7-1-1 — 7-1-4. [Repealed.]

7-1-5. Corporations organized for the business of insurance.

Notwithstanding any general law to the contrary, any corporation, whether organized with capital stock or as a mutual association, that is organized for the purpose of carrying on within this state the business of insurance, surety, or indemnity, shall be organized pursuant to chapter 1.2 of this title and shall have all the rights and privileges and be subject to provisions of chapter 1 of title 27, relating to domestic insurance companies; provided, however, the articles of incorporation comply with requirements established by rule or regulation promulgated by the director of the department of business regulation, and provided, further, that no insurance corporation may commence business until it has satisfied the requirements enumerated in § 27-1-37 . Any corporation as defined in this section and, notwithstanding the provisions of § 27-41-22 , any corporation organized, created, or established in any manner pursuant to chapters 19, 20, 20.1, 20.2, 20.3, and 41 of title 27, shall obtain prior approval from the director of the department of business regulation for all charter amendments made pursuant to this title. Any corporation defined in this section created by special act of the general assembly, may amend its charter pursuant to § 7-1.2-902 , subject to prior approval of the amendment by the director of the department of business regulation.

History of Section. P.L. 1988, ch. 48, § 2; P.L. 1999, ch. 147, § 1; P.L. 2005, ch. 36, § 2; P.L. 2005, ch. 72, § 2.

7-1-5.1. [Repealed.]

History of Section. P.L. 1988, ch. 48, § 3; Repealed by P.L. 1999, ch. 147, § 2, effective June 28, 1999.

7-1-5.2. Mutual insurance associations — Applicability of chapter.

Notwithstanding any provision of § 7-1-5 to the contrary, and without intending to limit those sections of chapter 1.2 of this title that may not be applicable to mutual associations by reason of the fact that those associations do not have shareholders, the following sections of chapter 1.2 of this title do not apply to any insurance company organized as a mutual association: § 7-1.2-601 (Right of corporation to acquire, dispose of, and cancel its own shares); § 7-1.2-602 (Authorized shares; shares in classes or series; issuance of shares); § 7-1.2-705 (Quorum of shareholders required for shareholders’ action); § 7-1.2-1201 (Rights of shareholders to dissent); § 7-1.2-1202 (Rights of dissenting shareholders); § 7-1.2-1315 (Avoidance of dissolution by share buyout); and § 7-1.2-1602(c)(2) (License fees payable by domestic corporations).

History of Section. P.L. 1999, ch. 313, § 1; P.L. 2005, ch. 36, § 2; P.L. 2005, ch. 72, § 2.

7-1-6. Time allowed for organization of corporations created by legislative act.

Every corporation created by special act of the general assembly shall, if no different time for that purpose is limited by the special act, be organized within two (2) years after the act takes effect. In every case where the corporation is not organized within the limited time, the act of incorporation becomes void at the end of the limited time.

History of Section. P.L. 1920, ch. 1925, § 81; G.L. 1923, ch. 248, § 81; G.L. 1938, ch. 116, § 81; G.L. 1956, § 7-1-6 .

7-1-7. Fees payable by corporations created by legislative act.

Before any corporation, other than a corporation for religious, literary, or charitable purposes, or a military or fire company, is organized under a charter granted by special act of the general assembly, the petitioners for the charter shall pay into the general treasury, for the use of the state, one-tenth of one percent (.1%) of the total amount of its authorized capital stock having par value, and in the case of stock having no par value ten cents ($0.10) for each share, but in no case less than one hundred dollars ($100); and whenever the authorized capital stock of any such corporation is increased by special act of the general assembly, the corporation shall pay into the general treasury, for the use of the state, one-tenth of one percent (.1%) of the total amount of the authorized increase in the case of stock having par value, and in the case of stock having no par value, ten cents ($0.10) for each share of the authorized increase; and the secretary of state shall not issue a certified copy of any act creating a corporation, or a certified copy of any act providing for an increase, until the secretary receives the certificate of the general treasurer to the effect that the required sum has been paid.

History of Section. G.L. 1896, ch. 29, § 16; G.L. 1909, ch. 39, § 16; P.L. 1920, ch. 1925, § 87; G.L. 1923, ch. 37, § 12; P.L. 1929, ch. 1391, § 3; G.L. 1938, ch. 116, § 97; G.L. 1956, § 7-1-7 .

7-1-7.1. Filings to be originals.

Filings made under this title at the secretary of state’s office are considered original and valid if they bear either original signatures, facsimile, or electronic signatures and shall include, but not be limited to any electronically transmitted documents or similar communications transmitted through a medium provided and authorized by the secretary of state.

History of Section. P.L. 1990, ch. 98, § 1; P.L. 2008, ch. 57, § 1; P.L. 2008, ch. 123, § 1.

7-1-8 — 7-1-12. [Repealed.]

7-1-13. Legislative control of future charters.

The charter or articles of association of every corporation subsequently created may be amended or repealed at the will of the general assembly.

History of Section. P.L. 1920, ch. 1925, § 79; G.L. 1923, ch. 248, § 79; G.L. 1938, ch. 116, § 79; G.L. 1956, § 7-1-13 .

7-1-14. Continuation for special purposes of statutes otherwise repealed.

Whenever any special act creating a corporation, the provisions of which are not subject to amendment or repeal at the will of the general assembly, refers to and adopts, either expressly or by implication, any statute or part of a statute previously repealed, the statute or part of a statute referred to and adopted is not deemed repealed, but is for the purpose for which it is referred to and adopted, but for no other purpose, deemed to be in force.

History of Section. P.L. 1920, ch. 1925, § 89; G.L. 1923, ch. 248, § 87; G.L. 1938, ch. 116, § 87; G.L. 1956, § 7-1-14 .

7-1-15, 7-1-16. [Repealed.]

7-1-17. Receipt of property for charitable purposes in excess of authorized holdings.

In case any real or personal estate is subsequently given to any corporation to hold for any charitable uses or purposes authorized or permitted by the charter of the corporation, or any amendment of the charter, or by law, and the corporation, but for the provisions of this section, would not be able to take or hold the estate or some part of it on account of the limitation as to the amount of property of the corporation prescribed by the charter or any amendment to it, then in every such case, it is lawful for the corporation to take and hold the real and personal estate, or the part of it as already stated, upon conditions subsequent, nevertheless, that the corporation obtains from the general assembly authority to take and hold real and personal estate to an amount large enough to include, in addition to its other property, the property given to the corporation as already stated, and that the application to the general assembly is made not later than one year from the time on which the corporation takes and holds, or but for the previously stated limitation would be entitled to take and hold, the given real or personal estate.

History of Section. G.L. 1896, ch. 177, § 8; G.L. 1909, ch. 213, § 8; G.L. 1923, ch. 248, § 91; G.L. 1938, ch. 116, § 91; P.L. 1944, ch. 1400, § 1; G.L. 1956, § 7-1-17 .

7-1-18 — 7-1-20. [Repealed.]

7-1-21. Agreements as to disposition of stock or insurance on death of stockholder.

1. No agreement in writing, between or among two (2) or more stockholders in a corporation, or between or among a corporation and one or more of its stockholders, whether in either case the agreement is made by all or less than all of the stockholders of the corporation, either previously or subsequently entered into, is deemed testamentary in character, or for that reason invalid or unenforceable, because the agreement contains a provision or provisions: (1) Regulating, in the event of the death of any stockholders, the transfer, distribution, or other disposition of all or any portion of the stock of the deceased stockholder to his or her estate or to the corporation or to or among the other stockholder or stockholders of the corporation or its, his, her, or their assignees, transferees, or successors; or (2) Regulating the destination, distribution, or other disposition of the proceeds of any policy, or policies, of insurance upon the life of any stockholder.
2. This section is not construed to affect the rights of the heirs, next of kin, legatees, devisees, or creditors of a stockholder who has deceased prior to May 6, 1957.

History of Section. G.L. 1938, ch. 116, § 99; P.L. 1954, ch. 3346, § 1; G.L. 1956, § 7-1-21 ; P.L. 1957, ch. 105, § 1.

7-1-22. [Repealed.]

History of Section. G.L. 1896, ch. 177, § 38; G.L. 1909, ch. 213, § 38; G.L. 1923, ch. 248, § 95; P.L. 1930, ch. 1612, § 1; G.L. 1938, ch. 116, § 95; G.L. 1956, § 7-1-22 ; Repealed by P.L. 1968, ch. 43, § 1.

7-1-23. Recovery of penalties — Compromise.

All penalties imposed by the terms of the general corporation law for failure to comply with the requirements of that law shall be recovered in a civil action brought in the name and on behalf of the state by the attorney general; provided, however, that the attorney general may, after examination of the facts as he or she deems advisable, compromise any penalty instead of instituting an action for the penalty, and permit the payment to the general treasurer for the use of the state of a smaller sum in lieu of the maximum penalty provided by the general corporation law.

History of Section. P.L. 1920, ch. 1925, § 82; G.L. 1923, ch. 248, § 82; G.L. 1938, ch. 116, § 82; G.L. 1956, § 7-1-23 .

7-1-24 — 7-1-26. [Repealed.]

7-1.1-1 — 7-1.1-141. [Repealed.]

7-1.2-101. Short title.

This chapter is and may be cited as the “Rhode Island Business Corporation Act”.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-102. Reservation of power.

The general assembly at all times has power to prescribe any regulations, provisions, and limitations that it deems advisable, which regulations, provisions, and limitations are binding on any corporation subject to the provisions of this chapter. The general assembly has power to amend, repeal, or modify this chapter at pleasure.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-103. Effect of repeal of prior acts.

The repeal of a prior act by this chapter does not impair, diminish or affect any right, privilege or immunity accrued or established, any suit pending, any right of action conferred, or any duty, restriction, liability or penalty imposed or required, under the provisions of the act, prior to the repeal.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-104. Severability.

If any provision of this chapter or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions or applications of the chapter that can be given effect without the invalid provision or application, and to this end the provisions of the chapter are severable.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-105. Execution, filing and recording of instruments.

1. Whenever any instrument is to be filed with the secretary of state or in accordance with this chapter, the instrument must be executed as follows:
   1. The articles of incorporation, and any other instrument to be filed before the election of the initial board of directors if the initial directors were not named in the articles of incorporation, must be signed by the incorporator or incorporators (or, in the case of any such other instrument, such incorporator’s or incorporators’ successors and assigns).
   2. All other instruments must be signed:
      1. By any authorized officer of the corporation; or
      2. If it appears from the instrument that there are no authorized officers, then by a majority of the directors or by the director or directors authorized by a majority of the directors; or
      3. If it appears from the instrument that there are no authorized officers or directors, then by the holders of record of all outstanding shares, or by those holders of record designated by a majority of all outstanding shares; or
2. Whenever this chapter requires any instrument to be acknowledged, such requirement is satisfied by either:
   1. The formal acknowledgment by any individual signing the instrument that it is his or her act and deed or the act and deed of the corporation, and that the facts stated therein are true. This acknowledgment must be made before an individual who is authorized by the law of the place of execution to take acknowledgment; or
   2. The signature, without more, of the individual or individuals signing the instrument, in which case such signature or signatures constitutes the affirmation or acknowledgment of the signatory, under penalties of perjury, that the instrument is that individual’s act and deed or the act and deed of the corporation, and that the facts stated therein are true.
3. Whenever any instrument is to be filed with the secretary of state or in accordance with this section or chapter, such requirement means that:
   1. The signed instrument must be delivered to the office of the secretary of state in either paper format or electronic transmission or another medium authorized by the secretary of state;
   2. All taxes and fees authorized by law to be collected by the secretary of state in connection with the filing of the instrument must be tendered to the secretary of state; and
   3. Upon delivery of the instrument, the secretary of state shall record the date and time of its delivery. Upon such delivery and tender of the required taxes and fees, the secretary of state shall certify that the instrument has been filed in the secretary of state’s office by endorsing upon the signed instrument the word “Filed”, and the date and time of its filing. This endorsement is the “filing date” of the instrument, and is conclusive of the date and time of its filing in the absence of actual fraud.
4. Any instrument filed in accordance with subsection (c) of this section is effective upon its filing date. Any instrument may provide that it is not to become effective until a specified time subsequent to the time it is filed, but not later than the 90th day after the date of its filing.
5. If another section of this chapter specifically prescribes a manner of executing, acknowledging or filing a specified instrument or a time when that instrument becomes effective which differs from the corresponding provisions of this section, then such other section governs.
6. Whenever any instrument authorized to be filed with the secretary of state under any provision of this chapter, has been so filed and is an inaccurate record of the corporate action therein referred to, or was defectively or erroneously executed, sealed or acknowledged, the instrument may be corrected by filing with the secretary of state a certificate of correction of the instrument which must be executed, acknowledged and filed in accordance with this section. The certificate of correction must specify the inaccuracy or defect to be corrected and set forth the portion of the instrument in corrected form. The corrected instrument must be specifically designated as such in its heading, specify the inaccuracy or defect to be corrected, and set forth the entire instrument in corrected form. An instrument corrected in accordance with this section is effective as of the date the original instrument was filed, except as to those individuals who are substantially and adversely affected by the correction and as to those individuals the instrument as corrected is effective from its filing date.
7. Notwithstanding that any instrument authorized to be filed with the secretary of state under this chapter is when filed inaccurately, defectively or erroneously executed, sealed or acknowledged, or otherwise defective in any respect, the secretary of state has no liability to any individual for the preclearance for filing, the acceptance for filing or the filing and indexing of such instrument by the secretary of state.
8. Any signature on any instrument authorized to be filed with the secretary of state under this chapter may be a facsimile or an electronically transmitted signature.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2008, ch. 57, § 2; P.L. 2008, ch. 123, § 2.

7-1.2-106. Definitions.

As used in this chapter:

1. “Articles of incorporation” means the original or restated articles of incorporation and all of their amendments including agreements of merger.
2. “Authorized shares” means the shares of all classes which the corporation is authorized to issue.
3. “Corporation” or “domestic corporation” means a corporation for profit subject to the provisions of this chapter, except a foreign corporation.
4. “Delivering/Delivered” means either physically transferring a paper document to the secretary of state or transferring a document to the secretary of state by electronic transmission through a medium provided and authorized by the secretary of state.
5. “Electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
6. “Employee” includes officers but not directors. A director may accept duties which also make him or her an employee.
7. “Filing” means delivered to the secretary of state in either paper format or electronic transmission through a medium provided and authorized by the secretary of state.
8. “Foreign corporation” means a corporation for profit organized under laws other than the laws of this state for a purpose or purposes for which a corporation may be organized under this chapter.
9. “Individual” means a natural person.
10. “Insolvent” means the inability of a corporation to pay its debts as they become due in the usual course of its business.
11. “Person” means an individual or an entity. An entity includes domestic and foreign business corporation, domestic and foreign nonprofit corporation; estate; trust; domestic and foreign unincorporated entity; and a state, the United States and a foreign government.
12. “Shareholder” means one who is a holder of record of shares in a corporation.
13. “Shares” means the units into which the proprietary interests in a corporation are divided.
14. “Signature” or “Signed” or “Executed” means an original signature, facsimile, or an electronically transmitted signature submitted through a medium provided and authorized by the secretary of state.
15. “State” means the state of Rhode Island.
16. “Subscriber” means one who subscribes for shares in a corporation, whether before or after incorporation.
17. The singular shall be construed to include the plural, the plural the singular, and the masculine the feminine, when consistent with the intent of this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2007, ch. 94, § 1; P.L. 2007, ch. 112, § 1; P.L. 2008, ch. 57, § 2; P.L. 2008, ch. 123, § 2.

7-1.2-201. Incorporators and organization of the corporation.

1. One or more individuals may act as incorporator or incorporators of a corporation by filing articles of incorporation for the corporation with the secretary of state.
2. After incorporation:
   1. If initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws, and transacting on any other business to come before the meeting.
   2. If initial directors are not named in the articles of incorporation, the incorporator or incorporators shall hold an organizational meeting at the call of the majority of the incorporators:
      1. To elect directors and complete the organization of the corporation; or
      2. To elect a board of directors who will complete the organization of the corporation.
3. The incorporator or incorporators calling a meeting under this section shall give at least three (3) days’ notice of the meeting by mail to each incorporator. The notice must state the time and place of the meeting.
4. The act or decision done or made by a majority of the incorporators are the act of the incorporators, provided that an action permitted to be taken at the meeting or meetings of incorporators under this section may be taken without a meeting if a consent, in writing, stating the action to be taken, is signed by all of the incorporators.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-202. Articles of incorporation.

1. The articles of incorporation must state:
   1. A corporate name that satisfies the requirements of § 7-1.2-401 .
   2. The total number of shares which the corporation has authority to issue, and if the corporation is to be authorized to issue more than one class of shares:
      1. The total number of shares of each class; and
      2. A statement of all or any of the designations and the powers, preferences, and rights, including voting rights, and the qualifications, limitations, or restrictions of them, which are permitted by the provisions of this chapter in respect of any class or classes of shares of the corporation and the fixing of which by the articles of incorporation is desired, and an express grant of the authority as it may then be desired to grant to the board of directors to fix by vote or votes any of them that may be desired but which is not fixed by the articles.
   3. The address of its initial registered office, and the name of its initial registered agent at the address.
   4. The name and address of each incorporator.
2. The articles of incorporation may state:
   1. A par value of authorized shares or classes of shares.
   2. Any provisions electing to provide preemptive rights to shareholders pursuant to the provisions of § 7-1.2-613 .
   3. Any provision, not inconsistent with law, which the incorporators elect to set forth in the articles of incorporation for the regulation of the internal affairs of the corporation, including, but not limited to, a provision eliminating or limiting the personal liability of a director to the corporation or to its shareholders for monetary damages for breach of the director’s duty as a director; provided that the provision does not eliminate or limit the liability of a director for:
      1. Any breach of the director’s duty of loyalty to the corporation or its shareholders;
      2. Acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
      3. Liability imposed pursuant to the provisions of § 7-1.2-811 ; or
      4. Any transaction from which the director derived an improper personal benefit (unless the transaction is permitted by § 7-1.2-807 ). No provision eliminating or limiting the personal liability of a director will be effective with respect to causes of action arising prior to the inclusion of the provision in the articles of incorporation of the corporation.
      5. Any provision which under this chapter is required or permitted to be set forth in the bylaws.
   4. If, pursuant to § 7-1.2-105(d) , the corporate existence is to begin at a time subsequent to the issuance of the certificate of incorporation by the secretary of state, the date when corporate existence begins.
3. The provisions permitted by subsection (b)(3) may also be included in the articles of incorporation or legislative charter of any existing or future financial institution, insurance company, public utility, or other quasi public corporation having purposes enumerated as exceptions to this chapter in § 7-1.2-301 .
4. The period of duration of a corporation is perpetual unless otherwise stated in the articles of incorporation.
5. It is not necessary to set forth in the articles of incorporation any of the corporate powers enumerated in this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2006, ch. 163, § 1; P.L. 2006, ch. 188, § 1.

7-1.2-203. Bylaws.

