is established that:
2. In a proceeding by a shareholder if it is established that:
3. In a proceeding by a creditor if it is established that:
4. In a proceeding by the corporation to have its voluntary dissolution continued under court supervision; or
5. In a proceeding by a shareholder if the corporation has abandoned its business and has failed within a reasonable time to liquidate and distribute its assets and dissolve.

The corporation obtained its articles of incorporation through fraud;

The corporation has continued to exceed or abuse the authority conferred upon it by law;

The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally, because of the deadlock;

The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive or fraudulent;

The shareholders are deadlocked in voting power and have failed, for a period that includes at least two (2) consecutive annual meeting dates, to elect successors to directors whose terms have expired; or

The corporate assets are being misapplied or wasted;

The creditor’s claim has been reduced to judgment, the execution on the judgment return unsatisfied, and the corporation is insolvent; or

The corporation has admitted in writing that the creditor’s claim is due and owing and the corporation is insolvent; or

Subsection (a)(2) shall not apply in the case of a corporation that, on the date of the filing of the proceeding, has shares that are:(i) listed on the New York Stock Exchange, the American Stock Exchange, or any exchange owned or operated by the NASDAQ Stock Market, LLC, or listed or quoted on a system owned or operated by the National Association of Securities Dealers, Inc.; or (ii) not so listed or quoted, but are held by at least three hundred (300) shareholders and the shares outstanding have a market value of at least Twenty Million Dollars ($20,000,000.00) (exclusive of the value of such shares held by the corporation’s subsidiaries, senior executives, directors and beneficial shareholders owning more than ten percent (10%) of such shares).

In this section “beneficial shareholder” has the meaning specified in Section 79-4-13.01(2).

HISTORY: Laws, 1987, ch. 486, § 14.30; Laws, 1990, ch. 538, § 7; Laws, 2007, ch. 361, § 17, eff from and after July 1, 2007.

Joint Legislative Committee Note —

Pursuant to Section 1-1-109, the Joint Legislative Committee on Compilation, Revision and Publication of Legislation corrected an error in a statutory reference in (b) by substituting “Subsection (a)(2)” for “Section 79-4-14.30(a)(2).” The Joint Committee ratified the correction at its August 1, 2013, meeting.

Amendment Notes —

The 2007 amendment added (b) and (c); designated the previously existing provisions as (a); added (a)(5); and made a minor stylistic change.

Cross References —

Right to challenge corporation’s power to act in proceeding brought by Attorney General for judicial dissolution, see § 79-4-3.04.

Venue for proceeding for judicial dissolution brought by any party named in this section, see § 79-4-14.31.

Required notice, upon commencement of proceeding under § 79-4-14.30 to dissolve corporation whose shares are not listed or regularly traded, of option to avoid dissolution by elective buyout of petitioner’s shares, see § 79-4-14.31.

Entering of decree of judicial dissolution of corporation, see § 79-4-14.33.

Dissolution of corporation the shares of which are not listed on national securities exchange or regularly traded in market maintained by members of national or affiliated securities association, see § 79-4-14.34.

Dissolution of professional corporation by Attorney General, see § 79-10-85.

Judicial dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-355 through 79-11-361.

RESEARCH REFERENCES

ALR.

Preferred stockholder’s rights, upon liquidation or dissolution, to dividends. 25 A.L.R.2d 788.

Stockholders’ rights to patent, copyright, or trademark owned by corporation on dissolution thereof. 30 A.L.R.2d 938.

What amounts to “oppressive” conduct under statute authorizing dissolution of corporation at suit of minority stockholders. 56 A.L.R.3d 358.

Dissolution of corporation on ground of intracorporate deadlock or dissension. 83 A.L.R.3d 458.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Relief other than by dissolution in cases of intracorporate deadlock or dissension. 34 A.L.R.4th 13.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2351, 2360 et seq.

6 Am. Jur. Legal Forms 2d, Corporations § 74:800.

5 Am. Jur. Proof of Facts 2d 645, Oppressive Conduct by Majority Shareholders, Directors, or Those in Control of Corporation.

6 Am. Jur. Proof of Facts 2d 387, Dissension or Deadlock of Corporate Directors or Shareholders.

CJS.

19 C.J.S., Corporations §§ 1641-1645, 1648, 1655, 1694 et seq.

Law Reviews.

1984 Mississippi Supreme Court Review: Corporate, Contract and Commercial Law. 55 Miss. L. J. 65.

JUDICIAL DECISIONS

1. Dissolution order did not exceed pleadings.

Chancellor’s corporate dissolution order did not exceed the pleadings because (1) such a claim was adequately pled, (2) the chancellor did not have to grant an election to purchase shares before exercising broad equity powers under Miss. Code Ann. § 79-4-14.34(i), (3) the chancellor could grant alternate remedies, since dissolution was not ordered, and (4) fiduciary breach was adequately claimed. Scafidi v. Hille, 180 So.3d 634, 2015 Miss. LEXIS 603 (Miss. 2015).

§79-4-14.31. Procedure for judicial dissolution.

Venue for a proceeding brought by any party named in Section 79-4-14.30 lies in the county where a corporation’s principal office is or was located, or the Chancery Court of the First Judicial District of Hinds County, Mississippi, if the corporation does not have a principal office in this state.

It is not necessary to make shareholders parties to a proceeding to dissolve a corporation unless relief is sought against them individually.

A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.

Within ten (10) days of the commencement of a proceeding under Section 79-4-14.30(2) to dissolve a corporation that is not a public corporation, the corporation shall send to all shareholders, other than the petitioner, a notice stating that the shareholders are entitled to avoid the dissolution of the corporation by electing to purchase the petitioner’s shares under Section 79-4-14.34 and accompanied by a copy of Section 79-4-14.34.

HISTORY: Laws, 1987, ch. 486, § 14.31; Laws, 1990, ch. 538, § 8; Laws, 1993, ch. 368, § 12; Laws, 1994, ch. 417, § 3; Laws, 2006, ch. 429, § 13; Laws, 2012, ch. 382, § 40, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2006 amendment, in (d), substituted “is not a public corporation” for “has no shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association,” and near the end of the section, inserted “and” following “Section 79-4-14.34.”

The 2012 amendment, effective January 1, 2013, rewrote (a).

Cross References —

Dissolution of professional corporation by Attorney General, see § 79-10-85.

Judicial dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-355 through 79-11-361.

RESEARCH REFERENCES

ALR.

Dissolution of corporation on ground of intracorporate deadlock or dissension. 83 A.L.R.3d 458.

Am. Jur.

19 Am. Jur. 2d, Corporations § 2351.

CJS.

19 C.J.S., Corporations §§ 1694 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-195.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-195.

11. In general.

The conditions which must be shown in order to entitle a stockholder to have a dissolution of a corporation and a receiver appointed are the insolvency of the corporation, or that the corporation ceases to be a going concern, or while not solvent the corporation sells its franchises in whole or in part. Welsh v. Clinton Lumber & Supply Co., 232 Miss. 507, 99 So. 2d 660, 1958 Miss. LEXIS 300 (Miss. 1958).

An order for the dissolution of a corporation and the appointment of a receiver was void where the petition for the dissolution of the corporation and the appointment of the receiver did not allege the existence of any emergency justifying the appointment of a receiver without notice, and the president and vice president, who owned the majority of the stock, were not given notice, and no bond was executed, as required by Code 1942, § 1357. Welsh v. Clinton Lumber & Supply Co., 232 Miss. 507, 99 So. 2d 660, 1958 Miss. LEXIS 300 (Miss. 1958).

Chancellor was justified in terminating the receivership and returning the assets to the corporation where the entire proceedings wherein the dissolution of the corporation was ordered and the receiver appointed were void for want of notice to other stockholders, and for failure to post the receiver’s bond, without regard to the fact that the president and vice president, who were majority stockholders of the corporation, failed to testify in the case. Welsh v. Clinton Lumber & Supply Co., 232 Miss. 507, 99 So. 2d 660, 1958 Miss. LEXIS 300 (Miss. 1958).

In order for minority stockholders in a domestic corporation to put an end to the corporation by requiring its dissolution, there must be either insolvency or mismanagement which must lead to insolvency. Kiersky v. Hyman Mercantile Co., 192 Miss. 195, 4 So. 2d 881, 198 So. 574 (Miss. 1941).

A minority of stockholders may have a receiver appointed, in equity, on the ground of maladministration, where the corporation is solvent, for the purpose of taking charge of and winding up the business if necessary. Brent v. B. E. Brister Sawmill Co., 103 Miss. 876, 60 So. 1018, 1912 Miss. LEXIS 244 (Miss. 1912).

A receiver of an insolvent corporation, whether public or private, in possession of its entire property, will be required to pay the wages of laborers who rendered services shortly before his appointment which were necessary to continue the business of the corporation and preserve its property in preference to both ordinary and mortgage creditors. L'Hote v. Boyet, 85 Miss. 636, 38 So. 1, 1904 Miss. LEXIS 176 (Miss. 1904).

§79-4-14.32. Receivership or custodianship.

Unless an election to purchase has been filed under Section 79-4-14.34, a court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the business and affairs of the corporation.The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian.The court appointing a receiver or custodian has jurisdiction over the corporation and all its property wherever located.

The court may appoint an individual or a domestic or foreign corporation (authorized to transact business in this state) as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.

The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:

1. The receiver (i) may dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court; and (ii) may sue and defend in his own name as receiver of the corporation in all courts of this state;
2. The custodian may exercise all the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its shareholders and creditors.

The court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation, its shareholders and creditors.

The court from time to time during the receivership or custodianship may order compensation paid and expenses paid or reimbursed to the receiver or custodian from the assets of the corporation or proceeds from the sale of the assets.

HISTORY: Laws, 1987, ch. 486, § 14.32; Laws, 2007, ch. 361, § 18, eff from and after July 1, 2007.

Amendment Notes —

The 2007 amendment, in (a), added “Unless an election to purchase has been filed under Section 79-4-14.34” to the beginning of the first sentence and deleted “exclusive” preceding “jurisdiction” in the last sentence; and in (e), substituted “expenses paid or reimbursed to the receiver or custodian from the assets” for “expense disbursements or reimbursements made to the receiver or custodian and his counsel from the assets.”

Cross References —

Dissolution of professional corporation by Attorney General, see § 79-10-85.

Judicial dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-355 through 79-11-361.

RESEARCH REFERENCES

ALR.

Dissolution of corporation on ground of intracorporate deadlock or dissension. 83 A.L.R.3d 458.

Am. Jur.

65 Am. Jur. 2d, Receivers §§ 39 et seq.

CJS.

75 C.J.S., Receivers §§ 71 et seq.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-193.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-193.

11. In general.

In an action involving a controversy among present and former members of a medical partnership which partnership leased its building from a corporation organized by the partners, the court improperly ordered that the corporation be liquidated, where the alleged conduct by the directors of the corporation consisting of their failing to reelect two directors as directors of the corporation after they withdrew from the medical partnership resulting in these two directors’ deferred compensation of $100 per month being terminated was not “oppressive” conduct within the meaning of § 79-3-193. Kisner v. Coffey, 418 So. 2d 58, 1982 Miss. LEXIS 2092 (Miss. 1982).

In an action by a minority shareholder to compel dissolution of a corporation on grounds of oppressive conduct that arose after the minority shareholder, who had an agreement with the former owners and majority shareholders to manage the corporation until its indebtedness was retired, was terminated by the new owners of the corporation prior to retirement of the debts, the chancery court erred in ordering dissolution, where the contract provided for the majority shareholders to buy the plaintiff’s stock at book value, and where plaintiff’s management of the corporation was inadequate; the statute does not sanction dissolution where the complaining party’s reasonable expectations have been thwarted, but not grossly so. Capitol Toyota, Inc. v. Gervin, 381 So. 2d 1038, 1980 Miss. LEXIS 1929 (Miss. 1980).

An order for the dissolution of a corporation and the appointment of a receiver was void where the petition for the dissolution of the corporation and the appointment of the receiver did not allege the existence of any emergency justifying the appointment of a receiver without notice, and the president and vice-president, who owned the majority of the stock, were not given notice, and no bond was executed, as required by Code 1942, § 1357. Welsh v. Clinton Lumber & Supply Co., 232 Miss. 507, 99 So. 2d 660, 1958 Miss. LEXIS 300 (Miss. 1958).

Chancellor was justified in terminating the receivership and returning the assets to the corporation where the entire proceedings wherein the dissolution of the corporation was ordered and the receiver appointed were void for want of notice to other stockholders, and for failure to post the receiver’s bond, without regard to the fact that the president and vice president, who were majority stockholders of the corporation, failed to testify in the case. Welsh v. Clinton Lumber & Supply Co., 232 Miss. 507, 99 So. 2d 660, 1958 Miss. LEXIS 300 (Miss. 1958).

The conditions which must be shown in order to entitle a stockholder to have a dissolution of a corporation and a receiver appointed are the insolvency of the corporation, or that the corporation ceases to be a going concern, or while not solvent the corporation sells its franchises in whole or in part. Welsh v. Clinton Lumber & Supply Co., 232 Miss. 507, 99 So. 2d 660, 1958 Miss. LEXIS 300 (Miss. 1958).

In order for minority stockholders in a domestic corporation to put an end to the corporation by requiring its dissolution, there must be either insolvency or mismanagement which must lead to insolvency. Kiersky v. Hyman Mercantile Co., 192 Miss. 195, 4 So. 2d 881, 198 So. 574 (Miss. 1941).

§79-4-14.33. Decree of dissolution.

If after a hearing the court determines that one or more grounds for judicial dissolution described in Section 79-4-14.30 exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the Secretary of State who shall file it.

After entering the decree of dissolution, the court shall direct the winding up and liquidation of the corporation’s business and affairs in accordance with Section 79-4-14.05 and the notification of claimants in accordance with Sections 79-4-14.06 and 79-4-14.07.

HISTORY: Laws, 1987, ch. 486, § 14.33, eff from and after January 1, 1988.

Cross References —

Dissolution of professional corporation by Attorney General, see § 79-10-85.

Judicial dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-355 through 79-11-361.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations § 2471.

CJS.

19 C.J.S., Corporations §§ 1704, 1716, 1725.

§79-4-14.34. Election to purchase in lieu of dissolution.

In a proceeding under Section 79-4-14.30(a)(2) to dissolve a corporation, the corporation may elect or, if it fails to elect, one or more shareholders may elect to purchase all shares owned by the petitioning shareholder at the fair value of the shares.An election pursuant to this section shall be irrevocable unless the court determines that it is equitable to set aside or modify the election.

An election to purchase pursuant to this section may be filed with the court at any time within ninety (90) days after the filing of the petition under Section 79-4-14.30(a)(2) or at such later time as the court in its discretion may allow. If the election to purchase is filed by one or more shareholders, the corporation shall, within ten (10) days thereafter, give written notice to all shareholders, other than the petitioner. The notice must state the name and number of shares owned by the petitioner and the name and number of shares owned by each electing shareholder and must advise the recipients of their right to join in the election to purchase shares in accordance with this section. Shareholders who wish to participate must file notice of their intention to join in the purchase no later than thirty (30) days after the effective date of the notice to them. All shareholders who have filed an election or notice of their intention to participate in the election to purchase thereby become parties to the proceeding and shall participate in the purchase in proportion to their ownership of shares as of the date the first election was filed, unless they otherwise agree or the court otherwise directs. After an election has been filed by the corporation or one or more shareholders, the proceeding under Section 79-4-14.30(a)(2) may not be discontinued or settled, nor may the petitioning shareholder sell or otherwise dispose of his shares, unless the court determines that it would be equitable to the corporation and the shareholders, other than the petitioner, to permit such discontinuance, settlement, sale or other disposition.

If, within sixty (60) days of the filing of the first election, the parties reach agreement as to the fair value and terms of purchase of the petitioner’s shares, the court shall enter an order directing the purchase of petitioner’s shares upon the terms and conditions agreed to by the parties.

If the parties are unable to reach an agreement as provided for in subsection (c), the court, upon application of any party, shall stay the Section 79-4-14.30(a)(2) proceedings and determine the fair value of the petitioner’s shares as of the day before the date on which the petition under Section 79-4-14.30(a)(2) was filed or as of such other date as the court deems appropriate under the circumstances.

Upon determining the fair value of the shares, the court shall enter an order directing the purchase upon such terms and conditions as the court deems appropriate, which may include payment of the purchase price in installments, where necessary in the interests of equity, provision for security to assure payment of the purchase price and any additional costs, fees and expenses as may have been awarded, and, if the shares are to be purchased by shareholders, the allocation of shares among them. In allocating petitioner’s shares among holders of different classes of shares, the court should attempt to preserve the existing distribution of voting rights among holders of different classes insofar as practicable and may direct that holders of a specific class or classes shall not participate in the purchase. Interest may be allowed at the rate and from the date determined by the court to be equitable, but if the court finds that the refusal of the petitioning shareholder to accept an offer of payment was arbitrary or otherwise not in good faith, no interest shall be allowed. If the court finds that the petitioning shareholder had probable grounds for relief under Section 79-4-14.30(a)(2)(ii) or (iv), it may award to the petitioning shareholder reasonable fees and expenses of counsel and of any experts employed by him.

Upon entry of an order under subsection (c) or (e), the court shall dismiss the petition to dissolve the corporation under Section 79-4-14.30, and the petitioning shareholder shall no longer have any rights or status as a shareholder of the corporation, except the right to receive the amounts awarded to him by the order of the court which shall be enforceable in the same manner as any other judgment.

The purchase ordered pursuant to subsection (e) shall be made within ten (10) days after the date the order becomes final unless before that time the corporation files with the court a notice of its intention to adopt articles of dissolution pursuant to Sections 79-4-14.02 and 79-4-14.03, which articles must then be adopted and filed within fifty (50) days thereafter. Upon filing of such articles of dissolution, the corporation shall be dissolved in accordance with the provisions of Sections 79-4-14.05 through 79-4-14.07 and the order entered pursuant to subsection (e) shall no longer be of any force or effect, except that the court may award the petitioning shareholder reasonable fees and expenses in accordance with the provisions of the last sentence of subsection (e) and the petitioner may continue to pursue any claims previously asserted on behalf of the corporation.

Any payment by the corporation pursuant to an order under subsection (c) or (e), other than an award of fees and expenses pursuant to subsection (e), is subject to the provisions of Section 79-4-6.40.

Nothing contained in this section shall diminish the inherent equity powers of the court to fashion alternative remedies to judicial dissolution.

HISTORY: Laws, 1993, ch. 368, § 11; Laws, 2006, ch. 429, § 14; Laws, 2007, ch. 361, § 19, eff from and after July 1, 2007.

Editor’s Notes —

At the direction of the co-counsel for the Joint Legislative Committee on Compilation, Revision and Publication of Legislation, an error in a statutory reference in the section was corrected by substituting “Section 79-4-14.30(a)(2)” for “Section 79-4-14.30(2)” everywhere it appears.