1. The bylaws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of incorporation. The initial bylaws of a corporation must be adopted by its incorporators or by its board of directors at its organization meeting. Subsequently, the bylaws may be amended by the shareholders, or, unless otherwise provided in the articles of incorporation or bylaws, by the board of directors, but any amendment to the bylaws by the board of directors may be changed by the shareholders.
2. Emergency bylaws.
   1. The board of directors of any corporation may adopt emergency bylaws, subject to repeal or change by action of the shareholders, which are, notwithstanding any different provision elsewhere in this chapter or in the articles of incorporation or bylaws, operative during any emergency in the conduct of the business of the corporation resulting from an attack on the United States or any nuclear or atomic disaster. The emergency bylaws may make any provision that may be practical and necessary for the circumstances of the emergency, including provisions that:
      1. A meeting of the board of directors may be called by any officer or director in any manner and under conditions prescribed in the emergency bylaws;
      2. The director or directors in attendance at the meeting, or any greater number fixed by the emergency bylaws, constitutes a quorum; and
      3. The officers or other individuals designated on a list approved by the board of directors before the emergency, all in the order of priority and subject to the conditions, and for a period of time (not longer than reasonably necessary after the termination of the emergency) that may be provided in the emergency bylaws or in the resolution approving the list, are, to the extent required to provide a quorum at any meeting of the board of directors, deemed directors for the meeting.
   2. The board of directors, either before or during any emergency, may provide, and from time to time modify, lines of succession in the event that during an emergency any or all officers or agents of the corporation are for any reason rendered incapable of discharging their duties.
   3. The board of directors, either before or during any emergency, may, effective in the emergency, change the head office or designate several alternative head offices or regional offices, or authorize the officers so to do.
   4. To the extent not inconsistent with any adopted emergency bylaws, the bylaws of the corporation remain in effect during any emergency, and upon its termination the emergency bylaws cease to be operative.
   5. Unless otherwise provided in emergency bylaws, notice of any meeting of the board of directors during any emergency may be given only to those directors that it may be feasible to reach at the time and by any means that may be feasible at the time, including publication or radio.
   6. To the extent required to constitute a quorum at any meeting of the board of directors during any emergency, the officers of the corporation who are present are, unless otherwise provided in emergency bylaws, deemed, in order of rank and within the same rank in order of seniority, directors for the meeting.
   7. No officer, director, or employee acting in accordance with any emergency bylaws is liable except for willful misconduct. No officer, director, or employee is liable for any action taken by him or her in good faith in an emergency in furtherance of the ordinary business affairs of the corporation even though not authorized by the bylaws then in effect.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-301. Purposes.

Corporations may be organized under this chapter for any lawful purpose or purposes, except for the purpose of carrying on within this state the business of a bank, savings bank, trust company, building and loan association, loan and investment company, safe deposit company, railroad, electric railroad or street railway company, telegraph or telephone company, gas or electric light, heat or power company, canal, aqueduct, or water company, turnpike company, or any corporation which now has or may subsequently have the right to take or condemn land or other property within this state under the power of eminent domain, or to exercise or acquire franchises in streets or highways of this state, and further except for the purpose of rendering the professional services specified in chapter 5.1 of this title which must be organized under the provisions of that chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-302. Powers.

1. In addition to the powers enumerated below, every corporation, its officers, directors and shareholders possess and may exercise all the powers and privileges granted by this chapter or by any other law or by its articles of incorporation, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of its business.
2. Each corporation has power to:
   1. Have perpetual existence unless a limited period of duration is stated in its articles of incorporation.
   2. Sue and be sued, complain and defend, in its corporate name.
   3. Have a corporate seal which may be altered at pleasure, and to use the seal by causing it, or a facsimile of it, to be impressed or affixed or reproduced in any other manner.
   4. Purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, and otherwise deal in and with, real or personal property, or any interest in that property, wherever situated.
   5. Sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise dispose of all or any part of its property and assets.
   6. Lend money and use its credit to assist its employees.
   7. Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign corporations, associations, partnerships, limited-liability companies or individuals, or direct or indirect obligations of the United States or of any other government, state, territory, governmental district or municipality or of any of their instrumentalities.
   8. Make contracts and guarantees and incur liabilities, borrow money at the rate of interest that the corporation may determine, issue its notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its property, franchises, and income.
   9. Lend money for its corporate purposes, invest and reinvest its funds, and take and hold real and personal property as security for the payment of the funds loaned or invested.
   10. Conduct its business, carry on its operations, and have offices and exercise the powers granted by this chapter, within or without this state.
   11. Elect or appoint officers and agents of the corporation, and define their duties, and fix their compensation.
   12. Make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for the administration and regulation of the affairs of the corporation.
   13. Make donations for the public welfare or for charitable, scientific, or educational purposes.
   14. Transact any lawful business which the board of directors finds will aid governmental authority.
   15. Pay pensions and establish pension plans, pension trusts, profit sharing plans, stock bonus plans, stock option plans, and other incentive plans for any or all of its directors, officers, and employees.
   16. Provide insurance for its benefit on the life of any of its directors, officers, or employees, or on the life of any shareholder for the purpose of acquiring at his or her death shares of its stock owned by the shareholder.
   17. Be a promoter, partner, member, associate, or manager of any partnership, limited-liability company, joint venture, trust, or other enterprise.
   18. Make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation.
   19. Indemnify any individual pursuant to § 7-1.2-814 .
   20. Make guarantees, although not in furtherance of its corporate purposes, when authorized at a meeting of shareholders by the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on guarantees, or a greater percentage that is provided in the articles of incorporation or bylaws.
   21. If authorized by a like vote, to mortgage, pledge, or give a security interest in all or any of its property, franchises, and income to secure a guarantee or to secure obligations other than its own.
3. Every corporation is governed by the provisions and is subject to the restrictions and liabilities contained in this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-303. Defense of ultra vires.

No act of a corporation and no conveyance or transfer of real or personal property to or by a corporation is invalid because the corporation was without capacity or power to do the act or to make or receive the conveyance or transfer, but the lack of capacity or power may be asserted:

1. In a proceeding by a shareholder against the corporation to enjoin the doing of any act or the transfer of real or personal property by or to the corporation. If the unauthorized act or transfer sought to be enjoined is being, or is to be, performed or made pursuant to a contract to which the corporation is a party, the court may, if all of the parties to the contract are parties to the proceeding and if it deems the same to be equitable, set aside and enjoin the performance of the contract, and in so doing may allow to the corporation or to the other parties to the contract, as the case may be, compensation for the loss or damage sustained by either of them which may result from the action of the court in setting aside and enjoining the performance of the contract, but anticipated profits to be derived from the performance of the contract shall not be awarded by the court as a loss or damage sustained.
2. In a proceeding by the corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through shareholders in a representative suit, against the incumbent or former officers or directors of the corporation.
3. In a proceeding by the attorney general, as provided in this chapter, to dissolve the corporation, or in a proceeding by the attorney general to enjoin the corporation from the transaction of unauthorized business.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-401. Corporate name.

1. The corporate name:
   1. Must contain the word “corporation”, “company”, “incorporated”, or “limited”, or an abbreviation of one of these words.
   2. Shall be distinguishable upon the records of the secretary of state from the name of any entity on file with the secretary of state or a name the exclusive right to which is, at the time filed, reserved or registered in the manner provided in this chapter, or the name of a corporation, whether business or nonprofit, limited partnership, limited-liability partnership or limited-liability company which has in effect a registration of its name as provided in this title, subject to the following:
2. This provision does not apply if the applicant files with the secretary of state a certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to the use of the name in this state.
3. The name may be the same as the name of a corporation or other association the certificate of incorporation or organization of which has been revoked by the secretary of state as permitted by law and the revocation has not been withdrawn within one year from the date of the revocation.
4. A corporation with which another corporation, domestic or foreign, is merged, or which is formed by the reorganization of one or more domestic or foreign corporations or upon a sale, lease, or other disposition to, or exchange with, a domestic corporation of all or substantially all the assets of another corporation, domestic or foreign, including its name, may have the same name as that used in this state by any of the corporations if at the time the other corporation was organized under the laws of, or is authorized to transact business in, this state.
5. Words and/or abbreviations that are required by statute to identify the particular type of business entity shall be disregarded when determining if a name is distinguishable upon the records of the secretary of state.
6. The secretary of state shall promulgate rules and regulations defining the term “distinguishable upon the record” for the administration of this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2011, ch. 54, § 1; P.L. 2011, ch. 60, § 1.

7-1.2-402. Fictitious business name.

1. Any corporation organized and existing under the laws of this state or authorized to transact business in this state may transact business in this state under a fictitious name, provided that it files a fictitious business name statement in accordance with this section prior to the time it commences to transact the business under the fictitious name and the fictitious name satisfied the requirements of § 7-1.2-401(a)(2) .
2. The fictitious business name statement must be filed with the secretary of state and must be executed by an authorized officer of the corporation and must state:
   1. The fictitious business name to be used;
   2. The name of the applicant corporation and the state or territory under the laws of which it is incorporated, the date of its incorporation, and a brief statement of the business in which it is engaged; and
   3. The address of its registered office within the state.
3. The fictitious business name statement expires upon the filing of the statement of abandonment of use of a fictitious business name registered in accordance with this section or upon the dissolution of the applicant corporation.
4. The statement of abandonment of use of a fictitious business name under this section may be filed with the secretary of state on forms furnished by the secretary of state and must be executed by an authorized officer of the corporation and must state:
   1. The fictitious business name being abandoned;
   2. The date on which the original fictitious business name statement being abandoned was filed;
   3. The name of the applicant corporation and the state or territory under the laws of which it is incorporated; and
   4. The address of its registered office within the state.
5. No domestic or foreign corporation transacting business under a fictitious business name contrary to the provisions of this section, or its assignee, may maintain any action upon or on account of any contract made, or transaction had, in the fictitious business name in any court of this state until a fictitious business name statement has been filed in accordance with this section.
6. [Deleted by P.L. 2005, ch. 36, § 36 and by P.L. 2005, ch. 72, § 36.]

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36.

7-1.2-403. Reserved name.

1. The exclusive right to the use of a corporate name may be reserved by:
   1. Any individual intending to organize a corporation under this chapter.
   2. Any domestic corporation intending to change its name.
   3. Any foreign corporation intending to make application for a certificate of authority to transact business in this state.
   4. Any foreign corporation authorized to transact business in this state and intending to change its name.
   5. Any individual intending to organize a foreign corporation and intending to have the corporation make application for a certificate of authority to transact business in this state.
2. The reservation is made by filing with the secretary of state an application to reserve a specified corporate name, executed by the applicant. If the secretary of state finds that the name is available for corporate use, the secretary of state shall reserve the name for the exclusive use of the applicant for a non-renewable period of one hundred and twenty (120) days.
3. The right to the exclusive use of a specified corporate name so reserved may be transferred to any other person by filing in the office of the secretary of state a notice of the transfer, executed by the applicant for whom the name was reserved, and specifying the name and address of the transferee.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-404. Registered name.

1. Any corporation organized and existing under the laws of any state or territory of the United States may register its corporate name under this chapter, provided its corporate name is distinguishable upon the records of the secretary of state from the name of any domestic corporation, limited partnership, limited-liability partnership or limited-liability company existing under the laws of this state, or the name of any foreign corporation, limited partnership, limited-liability partnership or limited-liability company authorized to transact business in this state, or any corporate name reserved, filed or registered under this title.
2. The registration is made by:
   1. Filing with the secretary of state:
      1. An application for registration executed by an authorized officer of the corporation, stating the name of the corporation, the state or territory under the laws of which it is incorporated, the date of its incorporation, a statement that it is carrying on or doing business, and a brief statement of the business in which it is engaged; and
      2. A certificate stating that the corporation is in good standing under the laws of the state or territory wherein it is organized, executed by the secretary of state of the state or territory or by any other official that may have custody of the records pertaining to corporations; and
   2. Paying to the secretary of state a registration fee.
3. The registration is effective for a period of one year from the effective date of the application.
4. A corporation, which has in effect a registration of its corporate name, may renew the registration from year to year by annually filing an application for renewal stating the facts required to be stated in an original application for registration and a certificate of good standing as required for the original registration. A renewal application must be filed prior to the expiration of the one-year period from the filing of an original application for registration or its last renewal and extends the registration for the following year.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36.

7-1.2-501. Registered office and registered agent — Designation of registered agent without authority.

1. Each corporation shall have and continuously maintain in this state:
   1. A registered office, which may be, but need not be, the same as its place of business.
   2. A registered agent, who may be:
      1. An individual resident in this state;
      2. A domestic corporation, a domestic limited partnership, a domestic limited-liability partnership, a domestic limited-liability company; or
      3. A foreign corporation, a foreign limited partnership, a foreign limited-liability partnership or a foreign limited-liability company authorized to transact business in this state, in each case, having a business office identical with the office of such registered agent which generally is open during normal business hours to accept service of process and otherwise perform the functions of a registered agent; provided, however, that in the case where the registered agent of a corporation is an attorney, the business address of the agent need not be identical with the registered office, but may be the usual business address of the attorney.
2. Any incorporator, officer, agent, or servant of a corporation, who designates a registered agent for that corporation without the registered agent’s authority, is guilty of a misdemeanor and, upon conviction, may be punished by a fine of not more than one thousand dollars ($1,000) or by imprisonment of not more than one year, or both.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-502. Change of registered office or registered agent.

1. A corporation may change its registered office or change its registered agent, or both, upon filing in the office of the secretary of state a statement stating:
   1. The name of the corporation.
   2. The address of its then registered office.
   3. If the address of its registered office has changed, the new address of the registered office.
   4. The name of its then registered agent.
   5. If its registered agent has changed, the name of its successor registered agent.
   6. The address of its registered office and the address of the business office of its registered agent, as changed.
2. The statement must be executed by the corporation by its authorized representative, and delivered to the secretary of state. If the secretary of state finds that the statement conforms to the provisions of this chapter, the secretary of state shall file the statement in his office, and upon that filing or upon a later date not more than thirty (30) days after the filing, as is set forth in the statement, the change of address of the registered office, or the appointment of a new registered agent, or both, as the case may be, becomes effective.
3. Any registered agent of a corporation may resign as an agent upon filing a written notice of the resignation with the secretary of state, who shall immediately notify the corporation of the resignation at its registered office. The appointment of the agent terminates upon the expiration of thirty (30) days after receipt of the notice by the secretary of state.
4. If a registered agent changes his or her or its business address to another place within the state, he or she or it may change the address and the address of the registered office of any corporations of which he or she or it is a registered agent by filing a statement as required above, except that it need be signed only by the registered agent and need not be responsive to subsection (a)(5) and must recite that a copy of the statement has been mailed to each corporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-503. Service of process on corporation.

1. The registered agent appointed by a corporation is an agent of the corporation upon whom any process, notice, or demand required or permitted by law to be served upon the corporation may be served.
2. Whenever a corporation fails to appoint or maintain a registered agent in this state, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then the secretary of state is an agent of the corporation upon whom any process, notice, or demand may be served. Service on the secretary of state of any process, notice, or demand is made by delivering to and leaving with him or her or with any clerk having charge of the corporation department of his or her office, duplicate copies of the process, notice, or demand. In the event any process, notice, or demand is served on the secretary of state, the secretary of state shall immediately forward one of the copies by certified mail, addressed to the corporation at its registered office. Any service upon the secretary of state is returnable in not less than thirty (30) days.
3. The secretary of state shall maintain a record of any such service setting forth the name of the plaintiff and defendant, the title, docket number and nature of the proceeding in which process has been served upon the secretary of state, the fact that service has been effected pursuant to this subsection, the return date thereof, and the day and hour when the service was made. The secretary of state shall not be required to retain such information for a period longer than five (5) years from receipt of the service of process.
4. Nothing contained in these provisions limits or affects the right to serve any process, notice, or demand required or permitted by law to be served upon a corporation in any other manner permitted by law.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-601. Right of corporation to acquire, dispose of and cancel its own shares.

1. Unless a corporation’s articles of incorporation provide otherwise, subject to subsection (f), a corporation may at any time, by resolution of its board of directors, redeem purchase, take, receive, or otherwise acquire, hold, own, pledge, transfer or dispose of its own shares.
2. In this section, “redeemable shares” means shares issued pursuant to § 7-1.2-602(c)(1) . When redeemable shares are called for redemption, those shares are not outstanding shares for the purpose of voting or determining the total number of shares entitled to vote on any matter on and after the date on which written notice of redemption has been sent to holders thereof and a sum sufficient to redeem such shares has been set aside to pay the redemption price to the holders of the shares upon surrender of certificates therefor.
3. When redeemable shares are redeemed or purchased by the corporation, the redemption or purchase effects a cancellation of the shares and a statement of cancellation must be filed pursuant to subsection (e).
4. When shares of a corporation other than redeemable shares are purchased, a corporation may, at any time, by resolution of its board of directors, cancel all or any part of the shares of the corporation of any class or series reacquired by it by filing a statement of cancellation as provided in subsection (e).
5. A statement of cancellation adopted by the board of directors must be delivered to the secretary of state for filing as follows:
   1. The statement of cancellation shall be executed by an authorized officer of the corporation, and must state:
      1. The name of the corporation.
      2. The number of shares canceled through redemption or purchase, itemized by classes and series.
      3. The aggregate number of issued shares, itemized by classes and series, after giving effect to the cancellation.
      4. If the articles of incorporation provide that the canceled shares are not to be reissued, then the number of shares which the corporation has authority to issue, itemized by classes and series, after giving effect to the cancellation.
   2. An original statement of cancellation must be delivered to the secretary of state. If the secretary of state finds that the statement of cancellation conforms to law, the secretary of state shall, when all fees and franchise taxes have been paid:
      1. Endorse on the original the word “Filed”, and the month, day, and year of the filing.
      2. File the original in his or her office.
   3. Upon filing of the statement of cancellation, the shares are restored to the status of authorized but unissued shares unless the articles of incorporation provide that the shares, when redeemed or purchased, are not to be reissued, in which case the filing of the statement of cancellation constitutes an amendment to the articles of incorporation and reduces the number of shares of the class canceled which the corporation is authorized to issue by the number of shares canceled.
6. No redemption or purchase of shares may be made by a corporation if, after giving it effect:
   1. The corporation would be insolvent; 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 redemption, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those redeeming shares (unless such preferential rights are waived by a majority of the shareholders entitled to such preferential rights, voting by class).

      The board of directors may base a determination that a redemption is not prohibited under subsection (f) 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.

7. Nothing contained in this section is construed to forbid the cancellation of shares in any other manner permitted by this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-602. Authorized shares — Shares in classes or series — Issuance of shares.

1. Every corporation has the power to create and issue the number of shares stated in its articles of incorporation or any amendment thereto.
2. Classes and series.  As stated in the articles of incorporation or in any amendment thereto, or in the resolution or resolutions providing for the issue of such shares adopted by the board of directors pursuant to authority expressly vested in it by the provisions of its articles of incorporation, a corporation may issue one or more classes of shares, including one or more classes of common shares, or one or more series of shares within any class thereof, any or all of which classes or series of shares may be certificated or uncertificated, with par value or without par value, and which classes or series may have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof as are stated and expressed in the articles of incorporation or any amendment thereto, or in the resolution or resolutions providing for the issue of such shares adopted by the board of directors pursuant to the authority expressly vested in it by the provisions of its articles of incorporation.
3. Without limiting the authority contained in these provisions, a corporation, when provided for in its articles of incorporation, may issue shares of preferred or special classes or series:
   1. Redeemable for cash, property, promissory notes or rights, including securities of any other corporation, at the option of either the holder or the corporation or upon the happening of a specified event, at the time or times, at the price or prices, or the rate or rates, and with the adjustments stated and expressed or provided for in the articles of incorporation or any amendment thereto, or in the vote or votes providing for the issuance of the shares adopted by the board of directors as previously provided; provided, however, that immediately following any such redemption the corporation must have outstanding one or more shares of one or more classes or series, which share, or shares together, have unlimited voting rights.
   2. Entitling the holders of the shares to cumulative, noncumulative, or partially cumulative dividends.
   3. Having preference over any other class or classes or series of shares as to the payment of dividends.
   4. Having preference in the assets of the corporation over any other class or classes or series of shares upon the voluntary or involuntary liquidation of the corporation.
   5. To the extent not inconsistent with this chapter, having limited or no voting rights, or having special voting rights including the power to elect one or more directors.
   6. Convertible into, or exchangeable for, at the option of either the holder or the corporation or upon the happening of a specified event, shares of any other class or classes or any other series of shares of the corporation, at such price or prices or at such rate or rates of exchange and with such adjustments as are stated in the articles of incorporation or in the resolution or resolutions providing for the issuance of such shares adopted by the board of directors.
4. If the articles of incorporation expressly vest authority in the board of directors, then, to the extent that the articles of incorporation have not established series and fixed and determined the variations in the relative rights and preferences as between the series, the board of directors has authority to divide any or all of the classes into series and, within the limitations, if any, stated in the articles of incorporation, to fix and determine the relative rights and preferences of the shares of any series established.
5. 1. Open-end investment company.  Notwithstanding the provisions of subsections (a) and (b) of this section, the board of directors of a corporation that is registered or intends to register as an open-end investment company under the Investment Company Act of 1940, as heretofore or hereafter amended, after the registration as an open-end investment company takes effect, may increase or decrease the aggregate number of shares or the number of shares of any class or series that the corporation has authority to issue unless a provision has been included in the articles of incorporation of the corporation after July 1, 2001, prohibiting such an action by the board of directors to increase or decrease the aggregate number of shares or the number of shares of any class or series that the corporation has authority to issue.
   2. Conditional license of franchise.  Any shares of a corporation which holds (directly or indirectly) a license or franchise from a governmental agency to conduct its business or is a member of a national securities exchange, which license, franchise or membership is conditioned upon some or all of the holders of its shares possessing prescribed qualifications may be made subject to redemption by the corporation to the extent necessary to prevent the loss of such license, franchise or membership or to reinstate it.
6. Dividends.  The holders of preferred or special shares of any class or of any series of shares are entitled to receive dividends at the rates, on the conditions and at the times that are stated and expressed in the articles of incorporation or in the vote or votes providing for the issue of the shares adopted by the board of directors as previously provided, payable in preference to, or in relation to, the dividends, payable on any other class or classes of shares, or of any other series of shares, and cumulative, non-cumulative or partially cumulative as is stated and expressed. When dividends upon the preferred and special shares, if any, to the extent of the preferences to which the shares are entitled, have been paid or declared and set apart for payment, a dividend on the remaining class or classes or series of shares may then be paid out of the remaining assets of the corporation available for dividends.
7. Rights upon liquidation.  The holders of the preferred or special shares of any class or of any series of shares are entitled to the rights upon the dissolution of, or upon any distribution of the assets or liquidation, voluntary or involuntary, of the corporation as are stated and expressed in the articles of incorporation or in the vote or votes providing for the issue of the shares adopted by the board of directors as previously provided.
8. Facts ascertainable outside the articles of incorporation.  Any of the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of any class or series of shares may be made dependent upon facts ascertainable outside the articles of incorporation or outside the resolution or resolutions providing for the issue of such shares adopted by the board of directors pursuant to authority expressly vested in it by its articles of incorporation, provided that the manner in which such facts operate upon the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of such class or series of shares is clearly and expressly set forth in the articles of incorporation or in the resolution or resolutions providing for the issue of such shares adopted by the board of directors. The term “facts”, as used in this subsection, includes, but is not limited to, the occurrence of any event, including a determination or action by any person, including the corporation.
9. Amendment of rights and restrictions by board of directors.  Subject to subsection (j), unless otherwise provided in the articles of incorporation, if no shares have been issued of a class or series established by resolution of the board of directors, the voting powers, designations, preferences, and relative, participating optional or other rights, if any or the qualifications, limitations or restrictions thereof, may be amended by a resolution or resolutions adopted by the board of directors.
10. 1. Issuance.  Before any corporation issues any shares of any class or of any series of any class of which the voting powers, designations, preferences, and relative, participating, optional, or other rights, if any, or the qualifications, limitations, or restrictions of the shares, if any, have not been stated in the articles of incorporation but are provided for in a vote or votes adopted by the board of directors pursuant to authority expressly vested in it by the provisions of the articles of incorporation, a certificate presenting a copy of the vote or votes and the number of shares of the class or series must be signed by an authorized officer of the corporation and filed in accordance with § 7-1.2-105 . Upon filing, the certificate constitutes an amendment to the articles of incorporation.
    2. Increase or decrease of shares. Unless otherwise provided in any vote or votes, the number of shares of any class or series as stated in the vote or votes may be increased or decreased (but not below the number of shares then outstanding) by a certificate likewise made, signed, and filed presenting a statement that a specified increase or decrease in the number of shares had been authorized and directed by a vote or votes likewise adopted by the board of directors. If the number of shares is decreased, the number of shares specified in the certificate resume the status which they had before the adoption of the prior resolution.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-603. Subscription for shares.

1. A subscription for shares entered into before incorporation is irrevocable for a period of six (6) months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation. A subscription for shares is not enforceable against a subscriber unless in writing and signed by the subscriber or by an agent of the subscriber.
2. 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.
3. 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.
4. 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 20 days after the corporation sends written demand for payment to the subscriber.
5. A subscription agreement entered into on or after incorporation is a contract between the subscriber and the corporation subject to § 7-1.2-604 .

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-604. Issuance of and consideration for shares.

1. Shares with par value may be issued for such consideration having a value not less than the par value thereof, as determined from time to time by the board of directors, or by the shareholders if the articles of incorporation so provide.
2. Shares without par value may be issued for such consideration as is determined from time to time by the board of directors, or by the shareholders if the articles of incorporation so provide.
3. 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.
4. 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. The determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of the shares relates to whether the shares are validly issued, fully paid and nonassessable.
5. 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.
6. 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 of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-605. Par value per share.

Solely for the purpose of any statute or regulation imposing any tax or fee based upon the capitalization of a corporation, unless otherwise stated in the articles of incorporation, all authorized shares of a corporation organized under this chapter are deemed to have a nominal or par value of one cent ($0.01) per share. If any federal or other statute or regulation applicable to a particular corporation requires that the shares of such corporation have a par value, such shares have the par value determined by the board of directors in order to satisfy the requirements of such statute or regulation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-606. Share rights and options.

Subject to any provisions in respect to rights and options stated in its articles of incorporation, a corporation may create and issue, whether or not in connection with the issuance and sale of any of its shares or other securities, rights or options entitling the holders to purchase from the corporation shares of any class or classes. Those rights or options are evidenced, and the recipients thereof designated, in any manner that the board of directors approves and, subject to the provisions of the articles of incorporation, shall state the terms upon which, the time or times within which and the price or prices at which the shares may be purchased from the corporation upon the exercise of any right or option. In the absence of fraud in the transaction, the judgment of the board of directors as to the adequacy of the consideration received for the rights or options is conclusive.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-607. Expenses of organization, reorganization and financing.

The reasonable charges and expenses of organization or reorganization of a corporation, and the reasonable expenses of and compensation for the sale or underwriting of its shares, may be paid or allowed by the corporation out of the consideration received by it in payment for its shares without rendering the shares not fully paid or assessable.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-608. Form and content of certificates.

1. The shares of a corporation may but need not be represented by certificates as determined by the board of directors. Every holder of shares represented by certificates and upon request every holder of uncertificated shares is entitled to have a certificate signed by the officer or officers designated for the purpose by the bylaws of the corporation, and in the absence of any designation, by the chairperson or the vice chairperson of the board of directors, or the president or a vice president, and by the treasurer or the assistant treasurer, or the secretary or an assistant secretary of the corporation, representing the number of shares registered in certificate form and may be sealed with the seal of the corporation or a facsimile of the seal. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon the certificate has ceased to be the officer, transfer agent or registrar before the certificate is issued, it may be issued by the corporation with the same effect as if he or she were the officer, transfer agent or registrar at the date of its issue.
2. Every certificate representing shares issued by a corporation which is authorized to issue shares of more than one class must state upon the face or back of the certificate, or state that the corporation will furnish to any shareholder upon request and without charge, a full statement of the designations, preferences, limitations and relative rights of the shares of each class authorized to be issued and, if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each series so far as the series have been fixed and determined and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series.
3. Each certificate representing shares must state upon the face of the certificate:
   1. That the corporation is organized under the laws of this state.
   2. The name of the person to whom issued.
   3. The number and class of shares, and the designation of the series, if any, which the certificate represents.
   4. The par value of each of the shares, if any.
4. No certificate may be issued for any share until the share is fully paid.
5. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner of the shares a written notice containing the information and statements required to be presented or stated on certificates pursuant to subsections (b) and (c) and § 7-1.2-609(b) .
6. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series are identical.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-609. Share transfer and ownership restrictions.

1. The shares of a corporation are personal property and are transferable in accordance with the provisions of § 6A-8-204 , as amended from time to time, except as may otherwise be provided in this chapter.
2. The articles of incorporation, bylaws, an agreement among all or less than all of the shareholders or an agreement between all or less than all of the 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.
3. 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 chapter and its existence is noted conspicuously on the front or back of the certificate or is noted in the initial transaction statement required by § 6A-8-204(2) . Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.
4. A restriction on the transfer, ownership 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. To permit a corporation to qualify as:
      1. A real estate investment trust under the provisions of the Internal Revenue Code of 1986, as heretofore or hereafter amended, or regulations adopted thereunder; or
      2. An investment company under the Investment Company Act of 1940, as heretofore or hereafter amended, or regulations adopted thereunder; and
   4. For any other reasonable purpose.
5. A restriction on the transfer or registration of transfer of shares may:
   1. Obligate the shareholder first to offer the corporation or other persons (separately, consecutively or simultaneously) an opportunity to acquire the restricted shares;
   2. Obligate the corporation or other persons (separately, consecutively or simultaneously) to acquire the restricted shares;
   3. 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;
   4. Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
6. For the purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-610. Fractional shares.

1. A corporation may:
   1. Issue fractions of a share;
   2. Arrange for the disposition of fractional interests by those entitled to those interests;
   3. Pay in cash the fair value of fractions of a share as of the time when those entitled to receive the fractions are determined; or
   4. Issue scrip in registered or bearer form which entitles the holder to receive a certificate for a full share upon the surrender of the scrip aggregating a full share.
2. A certificate for a fractional share, but not scrip, entitles unless it otherwise provides, the holder to exercise voting rights, to receive dividends on that share, and to participate in any of the assets of the corporation in the event of liquidation. The board of directors may issue scrip subject to the condition that it becomes void if not exchanged for certificates representing full shares before a specified date, or subject to the condition that the shares for which scrip is exchangeable may be sold by the corporation and the proceeds from the sale distributed to the holders of scrip, or subject to any other conditions which the board of directors deems advisable.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-611. Bonds — Facsimile signatures and seals.

The seal of the corporation and any or all signatures of the officers or other agents of the corporation upon a bond and any coupon attached to the bond may be facsimiles if the bond is countersigned by an officer or other agent of a trustee or other certifying or authenticating authority. In case any officer or other agent who has signed or whose facsimile signature has been placed upon the bond or coupon has ceased to be the officer or agent before the bond is issued, it may be issued by the corporation with the same effect as if he were the officer or agent at the date of its issue.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-612. Liability of subscribers and shareholders.

1. A holder of or subscriber to shares of a corporation is under no obligation to the corporation or its creditors with respect to the shares other than the obligation to pay to the corporation the unpaid portion of the consideration for which the shares were issued or to be issued, which in no event may be less than the amount of the consideration for which the shares could be lawfully issued.
2. Any person becoming an assignee or transferee of shares or of a subscription for shares in good faith and without knowledge or notice that the full consideration for the shares has not been paid is not personally liable to the corporation or its creditors for any unpaid portion of the consideration. An executor, administrator, conservator, guardian, trustee, assignee for the benefit of creditors or receiver is not personally liable to the corporation as a holder of or subscriber to shares of a corporation but the estate and funds in his or her hands are so liable.
3. No pledgee or other holder of shares as collateral security is personally liable as a shareholder.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-613. Shareholder’s preemptive rights.

1. Except to the extent limited or denied by this section or by the articles of incorporation, shareholders of a corporation incorporated prior to July 1, 2005, have a preemptive right to acquire unissued shares or securities convertible into shares or carrying a right to subscribe to or acquire shares. Unless otherwise provided in the articles of incorporation:
   1. No preemptive right exists:
      1. To acquire any shares issued to directors, officers, or employees pursuant to approval by the affirmative vote of the holders of a majority of the shares entitled to vote on the acquisition or when authorized by and consistent with a plan previously approved by a vote of shareholders; or
      2. To acquire any shares sold other than for money.
   2. Holders of shares of any class that is preferred or limited as to dividends or assets are not entitled to any preemptive right.
   3. Holders of shares of any class are not entitled to any preemptive right to shares of any class that is preferred or limited as to dividends or assets or to any obligations, unless convertible into shares of that class or carrying a right to subscribe to or acquire shares of that class.
   4. Holders of shares without voting power have no preemptive right to shares with voting power.
   5. The preemptive right is only an opportunity to acquire shares or other securities under terms and conditions that the board of directors may fix for the purpose of providing a fair and reasonable opportunity for the exercise of the right.
2. The shareholders of a corporation incorporated on or after July 1, 2005, do not have a preemptive right to acquire a corporation’s unissued shares or securities convertible into shares or carrying a right to subscribe for or acquire 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 or her 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:
      1. Shares issued as compensation to directors, officers, agents, or employees of the corporation, its subsidiaries or affiliates;
      2. 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;
      3. Shares authorized in articles of incorporation that are issued within six (6) months from the effective date of incorporation; or
      4. Shares sold otherwise than for money.
   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 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 year is subject to the shareholders’ preemptive rights.
3. For purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-614. Distributions to shareholders.

1. Distributions of other than shares.
   1. The 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 (a)(3) of this section.
   2. 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.
   3. No distribution may be made if, after giving it effect:
      1. The corporation would be insolvent; 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 (unless such preferential rights are waived by a majority of the shareholders entitled to such preferential rights, voting by class).
   4. The board of directors may base a determination that a distribution is not prohibited under subsection (a)(3) of this section 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.
   5. Except as provided in subsection (a)(7) of this section, the effect of a distribution under subsection (a)(3) of this section is measured:
      1. In the case of distribution by purchase, redemption or other acquisition of the corporation’s shares, as of the earlier of (A) the date money or other property is transferred or debt incurred by the corporation or (B) the date the shareholder ceases to be a shareholder with respect to the acquired shares;
      2. In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and
      3. In all other cases, as of (A) the date the distribution is authorized if the payment occurs within one hundred twenty (120) days after the date of authorization or (B) the date the payment is made if it occurs more than one hundred twenty (120) days after the date of authorization.
   6. 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.
   7. Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (a)(3) of this section if its terms of the indebtedness 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.
2. Distributions of shares.
   1. 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 distribution.
   2. Shares of one class or series may not be issued as a share distribution in respect to shares of another class or series unless (i) the articles of incorporation so authorize, (ii) a majority of the votes entitled to be cast by the class or series to be issued approve the issue, or (iii) there are not outstanding shares of the class or series to be issued.
   3. If the board of directors does not fix a record date for determining shareholders entitled to share distribution, then it is the date the board of directors authorizes the share distribution.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2006, ch. 163, § 1; P.L. 2006, ch. 188, § 1.

7-1.2-701. Meetings of shareholders.

1. Meetings of shareholders may be held at any place, either within or without this state, that may be stated in or fixed in accordance with the bylaws. If no other place is stated or fixed, all meetings will be held at the registered office of the corporation. An annual meeting of shareholders may be held at any time that is stated or fixed in accordance with the bylaws. Failure to hold the annual meeting at the designated time does not work a forfeiture or dissolution of the corporation. If the annual meeting is not held within any thirteen (13) month period the superior court may, in its discretion, on the application of any shareholder, summarily order a meeting to be held.
2. Special meetings of the shareholders may be called by the board of directors, or by a person or persons that may be authorized by the articles of incorporation or by the bylaws.
3. Notice of any meeting of shareholders must be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote at the meeting in the manner prescribed by § 7-1.2-702 .
4. 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 pursuant to the articles of incorporation, the bylaws or otherwise, however, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date.
5. 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; and
   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.
6. Upon the application of any shareholder, director or person aggrieved, the superior court for the county where the principal office of the corporation is located, shall immediately hear and determine the petition of the aggrieved with respect to the following:
   1. The validity of any election or appointment of any director or officer of a corporation and the right of any person to hold the office;
   2. If any office is claimed by more than one individual, the individual entitled to the office;
   3. The voting and other rights of persons claiming rights in respect of the contested election or appointment; or
   4. Failure of the corporation to hold an annual meeting within any thirteen (13) month period. The superior court may confirm the election or appointment, order a new election, or direct any other relief that may be just and proper.
7. If authorized by the board of directors in its sole discretion or by the bylaws, and subject to such guidelines and procedures as the board of directors may adopt or the bylaws may prescribe, shareholders and proxy holders not physically present at a meeting of shareholders may, by means of remote communication:
   1. Participate in a meeting of shareholders; and
   2. Be deemed present in person and vote at a meeting of shareholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that:
      1. The corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a shareholder or proxy holder;
      2. The corporation shall implement reasonable measures to provide such shareholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and
      3. If any shareholder or proxy holder votes or takes other action at the meeting by means of remote communication, the corporation shall maintain a record of that vote or other action.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-702. Notice to shareholders.

1. Any notice to shareholders given by the corporation under any provision of this chapter, the articles of incorporation or the bylaws is effective if given in writing, or by facsimile or a form of electronic transmission consented to by the shareholder to whom the notice is given. Any consent to alternative notice is revocable by the shareholder by written notice to the corporation. Any consent to alternative notice is deemed revoked if:
   1. The corporation is unable to deliver by facsimile or electronic transmission two (2) consecutive notices given by the corporation in accordance with such consent; and
   2. Such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation does not invalidate the action.
2. If mailed, the notice is deemed to be delivered when deposited in the United States mail addressed to the shareholder at his or her address as it appears on the stock transfer books of the corporation, with prepaid postage on the mail.
3. In the case of any corporation which has fifty (50) or more shareholders of record, if two (2) successive notices, reports or other communications addressed to a shareholder of the corporation at the address of the shareholder appearing on the books of the corporation have been returned to the corporation by the United States postal service marked to indicate that the United States postal service is unable to deliver the notices, reports or other communications to the shareholder at the address, all future notices, reports or other communications are deemed to have been given without further mailing if they are available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice, report, or other communication to other shareholders.
4. A shareholder may waive any notice required by this section, 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.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-703. Closing of transfer books and fixing record date.

1. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment of a meeting of shareholders, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors of a corporation may provide that stock transfer books are closed for a stated period, not less than that specified in any applicable bylaw and not more than sixty (60) days. In lieu of closing the stock transfer books, the bylaws, or in the absence of an applicable bylaw, the board of directors may fix in advance a date as the record date for any determination of shareholders, the date in any case to be not more than sixty (60) days prior to the date on which the particular action, requiring the determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring the dividend is adopted, as the case may be, is the record date for the determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, the determination applies to any adjournment of the meeting.
2. In order that the corporation may determine the shareholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date may not precede the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date has been fixed by the board of directors, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by this chapter, is the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in this state, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Delivery made to a corporation’s registered office must be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by this chapter, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting is the close of business on the day on which the board of directors adopts the resolution taking such prior action.
3. 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.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-704. Voting list.

1. After fixing a record date for a meeting, a corporation shall prepare a list of the names of all its shareholders who are entitled to notice of a shareholders’ meeting.
2. The shareholders’ list must be available for inspection by any shareholder, at least ten (10) days before the meeting for which the list was prepared and continuing through the meeting, at the corporation’s registered office or principal place of business. A shareholder, his or her agent or attorney is entitled on written demand to inspect the list during regular business hours during the period it is available for inspection.
3. The corporation shall make the shareholders’ list available to any shareholder in attendance, whether in person or by remote communication, and any shareholder, his or her agent, or attorney is entitled to inspect the list at any time during the meeting or any adjournment.
4. The persons who appear from the list to be shareholders entitled to vote at the meeting may vote at the meeting.
5. If the right to vote at any meeting is challenged, the person presiding at the meeting shall rely on the list to determine the right of the challenged person to vote.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2018, ch. 346, § 2.

7-1.2-705. Quorum of shareholders required for shareholders’ action.

1. Unless otherwise provided in the articles of incorporation or bylaws, a majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum at a meeting of shareholders, but in no event does a quorum consist of less than one-third (1/3) of the shares entitled to vote at the meeting. If a quorum is present, unless the vote of a greater number or voting by classes is required by this chapter or the articles of incorporation or bylaws, in all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter is the act of the shareholders.
2. Directors are elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. No amendment to the bylaws made by the board of directors pursuant to § 7-1.2-203 may require a greater number or voting by classes.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-706. Greater voting requirements.