Amendment Notes —

The 2006 amendment substituted “is not a public corporation” for “has no shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association” in the first sentence of (a); substituted “relief under Section 79-4-14.30(a)(2)(ii) or (iv)” for “relief under paragraphs (ii) or (iv) of Section 79-4-14.30(a)(2)” in the last sentence of (e); and made minor stylistic changes in (f) and (h).

The 2007 amendment deleted “that is not a public corporation” following “dissolve a corporation” in the first sentence of (a).

Cross References —

Required notice, upon commencement of proceeding to dissolve corporation whose shares are not listed or regularly traded, of option to avoid dissolution by elective buyout of petitioner’s shares under § 79-4-14.34, see § 79-4-14.31.

Judicial dissolution under Mississippi Nonprofit Corporation Act, see §§ 79-11-355 through 79-11-361.

RESEARCH REFERENCES

ALR.

Meaning of “book value” of corporate stock. 51 A.L.R.2d 606.

Dissolving or winding up affairs of corporation domiciled in another state. 19 A.L.R.3d 1279.

Valuation of corporate stock under “buy-out” or “first option” agreement giving option to or requiring corporation or other stockholders to purchase stock of deceased or withdrawing stockholders. 54 A.L.R.3d 790.

What constitutes waiver of stockholder’s or corporation’s right to enforce first-option stock purchase agreement. 55 A.L.R.3d 723.

What amounts to “oppressive” conduct under statute authorizing dissolution of corporation at suit of minority stockholders. 56 A.L.R.3d 358.

Dissolution of corporation on ground of intracorporate deadlock or dissension. 83 A.L.R.3d 458.

Availability of and time for bringing action against former director, officer, or stockholder in dissolved corporation for personal injuries incurred after final dissolution. 20 A.L.R.4th 414.

Am. Jur.

19 Am. Jur. 2d, Corporations §§ 2348 et seq.

3 Am. Jur. Proof of Facts 2d 379, Waiver of Right to Enforce “First Option” Stock Purchase Requirement.

CJS.

19 C.J.S., Corporations §§ 914-916 et seq.

JUDICIAL DECISIONS

1. In general.

2. Equitable powers.

1. In general.

In a proceeding relating to the dissolution of a closely held corporation, the court properly awarded accounting and legal fees to be recovered from the assets of the corporation, rather than from an improperly acting shareholder/officer of the corporation. Covington v. Covington, 780 So. 2d 665, 2001 Miss. App. LEXIS 114 (Miss. Ct. App. 2001).

2. Equitable powers.

Chancellor’s corporate dissolution order did not exceed the pleadings because (1) such a claim was adequately pled, (2) the chancellor did not have to grant an election to purchase shares before exercising broad equity powers under Miss. Code Ann. § 79-4-14.34(i), (3) the chancellor could grant alternate remedies, since dissolution was not ordered, and (4) fiduciary breach was adequately claimed. Scafidi v. Hille, 180 So.3d 634, 2015 Miss. LEXIS 603 (Miss. 2015).

When a shareholder sought a family corporation’s judicial dissolution in chancery court, a decree awarding the shareholder an in-kind division of the corporation’s land was not unauthorized, even after siblings invoked their right to purchase the shareholder’s shares, because Miss. Code Ann. § 79-4-14.34(i) said nothing in Miss. Code Ann. § 79-4-14.34 diminished the chancellor’s equity powers to fashion an alternate remedy. Rainbow Ranch, Inc. v. Hardin (In re Will of Hardin), 158 So.3d 341, 2014 Miss. App. LEXIS 401 (Miss. Ct. App. 2014), cert. denied, — So.3d —, 2015 Miss. LEXIS 120 (Miss. 2015).

Subarticle D. Miscellaneous.

§79-4-14.40. Deposit with state treasurer.

Assets of a dissolved corporation that should be transferred to a creditor, claimant or shareholder of the corporation who cannot be found or who is not competent to receive them shall be reduced to cash and deposited with the State Treasurer for safekeeping. When the creditor, claimant or shareholder furnishes satisfactory proof of entitlement to the amount deposited, the State Treasurer shall pay him or his representative that amount.

HISTORY: Laws, 1987, ch. 486, § 14.40, eff from and after January 1, 1988.

RESEARCH REFERENCES

Am. Jur.

19 Am. Jur. 2d, Corporations § 2421.

7A Am. Jur. Pl & Pr Forms, Corporations, Forms 499, 504.

6 Am. Jur. Legal Forms 2d, Corporations § 74:802.

Article 15. Foreign Corporations.

Subarticle A. Certificate of Authority.

§79-4-15.01. Authority to transact business required.

A foreign corporation may not transact business in this state until it obtains a certificate of authority from the Secretary of State.

The following activities, among others, do not constitute transacting business within the meaning of subsection (a):

1. Maintaining, defending or settling any proceeding;
2. Holding meetings of the board of directors or shareholders or carrying on other activities concerning internal corporate affairs;
3. Maintaining bank accounts;
4. Maintaining offices or agencies for the transfer, exchange and registration of the corporation’s own securities or maintaining trustees or depositories with respect to those securities;
5. Selling through independent contractors;
6. Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
7. Creating or acquiring indebtedness, mortgages and security interests in real or personal property;
8. Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
9. Owning, without more, real or personal property;
10. Conducting an isolated transaction that is completed within thirty (30) days and that is not one in the course of repeated transactions of a like nature;
11. Transacting business in interstate commerce;
12. Being a shareholder in a corporation or a foreign corporation that transacts business in this state;
13. Being a limited partner of a limited partnership or foreign limited partnership that is transacting business in this state;
14. Being a member or manager of a limited liability company or foreign limited liability company that is transacting business in this state.

The list of activities in subsection (b) is not exhaustive.

A foreign corporation which is general partner of any general or limited partnership, which partnership is transacting business in this state, is hereby declared to be transacting business in this state.

HISTORY: Laws, 1987, ch. 486, § 15.01; Laws, 1990, ch. 538, § 9; Laws, 2012, ch. 481, § 38, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, added (b)(12) through (14); and rewrote (d).

Cross References —

Consequences of transacting business without authority, see § 79-4-15.02.

Foreign corporations, certificate of authority to transact business in state, corporate name, etc., under Mississippi Nonprofit Corporation Act, see §§ 79-11-363 through 79-11-381.

Establishing or acquiring out-of-state trust institution, conditions for approval, see § 81-27-2.105.

OPINIONS OF THE ATTORNEY GENERAL

In practice, obtaining a Certificate of Authority from the Secretary of State qualifies the foreign corporation to do business in the state. Adams, Nov. 17, 2003, A.G. Op. 03-0596.

A School District should not necessarily assume that the foreign corporation is authorized to do business in Mississippi. The Mississippi Secretary of State can confirm whether or not a foreign corporation or contractor has been issued a Certificate of Authority. Adams, Nov. 17, 2003, A.G. Op. 03-0596.

RESEARCH REFERENCES

ALR.

Statutory requirements respecting issuance of corporate stock as applicable to foreign corporations. 8 A.L.R.2d 1185.

Foreign corporation’s purchase within state of goods to be shipped into other state or country as doing business within state for purpose of jurisdiction or service of process. 12 A.L.R.2d 1439.

Ownership or control by foreign corporation of stock of other corporation as constituting doing business within state. 18 A.L.R.2d 187.

Power of state to subject foreign corporation to jurisdiction of its courts on sole ground that corporation committed tort within state. 25 A.L.R.2d 1202.

What constitutes doing business within state by foreign magazine, newspaper, or other publishing corporation, for purposes other than taxation. 38 A.L.R.2d 747.

Leasing of real estate by foreign corporation, as lessor or lessee, as doing business within state within statutes prescribing conditions of right to do business. 59 A.L.R.2d 1131.

Holding directors’, officers’, or stockholders’, or sales meetings or conventions in a state by foreign corporation as doing business within the state. 84 A.L.R.2d 412.

Construction and application of state statutes and rules of court predicating in personam jurisdiction over nonresidents or foreign corporations on making or performing a contract within the state. 23 A.L.R.3d 551.

Construction and application as to isolated acts or transactions, of state statutes or rules of court predicating in personam jurisdiction over nonresidents or foreign corporations upon the doing of an act or upon doing or transacting business or “any” business, within a state. 27 A.L.R.3d 397.

Foreign corporation’s leasing of personal property as doing business within statutes prescribing conditions of right to business. 50 A.L.R.3d 1020.

Construction work by foreign corporation as doing business for purposes of statute requiring foreign corporation to qualify as condition of access to local courts. 90 A.L.R.3d 937.

State regulation of land ownership by alien corporation. 21 A.L.R.4th 1329.

Personal liability of stockholder, officer, or agent for debt of foreign corporation doing business in the state. 27 A.L.R.4th 387.

What constitutes doing business within state for purposes of state “closed door” statute barring unqualified or unregistered foreign corporation from local courts – modern cases. 88 A.L.R.4th 466.

Application of statute denying access to courts or invalidating contracts where corporation fails to comply with regulatory statute as affected by compliance after commencement of action. 23 A.L.R.5th 744.

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 14- 16, 157 et seq.

2 Am. Jur. Trials 409, Locating Public Records.

3 Am. Jur. Trials 681, Tactics and Strategy of Pleading.

4 Am. Jur. Proof of Facts 483, Doing Business.

CJS.

20 C.J.S., Corporations §§ 1813 et seq.

Law Reviews.

An analysis of Mississippi’s treatment of foreign corporations. 55 Miss. L. J. 259, June, 1985.

Holmes, The revised Model Business Corporation Act and corporate law reform in Mississippi. 57 Miss. L. J. 271, August, 1987.

JUDICIAL DECISIONS

I. Under Current Law.

1. In general.

2.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former §79-1-19.

12. Under former §79-1-23.

13. Under former §79-3-211.

14. Under former §79-3-289.

I. Under Current Law.

1. In general.

If a foreign corporation is not transacting business in Mississippi, a certificate of authority is not required in order to maintain an action in Mississippi, as demonstrated by § 79-4-15.02(c) which states that a court may stay a proceeding commenced by a foreign corporation until it determines whether the corporation requires a certificate of authority; since the court is granted some amount of discretion, it is apparent that not all foreign corporations require a certificate to maintain an action. Mississippi Ins. Guar. Ass'n v. Harkins & Co., 652 So. 2d 732, 1995 Miss. LEXIS 145 (Miss. 1995).

A foreign corporation was not transacting business in Mississippi, and therefore did not need a certificate of authority in order to maintain an action in Mississippi where the only business contact the corporation had with Mississippi was the actual commencement of the suit, since § 79-4-15.01(b)(1) states that simply maintaining, defending, or settling a proceeding does not constitute “transacting business.” Mississippi Ins. Guar. Ass'n v. Harkins & Co., 652 So. 2d 732, 1995 Miss. LEXIS 145 (Miss. 1995).

2.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former § 79-1-19.

A foreign corporation domesticated in Mississippi under statute remains a resident of state of original incorporation for all jurisdictional purposes, state and federal, and is subject to attachment in Mississippi courts as a “nonresident,” since, for purpose of removing to federal court an action brought in state of domestication, a domesticated foreign corporation is a nonresident. Southern Motor Express Co. v. Magee Truck Lines, Inc., 181 Miss. 223, 177 So. 653, 1937 Miss. LEXIS 132 (Miss. 1937).

Shares of stock in Louisiana corporation, doing business and domesticated in Mississippi, have their situs for devolution purposes in this state. Ewing v. Warren, 144 Miss. 233, 109 So. 601, 1926 Miss. LEXIS 342 (Miss. 1926).

12. Under former § 79-1-23.

In a personal injury action against a domesticated foreign corporation, the trial court’s exercise of jurisdiction as an attachment in chancery on the grounds of nonresidency did not violate the corporation’s right to equal protection of the laws, even though it claimed to be a domestic corporation for all intents and purposes, where the state of incorporation retained, inter alia, supervisory power and the final authority to dissolve the corporation. Louisville & N. R. Co. v. Hasty, 360 So. 2d 925, 1978 Miss. LEXIS 2307 (Miss.), cert. denied, 439 U.S. 1003, 99 S. Ct. 614, 58 L. Ed. 2d 679, 1978 U.S. LEXIS 4129 (U.S. 1978).

A foreign corporation domesticated in Mississippi under statute remains a resident of state of original incorporation for all jurisdictional purposes, state and federal, and is subject to attachment in Mississippi courts as a “nonresident,” since, for the purpose of removing to federal court an action brought in state of domestication, a domesticated foreign corporation is a nonresident. Southern Motor Express Co. v. Magee Truck Lines, Inc., 181 Miss. 223, 177 So. 653, 1937 Miss. LEXIS 132 (Miss. 1937).

13. Under former § 79-3-211.

Foreign corporation seeking to maintain action for breach of contract was not barred under Miss Code § 79-3-247 [repealed] from bringing action for failure to have certificate of authority to do business in state where foreign corporation maintained no office or bank account in state and had no employees in state and where purpose of contract was for foreign corporation to manage hotel, thus bringing business within reach of Commerce Clause and within exception to definition of “transacting business” under § 79-3-211 [repealed]. Madden Management, Inc. v. First Equities Corp., 666 F. Supp. 96, 1987 U.S. Dist. LEXIS 7872 (N.D. Miss. 1987).

If foreign corporation is qualified to do business in State of Mississippi, even though it may not be doing any business, its agent for process may be served and courts have personal jurisdiction over that corporation; actually doing business in state has nothing to do with personal jurisdiction where foreign corporation has qualified to do business in state; corporation qualifying to do business in state, under appropriate statutes, becomes like individual as far as suit is concerned. Read v. Sonat Offshore Drilling, Inc., 515 So. 2d 1229, 1987 Miss. LEXIS 2929 (Miss. 1987).

In a diversity action by a Florida construction company in federal district court for Mississippi, seeking to recover a construction contract debt from the surety, a Mississippi bank, the trial court committed reversible error when it granted the bank’s motion for dismissal on the grounds that the foreign company had engaged in intrastate commerce without qualifying to do so as required by Mississippi law, and thus, was precluded from maintaining an action in Mississippi state or federal court, where contract substantially related to interstate activities, where, under the National Bank Act, the bank was required to be sued where it was located, and where it would have been an impermissible burden on interstate commerce to permit Mississippi courtroom doors to remain closed to such foreign company on events and contracts substantially related to interstate activities. Diversacon Industries, Inc. v. National Bank of Commerce, 629 F.2d 1030, 1980 U.S. App. LEXIS 12640 (5th Cir. Miss. 1980).

A Georgia corporation was not barred from seeking relief in the Mississippi courts for an alleged breach of a restrictive covenant by one of its former employees, even though the claim arose out of the transaction of business in the state and even though plaintiff corporation had not first obtained a certificate of authority from the Secretary of State, where the record supported the trial court’s findings that plaintiff was engaged in interstate commerce and was thus exempted by subsections (d) and (e) of this section from the certificate requirements. Cheatham v. Kem Mfg. Corp., 372 So. 2d 1085, 1979 Miss. LEXIS 2148 (Miss. 1979).

Payment of the contractor’s privilege tax by a foreign corporation did not relieve it of the requirement that it obtain a certificate of authority to do business from the secretary of state and, absent such certificate, the contractor was not entitled to sue in state court to enforce a construction lien. Town & Country Plumbing Co. v. Delta Real Estate Development, Inc., 357 So. 2d 126, 1978 Miss. LEXIS 2491 (Miss. 1978).

An Arkansas corporation was doing business within the state where, of its chain of franchised retail stores, several were in Mississippi, and, with respect to a particular Mississippi store from which it sought recovery of franchise fees and other charges, evidence showed that the corporation had a contract right to control virtually the entire operation of the store and that it was in fact significantly involved in that operation. Barbee v. United Dollar Stores, Inc., 337 So. 2d 1277, 1976 Miss. LEXIS 1617 (Miss. 1976).

An Ohio corporation that had acted as purchaser and lessor of frozen drink machines, buying them from a Georgia corporation and leasing them to individuals in Mississippi who had agreed to lease them in an arrangement made through the Georgia corporation, was not “transacting” business within Mississippi within the meaning of § 79-3-247 [repealed] and could bring an action in the Mississippi district court to recover amounts due on the lease from the lessees. Xyoquip, Inc. v. Mims, 413 F. Supp. 962, 1976 U.S. Dist. LEXIS 17295 (N.D. Miss. 1976).

In a suit filed by a foreign corporation having no certificate of authority to do business in this state, where the record showed that the only business that the plaintiff had transacted in this state was entering into the lease contract with the defendant which was the subject of the suit, the transaction sued upon fell within the exception set up in Code 1972, § 79-3-211(d) [repealed], and the plaintiff was therefore not barred from bringing suit by Code 1972, § 79-3-247 [repealed]. Mid--Continent Refrigerator Co. v. Starks, 298 So. 2d 714, 1974 Miss. LEXIS 1572 (Miss. 1974).

Diversity action brought by nonresident plaintiffs to recover a brokerage fee allegedly owed by the defendant for two loan commitments was not barred by Code 1972 § 79-3-247 [repealed] where the transactions involved fell within the exception found in Code 1972 § 79-3-211(e) [repealed]. Ivor B. Clark Co. v. Southern Business & Industrial Development Co., 399 F. Supp. 824, 1974 U.S. Dist. LEXIS 6123 (S.D. Miss. 1974).

A foreign corporation not authorized by statute to do business in Mississippi cannot resort either to the state or to the federal court sitting within the state to enforce its rights unless they arose from and were exempted as a transaction in interstate commerce. Cone Mills Corp. v. Hurdle, 369 F. Supp. 426, 1974 U.S. Dist. LEXIS 12865 (N.D. Miss. 1974).

Code 1942, § 5309-239, prohibiting foreign corporations lacking a certificate of authority to maintain any action, suit or proceeding in the state, is a punitive statute designed to penalize those foreign corporations doing business in the State of Mississippi without qualifying as required by Code 1942, § 5309-221. Alabama Live Poultry, Inc. v. Ervin, 246 So. 2d 915, 1971 Miss. LEXIS 1429 (Miss. 1971).

A foreign corporation’s negotiation and purchase of common stock in one or more subsidiary companies within Mississippi does not render it doing business within the purview of the qualification statutes, and the fact that acquisition of stock in other companies was an avowed purpose of the foreign corporation’s charter has no effect upon the operation of this rule. Mid-Continent Tel. Corp. v. Home Tel. Co., 307 F. Supp. 1014, 1969 U.S. Dist. LEXIS 12626 (N.D. Miss. 1969).

The purchase or ownership of stock, even of a controlling interest, in a domestic corporation by a foreign corporation does not constitute doing business by the foreign corporation sufficient to subject it to service of process in the state of the subsidary’s operation. Mid-Continent Tel. Corp. v. Home Tel. Co., 307 F. Supp. 1014, 1969 U.S. Dist. LEXIS 12626 (N.D. Miss. 1969).