Whenever, with respect to any action to be taken by the shareholders of a corporation, the articles of incorporation require the vote of the holders of a greater proportion of the shares, or of any class or series of the shares, than required by this chapter with respect to the action, the provisions of the articles of incorporation control. An amendment of the articles of incorporation which changes or deletes a provision is authorized by the same vote as would be required to take action under the provision.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-707. Action by shareholders without a meeting.

1. Any action required or permitted to be taken at a meeting of shareholders by this chapter, or the articles of incorporation or bylaws of a corporation, may be taken without a meeting if all the shareholders entitled to vote on the action consent to the action in writing.
2. 1. Except for actions pursuant to § 7-1.2-1002 or § 7-1.2-1102 , any action required or permitted to be taken at a meeting of shareholders by this chapter or the articles of incorporation or bylaws of a corporation, may be taken without a meeting upon the written consent of less than all the shareholders entitled to vote on the action, if:
      1. Shareholders who consent would be entitled to cast at least the minimum number of votes that would be required to take the action at a meeting at which all shareholders entitled to vote on the action are present and voting in person or by proxy; and
      2. Action pursuant to this section is authorized by the articles of incorporation.
   2. Prompt notice of the action must be given to all shareholders who would have been entitled to vote upon the action if the meeting were held.
3. Whenever action is taken pursuant to this section, the written consents of the shareholders consenting to the action must be filed with the minutes of proceedings of shareholders.
4. Any action taken pursuant to this section has the same effect for all purposes as if the action had been taken at a meeting of the shareholders.
5. If any other provision of this chapter requires the filing of a certificate upon the taking of an action by shareholders, and action is taken in the manner authorized by this section, the certificate must state that the action was taken without a meeting pursuant to the written consents of the shareholders and must include the number of shares represented by the consents.
6. The record date for determining shareholders entitled to express consent in writing, without a meeting, is determined in accordance with § 7-1.2-703 and, if no record date is fixed for the determination of shareholders entitled to vote by written consent, the date on which such request for written consent is delivered, in accordance with § 7-1.2-702 , to shareholders is the record date for the determination of shareholders entitled to express such written consent.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-708. Voting of shares.

1. Each outstanding share, regardless of series or class, is entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are limited, enlarged or denied by the articles of incorporation as permitted by this chapter. If the articles of incorporation provide for more or less than one vote for any share, on any matter, every reference in this chapter to a majority or other proportion of shares refers to a majority or other proportion of votes entitled to be cast.
2. Shares held, directly or indirectly, by another corporation if a majority of the shares entitled to vote for the election of directors of the other corporation is held by the corporation, may not be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Nothing contained in these provisions is construed as limiting the right of any corporation to vote shares, including, but not limited to, its own shares, held in a fiduciary capacity.
3. Every shareholder entitled to vote at a meeting of shareholders or to express consent without a meeting may authorize another person or persons to act for him or her by proxy, executed, in writing, by the shareholder or by his or her duly authorized attorney in fact. No proxy is valid after three (3) years from the date of its execution, unless otherwise provided in the proxy.
   1. Without limiting the manner in which a shareholder may authorize another person or persons to act for him or her as proxy pursuant to subsection (c) of this section, the following constitutes a valid means by which a shareholder may grant that authority:
      1. A shareholder may execute a writing authorizing another person or persons to act for him or her as proxy. Execution may be accomplished by the shareholder or his or her authorized officer, director, employee or agent signing the writing or causing his or her signature to be affixed to the writing by any reasonable means including, but not limited to, facsimile signature.
      2. A shareholder may authorize another person or persons to act for him or her as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission, including internet and telephonic transmissions, to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or an agent authorized by the person who will be the holder of the proxy to receive the transmission, provided that the telegram, cablegram or other means of electronic transmission must either state or be submitted or communicated with information from which it can be determined that the telegram, cablegram or other electronic transmission, including internet and telephonic transmissions, was authorized by the shareholder. If it is determined that the telegrams, cablegrams or other electronic transmissions, including internet and telephonic transmissions, are valid, the inspectors or, if there are no inspectors, the other persons making that determination, shall specify the information upon which they relied.
   2. Any reliable reproduction of the writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that the copy, facsimile telecommunication or other reproduction is a complete reproduction of the entire original writing or transmission.
   3. 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 or her authority under the appointment.
4. The articles of incorporation may provide that at each election of directors, or at elections held under specified circumstances, every shareholder entitled to vote at the election has the right to vote, in person or by proxy, the number of shares owned by him or her for as many persons as there are directors to be elected and for whose election he or she has a right to vote, or to cumulate his or her votes by giving one candidate as many votes as the number of directors multiplied by the number of his or her shares equals, or by distributing the votes on the same principle among any number of the candidates.
5. Shares standing in the name of another corporation, domestic or foreign, may be voted by any officer, agent or proxy that the bylaws of the corporation may prescribe or, in the absence of a provision, as the board of directors of the corporation may determine.
6. Shares held by an administrator, executor, guardian, custodian under a gift to minors act, conservator or trustee may be voted by him or her, either in person or by proxy, without a transfer of the shares into his or her name.
7. Shares held by two (2) or more persons as joint tenants or as tenants in common may be voted at any meeting of the shareholders by any one of the persons, unless another joint tenant or tenant in common seeks to vote any of the shares in person or by proxy. In the latter event, the written agreement, if any, which governs the manner in which the shares are voted, controls if presented at the meeting. If there is no agreement presented at the meeting, the majority in number of the joint tenants or tenants in common present control the manner of voting. If there is no majority, or if there are two (2) joint tenants or tenants in common, both of whom seek to vote the shares, the shares, for the purpose of voting, must be divided equally among the joint tenants or tenants in common present.
8. Shares standing in the name of a receiver may be voted by the receiver, and shares held by or under the control of a receiver may be voted by the receiver without the transfer of those shares into his or her name if authority to do so is contained in an appropriate order of the court by which the receiver was appointed.
9. A shareholder whose shares are pledged is entitled to vote the shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee is entitled to vote the shares so transferred.
10. On and after the date on which written notice of redemption of redeemable shares has been mailed to the holders of the shares and a sum sufficient to redeem the shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders of the shares upon surrender of certificates for the shares, the shares are not entitled to vote on any matter and are not deemed to be outstanding shares.
11. 1. An executed proxy is irrevocable if it specifies that it is irrevocable and if, and only so long as, it is coupled with an interest sufficient in law to support an irrevocable power coupled with it. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the shares itself or an interest in the corporation generally.
    2. Without limiting the generality of subsection (k)(1) and subject to that subsection, a proxy is coupled with an interest and is irrevocable if it is held by any of the following or a nominee of any of the following:
       1. A pledgee under a valid pledge;
       2. A person who has agreed to purchase the shares under an executory contract of sale;
       3. A creditor or creditors of the corporation who extend or continue credit to the corporation in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit, the amount of the credit, and the name of the person extending or continuing credit; and
       4. A person who has contracted to perform services for the corporation if a proxy is required by the contract of employment, as part of the consideration for the contract of employment, if the proxy states that it was given in consideration of the contract of employment, the name of the employee, and the period of employment contracted for; provided the proxies are respectively revocable after the pledge is redeemed, or the executory contract of sale is performed, or the debt of the corporation is paid, or the period of employment has terminated.
    3. A provision contained in a proxy making it irrevocable is not enforceable against a purchaser for value of the shares subject to the provision without actual knowledge of the existence of the provision, unless notice of the proxy and its irrevocability appears plainly on the certificate or certificates representing the shares; provided that if such shares are uncertificated, a provision contained in a proxy making it irrevocable is enforceable against a purchaser for value of the shares subject to the provision without actual knowledge of the existence of the provision if, and only if, notice of the proxy and its irrevocability was provided in writing to such purchaser prior to the consummation of the purchase of such shares.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-709. Voting trusts and agreements among shareholders.

1. Any number of shareholders of a corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period not to exceed ten (10) years, by entering into a written voting trust agreement specifying the terms and conditions of the voting trust, by depositing a counterpart of the agreement with the corporation at its registered office, and by transferring their shares to the trustee or trustees for the purposes of the agreement. The trustee or trustees shall keep a record of the holders of voting trust certificates evidencing a beneficial interest in the voting trust, giving the names and addresses of all the holders and the number and class of the shares in respect of which the voting trust certificates held by each are issued, and shall deposit a copy of the record with the corporation at its registered office. The counterpart of the voting trust agreement and the copy of the record deposited with the corporation are subject to the same right of examination by a shareholder of the corporation, in person or by agent or attorney, as are the books and records of the corporation, and the counterpart and the copy of the record is subject to examination by any holder of record of voting trust certificates, either in person or by agent or attorney, at any reasonable time for any proper purpose. The trust certificates must state that they are issued pursuant to the voting trust agreement, and that fact must be stated in the stock ledger of the corporation.
2. Agreements among shareholders regarding the voting of their shares are valid and enforceable in accordance with their terms for a period not to exceed ten (10) years. An agreement is not subject to the provision of this section regarding voting trusts unless it is stated in the agreement that it is a voting trust.
3. The provisions of this section are construed as permissive and should not be interpreted to invalidate any voting or other agreement among shareholders, or any irrevocable proxy which is otherwise not illegal.
4. A voting trust or shareholders agreement may at any time or times be extended for an additional period not in excess of ten (10) years, but the extension is binding only with respect to those shares owned of record or beneficially by parties to the extension.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-710. Voting and inspection rights of bondholders and debenture holders.

The articles of incorporation may, to the extent and in the manner provided in the articles of incorporation, confer on the holders of bonds or other evidences of indebtedness of the corporation rights to vote in the election of directors and on any other matters on which shareholders may vote and rights to inspect the books and records of the corporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-711. Actions by shareholders.

1. Definitions.  In this section:
   1. “Derivative proceeding” means a civil suit in the right of a domestic corporation or, to the extent provided in subsection (h) of this section, 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.
2. Standing.  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.
3. Demand.  No shareholder may commence a derivative proceeding until:
   1. A written demand had been made upon the corporation to take suitable action; and
   2. Ninety (90) days have expired from the date 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 (90) day period.
4. Stay of proceedings.  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.
5. Dismissal.
   1. On motion by the corporation, the court shall dismiss a derivative proceeding if one of the groups specified in subsection (e)(2) or (e)(6) has determined in good faith after conducting a reasonable inquiry upon which its conclusions are based that the maintenance of the derivate proceedings is not in the best interests of the corporation.
   2. Unless a panel is appointed pursuant to subsection (e)(6), the determination in subsection (e)(1) must be made by:
      1. A majority vote of independent directors present at a meeting of the board of directors if the independent directors constitute a quorum; or
      2. A majority vote of a committee consisting of two (2) or more independent directors appointed by majority vote of independent directors present at a meeting of the board of directors, whether or not such independent directors constituted a quorum.
   3. None of the following by itself causes a director to be considered not independent for purposes of this section:
      1. The nomination or election of the directors or persons who are defendants in the derivative proceedings 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.
   4. If a derivative proceeding is commenced after a determination has been made rejecting a demand by a shareholder, the complaint must allege with particularity facts establishing either (A) that a majority of the board of directors did not consist of independent directors at the time the determination was made, or (B) that the requirements of subsection (e)(1) of this section have not been met.
   5. If a majority of the board of directors does not consist of independent directors at the time the determination is made, the corporation has the burden of proving that the requirements of subsection (e)(1) have been met. If a majority of the board of directors consists of independent directors at the time the determination is made, the plaintiff has the burden of proving that the requirements of subsection (e)(1) have not been met.
   6. The court may appoint a panel of one or more independent persons upon motion by the corporation to make a determination whether the maintenance of the derivative proceeding is in the best interests of the corporation. In such case, the plaintiff has the burden of proving that the requirements of subsection (e)(1) have not been met.
6. Discontinuance or settlement.  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.
7. Payment of expenses.  On termination of the derivative proceeding the court may:
   1. Order the corporation to pay the plaintiff’s reasonable expenses (including counsel fees) incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the corporation;
   2. Order the plaintiff to pay any defendant’s reasonable expenses (including counsel fees) incurred in defending the proceeding if it finds that the proceeding was commenced or maintained without reasonable cause or for an improper purpose; or
   3. Order a party to pay an opposing party’s reasonable expenses (including counsel fees) incurred because of the filing of a pleading, motion or other paper, if it finds that the pleading, motion or other paper was not well grounded in fact, after reasonable inquiry, or warranted by existing law or a good faith argument for the extension, modification or reversal of existing law and was interposed for an improper purpose, such as to harass or cause unnecessary delay or needless increase in the cost of litigation.
8. Applicability to foreign corporations.  In any derivative proceeding in the right of a foreign corporation, the matters covered by this subchapter are governed by the laws of the jurisdiction of incorporation of the foreign corporation except for subsections (d), (f), and (g) of this section.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2018, ch. 346, § 2.

7-1.2-801. Board of directors.

1. Except as may be otherwise provided in this chapter or in the articles of incorporation, the business and affairs of a corporation are managed by a board of directors. Directors need not be residents of this state or shareholders of the corporation unless the articles of incorporation or bylaws require it. The articles of incorporation or bylaws may prescribe other qualifications for directors. The board of directors has authority to fix the compensation of directors unless otherwise provided in the articles of incorporation.
2. A director shall discharge his duties as a director, including his duties as a member of a committee:
   1. In good faith;
   2. With the care that a person in a like position would reasonably believe appropriate under similar circumstances; and
   3. In a manner he or she reasonably believes to be in the best interests of the corporation.
3. In discharging his or her duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
   1. One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;
   2. Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person’s professional or expert competence; or
   3. A committee of the board of directors of which he or she is not a member if the director reasonably believes the committee merits confidence.
4. A director is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (c) unwarranted.
5. A director is not liable for any action taken as a director, or any failure to take any action, if he or she performed the duties of his or her office in compliance with this section.
6. For the purposes of subsections (b) through (e), “corporation” also includes any financial institution, insurance company, public utility or other quasi-public corporation having purposes enumerated as exceptions to this chapter in § 7-1.2-301 and the provisions of subsections (b) through (e) of this section are applicable to the directors of that corporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-802. Number and election of directors.

The board of directors of a corporation consists of one or more members. The number of directors is fixed by, or in the manner provided in, the articles of incorporation or the 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, but no decrease has the effect of shortening the term of any incumbent director. If the articles of incorporation provide for the election of directors in the manner specified in subsection (d) of § 7-1.2-708 , the number of directors may not be decreased unless approved by the shareholders with less than the number of shares previously entitled to elect one director voting against the decrease. Initial directors hold office until the first annual meeting of shareholders, and until their successors have been elected and qualified. At the first annual meeting of shareholders and at each subsequent annual meeting, the shareholders shall elect directors to hold office until the next succeeding annual meeting, except in the case of the classification of directors as permitted by this chapter. Each director holds office for the term for which he or she is elected and until his or her successor has been elected and qualified. Any director may resign at any time upon notice given in writing to the corporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-803. Classification of directors.

When the board of directors consists of nine (9) or more members, in lieu of electing the whole number of directors annually, the articles of incorporation may provide that the directors be divided into either two (2) or three (3) classes, each class to be as nearly equal in number as possible, the term of office of directors of the first class to expire at the first annual meeting of shareholders after their election, that of the second class to expire at the second annual meeting after their election, and that of the third class, if any, to expire at the third annual meeting after their election. At each annual meeting after the classification, the number of directors equal to the number of the class whose term expires at the time of the meeting will be elected to hold office until the second succeeding annual meeting, if there are two (2) classes, or until the third succeeding annual meeting, if there are three (3) classes. No classification of directors is effective prior to the first annual meeting of shareholders. The articles of incorporation may confer upon holders of any class or series of shares the right to elect one or more directors who serve for any term and have any voting powers stated in the articles of incorporation. The terms of office and voting powers of the directors elected in the manner provided in the articles of incorporation may be greater than or less than those of any other director or class of directors.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-804. Vacancies.

Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. A director elected to fill a vacancy is elected for the unexpired term of his or her predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by the board of directors for a term of office continuing only until the next election of directors by the shareholders. If at any time, by reason of death, resignation or other cause, a corporation should have no directors in office, then any officer or any shareholder or an executor, administrator, trustee or guardian of a shareholder, or other fiduciary entrusted with like responsibility for the person or estate of a shareholder, may call a special meeting of shareholders in accordance with the provisions of the articles of incorporation or the bylaws, or may apply to the superior court for a decree summarily ordering a meeting for the purposes of conducting an election.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-805. Removal of directors.

1. Any or all of the directors may be removed for cause by vote of the shareholders. The articles of incorporation or the specific provisions of a bylaw adopted by the shareholders may provide for the removal by action of the board, except in the case of any director elected by cumulative voting, or by the holders of the shares of any class or series, or holders of bonds, voting as a class, when entitled by the provisions of the articles of incorporation.
2. Unless the articles of incorporation provide that directors may be removed only for cause, any or all of the directors may be removed without cause by vote of the shareholders.
3. The removal of directors, with or without cause, as provided in subsections (a) and (b) of this section is subject to the following:
   1. In the case of a corporation having cumulative voting, no director may be removed when the votes cast against his or her removal would be sufficient to elect him or her if voted cumulatively at an election at which the same total number of votes were cast and the entire board, or the entire class of directors of which he or she is a member, were then being elected; and
   2. When by the provisions of the articles of incorporation the holders of the shares of any class or series, or holders of bonds, voting as a class, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series or the holders of the bonds, voting as a class.
4. An action to procure a judgment removing a director for cause may be brought by the attorney general or by the holders of ten percent (10%) of the outstanding shares, whether or not entitled to vote. The court having jurisdiction may bar from reelection any directors so removed for a period fixed by the court.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-806. Quorum of directors.

A majority of the number of directors fixed by or in the manner provided in the articles of incorporation or the bylaws, or by the shareholders or in the absence of a bylaw or shareholder action fixing the number of directors, then of the number stated in the articles of incorporation, constitutes a quorum for the transaction of business unless a greater number is required by the articles of incorporation or the bylaws. The act of the majority of the directors present at a meeting at which a quorum is present is the act of the board of directors, unless the act of a greater number is required by the articles of incorporation or the bylaws.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-807. Director and officer conflicts of interest.

1. No contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, is void or voidable nor are the directors or officers liable with respect to the contract or transaction solely for this reason, or solely because the director or officer is present at, or participates in, the meeting of the board or committee of the board which authorizes the contract or transaction, or solely because his or her or their votes are counted for that purpose, if:
   1. The material facts as to his or her or their interest or relationship are disclosed or are known to the board of directors or the committee, and the board of directors or committee authorizes, approves, or ratifies the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or
   2. The material facts as to his or her or their interest or relationship are disclosed or are known to the shareholders entitled to vote on the contract or transaction, and the contract or transaction is specifically authorized, approved, or ratified by vote of the shareholders; or
   3. The contract or transaction is fair and reasonable as to the corporation.
2. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-808. Executive and other committees.

Unless otherwise restricted or limited by the articles of incorporation or the bylaws, the board of directors, by resolution adopted by a majority of the full board of directors, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in the resolution or in the articles of incorporation or the bylaws of the corporation, have and may exercise all the authority of the board of directors, but no committee has the authority of the board of directors in reference to amending the articles of incorporation, adopting a plan of merger, recommending to the shareholders the sale, lease, exchange, or other disposition of all or substantially all the property and assets of the corporation other than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution or revocation of the corporation, or amending the bylaws of the corporation. The designation of any committee and the delegation to the committee of authority does not operate to relieve the board of directors, or any member of the board, of any responsibility imposed by law.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-809. Place, notice, and form of notice of directors’ and committee meetings.