That a foreign corporation entered into a service agreement with its Mississippi subsidiary whereby it furnishes to the subsidiary, upon its request, services in various areas requiring technical training and expertise and also sold to its subsidiary equipment and supplies, lends its money, and other financial assistance, local activities at least partly performed in Mississippi, these facts are insufficient to support the conclusion that the foreign corporation is “doing business” in the State of Mississippi. Mid-Continent Tel. Corp. v. Home Tel. Co., 307 F. Supp. 1014, 1969 U.S. Dist. LEXIS 12626 (N.D. Miss. 1969).

A greater degree of business activity is required to bar a foreign corporation from Mississippi courts than is required to subject the same foreign corporation to local service of process under the state’s long arm statute. Mid-Continent Tel. Corp. v. Home Tel. Co., 307 F. Supp. 1014, 1969 U.S. Dist. LEXIS 12626 (N.D. Miss. 1969).

A foreign corporation is “doing business” within the state where it performs acts (not excluded by the statute itself) that are within the functions of its corporate powers and the business so performed is substantial in scope, and the substantiality and scope of local activity are equated with some substantial part of its ordinary or customary business, usually continuous in the sense that it may be distinguished from merely casual, sporadic, or occasional transactions and isolated acts. Mid-Continent Tel. Corp. v. Home Tel. Co., 307 F. Supp. 1014, 1969 U.S. Dist. LEXIS 12626 (N.D. Miss. 1969).

A corporation is doing business for purposes of requiring it to qualify to have access to the courts of Mississippi when the corporation enters the state and carries on a substantial part of its business there on a regular basis, and the question of whether a corporation is so doing business in the state is one of the facts to be determined by the circumstances of each particular case, and the corporation’s activities must be judged as a whole. Humboldt Foods, Inc. v. Massey, 297 F. Supp. 236, 1968 U.S. Dist. LEXIS 7941 (N.D. Miss. 1968).

A Tennessee food processing corporation, which entered into a contract with five Mississippi planters under which the latter agreed to cultivate 1000 acres of green beans and the processor obligated itself to harvest and transport the beans, was not engaged in doing business in Mississippi, and was not prohibited from maintaining an action in federal court in that state, although not qualified to do business there. Humboldt Foods, Inc. v. Massey, 297 F. Supp. 236, 1968 U.S. Dist. LEXIS 7941 (N.D. Miss. 1968).

A corporation is not doing business in Mississippi merely because it has employees or agents in the state to solicit orders to be transmitted to the principal, or to perform acts incidental to interstate commerce. Humboldt Foods, Inc. v. Massey, 297 F. Supp. 236, 1968 U.S. Dist. LEXIS 7941 (N.D. Miss. 1968).

The penalty imposed against a foreign corporation doing business in Mississippi without having first qualified is that it shall not be permitted to avail itself of the state courts to enforce a cause of action accruing to it prior to the time it qualified to do business; but the contracts and other acts of a foreign corporation entered into or performed prior to its qualification are not rendered invalid. Wood v. Gulf States Capital Corp., 217 So. 2d 257, 1968 Miss. LEXIS 1259 (Miss. 1968).

A foreign credit corporation which has an agent in Mississippi for the purpose of calling upon prospective sellers of title retention notes to solicit and induce them to submit the collateral notes taken from their customers to the office of the credit corporation in Memphis, Tennessee, furnished an automobile to its agent for use in calling on manufacturers and dealers in Mississippi, and offered its services to dealers to collect delinquent money due on notes, or to recover the possession of property described in the notes, was not engaged in doing business in Mississippi within the purview of this section [Code 1942, § 5309-221]. Ross Constr. Co. v. U. M. & M. Credit Corp., 214 So. 2d 822, 1968 Miss. LEXIS 1336 (Miss. 1968).

A foreign corporation doing business in Mississippi without having qualified as required by statute cannot use the courts of this state to enforce any cause of action that accrued as the result of doing such business, and in order to avail itself of the state courts to enforce a cause of action, a foreign corporation doing business in the state must have qualified to do business when the cause of action accrued. Parker v. Lin-Co Producing Co., 197 So. 2d 228, 1967 Miss. LEXIS 1515 (Miss. 1967).

The statutory prohibition against bringing or maintaining actions or suits does not prevent a defendant from interposing defenses when sued nor preclude the asserting or recovering of a counterclaim. Smith v. Kincade, 232 F.2d 306, 1956 U.S. App. LEXIS 3022 (5th Cir. Miss. 1956).

Where a foreign corporation shipped its products f. o. b. from point outside the state to local dealers, who agreed to pay therefor and where the corporation also employed resident contract men to procure and recommend local dealers and investigate sureties on their performance bonds, the foreign corporation was not doing business in the state to such extent that the failure to qualify under this section [Code 1942, § 5319] would bar suits in courts of the state. J. R. Watkins Co. v. Flynt, 220 Miss. 871, 72 So. 2d 195, 1954 Miss. LEXIS 508 (Miss. 1954).

A foreign trading corporation having no office or place of business in this state, by employing a soliciting agent to obtain orders and send them to the home office, where they are filled by direct shipments to the purchasers, is not doing business in this state within the meaning of this section [Code 1942, § 5319]. Savell v. Schultz, Baujan & Co., 213 Miss. 427, 57 So. 2d 151, 1952 Miss. LEXIS 380 (Miss. 1952).

A foreign corporation which has failed to file a written power of attorney designating an agent on whom service of process may be had, in compliance with this section [Code 1942, § 5319], cannot maintain in a federal court an action, commenced on ground of diversity of citizenship, for a broker’s commission alleged to be due for the sale of real estate in the state, since this section [Code 1942, § 5319] also provides that a foreign corporation failing to comply with the above requirements shall not be permitted to bring or maintain any action or suit in any of the courts of the state. Woods v. Interstate Realty Co., 337 U.S. 535, 69 S. Ct. 1235, 93 L. Ed. 1524, 1949 U.S. LEXIS 2148 (U.S. 1949).

The Mississippi statutes deny to the noncomplying corporations permission to bring a suit in the state courts; but they do not prevent such a corporation from being sued upon its contracts in the state courts. Interstate Realty Co. v. Woods, 168 F.2d 701, 1948 U.S. App. LEXIS 2098 (5th Cir. Miss. 1948), rev'd, 337 U.S. 535, 69 S. Ct. 1235, 93 L. Ed. 1524, 1949 U.S. LEXIS 2148 (U.S. 1949).

A Tennessee corporation, which, through its agents, had contracted to sell real estate in Mississippi and in connection with sales had sent its agents into the state to meet prospective buyers and to show the properties to be sold, and which had admitted earnings from the sale of real estate in Mississippi over a period of years, was doing business in Mississippi within the meaning of this statute. Interstate Realty Co. v. Woods, 168 F.2d 701, 1948 U.S. App. LEXIS 2098 (5th Cir. Miss. 1948), rev'd, 337 U.S. 535, 69 S. Ct. 1235, 93 L. Ed. 1524, 1949 U.S. LEXIS 2148 (U.S. 1949).

In action on an account by a foreign corporation not authorized to do business in the state, where defendant’s plea and plaintiff’s replication raised issue whether plaintiff was doing business in the state, it was error to sustain demurrer to replication grounded on exhibits attached to the plea. W. T. Rawleigh Co. v. Lowry, 199 Miss. 107, 23 So. 2d 540, 1945 Miss. LEXIS 273 (Miss. 1945).

Foreign corporation, engaged in doing highway construction as its chief corporate function, was doing business in the state in the performance of a contract with the state highway commission for the construction of a link of state highway, within the purview of statutes requiring it to file a copy of its charter and designate an agent for the service of process. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Performance of contract between foreign highway construction corporation and state highway commission for construction of a link of highway within state was not an isolated transaction within the rule that an isolated dealing within the state by a foreign corporation is not doing business in the state so as to require filing of copy of charter and designation of agent for service of process. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

The usual test of whether a foreign corporation is doing business within the meaning of the statutes is whether or not it is doing such acts as are within the function of its corporate powers, and where the business so performed is substantial in scope such corporation is held to be doing business. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Permitting highway commission, in suit against it by foreign corporation to recover for damages for delay and additional compensation for extra work under contract with commission for construction of highway in state, to set up defense that corporation failed to qualify as a foreign corporation doing business in the state, after suit had been pending for three years and complainant had taken testimony for 20 days and rested, was not error, in absence of a showing that commission had notice of the noncompliance with the statutes prior to the taking of the evidence. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Foreign corporation doing business in state in performance of contract with highway commission for construction of highway could not recover damages for delay occasioned by commission nor additional compensation for extra work performed under such contract during time it failed to comply with provision requiring filing of a copy of its charter and designation of an agent for service of process. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

To constitute a foreign corporation doing business in a particular jurisdiction, the business must be of such nature and character as to warrant the inference that the corporation has subjected itself to the local jurisdiction, and is by its duly authorized officers or agents present within the state where the service of process is attempted. Lee v. Memphis Pub. Co., 195 Miss. 264, 14 So. 2d 351, 1943 Miss. LEXIS 133 (Miss. 1943).

A foreign finance company was subject to the privilege tax imposed by Laws 1940, ch. 110 on the business of acquiring notes and other securities whereby title is retained until payment of the purchase price of tangible personal property sold on installment payment contracts and the like, notwithstanding that such company did not file its corporate charter nor qualify to do business within the meaning of this section [Code 1942, § 5319]. Stone v. General Electric Contracts Corp., 193 Miss. 317, 7 So. 2d 811, 1942 Miss. LEXIS 84 (Miss. 1942), limited, Lincoln Nat'l Life Ins. Co. v. State Tax Com., 196 Miss. 82, 16 So. 2d 369, 1944 Miss. LEXIS 170 (Miss. 1944).

Where the sale of phonograph instruments to Mississippi residents by an Illinois corporation, which had no resident agent and had not filed a copy of its charter, was made through a Texas distributor, and was interstate in character, the fact that the distributor, who was compensated by a sales commission, had some sort of an understanding with the purchasers that the instrument would be kept in repair by the distributor, and the distributor did from time to time render this service, did not operate to take away the interstate character of the sale so as to preclude the corporation from foreclosing a chattel mortgage on the instrument. Smith v. J. P. Seeburg Corp., 192 Miss. 563, 6 So. 2d 591, 1942 Miss. LEXIS 44 (Miss. 1942).

A foreign corporation sending agents into the state to solicit the purchase of reserve title purchase money contracts, and purchasing such contracts at its office outside of the state, was not doing business in the state within the meaning of the statute. Yellow Mfg. Acceptance Corp. v. American Oil Co., 191 Miss. 757, 2 So. 2d 834, 1941 Miss. LEXIS 161 (Miss. 1941).

A foreign corporation was not doing business in Mississippi within the meaning of the statute, where it appeared that it was engaged in the business of procuring loans, its local agent sending the applications to the corporation’s home office for examination, and acceptance or rejection, and, if accepted, the transaction in connection with the loan was conducted through the home office, and the corporation required the borrower to pay its commission for handling the loan at the home office, or to execute notes payable to it in the city in which its home office was located. The fact that local correspondents, who received and transmitted applications for loans to a foreign loan corporation, were or were not agents of the corporation, rather than of the borrower, was immaterial in determining that the corporation was not doing business within the state, and so was not subject to the requirement as to filing a copy of its charter and appointing an agent to receive service of process. Morrison v. Guaranty Mortg. & Trust Co., 191 Miss. 207, 199 So. 110, 1940 Miss. LEXIS 256 (Miss. 1940).

Under statute (Laws 1934, Ch. 121), imposing franchise tax on corporations “doing business” in the state, which was defined to include each and every act, power or privilege exercised or enjoyed in the state as an incident to or by virtue of the powers and privileges acquired by the nature of the organization, a foreign corporation is “doing business” in the state and is subject to tax as soon as it gets ready to be active by having property there and enjoying the protection of the state for it, and qualifies formally by filing its charter and naming its agent for the service of process. Stone v. Interstate Natural Gas Co., 103 F.2d 544, 1939 U.S. App. LEXIS 3610 (5th Cir. Miss.), aff'd, 308 U.S. 522, 60 S. Ct. 292, 84 L. Ed. 442, 1939 U.S. LEXIS 16 (U.S. 1939).

A foreign corporation engaged in the business of discounting for cash for dealers, installment sales contracts for the unpaid balances on electric refrigerators and other electrical equipment, was not doing business within the state within the purview of this section [Code 1942, § 5319], so as to deny it the right to bring suit in the state for failure to file its charter and appoint a process agent, where the assignment contract between such corporation and the dealer was executed outside the state, payments thereon were to be made at the corporation’s place of business outside the state, and the title was vested in such corporation until payment was so made, notwithstanding that the corporation sent its agent into the state after the execution of the assignment contract to learn how its business was being conducted. Refrigeration Discount Corp. v. Turley, 189 Miss. 880, 198 So. 731, 1940 Miss. LEXIS 159 (Miss. 1940).

A foreign corporation, executing a contract in Minnesota for the sale of goods at wholesale, to be sold by the other party thereto in Mississippi, which contract required the purchaser to report his sale to the corporation, to designate his sales territory, and to remit a percentage of the proceeds of such sale, and permitted him to return unsold goods, was not doing business in Mississippi so as to require it to file a copy of its charter with the secretary of state and to appoint such officer as its process agent, and so as to preclude its resort to the court for failure to comply with such requirement, such contract being a contract of sale and not a contract of agency. Watson v. J. R. Watkins Co., 188 Miss. 435, 193 So. 913, 1940 Miss. LEXIS 17 (Miss. 1940).

A foreign corporation, engaged in the business of buying trade acceptances, conditional contracts and other financial paper from dealers and others taking such contracts, but maintaining no office in the state and completing the purchase of such commercial paper at its offices in another state, was not “doing business” within the state so as to preclude its resort to the courts of the state for failure to file the appointment of an agent within the state for the service of process, notwithstanding that it sometimes sent its agents into the state to solicit a purchase of such contracts and commercial paper; and, accordingly, it was error for the court below to grant a peremptory instruction for the defendant and to enter judgment in accordance therewith in a replevin suit wherein a foreign corporation sought recovery of possession of a refrigerator upon default in payment of instalments of a reserve title contract which it has purchased and accepted at its office in Memphis, Tennessee. C. I. T. Corp. v. Stuart, 185 Miss. 140, 187 So. 204, 1939 Miss. LEXIS 124 (Miss. 1939).

One test of whether foreign corporation is “doing business” within state within statute barring suit by foreign corporation doing business in state which does not file power of attorney to receive service is whether it is doing such acts as are within the function of its corporate powers. Marx & Bensdorf, Inc. v. First Joint Stock Land Bank, 178 Miss. 345, 173 So. 297, 1937 Miss. LEXIS 213 (Miss. 1937).

Foreign corporation which, through agent, who was nonresident, maintained headquarters at hotel within state large part of agent’s time, advertised for realty brokerage business and realized $19,102.95 in commissions in three years for selling thirty-three tracts of land held “doing business” within state within statute barring suit by foreign corporation doing business in state which does not file power of attorney to receive service. Marx & Bensdorf, Inc. v. First Joint Stock Land Bank, 178 Miss. 345, 173 So. 297, 1937 Miss. LEXIS 213 (Miss. 1937).

Corporation incorporated under laws of foreign country purchasing commercial paper secured by trust deeds in state and collecting notes and foreclosing trust deeds by agent in state who leased property pending foreclosures to realize on mortgages held not “doing business in state” within statute requiring foreign corporation doing business in state to file charter with secretary of state and appoint agent for service of process. North American Mortg. Co. v. Hudson, 176 Miss. 266, 168 So. 79, 1936 Miss. LEXIS 120 (Miss. 1936).

Foreign corporation doing business within state, not having complied with regulatory statute, could not bring action in state on notes due it. Wiley Electric Co. v. Electric Storage Battery Co., 167 Miss. 842, 147 So. 773, 1933 Miss. LEXIS 101 (Miss. 1933).

Louisiana corporation which loaned money pursuant to negotiations through office in Louisana, though loans were secured by Mississippi realty, held not doing business in Mississippi so as to preclude foreclosure of trust deed without compliance with statute. Dodds v. Pyramid Sec. Co., 165 Miss. 269, 147 So. 328, 1933 Miss. LEXIS 298 (Miss. 1933).

14. Under former § 79-3-289.

In a diversity action by a Florida construction company in federal district court for Mississippi, seeking to recover a construction contract debt from the surety, a Mississippi bank, the trial court committed reversible error when it granted the bank’s motion for dismissal on the grounds that the foreign company had engaged in intrastate commerce without qualifying to do so as required by Mississippi law, and thus, was precluded from maintaining an action in Mississippi state or federal Court, where contract substantially related to interstate activities, where, under the National Bank Act, the bank was required to be sued where it was located, and where it would have been an impermissible burden on interstate commerce to permit Mississippi courtroom doors to remain closed to such foreign company on events and contracts substantially related to interstate activities. Diversacon Industries, Inc. v. National Bank of Commerce, 629 F.2d 1030, 1980 U.S. App. LEXIS 12640 (5th Cir. Miss. 1980).

A foreign corporation not authorized by statute to do business in Mississippi cannot resort either to the state or to the federal court sitting within the state to enforce its rights unless they arose from and were exempted as a transaction in interstate commerce. Cone Mills Corp. v. Hurdle, 369 F. Supp. 426, 1974 U.S. Dist. LEXIS 12865 (N.D. Miss. 1974).

§79-4-15.02. Consequences of transacting business without authority.

A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.

The successor to a foreign corporation that transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any court in this state until the foreign corporation or its successor obtains a certificate of authority.

A court may stay a proceeding commenced by a foreign corporation, its successor or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.

A foreign corporation is liable for a civil penalty of Ten Dollars ($10.00) for each day, but not to exceed a total of One Thousand Dollars ($1,000.00) for each year, it transacts business in this state without a certificate of authority. The Attorney General may collect all penalties due under this subsection.

Notwithstanding subsections (a) and (b), the failure of a foreign corporation to obtain a certificate of authority shall not impair the validity of any contract, deed, mortgage, security interest, lien or act of such foreign corporation or prevent the foreign corporation from defending any action, suit or proceeding in any court of this state.

HISTORY: Laws, 1987, ch. 486, § 15.02; Laws, 2012, ch. 481, § 39, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, rewrote (e).

Cross References —

Foreign corporations, certificate of authority to transact business in state, corporate name, etc., under Mississippi Nonprofit Corporation Act, see §§ 79-11-363 through 79-11-381.

RESEARCH REFERENCES

ALR.

Effect of execution of foreign corporation’s contract which, while executory, was unenforceable because of noncompliance with conditions of doing business in state. 7 A.L.R.2d 256.

Rights of assignee or subsequent holder of negotiable paper executed to a foreign corporation doing business in state without compliance with local requirements. 80 A.L.R.2d 465.

Right to protection of corporate name, as between domestic corporation and foreign corporation not qualified to do business in state. 26 A.L.R.3d 994.

Foreign corporation’s leasing of personal property as doing business within statutes prescribing conditions of right to do business. 50 A.L.R.3d 1020.

Construction work by foreign corporation as doing business for purposes of statute requiring foreign corporation to qualify as condition of access to local courts. 90 A.L.R.3d 937.

State regulation of land ownership by alien corporation. 21 A.L.R.4th 1329.

Personal liability of stockholder, officer, or agent for debt of foreign corporation doing business in the state. 27 A.L.R.4th 387.

What constitutes doing business within state for purposes of state “closed door” statute barring unqualified or unregistered foreign corporation from local courts – modern cases. 88 A.L.R.4th 466.

Application of statute denying access to courts or invalidating contracts where corporation fails to comply with regulatory statute as affected by compliance after commencement of action. 23 A.L.R.5th 744.

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 225, 230 et seq.

12 Am. Jur. Pl & Pr Forms (Rev), Foreign Corporations, Forms 31-35.

CJS.

20 C.J.S., Corporations §§ 1843-1867.

Law Reviews.

Symposium on Mississippi Rules of Civil Procedure: Joinder of claims and parties-Rules 13, 14, 17 and 18. 52 Miss. L. J. 37.

An analysis of Mississippi’s treatment of foreign corporations. 55 Miss. L. J. 259, June, 1985.

JUDICIAL DECISIONS

I. Under Current Law.

1. In general.

2.-10. [Reserved for future use.]

II. Under Former §79-3-247.

11. In general.

I. Under Current Law.

1. In general.

Mississippi’s closing-door statute, Miss. Code Ann. § 79-4-15.02(a), did not foreclose the bank from enforcement of the notes and deeds of trust it assumed from a mortgage company because the mortgage company did not need a certificate of authority to enter into the mortgage transactions with the homeowners. Furthermore, the statute did not apply because the bank was merely defending the lawsuit brought by the homeowners. Carson v. McNeal, 375 F. Supp. 2d 509, 2005 U.S. Dist. LEXIS 13166 (S.D. Miss. 2005).

Federal district court dismissed, on grounds of res judicata, the claims of a foreign corporation, even though the prior dismissal of its claims by a State court had been erroneous where the corporation had not been authorized to do business at that time under Miss. Code Ann. § 79-4-15.02(a), but the State court should have stayed the proceedings under Miss. Code Ann. § 79-4-15.02(c). Cuba Timber Co., Plaintiff v. Boswell, 339 F. Supp. 2d 773, 2004 U.S. Dist. LEXIS 20289 (S.D. Miss. 2004).

If a foreign corporation is not transacting business in Mississippi, a certificate of authority is not required in order to maintain an action in Mississippi, as demonstrated by § 79-4-15.02(c) which states that a court may stay a proceeding commenced by a foreign corporation until it determines whether the corporation requires a certificate of authority; since the court is granted some amount of discretion, it is apparent that not all foreign corporations require a certificate to maintain an action. Mississippi Ins. Guar. Ass'n v. Harkins & Co., 652 So. 2d 732, 1995 Miss. LEXIS 145 (Miss. 1995).

A foreign corporation was not transacting business in Mississippi, and therefore did not need a certificate of authority in order to maintain an action in Mississippi where the only business contact the corporation had with Mississippi was the actual commencement of the suit, since § 79-4-15.01(b)(1) states that simply maintaining, defending, or settling a proceeding does not constitute “transacting business.” Mississippi Ins. Guar. Ass'n v. Harkins & Co., 652 So. 2d 732, 1995 Miss. LEXIS 145 (Miss. 1995).

2.-10. [Reserved for future use.]

II. Under Former § 79-3-247.

11. In general.

If corporation does not qualify to do business in State of Mississippi, it does not have access to courts in so far as maintaining action or suit. Read v. Sonat Offshore Drilling, Inc., 515 So. 2d 1229, 1987 Miss. LEXIS 2929 (Miss. 1987).

If foreign corporation is qualified to do business in State of Mississippi, even though it may not be doing any business, its agent for process may be served and courts have personal jurisdiction over that corporation; actually doing business in state has nothing to do with personal jurisdiction where foreign corporation has qualified to do business in state; corporation qualifying to do business in state, under appropriate statutes, becomes like individual as far as suit is concerned. Read v. Sonat Offshore Drilling, Inc., 515 So. 2d 1229, 1987 Miss. LEXIS 2929 (Miss. 1987).

In a diversity action by a Florida construction company in federal district court for Mississippi, seeking to recover a construction contract debt from the surety, a Mississippi bank, the trial court committed reversible error when it granted the bank’s motion for dismissal on the grounds that the foreign company had engaged in intrastate commerce without qualifying to do so as required by Mississippi law, and thus, was precluded from maintaining an action in Mississippi state or federal court, where contract substantially related to interstate activities, where, under the National Bank Act, the bank was required to be sued where it was located, and where it would have been an impermissible burden on interstate commerce to permit Mississippi courtroom doors to remain closed to such foreign company on events and contracts substantially related to interstate activities. Diversacon Industries, Inc. v. National Bank of Commerce, 629 F.2d 1030, 1980 U.S. App. LEXIS 12640 (5th Cir. Miss. 1980).

Statute prohibiting a foreign corporation which does not obtain from Mississippi’s secretary of state a certificate of authority to transact business in the state from maintaining an action in any courts in Mississippi does not deprive a defendant of the right to prevent compulsory counterclaims and third-party complaints. Environmental Coatings, Inc. v. Baltimore Paint & Chemical Co., 617 F.2d 110, 1980 U.S. App. LEXIS 17512 (5th Cir. Miss. 1980).

Where, at the time a foreign corporation entered into a contract with a franchisee, it was not authorized to do business within the state, but where it had qualified to transact business within the state by the time the cause of action for default in the payment of the franchise fees accrued, the foreign corporation was entitled to bring suit in state court to enforce its contract with its franchisee. Honey Fluff Donut Co. v. Daniel, Inc., 374 So. 2d 800, 1979 Miss. LEXIS 2363 (Miss. 1979).

Payment of the contractor’s privilege tax by a foreign corporation did not relieve it of the requirement that it obtain a certificate of authority to do business from the secretary of state and, absent such certificate, the contractor was not entitled to sue in state court to enforce a construction lien. Town & Country Plumbing Co. v. Delta Real Estate Development, Inc., 357 So. 2d 126, 1978 Miss. LEXIS 2491 (Miss. 1978).

Because it was engaged as well in intrastate business, the general interstate nature of the business of a multistate franchising corporation did not exempt it from the requirement of this section that it obtain a certificate to operate within the state; and a Mississippi franchisee against whom it filed suit to recover franchise fees and other charges was not estopped, by his filing of a counterclaim, from raising this statute as a bar to the corporation’s action, where the corporation had incorrectly alleged in its complaint that it was licensed and qualified in Mississippi, and the franchisee properly relied on the pleading by filing a responsive pleading. Barbee v. United Dollar Stores, Inc., 337 So. 2d 1277, 1976 Miss. LEXIS 1617 (Miss. 1976).

Statute did not apply to a national banking corporation. Indiana Nat'l Bank v. Roberts, 326 So. 2d 802, 1976 Miss. LEXIS 1764 (Miss. 1976).

Chancellor was correct in overruling a motion to dismiss under Code 1972, § 79-3-247 [Repealed] where there was nothing in the record to indicate that the complainant was doing, or had been doing, business in Mississippi. Crescent Plywood Co. v. Lawrence, 305 So. 2d 343, 1974 Miss. LEXIS 1477 (Miss. 1974).

The Mississippi Supreme Court’s judgment holding that because of an out-of-state cotton merchant’s failure to obtain a certificate of authority to qualify to do business in the state as a foreign corporation, the merchant, pursuant to Code 1942, § 5309-239, could not maintain an action in the state courts against a resident cotton farmer for his breach of a contract to sell his future cotton crop to the merchant by delivering the cotton to the merchant at a local warehouse-such contract having been negotiated by an independent, local broker whose practice was to telephone the necessary information to the merchant at its out-of-state office, where a contract was prepared and signed by the merchant and then forwarded to the broker to obtain the farmer’s signature-is repugnant to the commerce clause of the Federal Constitution (Art I, § 8, cl 3), where (1) even though delivery of the cotton to the merchant’s account at the local warehouse, taken in isolation, was an intrastate transaction, nevertheless such delivery was a part of interstate commerce since it was essential for sorting and classifying the cotton as a prerequisite to its shipment in interstate or foreign commerce under the merchant’s contracts for sale of the cotton to customers outside the state, and (2) the merchant’s contracts with the forum state did not exhibit the sort of localization or intrastate character required in situations where a state seeks to require a foreign corporation to qualify to do business, since the local broker who arranged the contracts was paid on a commission basis and had no authority to execute contracts on the merchant’s behalf, and since the merchant had no office or warehouse in the state, and no employees soliciting business or otherwise operating in the state on a regular basis. Allenberg Cotton Co. v. Pittman, 419 U.S. 20, 95 S. Ct. 260, 42 L. Ed. 2d 195, 1974 U.S. LEXIS 11 (U.S. 1974).

Mississippi Supreme Court’s holding that because of Tennessee cotton merchant’s failure to qualify to do business in Mississippi, merchant could not maintain action for Mississippi resident’s breach of contract to sell cotton to merchant, held violative of commerce clause of Federal Constitution. Allenberg Cotton Co. v. Pittman, 419 U.S. 20, 95 S. Ct. 260, 42 L. Ed. 2d 195, 1974 U.S. LEXIS 11 (U.S. 1974).

The phrase “in any court of this state” as used in Code 1942 § 5309-239, precludes an unqualified corporation’s resort, not only to Mississippi state courts but also to federal courts in Mississippi, with regard to actions arising out of purely intrastate activities. Fred Hale Machinery, Inc. v. Laurel Hill Lumber Co., 483 F.2d 58, 1973 U.S. App. LEXIS 8921 (5th Cir. Miss. 1973).

A statute such as Code 1942 § 5309-239 cannot be enforced if its application would unreasonably burden interstate commerce by prohibiting suits growing out of transactions in interstate commerce. Fred Hale Machinery, Inc. v. Laurel Hill Lumber Co., 483 F.2d 58, 1973 U.S. App. LEXIS 8921 (5th Cir. Miss. 1973).

Where negotiations for the design and supply of certain sawmill machinery were conducted in Louisiana and Mississippi, the Louisiana corporation arranged to supply components from manufacturers in Mississippi and Georgia, and the Louisiana corporation sent its employees to Mississippi in connection with the assembly and installation of the system, this transaction was of an interstate character, and application of Code 1942 § 5309-239 would create an unreasonable burden on interstate commerce, and accordingly, that section did not bar the Louisiana corporation from filing suit in Fred Hale Machinery, Inc. v. Laurel Hill Lumber Co., 483 F.2d 58, 1973 U.S. App. LEXIS 8921 (5th Cir. Miss. 1973).

Foreign corporation seeking to maintain action for breach of contract was not barred under Miss Code § 79-3-247 [repealed] from bringing action for failure to have certificate of authority to do business in state where foreign corporation maintained no office or bank account in state and had no employees in state and where purpose of contract was for foreign corporation to manage hotel, thus bringing business within reach of Commerce Clause and within exception to definition of “transacting business” under § 79-3-211 [repealed]. Madden Management, Inc. v. First Equities Corp., 666 F. Supp. 96, 1987 U.S. Dist. LEXIS 7872 (N.D. Miss. 1987).

A foreign corporation transacting business in Mississippi without having first obtained a certificate of authority, as required by statute, would not be precluded from asserting a third-party complaint in an action in which it was a defendant. Park v. Cannco Contractors, Inc., 446 F. Supp. 24, 1977 U.S. Dist. LEXIS 13861 (N.D. Miss. 1977).

An Ohio corporation that had acted as purchaser and lessor of frozen drink machines, buying them from a Georgia corporation and leasing them to individuals in Mississippi who had agreed to lease them in an arrangement made through the Georgia corporation, was not “transacting” business within Mississippi within the meaning of § 79-3-247 [repealed] and could bring an action in the Mississippi district court to recover amounts due on the lease from the lessees. Xyoquip, Inc. v. Mims, 413 F. Supp. 962, 1976 U.S. Dist. LEXIS 17295 (N.D. Miss. 1976).

Diversity action brought by nonresident plaintiffs to recover a brokerage fee allegedly owed by the defendant for two loan commitments was not barred by Code 1972 § 79-3-247 [repealed] where the transactions involved fell within the exception found in Code 1972 § 79-3-211(e) [repealed]. Ivor B. Clark Co. v. Southern Business & Industrial Development Co., 399 F. Supp. 824, 1974 U.S. Dist. LEXIS 6123 (S.D. Miss. 1974).

A foreign corporation not authorized by statute to do business in Mississippi cannot resort either to the state or to the federal court sitting within the state to enforce its rights unless they arose from and were exempted as a transaction in interstate commerce. Cone Mills Corp. v. Hurdle, 369 F. Supp. 426, 1974 U.S. Dist. LEXIS 12865 (N.D. Miss. 1974).

When the plaintiff nonresident corporation ceased to do business in this state, it was no longer in violation of the law requiring it to obtain a certificate of authority, and a cause of action thereafter accruing which did not arise directly out of the operation of the business could be maintained in the courts of this state. Val--U--King Homes, Inc. v. Taylor, 301 So. 2d 857, 1974 Miss. LEXIS 1676 (Miss. 1974).

In a suit filed by a foreign corporation having no certificate of authority to do business in this state, where the record showed that the only business that the plaintiff had transacted in this state was entering into the lease contract with the defendant which was the subject of the suit, the transaction sued upon fell within the exception set up in Code 1972, § 79-3-211(d)[Repealed], and the plaintiff was therefore not barred from bringing suit by Code 1972, § 79-3-247 [repealed]. Mid--Continent Refrigerator Co. v. Starks, 298 So. 2d 714, 1974 Miss. LEXIS 1572 (Miss. 1974).

Where a joint venturer consisted of three foreign corporations, the joint venturer could not maintain an action in negligence for damages where one of the corporations had failed to qualify to do business in Mississippi, even though the connection of such corporation with the transaction consisted only in furnishing its share of the capital needed to carry out the contract in the state and the actual performance of the contract was accomplished by another of the joint venturers. Scott Co. of California v. Enco Constr. Co., 264 So. 2d 409, 1972 Miss. LEXIS 1362 (Miss. 1972).

For the purposes of Code 1942, § 5309-239, providing that a foreign corporation transacting business in Mississippi without a certificate of authority shall not be permitted to maintain any action, a member of a joint venturer is transacting business in the state when one of the joint venturers is transacting in the state the business for which the joint venturer was formed. Scott Co. of California v. Enco Constr. Co., 264 So. 2d 409, 1972 Miss. LEXIS 1362 (Miss. 1972).

A strict construction of this statute is required, it being penal, before access to the state courts is precluded to a foreign corporation found to be “doing business” in the state, and the question of whether a foreign corporation is doing business within the state must be determined upon an ad hoc basis. S & A Realty Co. v. Hilburn, 249 So. 2d 379, 1971 Miss. LEXIS 1159 (Miss. 1971).

Where a foreign corporation had a 10 year lease within the state and subsequently renewed for an additional 10 years, paid the agreed rentals under both the initial and renewal leases, and proposed to execute a purchase option provided therein, and where the charter of the corporation provided that the corporation’s purpose was to buy, sell, lease, exchange, build and construct real estate, the corporation was transacting business within this section [Code 1942, § 5309-239], barring it from the courts because not qualified to do so. S & A Realty Co. v. Hilburn, 249 So. 2d 379, 1971 Miss. LEXIS 1159 (Miss. 1971).

Code 1942, § 5309-239, prohibiting foreign corporations lacking a certificate of authority to maintain any action, suit or proceeding in the state, is a punitive statute designed to penalize those foreign corporations doing business in the State of Mississippi without qualifying as required by Code 1942, § 5309-221. Alabama Live Poultry, Inc. v. Ervin, 246 So. 2d 915, 1971 Miss. LEXIS 1429 (Miss. 1971).

An Alabama corporation which had never received a license or authorization to do business in Mississippi, and which leased trucks for the purpose of hauling chickens in its trucking business, purchasing the chickens in Mississippi and delivering them to a Mississippi destination, was doing business in Mississippi and could not maintain an attachment suit against the owner of the trucks, under the provisions of this section [Code 1942, § 5309-239]. Alabama Live Poultry, Inc. v. Ervin, 246 So. 2d 915, 1971 Miss. LEXIS 1429 (Miss. 1971).

Where the evidence established that the foreign corporation plaintiff was a corporate entity separate and apart from a subsidiary which engaged in business in Mississippi without authority, the association between plaintiff and its subsidiary did not create the relationship of principal and agent between them, and that plaintiff was not engaged in doing business in Mississippi through the activities of its subsidiary, it was not prohibited from bringing a diversity action in the federal courts of that state. Bunge Corp. v. St. Louis Terminal Field Warehouse Co., 295 F. Supp. 1231, 1969 U.S. Dist. LEXIS 12581 (N.D. Miss. 1969).

A foreign corporation doing business in Mississippi without having qualified as required by statute cannot use the courts of the state to enforce any cause of action that accrued as a result of doing such business, and the fact that the corporation subsequently qualified to do business would not authorize it thereafter to maintain an action on the cause which had previously accrued. Bunge Corp. v. St. Louis Terminal Field Warehouse Co., 295 F. Supp. 1231, 1969 U.S. Dist. LEXIS 12581 (N.D. Miss. 1969).

The prohibition against a foreign corporation transacting business in Mississippi without a certificate of authority maintaining an action, suit, or proceeding in any court of the state applies to an action in a federal court in the state. Bunge Corp. v. St. Louis Terminal Field Warehouse Co., 295 F. Supp. 1231, 1969 U.S. Dist. LEXIS 12581 (N.D. Miss. 1969).

The penalty imposed against a foreign corporation doing business in Mississippi without having first qualified is that it shall not be permitted to avail itself of the state courts to enforce a cause of action accruing to it prior to the time it qualified to do business; but the contracts and other acts of a foreign corporation entered into or performed prior to its qualification are not rendered invalid. Wood v. Gulf States Capital Corp., 217 So. 2d 257, 1968 Miss. LEXIS 1259 (Miss. 1968).

A corporation is doing business for purposes of requiring it to qualify to have access to the courts of Mississippi when the corporation enters the state and carries on a substantial part of its business there on a regular basis, and the question of whether a corporation is so doing business in the state is one of the facts to be determined by the circumstances of each particular case, and the corporation’s activities must be judged as a whole. Humboldt Foods, Inc. v. Massey, 297 F. Supp. 236, 1968 U.S. Dist. LEXIS 7941 (N.D. Miss. 1968).

A corporation is not doing business in Mississippi merely because it has employees or agents in the state to solicit orders to be transmitted to the principal, or to perform acts incidental to interstate commerce. Humboldt Foods, Inc. v. Massey, 297 F. Supp. 236, 1968 U.S. Dist. LEXIS 7941 (N.D. Miss. 1968).