1. Meetings of the board of directors, or any committee designated by the board, regular or special, may be held either within or without this state.
2. Regular meetings of the board of directors or any committee designated by the board may be held with or without notice as prescribed in the bylaws. Unless the articles of incorporation or the bylaws provide for an alternative period, special meetings of the board of directors or any committee designated by the board must be preceded by at least two (2) days’ notice of the date, time, and place of the meeting. Attendance of a director at a meeting constitutes a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors or any committee designated by the board of directors need be specified in the notice or waiver of notice of the meeting unless required by the bylaws. Except as may be otherwise restricted by the articles of incorporation or bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board or committee by means of a conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other at the same time and participation by those means constitutes presence in person at a meeting.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-810. Action by directors without a meeting.

Unless otherwise provided by the articles of incorporation or bylaws, any action required by this chapter to be taken at a meeting of the directors of a corporation, or any action which may be taken at a meeting of the directors or of a committee, may be taken without a meeting if all of the directors, or all of the members of the committee, as the case may be, consent thereto in writing or by electronic transmission, before or after the action, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board or committee. The consent has the same effect as a unanimous vote for all purposes, and that may be stated in any certificate or other document filed with the secretary of state.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-811. Liability of directors in certain cases.

1. In addition to any other liabilities imposed by law upon directors of a corporation:
   1. Directors of a corporation who vote for or assent to the declaration of any dividend or other distribution of the assets of a corporation to its shareholders contrary to the provisions of this chapter or contrary to any restrictions contained in the articles of incorporation, are jointly and severally liable to the corporation for the amount of the dividend which is paid or the value of the assets which are distributed in excess of the amount of the dividend or distribution which could have been paid or distributed without a violation of the provisions of this chapter or the restrictions in the articles of incorporation.
   2. Directors of a corporation who vote for or assent to the purchase of its own shares contrary to the provisions of this chapter are jointly and severally liable to the corporation for the amount of consideration paid for the shares which is in excess of the maximum amount which could have been paid for the shares without a violation of the provisions of this chapter.
   3. Directors of a corporation who vote for or assent to any distribution of assets of a corporation to its shareholders during the liquidation of the corporation without the payment and discharge of, or making adequate provision for, all known debts, obligations, and liabilities of the corporation are jointly and severally liable to the corporation for the value of the assets which are distributed, to the extent that the debts, obligations, and liabilities of the corporation are not subsequently paid and discharged.
2. A director who is present at a meeting of its board of directors at which action on any corporate matter is taken is presumed to have assented to the action taken unless his or her dissent is entered in the minutes of the meeting or unless he or she files his or her written dissent to the action with the person acting as the secretary of the meeting before the meeting’s adjournment or forwards the dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. The right to dissent does not apply to a director who voted in favor of the action.
3. A director is not liable under this section if under the circumstances he or she acted with due care and in good faith, and without limiting the generality of what has just been stated, is not liable if he or she relied in good faith upon financial statements of the corporation represented to him or her to be correct and to be based upon generally accepted accounting principles by the president or the officer of the corporation having charge of its books of account, or stated in a written report by an independent public or certified public accountant or firm of accountants fairly to reflect the financial condition of the corporation.
4. Any director against whom a claim is asserted under or pursuant to this section for the payment of a dividend or other distribution of assets of a corporation and who is held liable on the claim, is entitled to contribution from the shareholders who accepted or received any dividend or assets, knowing the dividend or distribution to have been made in violation of this chapter, in proportion to the amounts received by them respectively.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-812. Officers.

1. The officers of a corporation consist of a president, a secretary, and a treasurer, and such other officers as are authorized by the bylaws or the board of directors each of whom is elected by the board of directors or by the shareholders at a time and in a manner as prescribed by the bylaws. Any other officers and assistant officers and agents that are necessary may be elected or appointed by the board of directors or by the shareholders or chosen in another manner prescribed by the bylaws. Any two (2) or more offices may be held by the same person. A failure to elect officers does not dissolve or otherwise affect the corporation.
2. All officers of the corporation, as between themselves and the corporation, have the authority and perform any duties in the management of the corporation that may be provided in the bylaws, or that may be determined by resolution of the board of directors, subject to any limitations on the authority contained in the bylaws.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-813. Resignation and removal of officers.

An officer may resign at any time by delivering notice to the corporation. Any officer may be removed at any time with or without cause by the board of directors or by any other manner permitted by the articles of incorporation or the bylaws. Election, appointment or removal of an officer or agent does not of itself create contract rights.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-814. Indemnification.

1. Definitions.  As used in this section:
   1. “Director” or “officer” means any individual who is or was a director or officer of the corporation and any individual who, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, limited-liability company, partnership, joint venture, trust, other enterprise, employee benefit plan, or other entity. A director or officer is considered to be serving an employee benefit plan at the corporation’s request if his or her duties to the corporation also impose duties on, or otherwise involve services by, him or her to the plan or participants on or beneficiaries of the plan. “Director” or “officer” includes, unless the context requires otherwise, the estate or personal representative of the director or officer.
   2. “Corporation” includes:
      1. Any domestic or foreign corporation, profit or nonprofit;
      2. Any domestic or foreign predecessor entity of the corporation in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction; and
      3. Any of the classes of quasi public corporations with purposes enumerated as exceptions in § 7-1.2-301 to the extent that the corporations are not subject to other provisions of the general laws or special acts authorizing indemnification of their directors and officers.
   3. “Expenses” include attorneys’ fees.
   4. “Liability” means the obligation to pay a judgment, penalties, fines (including an excise tax assessed with respect to an employee benefit plan), settlements, or reasonable expenses actually incurred by the person in connection with the proceeding.
   5. “Official capacity” means:
      1. When used with respect to a director, the office of director in the corporation; and
      2. When used with respect to an officer, as contemplated in subsection (i), the office in a corporation held by the officer. “Official capacity” does not include service for an individual other than a director, as contemplated in subsection (a)(1), the elective or appointive office in the corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan.
   6. “Party” includes an individual who was, is, or is threatened to be made, a named defendant or respondent in a proceeding.
   7. “Proceeding” means any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative.
2. Permissible indemnification.
   1. Except as otherwise provided in this section, a corporation has power to indemnify any individual made a party to any proceeding by reason of the fact that he or she is or was a director if:
      1. He or she conducted himself or herself in good faith; and
      2. He or she reasonably believed:
         1. In the case of conduct in his or her official capacity with the corporation, that his or her conduct was in its best interests; and
         2. In all other cases, that his or her conduct was at least not opposed to the corporation’s best interests; and
      3. In the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful; or
      4. He or she engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation.
   2. A director’s conduct with respect to an employee benefit plan for a purpose he or she reasonably believed to be in the interests of the participants and beneficiaries of the plan is deemed to be for a purpose which is not opposed to the best interests of the corporation in accordance with (b)(1)(ii)(B).
   3. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the individual did not meet the requisite standard of conduct set forth in this subsection.
   4. Unless ordered by a court under subsection (d) of this section, a corporation may not indemnify a director:
      1. 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 (b)(1)(i) and (ii)); or
      2. In connection with any proceeding for which the director was adjudged liable to the corporation on the basis that he or she received an improper personal benefit, whether or not involving action in his or her official capacity.
3. Mandatory indemnification.  Unless limited by the articles of incorporation, a director who has been wholly successful, on the merits or otherwise, in the defense of any proceeding referred to in subsection (b) of this section is indemnified against reasonable expenses incurred by him or her in connection with the proceeding.
4. Court-ordered indemnification.
   1. A court of appropriate jurisdiction, upon application of a director and any notice that the court requires, has authority to order indemnification in the following circumstances:
      1. If the court determines a director is entitled to reimbursement under subsection (c) of this section, the court shall order indemnification, in which case the director is also entitled to recover the expenses of securing the reimbursement; or
      2. If the court determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he or she has met the standard of conduct set forth in subsection (b)(1) or (b)(2) or has been adjudged liable in the circumstances described in subsection (b)(4)(ii), the court may order such indemnification as the court shall deem proper, except that indemnification with respect to any proceeding by or in the right of the corporation or in which liability has been adjudged in the circumstances described in subsection (b)(4)(i) is limited to expenses.
   2. A court of appropriate jurisdiction may be the same court in which the proceeding involving the director’s liability took place.
5. Advance for expenses.  Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of the proceeding upon receipt by the corporation of:
   1. A written affirmation by the director of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation as authorized in this section; and
   2. A written undertaking by or on behalf of the director to repay the amount if the court determines that he or she has not met that standard of conduct, and after a determination that the facts then known to those making the determination would not preclude indemnification under this section. The undertaking required by this subdivision must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. Determinations and authorizations of payments under this subsection are made in the manner specified in subsection (f).
6. Determination and authorization of indemnification.
   1. No indemnification under subsection (b) may be made by the corporation unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he or she has met the standard of conduct set forth in subsection (b). The determination must be made:
      1. By the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding; or
      2. If such a quorum cannot be obtained, then by a majority vote of a committee of the board, duly designated to act in the matter by a majority vote of the full board (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding; or
      3. By special legal counsel, selected by the board of directors or a committee of the board by vote as set forth in subsection (f)(1)(i) or (f)(1)(ii), or, if the requisite quorum of the full board cannot be obtained for the vote and the committee cannot be established, by a majority vote of the full board (in which selection directors who are parties may participate); or
      4. By the shareholders.
   2. Authorization of indemnification and determination as to reasonableness of expenses are made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses must be made in a manner specified in subsection (f)(1)(iii) for the selection of the counsel. Shares held by directors who are parties to the proceeding may not be voted on the subject matter under this subsection.
7. Variation by corporate action.  The indemnification provided by this section is not deemed exclusive of any other rights to which those seeking indemnification are entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office, and continues as to an individual who has ceased to be a director, officer, partner, trustee, employee, or agent and inures to the benefit of the heirs, executors, and administrators of an individual. Nothing contained in this section limits the corporation’s power to pay or reimburse expenses incurred by a director in connection with his or her appearance as a witness in a proceeding at a time when he or she has not been made a named defendant or respondent in the proceeding.
8. Officers.  Unless limited by the articles of incorporation:
   1. An officer of the corporation is indemnified under this section as and to the same extent provided for a director, and is entitled to the same extent as a director to seek indemnification pursuant to the provisions of this section;
   2. A corporation has the power to indemnify and to advance expenses to an officer, employee, or agent of the corporation to the same extent that it may indemnify and advance expenses to directors pursuant to this section; and
   3. A corporation, in addition, has the power to indemnify and to advance expenses to an officer, employee, or agent who is not a director to a further extent, consistent with law, that is provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.
9. Insurance.  A corporation has the power to purchase and maintain insurance on behalf of any individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan, against any liability asserted against him or her and incurred by him or her in any corporate capacity or arising out of his or her status as a director, officer, employee, or agent of the corporation, whether or not the corporation would have the power to indemnify him or her against the liability under the provisions of this section.
10. Shareholder approval.  Any indemnification of, or advance of expenses to, a director in accordance with this section, if arising out of a proceeding by or in the right of the corporation, must be reported, in writing, to the shareholders with or before the notice of the next shareholders’ meeting.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2007, ch. 98, § 1; P.L. 2007, ch. 107, § 1.

7-1.2-901. Right to amend articles of incorporation.

A corporation may amend its articles of incorporation, from time to time, in any and all respects as is desired, to the extent that its articles of incorporation, as amended, contain only provisions that might be lawfully contained in original articles of incorporation filed as of the time of the filing of the amendment, and, if a change in shares or the rights of shareholders, or an exchange, reclassification, subdivision, combination or cancellation of shares or rights of shareholders is to be made, the provisions that may be necessary to effect the change, exchange, reclassification, subdivision, combination or cancellation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-902. Right to amend legislative charters.

Any corporation created by special act of the general assembly, which is organized under this chapter, whose charter is subject to amendment or repeal at the will of the general assembly, may make amendment to its charter that corporations organized under this chapter may make to their articles of incorporation under § 7-1.2-901 . The proposed amendment is effected and evidenced in the same manner, by the same vote and upon the same terms and conditions as are prescribed in §§ 7-1.2-903 and 7-1.2-904 .

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-903. Procedure to amend articles of incorporation.

1. Amendments to a corporations articles of incorporation are made in the following manner:
   1. The board of directors adopts a resolution setting forth the proposed amendment and directing that it be submitted to a vote at a meeting of shareholders, which may be either the annual or a special meeting. If no shares have been issued, the amendment is adopted by resolution of the board of directors and the provisions subsequently stated for adoption by shareholders do not apply. The resolution may incorporate the proposed amendment in restated articles of incorporation which contain a statement that, except for the designated amendment, the restated articles of incorporation correctly state without change the corresponding provisions of the articles of incorporation as previously amended, and that the restated articles of incorporation, together with the designated amendment, supersede the original articles of incorporation and all amendments to those articles.
   2. Written notice stating the proposed amendment or a summary of the changes to be affected by the amendment must be given to each shareholder entitled to vote on the amendment within the time and in the manner provided in this chapter for the giving of notice of meetings of shareholders. If the meeting is an annual meeting, the proposed amendment or the summary may be included in the notice of the annual meeting.
   3. At the meeting a vote of the shareholders entitled to vote on the amendment must be taken on the proposed amendment. The proposed amendment is adopted upon receiving the affirmative vote of the holders of a majority of the shares entitled to vote on the amendment unless any class of shares is entitled to vote on the amendment as a class, pursuant to either the articles of incorporation or the provisions of § 7-1.2-904 , in which event approval of the proposed amendment also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class on the amendment.
2. Any number of amendments may be submitted to the shareholders, and voted upon by them, at one meeting.
3. The resolution authorizing a proposed amendment to the articles of incorporation may provide that at any time prior to the filing of the amendment with the secretary of state, notwithstanding authorization of the proposed amendment by the shareholders of the corporation, the board of directors may abandon the proposed amendment without further action by the shareholders.
4. Whenever the articles of incorporation require for action by the board of directors, by the holders of any class or series of shares or by the holders of any other securities having voting power the vote of a greater number or proportion than is required by any section of this title, the provision of the articles of incorporation requiring such greater vote may not be altered, amended or repealed except by such greater vote.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-904. Class voting on amendments.

1. Except as otherwise provided in this section, the holders of the outstanding shares of a class are entitled to vote as a class upon a proposed amendment, whether or not entitled to vote on the amendment by the provisions of the articles of incorporation, if the amendment would:
   1. Increase or decrease the aggregate number of authorized shares of the class.
   2. Increase or decrease the par value of the shares of the class.
   3. Effect an exchange, reclassification, or cancellation of all or part of the shares of the class.
   4. Effect an exchange, or create a right of exchange, of all or any part of the shares of another class into the shares of the class.
   5. Change the designations, preferences, limitations, or relative rights of the shares of the class.
   6. Change the shares of the class, whether with or without par value, into the same or a different number of shares, either with or without par value, of the same class or another class or classes.
   7. Create a new class of shares having rights and preferences prior and superior to the shares of the class, or increase the rights and preferences or the number of authorized shares of any class having rights and preferences prior or superior to the shares of the class.
   8. In the case of a preferred or special class of shares, divide the shares of the class into series and fix and determine the designation of the series and the variations in the relative rights and preferences between the shares of the series, or authorize the board of directors to do so.
   9. Limit or deny any existing preemptive rights of the shares of the class.
   10. Cancel or otherwise affect dividends on the shares of the class which have accrued but have not been declared.
2. If the proposed amendment would affect only the shares of one series of a class and not the entire class, then only the shares of the series so affected is considered a separate class for the purpose of this section. Any class and any series within a class is considered a separate class for purposes of this section if the effect of the proposed amendment upon the class or series would be different than the effect of the amendment upon the other classes or other series within the class. If the proposed amendment would affect two (2) or more classes or series within a class in the same way, but would not affect the remaining classes or series within the class in the same way, the two (2) or more classes or series affected in the same way are together considered a separate class for purposes of this section. Except as otherwise provided in the articles of incorporation or the certificate referred to in § 7-1.2-602 , if the proposed amendment would have no effect upon one or more classes or series of a class, the classes or series are not entitled to any vote on the proposed amendment and, for the purposes of this section, are not counted in determining the number of shares constituting the class.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-905. Articles of amendment.

1. The corporation may amend its articles of incorporation by filing with the secretary of state articles of amendment which must state:
   1. The name of the corporation.
   2. The amendment so adopted.
   3. The date of the adoption of the amendment by the shareholders or by the board of directors where no shares have been issued.
2. No amendment may affect any existing cause of action in favor of or against the corporation, or any pending suit to which the corporation is a party, or the existing rights of persons other than shareholders; and, in the event the corporate name is changed by amendment, no suit brought by or against the corporation under its former name abates for that reason.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-906. Restated articles of incorporation.

1. The corporation may at any time restate its articles of incorporation as previously amended by filing with the secretary of state restated articles of incorporation. The restated articles of incorporation may include one or more amendments to the articles of incorporation adopted in accordance with the provisions of § 7-1.2-903 .
2. The restated articles of incorporation must state all of the provisions of the articles of incorporation as previously amended, the additional amendments to the articles of incorporation, if any, together with a statement that such additional amendments were adopted in accordance with the provisions of § 7-1.2-903 , and a further statement that, except for the designated amendments, if any, the restated articles of incorporation correctly set forth without change the corresponding provisions of the articles of incorporation as previously amended, and that the restated articles of incorporation, together with the designated amendments, if any, supersede the original articles of incorporation and all previous amendments to the articles of incorporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36.

7-1.2-907. Amendment of articles of incorporation in reorganization proceedings.

1. Whenever a plan of reorganization of a corporation has been confirmed by decree or order of a court of competent jurisdiction in proceedings for the reorganization of the corporation, pursuant to the provisions of any applicable statute of the United States relating to reorganizations of corporations, the articles of incorporation of the corporation may be amended, in the manner provided in this section, in as many respects as are necessary to carry out the plan and put into effect, as long as the articles of incorporation, as amended, contain only provisions that might be lawfully contained in original articles of incorporation at the time of making the amendment.
2. Articles of amendment approved by decree or order of the court must be executed by the trustee or trustees of such corporation appointed in the reorganization proceedings (or a majority thereof), or if none are appointed and acting, by the person or persons that the court designates or appoints for the purpose, and must state the name of the corporation, the amendments of the articles of incorporation approved by the court, the date of the decree or order approving the articles of amendment, the title of the proceedings in which the decree or order was entered, and a statement that the decree or order was entered by a court having jurisdiction of the proceedings for the reorganization of the corporation pursuant to the provisions of an applicable statute of the United States.
3. This section does not apply to such corporation upon the entry of a final decree in the reorganization proceedings closing the case and discharging the trustee or trustees, if any.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1001. Procedure for merger.

1. Any two (2) or more domestic corporations may merge into one of the corporations, or into a new corporation, pursuant to a plan of merger approved in the manner provided in this chapter.
2. The board of directors of each corporation shall, by resolution adopted by each board, approve a plan of merger stating:
   1. The names of the corporations proposing to merge, and the name of the corporation which will survive or result from the merger, which is hereinafter designated as the surviving corporation.
   2. The terms and conditions of the proposed merger.
   3. The manner and basis of converting the shares of each merging corporation (other than those held by the surviving corporation, if any) into shares or obligations or other securities of the surviving corporation or, in whole or in part, into cash, property, or shares, obligations, or other securities of any other corporation.
   4. Any amendments to the articles of incorporation of the surviving corporation to be effected by the merger, or if no amendments are desired, a statement that the articles of incorporation of one of the corporations are the articles of incorporation of the surviving corporation, or in the case of a new corporation, all of the statements required to be stated in articles of incorporation for corporations organized under this chapter.
   5. Any other provisions with respect to the proposed merger that are deemed necessary or desirable.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1002. Approval by shareholders of merger.

1. The board of directors of each corporation, upon approving the plan of merger, shall, by resolution, direct that the plan be submitted to a vote at a meeting of shareholders, which may be either an annual or a special meeting. Written notice must be given to each shareholder, whether or not entitled to vote at the meeting, not less than twenty (20) days before the meeting, in the manner provided in this chapter for the giving of notice of meetings of shareholders, and, whether the meeting is an annual or a special meeting, must state that the purpose or one of the purposes is to consider the proposed plan of merger. A copy or a summary of the plan of merger, as the case may be, together with a statement of the shareholder’s right to dissent and a copy or a summary of § 7-1.2-1202 , must be included in or enclosed with the notice except where no such right is available.
2. At each meeting, shareholders shall vote on the proposed plan of merger. The plan of merger is approved upon receiving the affirmative vote of the holders of a majority of the shares entitled to vote on the plan of merger of each corporation, unless any class of shares of any corporation is entitled to vote as a class on it, in which event, as to the corporation, approval of the plan of merger also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class on it. Any class of shares of the surviving corporation and the merged corporation in a merger is entitled to vote as a class, whether or not the class is otherwise entitled to vote, if the plan of merger contains any provision which, if contained in a proposed amendment to articles of incorporation, would entitle the class of shares to a class vote.
3. 1. Notwithstanding the foregoing provisions of this section, except as may be required by the articles of incorporation, no approval of a plan of merger by the shareholders of the surviving corporation in a merger, and no notice to any of the shareholders of the corporation, are required if:
      1. The plan of merger does not amend the articles of incorporation of the corporation;
      2. The plan of merger does not involve the issuance or transfer by the corporation (either directly or through the medium of options or warrants for, or shares or debt instruments convertible within one year into, the shares) of shares possessing more than twenty percent (20%) of the total combined voting power of all classes of shares then entitled to vote for the election of directors which will be outstanding immediately after the merger; and
      3. 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.
   2. If a plan of merger is adopted by the surviving corporation in a merger without any approval by its shareholders, pursuant to the provisions of this subsection, that fact must be certified in the articles of merger.
4. After approval as already stated by each corporation, and at any time prior to the filing of the articles of merger, the merger may be abandoned pursuant to provisions for abandonment, if any, set forth in the plan of merger.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1003. Articles of merger.

1. Upon approval, articles of merger must be executed by each corporation by its authorized representative and must state:
   1. The plan of merger; and
   2. If, pursuant to § 7-1.2-1005 , the merger is to become effective at a time subsequent to the issuance of the certificate of merger by the secretary of state, the date when the merger is to become effective.
2. The original articles of merger must be delivered to the secretary of state. If the secretary of state finds that the articles conform to law, and all fees and taxes have been paid, the secretary of state shall:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in his or her office; and
   3. Issue a certificate of merger.
3. The secretary of state shall deliver the certificate of merger to the surviving or new corporation, as the case may be, or its representative.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.

7-1.2-1004. Merger of subsidiary corporation.

1. Any corporation owning at least ninety percent (90%) of the outstanding shares of each class of another corporation may merge the other corporation into itself without approval by a vote of the shareholders of either corporation. Its board of directors shall, by resolution, approve a plan of merger stating:
   1. The name of the subsidiary corporation and the name of the corporation owning at least ninety percent (90%) of its shares, which is subsequently in these provisions designated as the surviving corporation.
   2. The manner and basis of converting the shares of the subsidiary corporation (other than those held by the surviving corporation) into shares or other securities or obligations of the surviving corporation or of any other corporation, or in whole or in part, into cash or other consideration to be paid upon the surrender of each share of the subsidiary corporation.
2. A copy of the plan of merger must be mailed to each shareholder of the subsidiary corporation.
3. Articles of merger must be executed by the surviving corporation by an authorized representative and must state:
   1. The plan of merger; and
   2. If, pursuant to § 7-1.2-1005 , the merger is to become effective at a time subsequent to the issuance of the certificate of merger by the secretary of state, the date when the merger is to become effective.
4. On and after the thirtieth (30th) day after the mailing of a copy of the agreement of merger to shareholders of the subsidiary corporation or upon the waiver of the mailing by the holders of all outstanding shares, original articles of merger must be delivered to the secretary of state. If the secretary of state finds that the articles conform to law, the secretary of state shall, when all fees and franchise taxes have been paid:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in his or her office; and
   3. Issue a certificate of merger.
5. The secretary of state shall deliver the certificate of merger to the surviving corporation or its representative.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2006, ch. 163, § 1; P.L. 2006, ch. 188, § 1.

7-1.2-1005. Effect of merger.

1. A merger becomes effective upon the issuance of a certificate of merger by the secretary of state or on a later date as is stated in the plan.
2. When a merger becomes effective:
   1. The several corporations, parties to the plan of merger, are a single corporation, which is that corporation designated in the plan of merger as the surviving or new corporation.
   2. The separate existence of all corporations, parties to the plan of merger, except the surviving or new corporation, ceases.
   3. The surviving or new corporation has all the rights, privileges, immunities, and powers and is subject to all the duties and liabilities of a corporation organized under this chapter.
   4. The surviving or new corporation at that time and subsequently possesses all the rights, privileges, immunities, and franchises, as well of a public as of a private nature, of each of the merging corporations; and all property, real, personal, and mixed, all debts due on whatever account, including subscriptions to shares, all other choses in action, and all and every other interest of or belonging to or due to each of the corporations merged, is taken and deemed to be transferred to and vested in the single corporation without further act or deed; and the title to any real estate, or any interest in real estate, vested in any of the corporations does not revert or is in any way impaired because of the merger.
   5. The surviving or new corporation is subsequently responsible and liable for all the liabilities and obligations of each of the corporations merged or consolidated; and any claim existing or action or proceeding pending by or against any of the corporations may be prosecuted as if the merger had not taken place, or the surviving or new corporation may be substituted in its place. Neither the rights of creditors nor any liens upon the property of any corporation is impaired by the merger.
   6. The articles of incorporation of the surviving corporation are deemed to be amended to the extent, if any, that changes in its articles of incorporation are stated in the plan of merger; or, in the case of a new corporation, the statements in the articles of merger which are required or permitted to be stated in the articles of incorporation of corporations organized under this chapter are deemed to be the original articles of incorporation of the new corporation.
   7. The shares of the corporation or corporations party to the plan that are, under the terms of the plan, to be converted or exchanged, cease to exist, and the holders of the shares are entitled only to the shares, obligations, other securities, cash, or other property into which they have been converted or for which they have been exchanged in accordance with the plan, subject to any rights under § 7-1.2-1201 .

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1006. Merger of domestic and foreign corporations or other business entities.

1. One or more foreign corporations or other domestic or foreign business entities, and one or more domestic corporations may be merged in the following manner, if the merger is permitted by the laws of the state under which each foreign corporation or other business entity, is organized:
   1. Each domestic corporation shall comply with the provisions of this chapter with respect to the merger of domestic corporations, and each foreign corporation or other business entity, shall comply with the applicable provisions of the laws of the state under which it is organized.
   2. If the surviving or new corporation, or other business entity, as the case may be, is to be governed by the laws of any state other than this state, it shall comply with the provisions of this chapter with respect to foreign corporations (or in the case of other business entities, such chapter of the Rhode Island general laws relating to such other business entities) if it is to transact business in this state, and in every case it shall file with the secretary of state of this state:
      1. An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation of any domestic corporation which is a party to the merger and in any proceeding for the enforcement of the rights of a dissenting shareholder of any domestic corporation against the surviving or new corporation;
      2. An irrevocable appointment of the secretary of state of this state as its agent to accept service of process in any proceeding; and
      3. An agreement that it will promptly pay to the dissenting shareholders of any domestic corporation the amount, if any, to which they are entitled under the provisions of this chapter regarding the rights of dissenting shareholders.
2. The effect of the merger is the same as in the case of the merger of domestic corporations, if the surviving or new corporation or other business entity is to be governed by the laws of this state. If the surviving or new corporation is to be governed by the laws of any state other than this state, the effect of the merger is the same as in the case of the merger of domestic corporations except insofar as the laws of the other state provide otherwise.
3. At any time prior to the filing of the articles of merger, the merger may be abandoned pursuant to provisions for abandonment, if any, stated in the plan of merger.
4. As used in this section, “other business entity” means a business trust or association, a real estate investment trust, a common-law trust, a limited-liability company or an unincorporated business, including a partnership, whether general or limited.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2007, ch. 96, § 1; P.L. 2007, ch. 110, § 1.

7-1.2-1007. Conversion of other entities to a domestic corporation.

1. As used in this section, the term “other entity” means a limited-liability company, business trust or association, real estate investment trust, common-law trust, or any other unincorporated business or entity including a partnership (whether general or limited, including a registered limited-liability partnership) or a foreign corporation.
2. Any other entity may convert to a corporation of this state by complying with subsection (h) of this section and filing in the office of the secretary of state:
   1. A certificate of conversion to corporation that has been executed in accordance with subsection (i) of this section and filed in accordance with § 7-1.2-105 ; and
   2. Articles of incorporation that have been executed, acknowledged and filed in accordance with § 7-1.2-105 .
3. The certificate of conversion to corporation shall state:
   1. The date on which and jurisdiction where the other entity was first created, incorporated, formed or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic corporation;
   2. The name and type of the other entity immediately prior to the filing of the certificate of conversion to corporation; and
   3. The name of the corporation as set forth in its articles of incorporation filed in accordance with subsection (b) of this section.
4. Upon the effective time of the certificate of conversion to corporation and the articles of incorporation, the other entity shall be converted to a corporation of this state and the corporation shall thereafter be subject to all of the provisions of this title, except that notwithstanding § 7-1.2-105(d) the existence of the corporation shall be deemed to have commenced on the date the other entity commenced its existence in the jurisdiction in which the other entity was first created, formed, incorporated or otherwise came into being.
5. The conversion of any other entity to a corporation of this state shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a corporation of this state or the personal liability of any person incurred prior to such conversion.
6. When an other entity has been converted to a corporation of this state pursuant to this section, the corporation of this state shall, for all purposes of the laws of the state of Rhode Island, be deemed to be the same entity as the converting other entity. When any conversion shall have become effective under this section, for all purposes of the laws of the state of Rhode Island, all of the rights, privileges and powers of the other entity that has converted, and all property, real, personal and mixed, and all debts due to such other entity, as well as all other things and causes of action belonging to such other entity, shall remain vested in the domestic corporation to which such other entity has converted and shall be the property of such domestic corporation and that title to any real property vested by deed or otherwise in such other entity shall not revert to such other entity or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such other entity shall be preserved unimpaired, and all debts, liabilities and duties of the other entity that has converted shall remain attached to the corporation of this state to which such other entity has converted, and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as a corporation of this state. The rights, privileges, powers and interests in property of the other entity, as well as the debts, liabilities and duties of the other entity, shall not be deemed, as a consequence of the conversion, to have been transferred to the domestic corporation to which such other entity has converted for any purpose of the laws of the state of Rhode Island.
7. Unless otherwise agreed for all purposes of the laws of the state of Rhode Island or as required under applicable non-Rhode Island law, the converting other entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of such other entity and shall constitute a continuation of the existence of the converting other entity in the form of a corporation of this state.
8. Prior to filing a certificate of conversion to corporation with the office of the secretary of state, the conversion shall be approved in the manner provided for by the document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the other entity and the conduct of its business or by applicable law, as appropriate, and articles of incorporation shall be approved by the same authorization required to approve the conversion.
9. The certificate of conversion to corporation shall be signed by any person who is authorized to sign the certificate of conversion to corporation on behalf of the other entity.
10. In connection with a conversion hereunder, rights or securities of, or interests in, the other entity which is to be converted to a corporation of this state may be exchanged for or converted into cash, property, or shares of stock, rights or securities of such corporation of this state or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, or shares of stock, rights or securities of or interests in another domestic corporation or other entity or may be cancelled.

History of Section. P.L. 2007, ch. 94, § 2; P.L. 2007, ch. 112, § 2.

7-1.2-1008. Conversion of a domestic corporation to other entities.

1. A corporation of this state may, upon the authorization of such conversion in accordance with this section, convert to a limited-liability company, business trust or association, real estate investment trust, common-law trust, or any other unincorporated business or entity, including a partnership (whether general or limited, including a registered limited-liability partnership), or a foreign corporation.
2. The board of directors of the corporation that desires to convert under this section shall adopt a resolution approving such conversion, specifying the type of entity into which the corporation shall be converted and recommending the approval of such conversion by the stockholders of the corporation. Such resolution shall be submitted to the stockholders of the corporation at an annual or special meeting. Due notice of the time and purpose of the meeting shall be mailed to each holder of stock, whether voting or nonvoting, of the corporation at the address of the stockholder, as it appears on the records of the corporation, at least twenty (20) days prior to the date of the meeting. At the meeting, the resolution shall be considered and a vote taken for its adoption or rejection. If all outstanding shares of stock of the corporation, whether voting or nonvoting, shall be voted for the adoption of the resolution, the conversion shall be authorized.
3. If a corporation shall convert in accordance with this section to another entity organized, formed, or created under the laws of a jurisdiction other than the state of Rhode Island or to a Rhode Island unincorporated “other entity”, upon payment of all fees and taxes by the corporation, the corporation shall file with the secretary of state a certificate of conversion to non-Rhode Island entity, executed in accordance with § 7-1.2-105 , that certifies:
   1. The name of the corporation, and if it has been changed, the name under which it was originally incorporated;
   2. The date of filing of its original articles of incorporation with the secretary of state;
   3. The name and jurisdiction of the entity and type of entity to which the corporation shall be converted;
   4. That the conversion has been approved in accordance with the provisions of this section;
   5. The agreement of the corporation that it may be served with process in the state of Rhode Island in any action, suit, or proceeding for enforcement of any obligation of the corporation arising while it was a corporation of this state, and that it irrevocably appoints the secretary of state as its agent to accept service of process in any such action, suit, or proceeding; and
   6. The address to which a copy of the process referred to in subsection (c)(5) of this section shall be mailed to it by the secretary of state. In the event of such service upon the secretary of state in accordance with subsection (c)(5) of this section, the secretary of state shall forthwith notify such corporation that has converted out of the state of Rhode Island by letter, certified mail, return receipt requested, directed to such corporation that has converted out of the state of Rhode Island at the address so specified, unless such corporation shall have designated in writing to the secretary of state a different address for such purpose, in which case it shall be mailed to the last address designated. Such letter shall enclose a copy of the process and any other papers served on the secretary of state pursuant to this subsection. It shall be the duty of the plaintiff in the event of such service to serve process and any other papers in duplicate; to notify the secretary of state that service is being effected pursuant to this subsection; and to pay the secretary of state the sum of fifteen dollars ($15.00) for the use of the state, which sum shall be taxed as part of the costs in the proceeding, if the plaintiff shall prevail therein. The secretary of state shall maintain an alphabetical record of any such service setting forth the name of the plaintiff and the defendant; the title, docket number and nature of the proceeding in which process has been served; the fact that service has been effected pursuant to this subsection; the return date thereof; and the day and hour service was made. The secretary of state shall not be required to retain such information longer than five (5) years from receipt of the service of process.
4. Upon the filing in the office of the secretary of state of a certificate of conversion to non-Rhode Island entity in accordance with subsection (c) of this section, or upon the future effective date or time of the certificate of conversion to non-Rhode Island entity and payment to the secretary of state of all fees prescribed under this title, the secretary of state shall certify that the corporation has filed all documents and paid all fees required by this title, and thereupon the corporation shall cease to exist as a corporation of this state at the time the certificate of conversion becomes effective in accordance with § 7-1.2-105 . Such certificate of the secretary of state shall be prima facie evidence of the conversion by such corporation out of the state of Rhode Island.
5. The conversion of a corporation out of the state of Rhode Island in accordance with this section and the resulting cessation of its existence as a corporation of this state pursuant to a certificate of conversion to non-Rhode Island entity shall not be deemed to affect any obligations or liabilities of the corporation incurred prior to such conversion or the personal liability of any person incurred prior to such conversion, nor shall it be deemed to affect the choice of law applicable to the corporation with respect to matters arising prior to such conversion.
6. Unless otherwise provided in a resolution of conversion adopted in accordance with this section, the converting corporation shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not constitute a dissolution of such corporation.
7. In connection with a conversion of a domestic corporation to another entity pursuant to this section, shares of stock of the corporation of this state that is to be converted may be exchanged for or converted into cash, property, rights or securities of, or interests in, the entity to which the corporation of this state is being converted or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, shares of stock, rights or securities of, or interests in, another domestic corporation or other entity or may be cancelled.
8. When a corporation has been converted to another entity or business form pursuant to this section, the other entity or business form shall, for all purposes of the laws of the state of Rhode Island, be deemed to be the same entity as the corporation. When any conversion shall have become effective under this section, for all purposes of the laws of the state of Rhode Island, all of the rights, privileges, and powers of the corporation that has converted, and all property, real, personal, and mixed, and all debts due to such corporation, as well as all other things and causes of action belonging to such corporation, shall remain vested in the other entity or business form to which such corporation has converted and shall be the property of such other entity or business form, and the title to any real property vested by deed or otherwise in such corporation shall not revert to such corporation or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such corporation shall be preserved unimpaired, and all debts, liabilities, and duties of the corporation that has converted shall remain attached to the other entity or business form to which such corporation has converted, and may be enforced against it to the same extent as if said debts, liabilities, and duties had originally been incurred or contracted by it in its capacity as such other entity or business form. The rights, privileges, powers, and interest in property of the corporation that has converted, as well as the debts, liabilities, and duties of such corporation, shall not be deemed, as a consequence of the conversion, to have been transferred to the other entity or business form to which such corporation has converted for any purposes of the laws of the state of Rhode Island.
9. No vote of stockholders of a corporation shall be necessary to authorize a conversion if no shares of the stock of such corporation shall have been issued prior to the adopting by the board of directors of the resolution approving the conversion.

History of Section. P.L. 2007, ch. 94, § 2; P.L. 2007, ch. 112, § 2; P.L. 2011, ch. 77, § 2; P.L. 2011, ch. 82, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.

7-1.2-1101. Sale of assets in regular course of business and mortgage or pledge of assets.

The sale, lease, exchange, or other disposition of all, or substantially all, the property and assets of a corporation in the usual and regular course of its business, and the mortgage or pledge of any or all property and assets of a corporation, whether or not in the usual and regular course of business, may be made upon terms and conditions and for any consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as is authorized by its board of directors; and in any case no authorization or consent of the shareholders is required.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1102. Sale of assets other than in regular course of business.

A sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of a corporation, if not in the usual and regular course of its business, may be made upon terms and conditions and for any consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as is authorized in the following manner:

1. The board of directors’ adoption of a resolution recommending the sale, lease, exchange, or other disposition, and directing the submission of the resolution to a vote at a meeting of shareholders, which may be either an annual or a special meeting.
2. Written notice must be given to each shareholder, whether or not entitled to vote at the meeting, not less than twenty (20) days before the meeting, in the manner provided in this chapter for the giving of notice of meeting of shareholders. The notice must state whether the meeting is an annual or a special meeting, and that the purpose, or one of the purposes, is to consider the proposed sale, lease, exchange, or other disposition. A statement of the shareholder’s right to dissent and a copy or summary of § 7-1.2-1202 must be included in or enclosed with the notice.
3. At the meeting the shareholders may authorize the sale, lease, exchange, or other disposition and may fix, or may authorize the board of directors to fix, any or all of the terms and conditions of it and the consideration to be received by the corporation for it. The authorization requires the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on the authorization, unless any class of shares is entitled to vote on it as a class, pursuant to the articles of incorporation, in which event approval of the resolution also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class on the resolution.
4. After the authorization by a vote of shareholders, the board of directors nevertheless, in its discretion, may abandon the sale, lease, exchange, or other disposition of assets, subject to the rights of third parties under any related contracts, without any further action or approval by shareholders.
5. A transfer of all or substantially all of the property and assets of a corporation:
   1. To one or more subsidiary corporations in which the transferor corporation owns shares possessing at least two-thirds (2/3) of the total combined voting power of all classes of shares entitled to vote at that time for election of directors; or
   2. For cash, with or without an assumption of liabilities of the transferor corporation is governed by the provisions of § 7-1.2-1101 and not by this section. The sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of one or more subsidiaries in which the parent corporation owns shares possessing two-thirds (2/3) or more of the total combined voting power of all classes of shares entitled at that time to vote for the election of directors is treated as a disposition of all, or substantially all, the property and assets of the parent corporation within the meaning of this section if the shares of the subsidiary or subsidiaries constitute all or substantially all the property and assets of the parent corporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1201. Right of shareholders to dissent.