A Tennessee food processing corporation, which entered into a contract with five Mississippi planters under which the latter agreed to cultivate 1000 acres of green beans and the processor obligated itself to harvest and transport the beans, was not engaged in doing business in Mississippi, and was not prohibited from maintaining an action in federal court in that state, although not qualified to do business there. Humboldt Foods, Inc. v. Massey, 297 F. Supp. 236, 1968 U.S. Dist. LEXIS 7941 (N.D. Miss. 1968).

A foreign corporation doing business in Mississippi without having qualified as required by statute cannot use the courts of this state to enforce any cause of action that accrued as the result of doing such business, and in order to avail itself of the state courts to enforce a cause of action, a foreign corporation doing business in the state must have qualified to do business when the cause of action accrued. Parker v. Lin-Co Producing Co., 197 So. 2d 228, 1967 Miss. LEXIS 1515 (Miss. 1967).

§79-4-15.03. Application for certificate of authority.

A foreign corporation may apply for a certificate of authority to transact business in this state by delivering an application to the Secretary of State for filing. The application must set forth:

1. The name of the foreign corporation or, if its name is unavailable for use in this state, a corporate name that satisfies the requirements of Section 79-4-15.06;
2. The name of the state or country under whose law it is incorporated;
3. Its date of incorporation and period of duration;
4. The street address of its principal office;
5. The information required by Section 79-35-5(a); and
6. The names and usual business addresses of its current directors and officers.

The foreign corporation shall deliver with the completed application a certificate of existence (or a document of similar import) duly authenticated by the Secretary of State or other official having custody of corporate records in the state or country under whose law it is incorporated.

HISTORY: Laws, 1987, ch. 486, § 15.03; Laws, 2012, ch. 382, § 41, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, rewrote (a)(5).

Cross References —

Requirements of this section for obtaining original certificate of authority apply to obtaining amended certificate, see § 79-4-15.04.

Application of foreign professional corporation for certificate of authority to contain information required by this section, see § 79-10-93.

Foreign corporations, certificate of authority to transact business in state, corporate name, etc., under Mississippi Nonprofit Corporation Act, see §§ 79-11-363 through 79-11-381.

RESEARCH REFERENCES

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 174, 205, 220 et seq.

CJS.

20 C.J.S., Corporations § 1818.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former §79-3-219.

12. Under former §79-3-221.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former § 79-3-219.

A foreign corporation transacting business in Mississippi without having first obtained a certificate of authority, as required by statute, would not be precluded from asserting a third-party complaint in an action in which it was a defendant. Park v. Cannco Contractors, Inc., 446 F. Supp. 24, 1977 U.S. Dist. LEXIS 13861 (N.D. Miss. 1977).

12. Under former § 79-3-221.

A non-profit foreign corporation, operating a university in another state, which leased a farm which it owned in this state, was not required to file a copy of its charter or articles of incorporation in the office of the secretary of state under this section [Code 1942, § 5343]. Gillentine v. Illinois Wesleyan University, 194 F.2d 970, 1952 U.S. App. LEXIS 3708 (5th Cir. Miss. 1952).

Execution of a mineral lease in Mississippi covering land located in Mississippi, which contract was to be performed in Mississippi, constituted doing business within that state by a foreign corporation. Calcote v. Texas Pac. Coal & Oil Co., 157 F.2d 216, 1946 U.S. App. LEXIS 3285 (5th Cir. Miss.), cert. denied, 329 U.S. 782, 67 S. Ct. 205, 91 L. Ed. 671, 1946 U.S. LEXIS 1740 (U.S. 1946).

The usual test of whether a foreign corporation is doing business within the meaning of the statutes is whether or not it is doing such acts as are within the function of its corporate powers, and where the business so performed is substantial in scope such corporation is held to be doing business. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Foreign corporation, engaged in doing highway construction as its chief corporate function, was doing business in the state in the performance of a contract with the state highway commission for the construction of a link of state highway, within the purview of statutes requiring it to file a copy of its charter and designate an agent for the service of process. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Performance of contract between foreign highway construction corporation and state highway commission for construction of a link of highway within state was not an isolated transaction within the rule that an isolated dealing within the state by a foreign corporation is not doing business in the state so as to require filing of copy of charter and designation of agent for service of process. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Permitting highway commission, in suit against it by foreign corporation to recover for damages for delay and additional compensation for extra work under contract with commission for construction of highway in state, to set up defense that corporation failed to qualify as a foreign corporation doing business in the state, after suit had been pending for three years and complainant had taken testimony for 20 days and rested, was not error, in absence of a showing that commission had notice of the noncompliance with the statutes prior to the taking of the evidence. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Foreign corporation doing business in state in performance of contract with highway commission for construction of highway could not recover damages for delay occasioned by commission nor additional compensation for extra work performed under such contract during time it failed to comply with provision requiring filing of a copy of its charter and designation of an agent for service of process. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

A foreign finance company was subject to the privilege tax imposed by Laws 1940, Ch. 110 on the business of acquiring notes and other securities whereby title is retained until payment of the purchase price of tangible personal property sold on installment payment contracts and the like, notwithstanding that such company did not file its corporate charter nor qualify to do business within the meaning of section 5319. Stone v. General Electric Contracts Corp., 193 Miss. 317, 7 So. 2d 811, 1942 Miss. LEXIS 84 (Miss. 1942), limited, Lincoln Nat'l Life Ins. Co. v. State Tax Com., 196 Miss. 82, 16 So. 2d 369, 1944 Miss. LEXIS 170 (Miss. 1944).

Where the sale of phonograph instruments to Mississippi residents by an Illinois corporation, which had no resident agent and had not filed a copy of its charter, was made through a Texas distributor, and was interstate in character, the fact that the distributor, who was compensated by a sales commission, had some sort of an understanding with the purchasers that the instrument would be kept in repair by the distributor, and the distributor did from time to time render this service, did not operate to take away the interstate character of the sale so as to preclude the corporation from foreclosing a chattel mortgage on the instrument. Smith v. J. P. Seeburg Corp., 192 Miss. 563, 6 So. 2d 591, 1942 Miss. LEXIS 44 (Miss. 1942).

This section [Code 1942, § 5343] is applicable only to corporations doing intrastate business. Morrison v. Guaranty Mortg. & Trust Co., 191 Miss. 207, 199 So. 110, 1940 Miss. LEXIS 256 (Miss. 1940).

The fact that local correspondents, who received and transmitted applications for loans to a foreign loan corporation, were or were not agents of the corporation, rather than of the borrower, was immaterial in determining that the corporation was not doing business within the state, and so was not subject to the requirement as to filing a copy of its charter and appointing an agent to receive service of process. Morrison v. Guaranty Mortg. & Trust Co., 191 Miss. 207, 199 So. 110, 1940 Miss. LEXIS 256 (Miss. 1940).

A foreign corporation was not doing business in Mississippi within the meaning of the statute, where it appeared that it was engaged in the business of procuring loans, its local agent sending the applications to the corporation’s home office for examination, and acceptance or rejection, and, if accepted, the transaction in connection with the loan was conducted through the home office, and the corporation required the borrower to pay its commission for handling the loan at the home office, or to execute notes payable to it in the city in which its home office was located. Morrison v. Guaranty Mortg. & Trust Co., 191 Miss. 207, 199 So. 110, 1940 Miss. LEXIS 256 (Miss. 1940).

In an action on a note by a foreign corporation, in which the defendant pleaded abatement on the ground that the plaintiff had not filed a copy of its charter or appointed an agent to receive service of process, the requirement of interrogatories propounded by the defendant as to all transactions of the corporation within the state from 1923 to 1931 would impose such a burden upon the right to sue as practically to defeat it, and so would not be done, where it appeared that many of the transactions had no relation to the suit before the court and so were irrelevant, there was no index to the plaintiff’s files, which were stored in such a manner that it was practically impossible to go through them, and the defendant had not accepted an offer to give them access to the files. Morrison v. Guaranty Mortg. & Trust Co., 191 Miss. 207, 199 So. 110, 1940 Miss. LEXIS 256 (Miss. 1940).

A foreign corporation, executing a contract in Minnesota for the sale of goods at wholesale, to be sold by the other party thereto in Mississippi, which contract required the purchaser to report his sale to the corporation, to designate his sales territory, and to remit a percentage of the proceeds of such sale, and permitted him to return unsold goods, was not doing business in Mississippi so as to require it to file a copy of its charter with the secretary of state and to appoint such officer as its process agent, and so as to preclude its resort to the court for failure to comply with such requirement, such contract being a contract of sale and not a contract of agency. Watson v. J. R. Watkins Co., 188 Miss. 435, 193 So. 913, 1940 Miss. LEXIS 17 (Miss. 1940).

However, an undertaking by a foreign corporation in connection with a conditional sale of an ice cream dispenser, otherwise an interstate transaction, to service it gratis for a year, gives the transaction a local character, rendering the contract of conditional sale unenforceable by reason of the corporation’s failure to comply with the requirement of this section [Code 1942, § 5343] with regard to filing a copy of its charter in order to do business in the state. Case v. Mills Novelty Co., 187 Miss. 673, 193 So. 625, 1940 Miss. LEXIS 237 (Miss. 1940).

Where a foreign corporation fails to file a copy of its charter, a contract by which an intrastate sale was made by it is void. Case v. Mills Novelty Co., 187 Miss. 673, 193 So. 625, 1940 Miss. LEXIS 237 (Miss. 1940).

Under statute (Laws 1934, Ch. 121), imposing franchise tax on corporations “doing business” in the state, which was defined to include each and every act, power or privilege exercised or enjoyed in the state as an incident to or by virtue of the powers and privileges acquired by the nature of the organization, a foreign corporation is “doing business” in the state and is subject to tax as soon as it gets ready to be active by having property there and enjoying the protection of the state for it, and qualifies formally by filing its charter and naming its agent for the service of process. Stone v. Interstate Natural Gas Co., 103 F.2d 544, 1939 U.S. App. LEXIS 3610 (5th Cir. Miss.), aff'd, 308 U.S. 522, 60 S. Ct. 292, 84 L. Ed. 442, 1939 U.S. LEXIS 16 (U.S. 1939).

Foreign corporation purchasing commercial paper secured by trust deeds in state, and collecting notes and foreclosing trust deeds by agent in state, who leased property pending foreclosures to realize on mortgages, held not “doing business in state.” North American Mortg. Co. v. Hudson, 176 Miss. 266, 168 So. 79, 1936 Miss. LEXIS 120 (Miss. 1936).

Contract for purchase of property sold on foreclosure under deed of trust which had been executed to foreign corporation not having filed its charter with state, held not void as to third persons purchasing property. Citizens' Bank of Hattiesburg v. Grigsby, 170 Miss. 655, 155 So. 684, 1934 Miss. LEXIS 181 (Miss. 1934).

Foreign corporation soliciting subscriptions within state, with intention of thereafter constructing canning factory, was doing business within state. Peterman Constr. & Supply Co. v. Blumenfeld, 156 Miss. 55, 125 So. 548, 1930 Miss. LEXIS 142 (Miss. 1930).

Foreign corporation’s compliance with law cannot as respects particular contract, be made to relate back to date of its execution. Peterman Constr. & Supply Co. v. Blumenfeld, 156 Miss. 55, 125 So. 548, 1930 Miss. LEXIS 142 (Miss. 1930).

Test whether foreign corporation is doing business within state is whether it is doing acts within function of corporate powers. Peterman Constr. & Supply Co. v. Blumenfeld, 156 Miss. 55, 125 So. 548, 1930 Miss. LEXIS 142 (Miss. 1930).

That foreign corporation did business in state without filing charter held not to prevent it from selling property in state to liquidate its affairs; this section [Code 1942, § 5343] only denies corporation the right to enforce rights growing out of business transacted contrary to statute. Long Beach Canning Co. v. Clark, 141 Miss. 177, 106 So. 646, 1926 Miss. LEXIS 439 (Miss. 1926); Harleston v. West Louisiana Bank, 129 Miss. 111, 91 So. 423, 1922 Miss. LEXIS 6 (Miss. 1922).

Foreign corporation not required to file copy of charter to sell property in this state; sale by foreign corporation of specific property in state held not doing business therein. Long Beach Canning Co. v. Clark, 141 Miss. 177, 106 So. 646, 1926 Miss. LEXIS 439 (Miss. 1926); Harleston v. West Louisiana Bank, 129 Miss. 111, 91 So. 423, 1922 Miss. LEXIS 6 (Miss. 1922).

Contract between foreign corporation and one selling its newspapers, not as agent, but on his own account for purchase of newspapers on credit, contemplated a sale of the newspapers by a foreign corporation from without the state, and did not constitute doing business within the state, under this section [Code 1942, § 5343]. Item Co. v. Shipp, 140 Miss. 699, 106 So. 437, 1925 Miss. LEXIS 305 (Miss. 1925).

Single transaction by foreign corporation is not doing business in state. Item Co. v. Shipp, 140 Miss. 699, 106 So. 437, 1925 Miss. LEXIS 305 (Miss. 1925).

Sale of motor trucks by order through agent of foreign corporation resident in state held interstate commerce. City Sales Agency, Inc. v. Smith, 126 Miss. 202, 88 So. 625, 1921 Miss. LEXIS 24 (Miss. 1921).

Failure of foreign corporation to comply with this section [Code 1942, § 5343] does not withdraw from it recognition of its status as a corporation. Springfield Grocery Co. v. Devitt, 126 Miss. 169, 88 So. 497, 1921 Miss. LEXIS 12 (Miss. 1921).

A contract, whereby a foreign corporation purchased cotton seed “F.O.B. Como, Miss., mill weights to govern,” for shipment to the foreign state, where the mills were located and where the contract was required to be approved, held to be an interstate transaction, and corporation could recover for its breach in Mississippi without complying with this section [Code 1942, § 5343]. Union Cotton Oil Co. v. Patterson, 116 Miss. 802, 77 So. 795, 1917 Miss. LEXIS 360 (Miss. 1917).

Foreign corporation which had not complied with this section [Code 1942, § 5343] could not enforce note given by citizen for a debt due it in the courts of this state. Quartette Music Co. v. Haygood, 108 Miss. 755, 67 So. 211, 1914 Miss. LEXIS 271 (Miss. 1914).

§79-4-15.04. Amended certificate of authority.

A foreign corporation authorized to transact business in this state must obtain an amended certificate of authority from the Secretary of State if it changes:

1. Its corporate name;
2. The period of its duration;
3. Any of the information required by Section 79-35-5(a); or
4. The state or country of its incorporation.

The requirements of Section 79-4-15.03 for obtaining an original certificate of authority apply to obtaining an amended certificate under this section.

HISTORY: Laws, 1987, ch. 486, § 15.04; Laws, 2012, ch. 382, § 42, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, added (a)(3); and redesignated former (a)(3) as (a)(4); and made a minor stylistic change.

Cross References —

Requirement that foreign corporation which changes its name obtain amended certificate of authority to transact business, see § 79-4-15.06.

Foreign corporations, certificate of authority to transact business in state, corporate name, etc., under Mississippi Nonprofit Corporation Act, see §§ 79-11-363 through 79-11-381.

RESEARCH REFERENCES

Am. Jur.

8 Am. Jur. Legal Forms 2d, Foreign Corporations § 122:36.

§79-4-15.05. Effect of certificate of authority.

A certificate of authority authorizes the foreign corporation to which it is issued to transact business in this state subject, however, to the right of the state to revoke the certificate as provided in Sections 79-4-1.01 et seq.

A foreign corporation with a valid certificate of authority has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by Sections 79-4-1.01 et seq. is subject to the same duties, restrictions, penalties and liabilities now or later imposed on, a domestic corporation of like character.

Sections 79-4-1.01 et seq. do not authorize this state to regulate the organization or internal affairs of a foreign corporation authorized to transact business in this state.

HISTORY: Laws, 1987, ch. 486, § 15.05, eff from and after January 1, 1988.

Cross References —

Foreign corporations, certificate of authority to transact business in state, corporate name, etc., under Mississippi Nonprofit Corporation Act, see §§ 79-11-363 through 79-11-381.

RESEARCH REFERENCES

ALR.

Foreign corporation’s leasing of personal property as doing business within statutes prescribing conditions of right to business. 50 A.L.R.3d 1020.

Construction work by foreign corporation as doing business for purposes of statute requiring foreign corporation to qualify as condition of access to local courts. 90 A.L.R.3d 937.

State regulation of land ownership by alien corporation. 21 A.L.R.4th 1329.

Personal liability of stockholder, officer, or agent for debt of foreign corporation doing business in the state. 27 A.L.R.4th 387.

Reinstatement of repealed, forfeited, expired, or suspended corporate charter as validating interim acts of corporation. 42 A.L.R.4th 392.

CJS.

20 C.J.S., Corporations §§ 1810-1827.

Law Reviews.

An analysis of Mississippi’s treatment of foreign corporations. 55 Miss. L. J. 259, June, 1985.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former §79-3-213.

12. Under former §79-3-223.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former Law.

11. Under former § 79-3-213.

If foreign corporation is qualified to do business in State of Mississippi, even though it may not be doing any business, its agent for process may be served and courts have personal jurisdiction over that corporation; actually doing business in state has nothing to do with personal jurisdiction where foreign corporation has qualified to do business in state; corporation qualifying to do business in state, under appropriate statutes, becomes like individual as far as suit is concerned. Read v. Sonat Offshore Drilling, Inc., 515 So. 2d 1229, 1987 Miss. LEXIS 2929 (Miss. 1987).

Neither the maintaining nor defending of any action or suit constitutes “transacting business” in the state under Mississippi law. Hyde Constr. Co. v. Koehring Co., 321 F. Supp. 1193, 1969 U.S. Dist. LEXIS 13680 (D. Miss. 1969).

A foreign corporation which has never qualified to do business in Mississippi is not precluded from suing there on a policy of liability insurance issued to it in another state, in respect of a judgment recovered against it in Mississippi after its withdrawal from the state for negligence in the performance of services there. Aerial Agricultural Service, Inc. v. Till, 207 F. Supp. 50, 1962 U.S. Dist. LEXIS 3655 (N.D. Miss. 1962).

Foreign corporation doing business in state in performance of contract with highway commission for construction of highway could not recover damages for delay occasioned by commission nor additional compensation for extra work performed under such contract during time it failed to comply with provision requiring filing of a copy of its charter and designation of an agent for service of process. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Permitting highway commission, in suit against it by foreign corporation to recover for damages for delay and additional compensation for extra work under contract with commission for construction of highway in state, to set up defense that corporation failed to qualify as a foreign corporation doing business in the state, after suit had been pending for three years and complainant had taken testimony for 20 days and rested, was not error, in absence of a showing that commission had notice of the noncompliance with the statutes prior to the taking of the evidence. Newell Contracting Co. v. State Highway Com., 195 Miss. 395, 15 So. 2d 700, 1943 Miss. LEXIS 172 (Miss. 1943).

Failure of foreign corporation to file copy of its charter with secretary of state does not affect its status. Springfield Grocery Co. v. Devitt, 126 Miss. 169, 88 So. 497, 1921 Miss. LEXIS 12 (Miss. 1921).

Foreign corporations held authorized to do business in this state by this section [Code 1942, § 5344] and comity of nations. Springfield Grocery Co. v. Devitt, 126 Miss. 169, 88 So. 497, 1921 Miss. LEXIS 12 (Miss. 1921).

Foreign corporations can do nothing that domestic corporations are prohibited from doing. State ex rel. Attorney Gen. v. Edward Hinds Lumber Co., 106 Miss. 780, 64 So. 729, 1914 Miss. LEXIS 19 (Miss. 1914).

Statutes limiting holdings of domestic corporations being legislative declaration of public policy apply to foreign corporations. State ex rel. Attorney Gen. v. Edward Hinds Lumber Co., 106 Miss. 780, 64 So. 729, 1914 Miss. LEXIS 19 (Miss. 1914).

In a suit to cancel an acquittance, and to enforce an accounting between the parties in case a discovery be necessary to obtain data, the fact that defendant in such suit is a foreign corporation having its office, books and assets out of the state, and that the court may find itself powerless to grant administrative relief, if defendant declines to make discovery, is not a cause for declining to sustain the same. Clark v. Equitable Life Assurance Soc., 76 Miss. 22, 23 So. 453, 1898 Miss. LEXIS 60 (Miss. 1898).

Under this section [Code 1942, § 5344] foreign corporations may sue and be sued in this state as individual non-residents may sue and be sued. Pullman Palace-Car Co. v. Lawrence, 74 Miss. 782, 22 So. 53, 1896 Miss. LEXIS 184 (Miss. 1896).

It is no defense to a transitory action of trespass brought in this state that the wrong was done and the injury inflicted in another state, and that both plaintiff and defendant, a foreign corporation, were at the time, are now and have been continuously since, residents and citizens of such other states. Pullman Palace-Car Co. v. Lawrence, 74 Miss. 782, 22 So. 53, 1896 Miss. LEXIS 184 (Miss. 1896).

Although a note and trust deed given by a foreign corporation to secure a loan be void in the state where made, because of a disregard of statutory requirements, it cannot repudiate its contract without restoring the status quo by returning the money borrowed. Though the contract be void, if it be one free from moral turpitude, the corporation is liable for the money received thereunder. Williams v. Bank of Commerce, 71 Miss. 858, 16 So. 238, 1894 Miss. LEXIS 34 (Miss. 1894).

12. Under former § 79-3-223.

A foreign corporation, whose certificate of authority to do business within the State was suspended after it filed a breach of lease action, was not required to become reinstated as a condition for proceeding to trial. Capital Associates, Inc. v. Sally Southland, Inc., 529 So. 2d 640, 1988 Miss. LEXIS 338 (Miss. 1988).

§79-4-15.06. Corporate name of foreign corporation.

If the corporate name of a foreign corporation does not satisfy the requirements of Section 79-4-4.01, the foreign corporation to obtain or maintain a certificate of authority to transact business in this state:

1. May add the word “corporation,” “incorporated,” “company” or “limited,” or the abbreviation “corp.,” “inc.,” “co.” or “ltd.,” to its corporate name for use in this state; or
2. May use a fictitious name to transact business in this state if its real name is unavailable and it delivers to the Secretary of State for filing a copy of the resolution of its board of directors, certified by its secretary, adopting the fictitious name.
3. The corporate name of a nonprofit corporation incorporated or authorized to transact business in this state;
4. The name of a limited partnership, limited liability partnership or limited liability company that is organized or registered under the laws of this state and which has not been dissolved; and
5. A name that is reserved or registered in the Office of the Secretary of State for any of the entities named in subsection (b) which reservation or registration has not expired.

Except as authorized by subsections (c) and (d), the corporate name (including a fictitious name) of a foreign corporation must be distinguishable upon the records of the Secretary of State from:

The corporate name of a corporation incorporated or authorized to transact business in this state;

The fictitious name of another foreign corporation or foreign limited liability company authorized to transact business in this state;

A foreign corporation may apply to the Secretary of State for authorization to use in this state the name of another corporation (incorporated or authorized to transact business in this state) that is not distinguishable upon his records from the name applied for. The Secretary of State shall authorize use of the name applied for if:

The other corporation consents to the use in writing and submits an undertaking in form satisfactory to the Secretary of State to change its name to a name that is distinguishable upon the records of the Secretary of State from the name of the applying corporation; or

The applicant delivers to the Secretary of State a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant’s right to use the name applied for in this state.

A foreign corporation may use in this state the name (including the fictitious name) of another domestic or foreign corporation that is used in this state if the other corporation is incorporated or authorized to transact business in this state and the foreign corporation:

Has merged with the other corporation;

Has been formed by reorganization of the other corporation; or

Has acquired all or substantially all of the assets, including the corporate name, of the other corporation.

If a foreign corporation authorized to transact business in this state changes its corporate name to one that does not satisfy the requirements of Section 79-4-4.01, it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of Section 79-4-4.01 and obtains an amended certificate of authority under Section 79-4-15.04.

HISTORY: Laws, 1987, ch. 486, § 15.06; Laws, 2012, ch. 481, § 40, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment, effective January 1, 2013, in (b), deleted former (2), which read: “A corporate name reserved or registered under Section 79-4-4.02 or 79-4-4.03,” redesignated former (3) and (4) as (2) and (3), inserted “or foreign limited liability company” in (2), and added (4) and (5).

Cross References —

Requirement that application by foreign corporation for certificate of authority to transact business set forth name that satisfies requirements of this section, see § 79-4-15.03.

Mississippi Nonprofit Corporation Act, see §§ 79-11-101 et seq.

Foreign corporations, certificate of authority to transact business in state, corporate name, etc., under Mississippi Nonprofit Corporation Act, see §§ 79-11-363 through 79-11-381.

RESEARCH REFERENCES

ALR.

Incorporation of company under particular name as creating exclusive right to such name. 68 A.L.R.3d 1168.

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 150 et seq.

CJS.

20 C.J.S., Corporations § 1887.

§79-4-15.07. Repealed.

Repealed by Laws, 2012, ch. 382, § 127, effective January 1, 2013.

§79-4-15.07. [Laws, 1987, ch. 486, § 15.07, eff from and after January 1, 1988.]

Editor’s Notes —

Former § 79-4-15.07 pertained to registered office and registered agent of foreign corporation. For present provisions relating to registered agents, see §§ 79-35-1 et seq.

§79-4-15.08. Repealed.

Repealed by Laws, 2012, ch. 382, § 128, effective January 1, 2013.

§79-4-15.08. [Laws, 1987, ch. 486, § 15.08, eff from and after January 1, 1988.]

Editor’s Notes —

Former § 79-4-15.08 provided for the change of an officer or registered agent of a foreign corporation. For present provisions relating to registered agents, see §§ 79-35-1 et seq.

§79-4-15.09. Repealed.

Repealed by Laws, 2012, ch. 382, § 129, effective January 1, 2013.

§79-4-15.09. [Laws, 1987, ch. 486, § 15.09, eff from and after January 1, 1988.]

Editor’s Notes —

Former § 79-4-15.09 pertained to the resignation of a registered agent. For present provisions relating to registered agents, see §§ 79-35-1 et seq.

§79-4-15.10. Service of process, demand or notice on foreign corporation.

Notice or demand required or permitted by law on a foreign corporation authorized to transact business in this state is governed by Section 79-35-13. Service of process is governed by the Mississippi Rules of Civil Procedure.

HISTORY: Laws, 1987, ch. 486, § 15.10; Laws, 2012, ch. 382, § 43, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment rewrote the section.

Cross References —

Requirement that Secretary of State deliver filed documents to corporation or representative after filing, see § 79-4-1.25.

Requirement that Secretary of State give notice in accordance with this section to foreign corporation for which he has determined that grounds exist for the revocation of its certificate of authority, and notice when certificate of authority has been revoked, see § 79-4-15.31.

Foreign corporation’s right to appeal revocation of its certificate of authority 30 days after service is perfected under § 79-4-15.10, see § 79-4-15.32.

Foreign corporations, certificate of authority to transact business in state, corporate name, etc., under Mississippi Nonprofit Corporation Act, see §§ 79-11-363 through 79-11-381.

RESEARCH REFERENCES

ALR.

Foreign corporation’s purchase within state of goods to be shipped into other state or country as doing business within state for purposes of jurisdiction or service of process. 12 A.L.R.2d 1439.

Federal or state law as controlling, in diversity action, whether foreign corporation is amenable to service of process in state. 6 A.L.R.3d 1103.

Attorney representing foreign corporation in litigation as its agent for service of process in unconnected actions or proceedings. 9 A.L.R.3d 738.

Who is “general” or “managing” agent of foreign corporation under statute authorizing service of process on such agent. 17 A.L.R.3d 625.

Products liability: In personam jurisdiction over nonresident manufacturer or seller under “long-arm” statutes. 19 A.L.R.3d 13.

Applicability, to actions not based on products liability, of state statutes or rules of court predicating in personam jurisdiction over foreign manufacturers and distributors upon use of their goods within state. 20 A.L.R.3d 957.

Construction and application of state statutes or rules of court predicating in personam jurisdiction over nonresidents or foreign corporations on making or performing a contract within the state. 23 A.L.R.3d 551.

Construction and application of state statutes or rules of court predicating in personam jurisdiction over nonresidents or foreign corporations on the commission of a tort within the state. 24 A.L.R.3d 532.

Application of statute denying access to courts or invalidating contracts where corporation fails to comply with regulatory statute as affected by compliance after commencement of action. 23 A.L.R.5th 744.

Validity, construction, and application of “fiduciary shield” doctrine – modern cases. 79 A.L.R.5th 587.

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 213- 215, 454, 476 et seq.

12 Am. Jur. Pl & Pr Forms (Rev), Foreign Corporations, Forms 11 et seq.

CJS.

20 C.J.S., Corporations §§ 1815, 1937 et seq.

Lawyers’ Edition.

State regulation of judicial proceedings as violating commerce clause (Art I, 8, cl 3) of Federal Constitution – Supreme Court cases. 100 L. Ed. 2d 1049.

JUDICIAL DECISIONS

I. UNDER CURRENT LAW.

1.-10. [Reserved for future use.]

II. UNDER FORMER LAW.

A. Former §79-1-27.

11. In general.

12. What constitutes doing business.

13. Service of process.

14. Attachment suits.

B. Former §79-1-29.

15. In general.

16. Effectiveness of service of process in particular cases.

17. Defective return of process.

18. Mailing copy of process.

19. Appearance of defendant specially as conferring jurisdiction.

20. Application of section to particular corporations.

C. Former §79-3-229.

21. In general.

D. Former §79-4-15.10.

22. In general.

I. UNDER CURRENT LAW.

1.-10. [Reserved for future use.]

II. UNDER FORMER LAW.

A. Former § 79-1-27.

11. In general.

Even when jurisdiction is sought under § 79-1-27 [repealed], it is necessary for plaintiff to prove that nonresident corporation “does business” in Mississippi. Rittenhouse v. Mabry, 832 F.2d 1380, 1987 U.S. App. LEXIS 15605 (5th Cir. Miss. 1987), but see, Gross v. Chevrolet Country, 655 So. 2d 873, 1995 Miss. LEXIS 226 (Miss. 1995), cert. denied, 516 U.S. 1094, 116 S. Ct. 817, 133 L. Ed. 2d 761, 1996 U.S. LEXIS 776 (U.S. 1996).

A nonresident manufacturer of grinding machines was not amenable to suit in Mississippi by a Louisiana resident who had worked in Mississippi as an operator of such machine and who had allegedly become permanently disabled as a result of the constant inhalation of dust particles at work, where, inter alia, defendant manufacturer did not have a single employee in the state when the cause of action accrued or when the complaint was filed, even though a single corporate employee subsequently moved to the state and was served process, and where defendant had never paid state taxes or availed itself of the protection of any state laws; further, plaintiff had only avialed himself of the protection of Mississippi’s laws to the limited extent that he worked and traveled in the state. Washington v. Norton Mfg., Inc., 588 F.2d 441, 1979 U.S. App. LEXIS 17345 (5th Cir. Miss.), cert. denied, 442 U.S. 942, 99 S. Ct. 2886, 61 L. Ed. 2d 313, 1979 U.S. LEXIS 2186 (U.S. 1979).

The Mississippi statutes providing for the method of service on a resident or a qualified foreign corporation, the “doing business” statute, and the statute providing for substituted service on any corporation doing business in the state, must be read together, and such reading leads to the inescapable conclusion that effective process under these statutes presupposes a factual determination that the foreign corporation is doing business in the State of Mississippi. Hyde Constr. Co. v. Koehring Co., 321 F. Supp. 1193, 1969 U.S. Dist. LEXIS 13680 (D. Miss. 1969).

Under statute, foreign corporations are suable only when found doing business in state. Knower v. Baldwin, 195 Miss. 166, 15 So. 2d 47, 1943 Miss. LEXIS 137 (Miss. 1943); Arnett v. Carol C. & Fred R. Smith, Inc., 165 Miss. 53, 145 So. 638, 1932 Miss. LEXIS 301 (Miss. 1932).

Judgment rendered against road contractor and his foreign corporate surety held not void because when rendered surety had been dissolved and was in hands of receiver. Rawlings v. American Oil Co., 173 Miss. 683, 161 So. 851, 1935 Miss. LEXIS 236 (Miss. 1935).

Foreign corporations dissolved in domicile of its origin may be deemed alive in foreign state, so far as to afford remedies to its own citizens against property within its jurisdiction. Rawlings v. American Oil Co., 173 Miss. 683, 161 So. 851, 1935 Miss. LEXIS 236 (Miss. 1935).

Chancery court was without territorial jurisdiction of nonresident national bank not doing business in state. First Nat'l Bank v. Mississippi Cottonseed Products Co., 171 Miss. 282, 157 So. 349, 1934 Miss. LEXIS 225 (Miss. 1934).

Court, having acquired jurisdiction of foreign corporation, garnishee in suit by non-resident employee-creditor, by personal service on agent of corporation, could require answer and condemn any indebtedness due by corporation to its employee-creditor under employment contract made and performable outside state. Bean v. Bean, 166 Miss. 434, 147 So. 306, 1933 Miss. LEXIS 367 (Miss. 1933).

Foreign corporation designating resident agent is placed, as regards venue in transitory action, in same position as domestic corporation. Sandford v. Dixie Const. Co., 157 Miss. 626, 128 So. 887, 1930 Miss. LEXIS 353 (Miss. 1930).

This section [Code 1942, § 5345] does not apply to actions originating prior to its adoption. Saxony Mills v. Wagner & Co., 94 Miss. 233, 47 So. 899, 1908 Miss. LEXIS 32 (Miss. 1908).

12. What constitutes doing business.

Section 79-1-27 [repealed] applies only to non-resident corporations found doing business in Mississippi; non-resident corporation is not doing business in Mississippi where it has neither employees nor representatives in Mississippi, does not maintain offices, bank accounts or other property in state, and only contract with state is receipt of telephone and catalog orders and sale of product to Mississippi retailers. Schmid v. Roehm GmbH, 617 F. Supp. 655, 1985 U.S. Dist. LEXIS 16189 (S.D. Miss. 1985).

Sections 13-3-57 and 79-1-27 [repealed] must be harmonized to support state’s valid policy of opening doors of Mississippi courts to foreign corporations found doing business in state to sue and be sued from all bona fide causes of action; merely doing business in Mississippi is not sufficient to support exercise of personal jurisdiction, and business in Mississippi of non-resident defendant must be of systematic and ongoing nature, cause of action must be incident to business activity, and assertion of jurisdiction must not offend notions of fairness and substantial justice; busline which does not maintain ticket agents, representatives, employees, offices, or property in Mississippi and which does not advertise or solicit business or negotiate or execute contracts in Mississippi but whose charter service has merely passed through state is not subject to jurisdiction for cause of action which does not arise out of activities of busline in state. Allen v. Jefferson Lines, Inc., 610 F. Supp. 236, 1985 U.S. Dist. LEXIS 19139 (S.D. Miss. 1985).

Pennsylvania corporation which maintains no offices, employees, or representatives in Mississippi, and negotiates no contracts in Mississippi is not “doing business” in Mississippi under § 79-1-27 [repealed], even though its products are sold on regular basis in Mississippi, where such sales are only as result of marketing products nationally to independent distributors who in turn sell to wholesalers and retailers, or who sell in their own outlet stores in various states. Smith v. De Walt Products Corp., 743 F.2d 277, 1984 U.S. App. LEXIS 17911 (5th Cir. Miss. 1984).

Mississippi Code § 79-1-27 [repealed], providing that any corporation doing business in Mississippi is subject to suit there, must be construed and harmonized with § 13-3-57 “doing business clause” which cannot be used by non-resident plaintiff; to extent jurisdiction over nonresident corporation in suit by non-resident plaintiff on authority of § 79-1-27 [repealed] would be contrary to intention of Mississippi legislature. Smith v. De Walt Products Corp., 743 F.2d 277, 1984 U.S. App. LEXIS 17911 (5th Cir. Miss. 1984).

The fact that the president of a foreign corporation made several trips to Mississippi in connection with plans to be performed on certain trucks and had representatives who traveled within the state soliciting the sale and installation of their products, was not sufficient to satisfy the minimal contact requirement necessary for the courts of Mississippi to acquire jurisdiction in an action against the corporation which had installed in Alabama, in a manner alleged to be negligent, a braking system on a truck which crashed into the plaintiff’s store, where all of the actual work of assembly and installation by the corporation was performed in Alabama and the owners of trucks delivered them to the plant in Alabama for these services. Collins v. Truck Equipment Sales, Inc., 231 So. 2d 187, 1970 Miss. LEXIS 1576 (Miss. 1970).

Neither the fact that a manufacturer of equipment sold its products to Mississippi distributors or wholesalers, nor the fact that the manufacturer had employees on an average of 17 or 18 per year visiting within Mississippi to give assistance to the distributors in the sale of equipment manufactured by it and to help repair and adjust such equipment, standing alone, would compel a finding that the manufacturer is or was “doing business” within the State of Mississippi under the provisions of Code 1942, § 1437 or § 5345. Hyde Constr. Co. v. Koehring Co., 321 F. Supp. 1193, 1969 U.S. Dist. LEXIS 13680 (D. Miss. 1969).

Where a Wisconsin corporate manufacturer had 10 distributors in Mississippi, made substantial sales to its distributors, sent an average of 17 employees into the state each year to give assistance to its distributors, had several pieces of equipment operating within the state, extended and secured credit within the state and made contracts with its distributors, giving it considerable control over their activities, the corporation was “doing business” in Mississippi within the “long-arm” and “doing business” statutes. Hyde Constr. Co. v. Koehring Co., 321 F. Supp. 1193, 1969 U.S. Dist. LEXIS 13680 (D. Miss. 1969).