1. Any shareholder of a corporation has the right to dissent from any of the following corporate actions:
   1. Any plan of merger to which the corporation is a party, provided articles of merger have been filed in connection with the transaction under § 7-1.2-1003 , unless the corporation is the surviving corporation in a merger and the approval of its shareholders was not required by virtue of the provisions of either § 7-1.2-1002 or § 7-1.2-1004 ; or
   2. Any sale or exchange of all or substantially all of the property and assets of a corporation which requires the approval of the shareholders under § 7-1.2-1102 .
2. A shareholder may not dissent as to less than all of the shares registered in his or her name which are owned beneficially by him or her. A nominee or fiduciary may not dissent on behalf of any beneficial owner as to less than all of the shares of the owner registered in the name of the nominee or fiduciary.
3. Unless otherwise provided in the articles of incorporation of the issuing corporation, there is no right to dissent for the holders of the shares of any class or series which, on the date fixed to determine the shareholders entitled to receive notice of the proposed transaction (or a copy of the agreement of merger under § 7-1.2-1004 ), were:
   1. Registered on a national securities exchange or included as national market securities in the national association of securities dealers automated quotations system or any successor national market system; or
   2. Held of record by not less than two thousand (2,000) shareholders.
4. A shareholder entitled to the right to dissent under this section may not challenge a completed corporate action for which the right to dissent is available unless such corporate action:
   1. Was not effectuated in accordance with the applicable provisions of this chapter or the corporation’s articles of incorporation, bylaws or board of directors’ resolution authorizing the corporate action; or
   2. Was procured as a result of fraud or material misrepresentation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1202. Rights of dissenting shareholders.

1. Any shareholder electing to exercise the right of dissent shall file with the corporation, prior to or at the meeting of shareholders at which the proposed corporate action is submitted to a vote, a written objection to the proposed corporate action. If the proposed corporate action is approved by the required vote and the shareholder has not voted in favor of it, the shareholder may, within ten (10) days after the date on which the vote was taken, or if a corporation is to be merged without a vote of its shareholders into another corporation, any of its shareholders may, within fifteen (15) days after the plan of the merger has been mailed to the shareholders, make written demand on the corporation, or, in the case of a merger, on the surviving or new corporation, domestic or foreign, for payment of the fair value of the shareholder’s shares. If the proposed corporate action is effected, the corporation shall pay to the shareholder, upon surrender of the certificate or certificates representing the shares, the fair value of the shares as of the day prior to the date on which the vote was taken approving the proposed corporate action, excluding any appreciation or depreciation in anticipation of the corporate action. Any shareholder failing to make demand within the ten (10) day period or the fifteen (15) day period, as the case may be, is bound by the terms of the proposed corporate action. Any shareholder making the demand is thereafter only entitled to payment as provided in this section and is not entitled to vote or to exercise any other rights of a shareholder.
2. No demand may be withdrawn unless the corporation consents to it. If, however, the demand is withdrawn upon consent, or if the proposed corporate action is abandoned or rescinded or the shareholders revoke the authority to effect the action, or if, in the case of a merger, on the date of the filing of the articles of merger the surviving corporation is the owner of all the outstanding shares of the other corporations, domestic and foreign, that are parties to the merger, or if no demand or petition for the determination of fair value by a court has been made or filed within the time provided in this section, or if a court of competent jurisdiction determines that the shareholder is not entitled to the relief provided by this section, then the right of the shareholder to be paid the fair value of his or her shares ceases and his status as a shareholder is restored, without prejudice to any corporate proceedings taken during the interim.
3. Within ten (10) days after the corporate action is effected, the corporation, or, in the case of a merger, the surviving or new corporation, domestic or foreign, shall give written notice of the action to each dissenting shareholder who has made demand as provided in these provisions, and shall make a written offer to each dissenting shareholder to pay for the shares at a specified price deemed by the corporation to be the fair value of the shares. The notice and offer must be accompanied by a balance sheet of the corporation the shares of which the dissenting shareholder holds, as of the latest available date and not more than twelve (12) months prior to the making of the offer, and a profit and loss statement of the corporation for the twelve (12) month period ended on the date of the balance sheet.
4. If within thirty (30) days after the date on which the corporate action was effected the fair value of the shares is agreed upon between any dissenting shareholder and the corporation, payment for the shares must be made within ninety (90) days after the date on which the corporate action was effected, upon surrender of the certificate or certificates representing the shares. Upon payment of the agreed value, the dissenting shareholder ceases to have any interest in the shares.
5. If within the period of thirty (30) days a dissenting shareholder and the corporation do not agree on the matter, then the corporation, within thirty (30) days after receipt of written request for the filing from any dissenting shareholder given within sixty (60) days after the date on which the corporate action was effected, shall, or at its election at any time within the period of sixty (60) days may, file a petition in any court of competent jurisdiction in the county in this state where the registered office of the corporation is located praying that the fair value of the shares is found and determined. If, in the case of a merger, the surviving or new corporation is a foreign corporation without a registered office in this state, the petition must be filed in the county where the registered office of the domestic corporation was last located. If the corporation fails to institute the proceeding as provided, any dissenting shareholder may do so in the name of the corporation. All dissenting shareholders, wherever they reside, must be made parties to the proceeding as an action against their shares quasi in rem. A copy of the petition must be served on each dissenting shareholder who is a resident of this state and served by registered or certified mail on each dissenting shareholder who is a nonresident. Service on nonresidents may also be made by publication as provided by law. The jurisdiction of the court is plenary and exclusive. All shareholders who are parties to the proceeding are entitled to judgment against the corporation for the amount of the fair value of their shares. The court may, if it so elects, appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the power and authority that is specified in the order of their appointment or an amendment of the order. The judgment is payable only upon and concurrently with the surrender to the corporation of the certificate or certificates representing the shares. Upon payment of the judgment, the dissenting shareholder ceases to have any interest in the shares.
6. The judgment should include an allowance for interest at the rate of interest on judgments in civil actions from the date on which the vote was taken on the proposed corporate action to the date of payment.
7. The court shall determine and assess the costs and expenses of any proceeding against the corporation, but all or any part of the costs and expenses may be apportioned and assessed as the court deems equitable against any or all of the dissenting shareholders who are parties to the proceeding to whom the corporation has made an offer to pay for the shares if the court finds that the action of the shareholders in failing to accept the offer was arbitrary or vexatious or not in good faith. The expenses include reasonable compensation for and reasonable expenses of the appraisers, but exclude the fees and expenses of counsel for and experts employed by any party; but if the fair value of the shares as determined materially exceeds the amount which the corporation offered to pay for the shares, or if no offer was made, the court in its discretion may award to any shareholder who is a party to the proceeding a sum that the court determines to be reasonable compensation to any expert or experts employed by the shareholder in the proceeding.
8. Within twenty (20) days after demanding payment for his or her shares, each shareholder demanding payment shall submit the certificate or certificates representing his or her shares to the corporation for notation on the certificate that the demand has been made. His or her failure to do so may, at the option of the corporation, terminate his or her rights under this section unless a court of competent jurisdiction, for good and sufficient cause shown, directs otherwise. If shares represented by a certificate on which notation has been made are transferred, each new certificate issued for the shares must bear similar notation, together with the name of the original dissenting holder of the shares, and a transferee of the shares acquires by the transfer no rights in the corporation other than those which the original dissenting shareholder had after making demand for payment of the fair value of the shares.
9. Shares acquired by a corporation pursuant to payment of the agreed value for the shares or to payment of the judgment entered for the shares, as provided in this section, may be held and disposed of by the corporation. However, in the case of a merger, they may be held and disposed of as the plan of merger otherwise provides.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1301. Voluntary dissolution by incorporators.

1. A corporation that has not commenced business and that has not issued any shares, may be voluntarily dissolved by its incorporators at any time in the following manner:
   1. Articles of dissolution are executed by a majority of the incorporators, and verified by them, and state:
      1. The name of the corporation;
      2. The date of issuance of its certificate of incorporation;
      3. That none of its shares have been issued;
      4. That the corporation has not commenced business;
      5. That the amount, if any, actually paid in on subscriptions for its shares, less any part of the amount disbursed for necessary expenses, has been returned to those entitled to it;
      6. That no debts of the corporation remain unpaid; and
      7. That a majority of the incorporators elect that the corporation be dissolved.
   2. The original articles of dissolution are delivered to the secretary of state. If the secretary of state finds that the articles of dissolution conform to law, the secretary of state shall, when all fees and taxes have been paid:
      1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
      2. File the original in his or her office; and
      3. Issue a certificate of dissolution.
   3. If the corporation is dissolved prior to the effective date stated on the articles of incorporation, no taxes shall be due.
2. The certificate of dissolution is delivered to the incorporators or their representative. Upon the issuance of the certificate of dissolution by the secretary of state, the existence of the corporation ceases.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2007, ch. 95, § 1; P.L. 2007, ch. 111, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.

7-1.2-1302. Voluntary dissolution by consent of shareholders.

1. A corporation may be voluntarily dissolved by the written consent of all of its shareholders entitled to vote thereon.
2. Upon the adoption of the resolution:
   1. The corporation shall immediately deliver notice of the adoption of such resolution to each known creditor of the corporation.
   2. The corporation shall proceed to collect its assets, sell or otherwise dispose of those of its properties that are not to be distributed in kind to its shareholders, pay, satisfy, and discharge its liabilities and obligations and do all other acts required to liquidate its business and affairs. After paying or adequately providing for the payment of all its obligations, the corporation distributes the remainder of its assets, either in cash or in kind, among its shareholders according to their respective rights and interests.
   3. The corporation, at any time during the liquidation of its business and affairs, may apply to a court of competent jurisdiction within the state and county in which the registered office or principal place of business of the corporation is situated, to have the liquidation continued under the supervision of the court as provided in this chapter.
3. Upon the completion of the actions set forth in subsection (b) of this section, the corporation shall execute and file articles of dissolution in accordance with the provisions of §§ 7-1.2-1308 and 7-1.2-1309 .

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2007, ch. 98, § 1; P.L. 2007, ch. 107, § 1.

7-1.2-1303. Voluntary dissolution by act of corporation.

A corporation may be dissolved by the act of the corporation, when authorized in the following manner:

1. The board of directors adopts a resolution recommending that the corporation be dissolved, and directing that the question of the dissolution be submitted to a vote at a meeting of the shareholders, which may be either an annual or a special meeting.
2. Written notice is given to each shareholder entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of meetings of shareholders, and, whether the meeting is an annual or special meeting, states that the purpose, or one of the purposes, of the meeting is to consider the advisability of dissolving the corporation.
3. At the meeting a vote of shareholders entitled to vote at the meeting is taken on a resolution to dissolve the corporation. The resolution is adopted upon receiving the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on the resolution, unless any class of shares is entitled to vote on the resolution as a class, in which event approval of the resolution also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class and of the total shares entitled to vote on the resolution.
4. The corporation shall immediately deliver notice of the adoption of such resolution by a vote of the shareholders to each known creditor of the corporation.
5. The corporation shall proceed to collect its assets, sell or otherwise dispose of those of its properties that are not to be distributed in kind to its shareholders, pay, satisfy, and discharge its liabilities and obligations and do all other acts required to liquidate its business and affairs. After paying or adequately providing for the payment of all its obligations, the corporation distributes the remainder of its assets, either in cash or in kind, among its shareholders according to their respective rights and interests.
6. The corporation, at any time during the liquidation of its business and affairs, may apply to a court of competent jurisdiction within the state and county in which the registered office or principal place of business of the corporation is situated, to have the liquidation continued under the supervision of the court as provided in this chapter.
7. Upon the completion of actions set forth in subsections (1) — (6) of this section, the corporation shall execute and file articles of dissolution in accordance with the provisions of §§ 7-1.2-1308 and 7-1.2-1309 .

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2007, ch. 98, § 1; P.L. 2007, ch. 107, § 1.

7-1.2-1304. Revocation of voluntary dissolution proceedings by consent of shareholders.

1. By the written consent of all of its shareholders entitled to vote thereon, a corporation may, within one hundred twenty (120) days of its effective date of the articles of dissolution, revoke voluntary dissolution proceedings previously taken, in the following manner:
2. Upon the execution of the written consent, a statement of revocation of voluntary dissolution proceedings is executed by the corporation by its authorized representative. The statement proclaims:
   1. The name of the corporation.
   2. The names and respective addresses of its officers.
   3. The names and respective addresses of its directors.
   4. A copy of the written consent signed by all shareholders of the corporation revoking the voluntary dissolution proceedings.
   5. That the written consent has been signed by all shareholders entitled to vote thereon of the corporation or signed in their names by their authorized attorneys.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1305. Revocation of voluntary dissolution proceedings by act of corporation.

By the act of the corporation, a corporation may, at any time within one hundred twenty (120) days of its effective date of the articles of dissolution, revoke voluntary dissolution proceedings previously taken, in the following manner:

1. The board of directors adopts a resolution recommending that the voluntary dissolution proceedings be revoked, and directing that the question of the revocation be submitted to a vote at a special meeting of shareholders.
2. Written notice, stating that the purpose, or one of the purposes, of the meeting is to consider the advisability of revoking the voluntary dissolution proceedings, is given to each shareholder entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of special meetings of shareholders.
3. At the meeting, a vote of the shareholders entitled to vote at the meeting is taken on a resolution to revoke the voluntary dissolution proceedings, which requires for its adoption the affirmative vote of the holders of a majority of the shares entitled to vote on the resolution.
4. Upon the adoption of the resolution, a statement of revocation of voluntary dissolution proceedings is executed by the corporation by its authorized representative. The statement proclaims:
   1. The name of the corporation.
   2. The names and respective addresses of its officers.
   3. The names and respective addresses of its directors.
   4. A copy of the resolution adopted by the shareholders revoking the voluntary dissolution proceedings.
   5. The number of shares outstanding.
   6. The number of shares voted for and against the resolution, respectively.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1306. Filing of statement of revocation of voluntary dissolution proceedings.

The statement of revocation of voluntary dissolution proceedings, whether by consent of shareholders or by act of the corporation, is delivered to the secretary of state. If the secretary of state finds that the statement conforms to law, the secretary of state shall, when all fees and franchise taxes have been paid:

1. Endorse on the original the word “Filed”, and the month, day, and year of the filing.
2. File the original in his or her office.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1307. Effect of statement of revocation of voluntary dissolution proceedings.

1. Upon the filing by the secretary of state of a statement of revocation of voluntary dissolution proceedings, whether by consent of its shareholders or by act of the corporation, the revocation of the voluntary dissolution proceedings becomes effective and the corporation may again carry on its business.
2. Revocation of dissolution is effective upon the effective date of the statement of revocation of voluntary dissolution.
3. 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, except as subsequently provided.
4. If, as permitted by the provisions of this title, another corporation, whether business or nonprofit, limited partnership, limited-liability partnership or limited-liability company, domestic or foreign, qualified to transact business in this state, bears or has filed a fictitious business name statement with respect to or reserved or registered a name which is not distinguishable upon the records of the secretary of state from the name of a corporation with respect to which the certificate of voluntary dissolution is proposed to be withdrawn, then the secretary of state shall condition effectiveness of the statement of revocation of voluntary dissolution upon the amendment by the corporation of its articles of incorporation or otherwise complying with the provisions of this chapter with respect to the use of a name available to it under the laws of this state so as to designate a name which is distinguishable upon the records of the secretary of state from its former name.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1308. Articles of dissolution.

The corporation shall execute articles of dissolution by its authorized officer. The statement proclaims:

1. The name of the corporation.
2. That all debts, obligations, and liabilities of the corporation have been paid, discharged or have been subject to a completed bankruptcy proceeding under Title 11 of the U.S. Code.
3. That all the remaining property and assets of the corporation have been distributed among its shareholders in accordance with their respective rights and interests.
4. That there are not suits pending against the corporation in any court, or that adequate provision has been made for the satisfaction of any judgment, order, or decree that may be entered against it in any pending suit.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2014, ch. 485, § 1; P.L. 2014, ch. 511, § 1.

7-1.2-1309. Filing of articles of dissolution.

1. The articles of dissolution are delivered to the secretary of state. If the secretary of state finds that the articles of dissolution conform to law, the secretary of state shall, when all fees and taxes have been paid:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in his or her office; and
   3. Issue a certificate of dissolution.
2. The certificate of dissolution is delivered to the representative of the dissolved corporation. Upon the issuance of the certificate of dissolution the existence of the corporation ceases, except for the purpose of suits, other proceedings, and appropriate corporate action by shareholders, directors, and officers as provided in this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.

7-1.2-1310. Revocation of articles of incorporation.

1. The articles of incorporation of a corporation may be revoked by the secretary of state upon the conditions prescribed in this section when it is established that:
   1. The corporation procured its articles of incorporation through fraud; or
   2. The corporation has continued to exceed or abuse the authority conferred upon it by law; or
   3. The corporation has failed to file its annual report within the time required by this chapter, or with respect to any corporation in good corporate standing on the records of the secretary of state on or after July 1, 2019, has failed to pay any required fees to the secretary of state when they have become due and payable, or the secretary of state has received notice from the division of taxation, in accordance with § 44-11-26.1 , that the corporation has failed to pay corporate taxes; or
   4. The corporation has failed for thirty (30) days to appoint and maintain a registered agent in this state as required by this chapter; or
   5. The corporation has failed, after change of its registered office or registered agent, to file in the office of the secretary of state a statement of the change as required by this chapter; or
   6. The corporation has failed to file in the office of the secretary of state any amendment to its articles of incorporation or any articles of merger within the time prescribed by this chapter; or
   7. A misrepresentation has been made of any material matter in any application, report, affidavit, or other document submitted by the corporation pursuant to this chapter.
2. No articles of incorporation of a corporation may be revoked by the secretary of state unless:
   1. The secretary of state gives the corporation notice thereof not less than sixty (60) days prior to such revocation by regular mail addressed to the registered office of the corporation in this state on file with the secretary of state’s office, which notice shall specify the basis for the revocation; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned as undeliverable by the United States Postal Service for any reason, or if the revocation notice is returned as undeliverable by the United States Postal Service for any reason, the secretary of state gives notice as follows:
      1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
      2. In the case of a domestic corporation that has not yet filed an annual report, then to any one of the incorporators listed on the articles of incorporation, and no further notice is required; and
   2. The corporation fails prior to revocation to file the annual report or pay the fees, or file the required statement of change of registered agent or registered office, or file the articles of amendment or articles of merger, or correct the misrepresentation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.

7-1.2-1311. Issuance of certificates of revocation.

1. Upon revoking any certificate of incorporation, the secretary of state shall:
   1. Issue a certificate of revocation;
   2. File the certificate in his or her office; and
   3. Send to the corporation by regular mail a copy of the certificate of revocation, addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the revocation certificate is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
      1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
      2. In the case of a domestic corporation which has not yet filed an annual report, then to any one of the incorporators listed on the articles of incorporation, and no further notice is required.
2. Upon the issuance of the certificate of revocation, the authority of the corporation to transact business in this state ceases.
3. Notwithstanding anything to the contrary, the issuance of a certificate of revocation of a corporation does not terminate the authority of its registered agent.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1312. Withdrawal of certificate of revocation.