When an agent of foreign finance corporation was served when he came into the state to repossess an automobile purchased by the plaintiff in a tort action for false accusations allegedly made by such finance corporation, and the foreign corporation had purchased the conditional sales contract made by the plaintiff from an automobile dealer in Louisiana, the defendant finance corporation was not doing business in the state so as to be subject to the jurisdiction of the court. Dillon v. Allen-Parker Co., 223 Miss. 359, 78 So. 2d 357, 1955 Miss. LEXIS 388 (Miss. 1955).

A financial agent may be appointed by a nonresident landlord to pay a debt or collect rents without being constituted an agent on whom process may be served. Gillentine v. Illinois Wesleyan University, 194 F.2d 970, 1952 U.S. App. LEXIS 3708 (5th Cir. Miss. 1952).

The mere presence of an agent within the state, transacting some business for a foreign corporation, is not enough to subject the latter to suit unless the agent’s activities are such as to warrant the inference that the corporation itself is present and doing business within the state. Gillentine v. Illinois Wesleyan University, 194 F.2d 970, 1952 U.S. App. LEXIS 3708 (5th Cir. Miss. 1952).

Where a foreign religious, charitable and educational corporation was not licensed to do business in the State of Mississippi, had not appointed any agent for service of process in that state and maintained no office or place of business of any kind, and its sole business was operating a university, the fact that the corporation, which owned a farm in this state which it leased to a tenant, furnished money to build a gin house on leased land and for installation of gin machinery therein does not constitute doing business. Gillentine v. Illinois Wesleyan University, 194 F.2d 970, 1952 U.S. App. LEXIS 3708 (5th Cir. Miss. 1952).

Foreign corporation was not “doing business” in state so as to subject it to suit by service of process on its traveling salesman to recover damages for personal injuries growing out of automobile collision, where such salesman sold no merchandise but merely solicited orders which were submitted to the corporation for approval, was paid by commission, used his own automobile, which he was driving at the time of the collision, and conducted his solicitation according to his own plan, although aided by suggestion or direction from time to time as to points or prospects to be covered, and subject to the general supervision of the corporation. Knower v. Baldwin, 195 Miss. 166, 15 So. 2d 47, 1943 Miss. LEXIS 137 (Miss. 1943).

13. Service of process.

Corporation was in Mississippi doing business day it was served through physician who was sole member of professional corporation, and this satisfied requirements of § 79-1-27 [repealed], where physician was only member of corporation and service was effected on physician as corporation’s agent while he was directly engaged in corporation’s business. Rittenhouse v. Mabry, 832 F.2d 1380, 1987 U.S. App. LEXIS 15605 (5th Cir. Miss. 1987), but see, Gross v. Chevrolet Country, 655 So. 2d 873, 1995 Miss. LEXIS 226 (Miss. 1995), cert. denied, 516 U.S. 1094, 116 S. Ct. 817, 133 L. Ed. 2d 761, 1996 U.S. LEXIS 776 (U.S. 1996).

If foreign corporation is qualified to do business in State of Mississippi, even though it may not be doing any business, its agent for process may be served and courts have personal jurisdiction over that corporation; actually doing business in state has nothing to do with personal jurisdiction where foreign corporation has qualified to do business in state; corporation qualifying to do business in state, under appropriate statutes, becomes like individual as far as suit is concerned. Read v. Sonat Offshore Drilling, Inc., 515 So. 2d 1229, 1987 Miss. LEXIS 2929 (Miss. 1987).

If foreign corporation is not qualified to do business in state, and is found doing business in state, it may be sued simply by serving process upon any agent of corporation in state, and Mississippi courts then have personal jurisdiction over foreign corporation. Read v. Sonat Offshore Drilling, Inc., 515 So. 2d 1229, 1987 Miss. LEXIS 2929 (Miss. 1987).

The steps required by the statute to be taken in order to give effectual notice to a foreign corporation of a suit against it are essential to the validity of the process, without which a judgment by default is void. Cudahy Packing Co. v. Smith, 191 Miss. 31, 2 So. 2d 347, 1941 Miss. LEXIS 129 (Miss. 1941).

The sending, by registered mail, by the clerk of the court, of a copy of a summons in an action against the Cudahy Packing Co., a Maine corporation, addressed to “The Cudahy Packing Co., Chicago, Ill.,” was not effectual notice to the defendant, although the return receipt bore the signature “Cudahy Packing Co., H. Bogers,” where it appeared that there were five or six corporations organized and existing under the laws of different states, all named “Cudahy Packing Co.,” and that all these corporations had their general business offices in the same building in Chicago, but that each had a different setup for the handling therein of the details of their respective corporate businesses, and the mailing of the copy of the summons was so addressed and sent as to make it uncertain whether it would be received by the particular defendant, rather than by some other person or corporation. Cudahy Packing Co. v. Smith, 191 Miss. 31, 2 So. 2d 347, 1941 Miss. LEXIS 129 (Miss. 1941).

Where a foreign corporation, which made no appearance in circuit court, and suffered a default judgment to be entered against it, appealed to the supreme court, and the record showed that the mailing of a copy of the summons had not complied with the statutory requirement so as to give the circuit court territorial jurisdiction over the corporation, if the circuit court, upon remand of the case, took jurisdiction after the issue of territorial jurisdiction was first presented and determined, the appellant corporation (which by appeal had taken notice of the pendency of the action), might then proceed upon the merits, and on appeal might still insist upon and have a review of the question of territorial jurisdiction. Cudahy Packing Co. v. Smith, 191 Miss. 31, 2 So. 2d 347, 1941 Miss. LEXIS 129 (Miss. 1941).

Plea to jurisdiction of consumer’s action against foreign corporate manufacturer for injuries allegedly caused by glass in candy made by such manufacturer and purchased from retail merchant held properly sustained, where service was had on corporation’s former agent after corporation’s withdrawal from state and it did not appear that candy allegedly causing injuries before such withdrawal was in any way connected with business done by manufacturer within the state. Walters v. Curtis Candy Co., 172 Miss. 187, 159 So. 560, 1935 Miss. LEXIS 126 (Miss. 1935).

Foreign corporation, sued for employee’s death, by moving to quash process and pleading in abatement, did not waive court’s lack of territorial jurisdiction. Arnett v. Carol C. & Fred R. Smith, Inc., 165 Miss. 53, 145 So. 638, 1932 Miss. LEXIS 301 (Miss. 1932).

14. Attachment suits.

In an attachment suit brought in chancery court by an Alabama citizen to recover damages from an Alabama corporation for personal injuries received as a result of a railroad crossing accident in Alabama, and to attach funds in the hands of a Mississippi corporation, where the defendant corporation owned no property or did no business in Mississippi, service of process upon an employee designated as a superintendent of the defendant corporation but who was employed by another corporation, and received no compensation from defendant corporation, was not effective to confer territorial jurisdiction over the defendant corporation. Alabama, T. & N. R. Co. v. Howell, 244 Miss. 157, 141 So. 2d 242, 1962 Miss. LEXIS 433 (Miss. 1962).

Nonresident debtor in attachment suit appearing solely for purpose of objecting, did not, thereby, submit to jurisdiction of court. Alabama Power Co. v. Jackson, 181 Miss. 691, 179 So. 571, 1938 Miss. LEXIS 109 (Miss. 1938).

Motion of nonresident national bank, not doing business in state, to quash attachment in suit against it, did not constitute general appearance. First Nat'l Bank v. Mississippi Cottonseed Products Co., 171 Miss. 282, 157 So. 349, 1934 Miss. LEXIS 225 (Miss. 1934).

Nonresident national bank’s appearance in chancery court suit for purpose of moving to quash attachment, issued against its property in violation of federal statute, did not confer territorial jurisdiction over bank on court, which should have dismissed bill as to bank after quashing attachment. First Nat'l Bank v. Mississippi Cottonseed Products Co., 171 Miss. 282, 157 So. 349, 1934 Miss. LEXIS 225 (Miss. 1934).

Nonresident national bank, not doing business in state, did not waive point that chancery court lacked jurisdiction of attachment suit against it by pleading want of territorial jurisdiction. First Nat'l Bank v. Mississippi Cottonseed Products Co., 171 Miss. 282, 157 So. 349, 1934 Miss. LEXIS 225 (Miss. 1934).

Foreign railroad corporation with line of railroad within state and property subject to execution and liable to personal judgment held, nevertheless, “nonresident” within attachment statute. Clark v. Louisville & N. R. Co., 158 Miss. 287, 130 So. 302, 1930 Miss. LEXIS 51 (Miss. 1930).

This section [Code 1942, § 5345] does not domesticate foreign corporations doing business in this state nor relieve them of liability to attachment on ground of nonresidence. Central Western Development Co. v. Lewis, 142 Miss. 428, 107 So. 557, 1926 Miss. LEXIS 100 (Miss. 1926).

B. Former § 79-1-29.

15. In general.

Supplemental record in the supreme court on appeal from a default judgment against a foreign corporation, disclosing that the certificate of the circuit clerk as to service of process on one alleged to be the corporation’s resident agent was filed almost five months after adjournment of the trial court at which the default judgment was obtained, was not a sufficient compliance with the statutory requirement of affirmative proof of service of process on a duly appointed resident agent in order to confer jurisdiction upon the trial court. Superior Oil Co. v. Smith, 200 Miss. 782, 29 So. 2d 114, 1947 Miss. LEXIS 362 (Miss. 1947).

Default judgment against a foreign corporation was set aside where process was served on one alleged to be the corporation’s resident agent for process and a copy was properly forwarded by registered mail to its home office, but there was no proof of the appointment of such resident agent on file in the trial court at the time the case was tried. Superior Oil Co. v. Smith, 200 Miss. 782, 29 So. 2d 114, 1947 Miss. LEXIS 362 (Miss. 1947).

This section [Code 1942, § 5346] refers only to foreign corporations found doing business in this state. Knower v. Baldwin, 195 Miss. 166, 15 So. 2d 47, 1943 Miss. LEXIS 137 (Miss. 1943).

The steps required by the statute to be taken in order to give effectual notice to a foreign corporation of a suit against it are essential to the validity of the process, without which a judgment by default is void. Cudahy Packing Co. v. Smith, 191 Miss. 31, 2 So. 2d 347, 1941 Miss. LEXIS 129 (Miss. 1941).

The purpose of statute providing that, where a corporation does a local business in state without filing its charter and having an agent upon whom process may be served, process may be served on any person found representing corporation at time transaction involved took place, is to give an effectual process so as to bring a corporation into a court where judgment may be rendered, and that statute has no relation to a motion to quash process. Gridley, Maxon & Co. v. Turner, 179 Miss. 890, 176 So. 733, 177 So. 362, 1937 Miss. LEXIS 83 (Miss. 1937), overruled, Mladinich v. Kohn, 250 Miss. 138, 164 So. 2d 785, 1964 Miss. LEXIS 451 (Miss. 1964).

Statute relating to obtaining jurisdiction of person of foreign corporation by service on agent held not to authorize suit against foreign insurance company in county other than those specified by statute controlling venue of such suits. Fireman's Fund Ins. Co. v. Cole, 169 Miss. 634, 152 So. 872, 1934 Miss. LEXIS 40 (Miss. 1934).

Court, by personal service on agent of foreign corporation doing business in this state, acquired jurisdiction of corporation, garnishee in suit by nonresident employee-creditor, and could require answer and condemn any indebtedness due by corporation to its employee-creditor under employment contract made and performable outside state. Bean v. Bean, 166 Miss. 434, 147 So. 306, 1933 Miss. LEXIS 367 (Miss. 1933).

Claimant of funds in attachment proceeding has burden of proving failure of proper service on judgment debtor. Piqua Sav. Bank v. Copiah Hardware Co., 146 Miss. 581, 111 So. 836, 1927 Miss. LEXIS 225 (Miss. 1927).

This section [Code 1942, § 5346] does not apply to action originating prior to its adoption. Saxony Mills v. Wagner & Co., 94 Miss. 233, 47 So. 899, 1908 Miss. LEXIS 32 (Miss. 1908).

16. Effectiveness of service of process in particular cases.

Where process is personally served on construction superintendent of foreign corporation engaged in building a building in Mississippi, such corporation was properly and legally served with process under § 79-1-29 [repealed]. Holvitz v. Norfleet--Ashley, Inc., 369 F. Supp. 394, 1973 U.S. Dist. LEXIS 10631 (N.D. Miss. 1973).

Service of process on a foreign railroad company’s station agent is sufficient without mailing a copy to the home office by registered mail. Illinois C. R. Co. v. McDaniel, 246 Miss. 600, 151 So. 2d 805, 1963 Miss. LEXIS 486 (Miss. 1963).

In an attachment suit brought in chancery court by an Alabama citizen to recover damages from an Alabama corporation for personal injuries received as a result of a railroad crossing accident in Alabama, and to attach funds in the hands of a Mississippi corporation, where the defendant corporation owned no property nor did any business in Mississippi, service of process upon an employee designated as a superintendent of the defendant corporation but who was employed by another corporation, and received no compensation from defendant corporation, was not effective to confer territorial jurisdiction over the defendant corporation. Alabama, T. & N. R. Co. v. Howell, 244 Miss. 157, 141 So. 2d 242, 1962 Miss. LEXIS 433 (Miss. 1962).

Suit having been filed and process for defendant having been issued promptly by clerk, a suit was pending which tolled running of statute of limitations though process was served on plantation manager of defendant corporation and not on its designated agent for receiving of service of process. Frederick Smith Enterprise Co. v. Lucas, 204 Miss. 43, 36 So. 2d 812, 1948 Miss. LEXIS 341 (Miss. 1948).

Foreign corporation was not “doing business” in state so as to subject it to suit by service of process on its traveling salesman to recover damages for personal injuries growing out of automobile collision, where such salesman sold no merchandise but merely solicited orders which were submitted to the corporation for approval, was paid by commission, used his own automobile, which he was driving at the time of the collision, and conducted his solicitation according to his own plan, although aided by suggestion or direction from time to time as to points or prospects to be covered, and subject to the general supervision of the corporation. Knower v. Baldwin, 195 Miss. 166, 15 So. 2d 47, 1943 Miss. LEXIS 137 (Miss. 1943).

General rule that withdrawal of foreign corporation from state does not revoke local agent’s authority to receive service of process or deprive local courts of jurisdiction of actions arising out of business done within the state cannot be extended to actions not incidental to or connected with business done in state by such foreign corporation. Walters v. Curtis Candy Co., 172 Miss. 187, 159 So. 560, 1935 Miss. LEXIS 126 (Miss. 1935).

Where foreign trainmen’s brotherhood engaged in insurance business in state had never designated state insurance commissioner as its agent for service of process, service of process on officer of local lodge through whom association dealt in respect to matter in controversy, held sufficient to give court jurisdiction in suit against association. Brotherhood of Railroad Trainmen v. Agnew, 170 Miss. 604, 155 So. 205, 1934 Miss. LEXIS 155 (Miss. 1934).

Judgment debtor was not proper person to serve process on against nonresident in garnishment proceeding based on such judgment. Hirsch Bros. & Co. v. R. E. Kennington Co., 155 Miss. 242, 124 So. 344, 1929 Miss. LEXIS 285 (Miss. 1929).

Jurisdiction of foreign corporation suing in state is not obtained by service of summons on its attorney. Delta Ins. & Realty Agency v. Fourth Nat'l Bank, 146 Miss. 11, 111 So. 435, 1927 Miss. LEXIS 184 (Miss. 1927).

Mere soliciting agent of foreign corporation not doing business in state is not an agent on whom process may be served; the statute contemplates agents with general authority and discretion and not mere employees. Saxony Mills v. Wagner & Co., 94 Miss. 233, 47 So. 899, 1908 Miss. LEXIS 32 (Miss. 1908).

17. Defective return of process.

Return on summons “executed personally by delivering to E. M. agent of and for” defendant held insufficient to support decree pro confesso. National Surety Co. v. Board of Sup'rs, 120 Miss. 706, 83 So. 8, 1919 Miss. LEXIS 125 (Miss. 1919).

Service of process held void where return did not show relation of party on whom served to defendant. Supreme Ruling, F. M. C. v. Sommers, 108 Miss. 54, 66 So. 322, 1914 Miss. LEXIS 166 (Miss. 1914).

18. Mailing copy of process.

The sending, by registered mail, by the clerk of the court, of a copy of a summons in an action against the Cudahy Packing Co., a Maine corporation, addressed to “The Cudahy Packing Co., Chicago, Ill.,” was not effectual notice to the defendant, although the return receipt bore the signature “Cudahy Packing Co., H. Bogers,” where it appeared that there were five or six corporations organized and existing under the laws of different states, all named “Cudahy Packing Co.,” and that all these corporations had their general business offices in the same building in Chicago, but that each had a different setup for the handling therein of the details of their respective corporate businesses, and the mailing of the copy of the summons was so addressed and sent as to make it uncertain whether it would be received by the particular defendant, rather than by some other person or corporation. Cudahy Packing Co. v. Smith, 191 Miss. 31, 2 So. 2d 347, 1941 Miss. LEXIS 129 (Miss. 1941).

Attempted service on agent September 6, 1915, and mailing of summons December 30, 1915, calling for appearance of corporation at rules September 13 did not comply with this section [Code 1942, § 5346]. Columbia Star Milling Co. v. Brand, 115 Miss. 625, 76 So. 557, 1917 Miss. LEXIS 241 (Miss. 1917).

Default judgment held erroneous where clerk failed to mail notice as required. Eminent Household of Columbian Woodmen v. Lundy, 110 Miss. 881, 71 So. 16, 1916 Miss. LEXIS 222 (Miss. 1916).

19. Appearance of defendant specially as conferring jurisdiction.

Where a foreign corporation, which made no appearance in circuit court, and suffered a default judgment to be entered against it, appealed to the supreme court, and the record showed that the mailing of a copy of the summons had not complied with the statutory requirement so as to give the circuit court territorial jurisdiction over the corporation, if the circuit court, upon remand of the case, took jurisdiction after the issue of territorial jurisdiction was first presented and determined, the appellant corporation might (which by appeal had taken notice of the pendency of the action), then proceed upon the merits, and on appeal might still insist upon and have a review of the question of territorial jurisdiction. Cudahy Packing Co. v. Smith, 191 Miss. 31, 2 So. 2d 347, 1941 Miss. LEXIS 129 (Miss. 1941).

Where process on a foreign corporation is invalid or ineffectual, and corporation does not appear in answer to suit, question of jurisdiction of the person may be raised in any appropriate proceeding, but, if corporation files a motion to quash process, corporation is brought into court by appearing for purpose of quashing process, even though process may be insufficient within itself to bring corporation into court, and thereby court is given jurisdiction of the person notwithstanding any defect in process. Gridley, Maxon & Co. v. Turner, 179 Miss. 890, 176 So. 733, 177 So. 362, 1937 Miss. LEXIS 83 (Miss. 1937), overruled, Mladinich v. Kohn, 250 Miss. 138, 164 So. 2d 785, 1964 Miss. LEXIS 451 (Miss. 1964).

Where nonresident defendant corporation in attachment suit was not brought in by publication of summons, and attempted service of summons on agent was not within county where suit was brought, the appearance of the defendant in state court for the sole purpose of procuring the removal of the cause to the federal court did not constitute such an appearance that, upon remand of the cause, defendant was then in state court without necessity of further process. McCoy v. Watson, 153 Miss. 416, 121 So. 116, 1929 Miss. LEXIS 35 (Miss. 1929).

20. Application of section to particular corporations.

But where foreign trainmen’s brotherhood, engaged in insurance business instate, had never designated state insurance commissioner as its agent for service of process, service of process on association may properly be made in same manner as provided for service on foreign corporations doing business in state. Brotherhood of Railroad Trainmen v. Agnew, 170 Miss. 604, 155 So. 205, 1934 Miss. LEXIS 155 (Miss. 1934).

This section [Code 1942, § 5346] does not apply to insurance companies who have filed power of attorney with insurance commissioner, Fidelity & Casualty Co. v. Cross (1921) 127 Miss 31, 89 So 780; nor to insurance companies appointing agent for service of process. Great Southern Life Ins. Co. v. Gomillion, 145 Miss. 314, 110 So. 770, 1927 Miss. LEXIS 116 (Miss. 1927).

Railroad doing only interstate business is not denied due process by serving one of its bona fide agents within the state in a cause of action accruing elsewhere. Vicksburg, S. & P. R. Co. v. Forcheimer, 113 Miss. 531, 74 So. 418, 1917 Miss. LEXIS 130 (Miss. 1917).

C. Former § 79-3-229.

21. In general.

If foreign corporation is qualified to do business in State of Mississippi, even though it may not be doing any business, its agent for process may be served and courts have personal jurisdiction over that corporation; actually doing business in state has nothing to do with personal jurisdiction where foreign corporation has qualified to do business in state; corporation qualifying to do business in state, under appropriate statutes, becomes like individual as far as suit is concerned. Read v. Sonat Offshore Drilling, Inc., 515 So. 2d 1229, 1987 Miss. LEXIS 2929 (Miss. 1987).

In a diversity action a federal district court in Mississippi would have jurisdiction over a nonresident car manufacturer pursuant to Miss Code § 79-3-229 in a suit by a nonresident plaintiff pleading a cause of action which arose entirely out-of-state, where the manufacturer was expressly authorized to do business in Mississippi, was actually doing business, and had designated a resident agent upon whom process was served pursuant to § 79-3-229. Cowan v. Ford Motor Co., 694 F.2d 104, 1982 U.S. App. LEXIS 23146 (5th Cir. Miss. 1982).

A foreign credit corporation which has an agent in Mississippi for the purpose of calling upon prospective sellers of title retention notes to solicit and induce them to submit the collateral notes taken from their customers to the office of the credit corporation in Memphis, Tennessee, furnished an automobile to its agent for use in calling on manufacturers and dealers in Mississippi, and offered its services to dealers to collect delinquent money due on notes, or to recover the possession of property described in the notes, was not engaged in doing business in Mississippi within the purview of this section [Code 1942, § 5309-230]. Ross Constr. Co. v. U. M. & M. Credit Corp., 214 So. 2d 822, 1968 Miss. LEXIS 1336 (Miss. 1968).

Service of process on a foreign corporation’s statutory agent does not confer jurisdiction of an action by a nonresident or a cause of action accruing in another state. Stavang v. American Potash & Chemical Corp., 227 F. Supp. 786, 1964 U.S. Dist. LEXIS 8326 (S.D. Miss. 1964), aff'd, 344 F.2d 117, 1965 U.S. App. LEXIS 5882 (5th Cir. Miss. 1965).

A foreign corporation which has never qualified to do business in Mississippi is not precluded from suing there on a policy of liability insurance issued to it in another state, in respect of judgment recovered against it in Mississippi after its withdrawal from the state for negligence in the performance of services there. Aerial Agricultural Service, Inc. v. Till, 207 F. Supp. 50, 1962 U.S. Dist. LEXIS 3655 (N.D. Miss. 1962).

All foreign corporations doing business in this state shall be subject to suit here to same extent that corporations of state are, whether cause of action accrued here or not, and this statute indicates general policy of equality and similarity of treatment as between foreign and domestic corporations. Poole v. Mississippi Publishers Corp., 208 Miss. 364, 44 So. 2d 467, 1950 Miss. LEXIS 255 (Miss. 1950).

Rule to effect that citizen of one state may be enjoined from prosecuting action against another citizen of same state applies equally when injunction is sought to restrain citizen of one state from prosecuting action against nonresident corporation doing business with lawful authority in such state. Poole v. Mississippi Publishers Corp., 208 Miss. 364, 44 So. 2d 467, 1950 Miss. LEXIS 255 (Miss. 1950).

Actions against Louisiana corporation brought in the federal district court for the southern district of Mississippi was proper where such corporation had appointed an agent for the service of process in accordance with this section [Code 1942, § 5319], such appointment being a consent by the corporation to be sued in the state, which waives the right to be sued only in the district of which it is an inhabitant, irrespective of the basis of federal jurisdiction. Amalgamated Ass'n of St., Elec. Ry. & Motor Coach Emples. of Am. v. Southern Bus Lines, Inc., 172 F.2d 946, 1949 U.S. App. LEXIS 3511 (5th Cir. Miss. 1949).

Maintenance by a foreign newspaper corporation of a news gathering office in the state, the employment of a resident contact man to recommend suitable persons to become local distributors in the state, and a contract with a truck operator to transport its papers into the state for sale and distribution by local distributor, did not constitute “doing business” in the state so as to make such corporation amenable to service of process in the state. Lee v. Memphis Pub. Co., 195 Miss. 264, 14 So. 2d 351, 1943 Miss. LEXIS 133 (Miss. 1943).

A foreign corporation operating a motor transportation line for the conveyance of passengers through a county of this state, and having a resident agent for the service of process in this state, could be sued in such county by a passenger, seeking to recover damages for personal injury sustained notwithstanding that the cause of action arose in Louisiana and the plaintiff was a temporary resident of this state. Tri-State Transit Co. v. Mondy, 194 Miss. 714, 12 So. 2d 920, 1943 Miss. LEXIS 85 (Miss. 1943).

General rule that withdrawal of foreign corporation from state does not revoke local agent’s authority to receive service of process or deprive local courts of jurisdiction of actions arising out of business done within the state cannot be extended to actions not incidental to or connected with business done in state by such foreign corporation. Walters v. Curtis Candy Co., 172 Miss. 187, 159 So. 560, 1935 Miss. LEXIS 126 (Miss. 1935).

Plea to jurisdiction of consumer’s action against foreign corporate manufacturer for injuries allegedly caused by glass in candy made by such manufacturer and purchased from retail merchant held properly sustained, where service was had on corporation’s former agent after corporation’s withdrawal from state and it did not appear that candy allegedly causing injuries before such withdrawal was in any way connected with business done by manufacturer within the state. Walters v. Curtis Candy Co., 172 Miss. 187, 159 So. 560, 1935 Miss. LEXIS 126 (Miss. 1935).

D. Former § 79-4-15.10.

22. In general.

There was no statutory or other authority that would allow a Mississippi court to compel nonresident, non-parties to the litigation to produce documents in a breach of contract dispute between a seed company and a corporation. Syngenta Crop Prot., Inc. v. Monsanto Co., 908 So. 2d 121, 2005 Miss. LEXIS 466 (Miss. 2005).

Subarticle B. Withdrawal.

§79-4-15.20. Withdrawal of foreign corporations.

A foreign corporation authorized to transact business in this state may not withdraw from this state until it obtains a certificate of withdrawal from the Secretary of State.

A foreign corporation authorized to transact business in this state may apply for a certificate of withdrawal by delivering an application to the Secretary of State for filing. The application must set forth:

1. The name of the foreign corporation and the name of the state or country under whose law it is incorporated;
2. That it is not transacting business in this state and that it surrenders its authority to transact business in this state;
3. That it revokes the authority of its registered agent to accept service on its behalf and appoints the Secretary of State as its agent for service of process in any proceeding based on a cause of action arising during the time it was authorized to transact business in this state;
4. A mailing address to which the Secretary of State may mail a copy of any process served on him under paragraph (3) of this subsection; and
5. A commitment to notify the Secretary of State in the future of any change in its mailing address.

After the withdrawal of the corporation is effective, service of process on the Secretary of State under the Mississippi Rules of Civil Procedure is service on the foreign corporation. Upon receipt of process, the Secretary of State shall mail a copy of the process to the foreign corporation at the mailing address set forth in its application for withdrawal.

HISTORY: Laws, 2005, ch. 502, § 2; Laws, 2012, ch. 382, § 44, eff from and after Jan. 1, 2013.

Editor’s Notes —

A former § 79-4-15.20 [Laws, 1987, ch. 486, § 15.20, eff from and after January 1, 1988; Repealed by Laws, 2004, ch. 495, § 12, eff from and after July 1, 2004] also provided for the withdrawal of foreign corporations.

Amendment Notes —

The 2012 amendment in (b)(4), substituted “paragraph” for “subdivision” preceding “(3)”, and inserted “of this subsection” thereafter; and substituted “the Mississippi Rules of Civil Procedure” for “this section” following “Secretary of State under” in (c).

Cross References —

Withdrawal of foreign corporation under Mississippi Nonprofit Corporation Act, see § 79-11-383.

RESEARCH REFERENCES

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 266- 268, 457- 461.

8A Am. Jur. Legal Forms 2d, Foreign Corporations §§ 122:45-122:47, 122:51.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-237.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-237.

11. In general.

It would appear that this section [Code 1942, § 5309-234] was enacted to prevent a corporation from withdrawing from the State of Mississippi after a citizen of this state acquires a right to sue the corporation, and that jurisdiction conferred upon a foreign corporation through the provisions of this section is predicated upon the fact that the cause of action accrued during the time that the corporation was qualified to do business within the State of Mississippi, regardless of the origin or genesis of the acts which gave rise to the cause of action, that is, whether or not they accrued or had their effect within or without the State of Mississippi. Hyde Constr. Co. v. Koehring Co., 321 F. Supp. 1193, 1969 U.S. Dist. LEXIS 13680 (D. Miss. 1969).

Where successor corporation agreed to assume the liabilities and obligations of the predecessor corporation which were due from the state, the successor corporation was liable for municipal privilege taxes in view of the statute providing for withdrawal of foreign corporation from the state and also in view of statute providing that a tax is a debt due by corporation and may be recovered by action. General Contract Corp. v. Bailey, 218 Miss. 484, 67 So. 2d 485, 1953 Miss. LEXIS 564 (Miss. 1953).

General rule that withdrawal of foreign corporation from state does not revoke local agent’s authority to receive service of process or deprive local courts of jurisdiction of actions arising out of business done within the state cannot be extended to actions not incidental to or connected with business done in state by such foreign corporation. Walters v. Curtis Candy Co., 172 Miss. 187, 159 So. 560, 1935 Miss. LEXIS 126 (Miss. 1935).

Plea to jurisdiction of consumer’s action against foreign corporate manufacturer for injuries allegedly caused by glass in candy made by such manufacturer and purchased from retail merchant held properly sustained, where service was had on corporation’s former agent after corporation’s withdrawal from state and it did not appear that candy allegedly causing injuries was in any way connected with the business done by manufacturer within the state. Walters v. Curtis Candy Co., 172 Miss. 187, 159 So. 560, 1935 Miss. LEXIS 126 (Miss. 1935).

Subarticle C. Revocation of Certificate of Authority.

§79-4-15.30. Grounds for revocation.

The Secretary of State may commence a proceeding under Section 79-4-15.31 to revoke the certificate of authority of a foreign corporation authorized to transact business in this state if:

1. The foreign corporation does not deliver its annual report to the Secretary of State within sixty (60) days after it is due;
2. The foreign corporation does not pay within sixty (60) days after they are due any franchise taxes or penalties imposed by Sections 79-4-1.01 et seq. or other law;
3. The foreign corporation is without a registered agent in this state for sixty (60) days or more;
4. The foreign corporation does not inform the Secretary of State by an appropriate filing that its registered agent has changed or that its registered agent has resigned, within sixty (60) days of the change or resignation;
5. An incorporator, director, officer or agent of the foreign corporation signed a document he knew was false in any material respect with intent that the document be delivered to the Secretary of State for filing;
6. The Secretary of State receives a duly authenticated certificate from the Secretary of State or other official having custody of corporate records in the state or country under whose law the foreign corporation is incorporated stating that it has been dissolved or disappeared as the result of a merger.

HISTORY: Laws, 1987, ch. 486, § 15.30; Laws, 2012, ch. 382, § 45, eff from and after Jan. 1, 2013.

Amendment Notes —

The 2012 amendment deleted “or registered office” following “a registered agent” in (3); and in (4), deleted references to “registered office” and substituted ‘inform the Secretary of State by an appropriate filing‘ for ‘inform the Secretary of State under Section 79-4-15.08 or 79-4-15.09.”

Cross References —

Procedures for and effect of revocation of foreign corporation’s certificate of authority, see § 79-4-15.31.

Administrative revocation, under this section and §§ 79-4-15.31 and 79-4-15.32, of foreign professional corporations certificate of authority, see § 79-10-95.

Revocation of certificate of authority under Mississippi Nonprofit Corporation Act, see §§ 79-11-385 through 79-11-389.

RESEARCH REFERENCES

ALR.

Foreign corporation’s leasing of personal property as doing business within statutes prescribing conditions of right to do business. 50 A.L.R.3d 1020.

State regulation of land ownership by alien corporation. 21 A.L.R.4th 1329.

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 176, 177, 398- 401.

CJS.

20 C.J.S., Corporations §§ 1810, 1843.

Law Reviews.

An analysis of Mississippi’s treatment of foreign corporations. 55 Miss L. J. 259, June, 1985.

JUDICIAL DECISIONS

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former §79-3-241.

11. In general.

I. Under Current Law.

1.-10. [Reserved for future use.]

II. Under Former § 79-3-241.

11. In general.

A foreign corporation, whose certificate of authority to do business within the State was suspended after it filed a breach of lease action, was not required to become reinstated as a condition for proceeding to trial. Capital Associates, Inc. v. Sally Southland, Inc., 529 So. 2d 640, 1988 Miss. LEXIS 338 (Miss. 1988).

§79-4-15.31. Procedure for and effect of revocation.

If the Secretary of State determines that one or more grounds exist under Section 79-4-15.30 for revocation of a certificate of authority, he shall serve the foreign corporation with written notice of his determination under Section 79-4-15.10, except that such determination may be served by first class mail.

If the foreign corporation does not correct each ground for revocation or demonstrate to the reasonable satisfaction of the Secretary of State that each ground determined by the Secretary of State does not exist within sixty (60) days after service of the notice is perfected under Section 79-4-15.10, the Secretary of State may revoke the foreign corporation’s certificate of authority by signing a certificate of revocation that recites the ground or grounds for revocation and its effective date. The Secretary of State shall file the original of the certificate and serve a copy on the foreign corporation under Section 79-4-15.10, except that such certificate may be served by first-class mail.

The authority of a foreign corporation to transact business in this state ceases on the date shown on the certificate revoking its certificate of authority.

The Secretary of State’s revocation of a foreign corporation’s certificate of authority appoints the Secretary of State the foreign corporation’s agent for service of process in any proceeding based on a cause of action which arose during the time the foreign corporation was authorized to transact business in this state. Service of process on the Secretary of State under the Mississippi Rules of Civil Procedure is service on the foreign corporation. Upon receipt of process, the Secretary of State shall mail a copy of the process to the secretary of the foreign corporation at its principal office shown in its most recent annual report or in any subsequent communication received from the corporation stating the current mailing address of its principal office, or, if none are on file, in its application for a certificate of authority.

Revocation of a foreign corporation’s certificate of authority does not terminate the authority of the registered agent of the corporation.

The administrative revocation of a foreign corporation’s certificate of authority shall not impair the validity of any contract, deed, mortgage, security interest, lien or act of such foreign corporation or prevent the foreign corporation from defending any action, suit or proceeding with any court of this state.

A foreign corporation whose registration has been administratively revoked may not maintain any action, suit or proceeding in any court of this state until such foreign corporation’s certificate of authority has been reinstated.

HISTORY: Laws, 1987, ch. 486, § 15.31; Laws, 1991, ch. 509, § 3; Laws, 2012, ch. 382, § 46; Laws, 2012, ch. 481, § 41, eff from and after Jan. 1, 2013.

Joint Legislative Committee Note —

Section 41 of Chapter 481, Laws of 2012, effective January 1, 2013 (approved April 24, 2012), amended this section. Section 46 of Chapter 382, Laws of 2012, effective January 1, 2013 (approved April 17, 2012), also amended this section. As set out above, this section reflects the language of Section 41 of Chapter 481, Laws of 2012, which contains language that specifically provides that it supersedes § 79-4-15.31 as amended by Laws of 2012, ch. 382.

Amendment Notes —

The first 2012 amendment (ch. 382), substituted “the Mississippi Rules of Civil Procedure” for “this subsection” in the second sentence of (d).

The second 2012 amendment (ch. 481), effective January 1, 2013, substituted “the Mississippi Rules of Civil Procedure” for “this subsection” preceding “is service on the foreign corporation” in (d); and added (f) and (g).

Cross References —

Service of process, notice or demand on foreign corporation which has had its certificate of authority revoked under this section, see § 79-4-15.10.

Authority and grounds for Secretary of State to commence proceeding under § 79-4-15.31 to revoke certificate of authority of foreign corporation, see § 79-4-15.30.

Appeal from revocation, see § 79-4-15.32.

Administrative revocation, under this section and §§ 79-4-15.30 and 79-4-15.32, of foreign professional corporation’s certificate of authority, see § 79-10-95.

Revocation of certificate of authority under Mississippi Nonprofit Corporation Act, see §§ 79-11-385 through 79-11-389.

RESEARCH REFERENCES

ALR.

Foreign corporation’s leasing of personal property as doing business within statutes prescribing conditions of right to business. 50 A.L.R.3d 1020.

State regulation of land ownership by alien corporation. 21 A.L.R.4th 1329.

Reinstatement of repealed, forfeited, expired, or suspended corporate charter as validating interim acts of corporation. 42 A.L.R.4th 392.

Am. Jur.

36 Am. Jur. 2d, Foreign Corporations §§ 176, 177, 396 et seq.

12 Am. Jur. Pl & Pr Forms (Rev), Foreign Corporations, Forms 31, 32.

8 Am. Jur. Legal Forms 2d, Foreign Corporations §§ 122:52.

CJS.

20 C.J.S., Corporations §§ 1843-1867.

Law Reviews.

An analysis of Mississippi’s treatment of foreign corporations. 55 Miss L. J. 259, June, 1985.

§79-4-15.32. Appeal from revocation.