1. Within twenty (20) years after issuing a certificate of revocation as provided in § 7-1.2-1311 , the secretary of state may withdraw the certificate of revocation and retroactively reinstate the corporation in good standing as if its articles of incorporation had not been revoked, except as subsequently provided:
   1. Upon the filing by the corporation of the documents it had previously failed to file as set forth in subdivisions (3) — (6) of § 7-1.2-1310(a) ;
   2. Upon the payment by the corporation of a penalty for each year or part of a year that has elapsed since the issuance of the certificate of revocation; and
   3. Upon the filing by the corporation of a certificate of good standing from the Rhode Island division of taxation.
2. If, as permitted by the provisions of this title, another corporation, whether business or nonprofit, limited partnership, limited-liability partnership or limited-liability company, or domestic or foreign, qualified to transact business in this state, bears or has filed a fictitious business name statement with respect to or reserved or registered a name that is not distinguishable upon the records of the secretary of state from the name of a corporation with respect to which the certificate of revocation is proposed to be withdrawn, then the secretary of state shall condition the withdrawal of the certificate of revocation upon the reinstated corporation’s amending its articles of incorporation or otherwise complying with the provisions of this chapter with respect to the use of a name available to it under the laws of this state so as to designate a name which is distinguishable upon the records of the secretary of state from its former name.
3. Upon the withdrawal of the certificate of revocation and reinstatement of the corporation in good standing as provided in subsection (a) of this section, title to any real estate, or any interest in real estate, held by the corporation at the time of the issuance of the certificate of revocation and not conveyed subsequent to the revocation of its articles of incorporation is deemed to be revested in the corporation without further act or deed.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2006, ch. 163, § 1; P.L. 2006, ch. 188, § 1; P.L. 2021, ch. 385, § 1, effective July 13, 2021; P.L. 2021, ch. 386, § 1, effective July 13, 2021.

7-1.2-1313. Appeal from revocation of articles of incorporation.

Any corporation aggrieved by the action of the secretary of state in revoking its articles of incorporation may appeal the action in the manner provided in § 7-1.2-1601 .

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1314. Jurisdiction of court to liquidate assets and business of corporation.

1. The superior court has full power to liquidate the assets and business of a corporation:
   1. In an action by a shareholder when it is established that, whether or not the corporate business has been or could be operated at a profit, dissolution would be beneficial to the shareholders because:
      1. The directors or those other individuals who may be responsible for management pursuant to § 7-1.2-1701(a) are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock; or
      2. The acts of the directors or those in control of the corporation are illegal, oppressive, or fraudulent; or
      3. The shareholders are deadlocked in voting power, and have failed, for a period which includes at least two (2) consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election and qualification of their successors; or
      4. The corporate assets are being misapplied or are in danger of being wasted or lost; or
      5. Two (2) or more factions of shareholders are divided and there is such internal dissension that serious harm to the business and affairs of the corporation is threatened; or
      6. The holders of one-half (1/2) or more of all the outstanding shares of the corporation have voted to dissolve the corporation;
   2. 1. In an action by a creditor:
         1. When it is established that the corporation is insolvent; or
         2. When it is established that the corporate assets are being misapplied or are in danger of being wasted or lost.
      2. If it is established that the claim of a creditor has been reduced to judgment and an execution on the judgment returned unsatisfied or that a corporation has admitted, in writing, that the claim of a creditor is due and owing, the establishment of the facts are prima facie evidence of insolvency.
      3. Every petition filed by a creditor for the liquidation of the assets and business of a corporation must contain a statement as to whether the creditor is or is not an officer, director, or shareholder of the corporation. Every petition for the liquidation of the assets and business of a corporation filed by an officer, director, or shareholder of a corporation or by a creditor who is an officer, director or shareholder, must contain, to the best of petitioner’s knowledge, information, and belief, the names and addresses of all known creditors of any class of the corporation.
   3. When an action has been filed by the attorney general to dissolve a corporation and it is established that liquidation of its business and affairs should precede the entry of a decree of dissolution.
2. Proceedings under subsections (a)(1) or (a)(2) should be brought in the county in which the registered or principal office of the corporation is situated.
3. It is not necessary to make shareholders parties to any action or proceeding unless relief is sought against them personally.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1315. Avoidance of dissolution by share buyout.

Whenever a petition for dissolution of a corporation is filed by one or more shareholders (subsequently in this section referred to as the “petitioner”) pursuant to either § 7-1.2-1314 or a right to compel dissolution which is authorized under § 7-1.2-1701 or is otherwise valid, one or more of its other shareholders may avoid the dissolution by filing with the court prior to the commencement of the hearing, or, in the discretion of the court, at any time prior to a sale or other disposition of the assets of the corporation, an election to purchase the shares owned by the petitioner at a price equal to their fair value. If the shares are to be purchased by other shareholders, notice must be sent to all shareholders of the corporation other than the petitioner, giving them an opportunity to join in the election to purchase the shares. If the parties are unable to reach an agreement as to the fair value of the shares, the court shall, upon the giving of a bond or other security sufficient to assure to the petitioner payment of the value of the shares, stay the proceeding and determine the value of the shares, in accordance with the procedure set forth in § 7-1.2-1202 , as of the close of business on the day on which the petition for dissolution was filed. Upon determining the fair value of the shares, the court shall state in its order directing that the shares be purchased, the purchase price and the time within which the payment is to be made, and may decree any other terms and conditions of sale that it determines to be appropriate, including payment of the purchase price in installments extending over a period of time, and, if the shares are to be purchased by shareholders, the allocation of shares among shareholders electing to purchase them, which, so far as practicable, are to be proportional to the number of shares previously owned. The petitioner is entitled to interest, at the rate on judgments in civil actions, on the purchase price of the shares from the date of the filing of the election to purchase the shares, and all other rights of the petitioner as owner of the shares terminate on that date. The costs of the proceeding, which include reasonable compensation and expenses of appraisers but not fees and expenses of counsel or of experts retained by a party, will be allocated between or among the parties as the court determines. Upon full payment of the purchase price, under the terms and conditions specified by the court, or at any other time that is ordered by the court, the petitioner shall transfer the shares to the purchaser.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1316. Procedure in liquidation of corporation by court.

1. In proceedings to liquidate the assets and business of a corporation the court has general equity jurisdiction and power to issue any orders, injunctions, and decrees that justice and equity require, to appoint a receiver or receivers pendente lite, with any powers and duties that the court, from time to time, directs, and to take any other proceedings that are requisite to preserve the corporate assets wherever situated, and carry on the business of the corporation until a full hearing can be had.
2. After a hearing had upon any notice that the court directs to be given to all parties to the proceedings and to any other parties in interest designated by the court, the court may appoint a liquidating receiver or receivers with authority to take charge of any of the corporation’s estate and effects of which he or she has been appointed receiver and to collect the assets of the corporation, including all amounts owing to the corporation whether by shareholders on account of any unpaid portion of the consideration for the issuance of shares or otherwise.
3. The hearing date for the appointment of a permanent receiver is not to be more than twenty-one (21) days after commencement of the action, unless the hearing date is extended by the court for good cause shown.
4. The liquidating receiver or receivers has authority subject to court order, to sue and defend in all courts in his or her own name as receiver of the corporation, or in its name, to intervene in any action or proceeding relating to its assets or business, to compromise any dispute or controversy, to preserve the assets of the corporation, to carry on its business, to sell, convey, and dispose of all or any part of the assets of the corporation wherever situated, either at public or private sale, to redeem any mortgages, security interests, pledges, or liens of or upon any of its assets, and generally to do all other acts which might be done by the corporation or that is necessary for the administration of his or her trust according to the course of equity. The assets of the corporation or the proceeds resulting from a sale, conveyance, or other disposition of the assets will be applied to the expenses of the liquidation and to the payment of the liabilities and obligations of the corporation, and any remaining assets or proceeds will distributed under the direction of the court among its shareholders according to their respective rights and interests. The order appointing the receiver or receivers sets forth their powers and duties. The powers and duties may be increased or diminished at any time during the proceeding.
5. The court has power to allow from time to time as expenses of the liquidation compensation to the receiver or receivers and to attorneys in the proceeding, and to direct the payment of the compensation out of the assets of the corporation or the proceeds of any sale or disposition of the assets.
6. The court appointing the receiver has exclusive jurisdiction of the corporation and its property, wherever situated, and of all questions arising in the proceedings concerning the property.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1317. Bond of receivers.

A receiver shall in all cases give any bond that the court directs with any sureties that the court requires.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1318. Filing of claims in liquidation proceedings.

In proceedings to liquidate the assets and business of a corporation, the court may require all creditors of the corporation to file with the receiver, in any form that the court prescribes, proofs under oath of their respective claims. If the court requires the filing of claims, it shall fix a date, which is not to be less than four (4) months from the date of the order, as the last day for the filing of claims, and shall prescribe the notice that is to be given to creditors and claimants of the fixed date. Prior to the fixed date, the court may extend the time for the filing of claims. Creditors and claimants failing to file proofs of claim on or before the fixed date may be barred, by court order, from participating in the distribution of the assets of the corporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1319. Discontinuance of liquidation proceedings.

The liquidation of the assets and business of a corporation may be discontinued at any time during the liquidation proceedings when it is established that cause for liquidation no longer exists. In the event that the court dismisses the proceedings, it shall direct the receiver to redeliver to the corporation all its remaining property and assets, and shall order any notice to creditors that the court deems proper under the circumstances.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1320. Decree of involuntary dissolution.

In proceedings to liquidate the assets and business of a corporation, when the costs and expenses of the proceedings and all debts, obligations, and liabilities of the corporation have been paid and discharged and all of its remaining property and assets distributed to its shareholders, or in case its property and assets are not sufficient to satisfy and discharge the costs, expenses, debts, and obligations, all the property and assets have been applied as far as they will go to their payment, the court shall enter a decree dissolving the corporation, at which time the existence of the corporation ceases.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1321. Filing of decree of dissolution.

In case the court enters a decree dissolving a corporation, it is the duty of the clerk of the court to file a certified copy of the decree with the secretary of state. There is no fee charged by the secretary of state for that filing.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1322. Deposit with state treasury of amount due certain shareholders.

Upon the voluntary or involuntary dissolution of a corporation, the portion of the assets distributable to a creditor or shareholder who is unknown or cannot be found, or who is under disability and there is no person legally competent to receive the distributive portion, will be reduced to cash and deposited with the general treasury and paid over to the creditor or shareholder or to his or her legal representative upon satisfactory proof to the general treasury of his or her right to the payment.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1323. Jurisdiction of court to appoint a receiver.

Upon the establishment of any of the grounds for liquidation of the assets and business of

1. A domestic corporation or
2. A foreign corporation, to the extent the foreign corporation has assets within the state, stated in § 7-1.2-1314 , and upon the establishment that the liquidation would not be appropriate, the superior court has full power to appoint a receiver, with any powers and duties that the court, from time to time, directs, and to take any other proceedings that the court deems advisable under the circumstances. The provisions of §§ 7-1.2-1314 — 7-1.2-1322 , insofar as they are consistent with the nature of the proceeding, apply to the proceeding, and in the proceeding the court has the full powers of a court of equity to make or enter any orders, injunctions, and decrees and grant any other relief in the proceeding that justice and equity require.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1324. Survival of remedy after dissolution.

The dissolution of a corporation either:

1. By the issuance of a certificate of dissolution by the secretary of state; or
2. By a decree of court when the court has not liquidated the assets and business of the corporation as provided in this chapter; or
3. By expiration of its period of duration; does not take away or impair any remedy available to or against the corporation, its directors, officers, or shareholders, for any right or claim existing, or any liability incurred, prior to the dissolution if action or other proceeding on the right, claim, or liability is commenced within two (2) years after the date of the dissolution. Any action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name. The shareholders, directors, and officers have power to take any corporate or other action that is appropriate to protect the remedy, right, or claim. If the corporation was dissolved by the expiration of its period of duration, the corporation may amend its articles of incorporation at any time during the period of two (2) years so as to extend its period of duration.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1325. Continuation of certain corporate powers.

Any corporation dissolved in any manner under this chapter or any corporation whose existence is terminated under § 44-12-8 or any corporation whose articles of incorporation are revoked by the secretary of state under § 7-1.2-1310 nevertheless continues for five (5) years after the date of the dissolution, termination, or revocation for the purpose of enabling it to settle and close its affairs, to dispose of and convey its property, to discharge its liabilities, and to distribute its assets, but not for the purpose of continuing the business for which it was organized. The shareholders, directors, and officers have power to take any corporate or other action that is appropriate to carry out the purposes of this section.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1401. Admission of foreign corporation and other entities.

1. No foreign corporation has the right to transact business in this state until it has procured a certificate of authority to do so from the secretary of state. No foreign corporation is entitled to procure a certificate of authority under this chapter to transact any business in this state which a corporation organized under this chapter is not permitted to transact. A foreign corporation may not be denied a certificate of authority because the laws of the state or country under which the corporation is organized governing its organization and internal affairs differ from the laws of this state, and nothing contained in this chapter authorizes this state to regulate the organization or the internal affairs of the corporation.
2. Without excluding other activities which may not constitute transacting business in this state, a foreign corporation is not considered to be transacting business in this state, for the purposes of this chapter, because of carrying on in this state any one or more of the following activities:
   1. Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement of the suit or the settlement of claims or disputes.
   2. Holding meetings of its directors or shareholders or carrying on other activities concerning its internal affairs.
   3. Maintaining bank accounts.
   4. Maintaining offices or agencies for the transfer, exchange, and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.
   5. Effecting sales through independent contractors.
   6. Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where the orders require acceptance outside of this state before becoming binding contracts.
   7. Creating, as borrower or lender, or acquiring indebtedness or mortgages or other security interests in real or personal property.
   8. Securing or collecting debts or enforcing any rights in property securing the debts.
   9. Transacting any business in interstate commerce.
   10. Conducting an isolated transaction completed within a period of thirty (30) days and not in the course of a number of repeated transactions of like nature.
   11. Acting as a general partner of a limited partnership which has filed a certificate of limited partnership as provided in § 7-13-8 or has registered with the secretary of state as provided in § 7-13-49 .
   12. Acting as a member of a limited-liability company which has registered with the secretary of state as provided in § 7-16-49 .
3. Any “other entity”, as defined in § 7-16-5.1(a) , Massachusetts trust or business trust established by law of any other state, desiring to do business in this state, is deemed to be a foreign corporation and is required to register under, and comply with the provisions of, this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1402. Powers of foreign corporation.

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

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1403. Corporate name of foreign corporation.

The secretary of state shall not issue a certificate of authority or amended certificate of authority to a foreign corporation unless the corporate name of the corporation:

1. Contains the word “corporation”, “company”, “incorporated”, or “limited”, or contains an abbreviation of one of these words, or the corporation, for use in this state, adds at the end of its name one of the words or an abbreviation of the word.
2. Does not contain any word or phrase which indicates or implies that it is organized for any purpose other than one or more of the purposes contained in its articles or certificate of incorporation or that it is authorized or empowered to conduct the business of any types prohibited by § 7-1.2-301 .
3. Is distinguishable upon the records of the secretary of state from the name of any entity on file with the secretary of state or a name the exclusive right to which is, at the time, filed, reserved or registered in the manner provided in this title, subject to the following:
   1. This provision does not apply if the foreign corporation applying for a certificate of authority files with the secretary of state any one of the following:
      1. A fictitious business name statement pursuant to § 7-1.2-402 ; or
      2. A certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the foreign corporation to the use of the name in this state; and
   2. The name may be the same as the name of a corporation or other association, the articles of incorporation or organization of which has been revoked by the secretary of state and the revocation has not been withdrawn within one year from the date of the revocation.
   3. Words and/or abbreviations that are required by statute to identify the particular type of business entity shall be disregarded when determining if a name is distinguishable upon the records of the secretary of state.
   4. The secretary of state shall promulgate rules and regulations defining the term “distinguishable upon the record” for the administration of this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36; P.L. 2011, ch. 54, § 1; P.L. 2011, ch. 60, § 1.

7-1.2-1404. Change of name by foreign corporation.

Whenever a foreign corporation which is authorized to transact business in this state changes its name to one that does not satisfy the requirements of § 7-1.2-1403 , it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of § 7-1.2-1403 and obtains an amended certificate of authority under § 7-1.2-1411 .

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1405. Application for certificate of authority.

In order to procure a certificate of authority to transact business in this state, a foreign corporation must make application for the certificate of authority to the secretary of state, which application includes:

1. The name of the corporation and the state or country under the laws of which it is incorporated.
2. The name which the corporation elects to use in this state in accordance with § 7-1.2-1403 .
3. The date of incorporation and the period of duration of the corporation.
4. The street address of the principal office of the corporation.
5. The name and address of its proposed registered agent in this state.
6. The purpose or purposes of the corporation which it proposes to pursue in the transaction of business in this state.
7. The names and respective addresses of the directors of the corporation if the state or country under the laws of which it was incorporated requires that it have directors and if not, the names and respective addresses of its principal officers.
8. A statement of the aggregate number of shares which the corporation has authority to issue, itemized by classes, par value of shares, shares without par value, and series, if any, within a class.
9. An estimate, expressed as a percentage, of the proportion that the estimated value of the property of the corporation to be located within this state during the following year bears to the value of all property of the corporation to be owned during the following year, wherever located, and an estimate, expressed as a percentage, of the proportion that the gross amount of business to be transacted by the corporation at or from places of business in this state during the following year bears to the gross amount which will be transacted by the corporation during the following year.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2011, ch. 53, § 1; P.L. 2011, ch. 64, § 1; P.L. 2018, ch. 346, § 2.

7-1.2-1406. Filing of application for certificate of authority.

1. A foreign corporation must deliver the application for a certificate of authority to the secretary of state, together with a certificate of good standing issued by the proper officer of the state or country under the laws of which it is incorporated.
2. If the secretary of state finds that the application conforms to law, the secretary of state shall, when all fees have been paid:
   1. Endorse on the original of the application the word “Filed”, and the month, day, and year of the filing.
   2. File in his or her office the original of the application and a certificate of good standing issued by the proper officer of the state or country under the laws of which it is incorporated.
   3. Issue a certificate of authority to transact business in this state.
3. The secretary of state shall deliver the certificate of authority to the corporation or its representative.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1407. Effect of certificate of authority.

Upon the issuance of a certificate of authority by the secretary of state, the corporation is authorized to transact business in this state for the purposes stated in its application, subject, however, to the right of this state to suspend or to revoke the authority as provided in this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1408. Registered office and registered agent of foreign corporation.

1. Each foreign corporation authorized to transact business in this state must have and continuously maintain in this state a registered agent, who is either:
   1. An individual resident in this state; or
   2. A corporation, limited partnership, limited-liability partnership, limited-liability company, and in each case either domestic or one authorized to transact business in this state.
2. Foreign corporations who are the holders of mortgages on real estate located within this state which do not maintain the loan documentation and records within the state shall authorize the registered agent to accept mortgage discharge payment and to issue a discharge of the mortgages upon the payment.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1409. Change of registered office or registered agent of foreign corporation.

1. A foreign corporation authorized to transact business in this state may change its registered office or change its registered agent, or both, upon filing in the office of the secretary of state a statement stating:
   1. The name of the corporation.
   2. The address of its then registered office.
   3. If the address of its registered office is changed, the address to which the registered office is to be changed.
   4. The name of its then registered agent.
   5. If its registered agent is changed, the name of its successor registered agent.
   6. The address of its registered office and the address of the business office of its registered agent, as changed.
2. The statement must be executed by an authorized representative of the corporation and delivered to the secretary of state. If the secretary of state finds that the statement conforms to the provisions of this chapter, the secretary of state shall file the statement in his or her office, and upon the filing, the change of address of the registered office, or the appointment of a new registered agent, or both, becomes effective.
3. Any registered agent of a foreign corporation may resign as the agent upon filing a written notice of resignation with the secretary of state, who shall immediately mail a copy of the notice to the corporation at its principal office in the state or country under the laws of which it is incorporated. The appointment of the agent terminates upon the expiration of thirty (30) days after receipt of the notice by the secretary of state.
4. If a registered agent changes his or her or its business address to another place within the state, he or she or it may change the address and the address of the registered office of any corporations of which he or she or it is registered agent by filing a statement as required above except that it must be signed only by the registered agent, need not be responsive to subsection (a)(5), and must recite that a copy of the statement has been mailed to each corporation.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1410. Service of process on foreign corporation.

1. The registered agent appointed by a foreign corporation authorized to transact business in this state is an agent of the corporation upon whom any process, notice, or demand required or permitted by law to be served upon the corporation may be served.
2. Whenever a foreign corporation authorized to transact business in this state fails to appoint or maintain a registered agent in this state, or whenever any registered agent cannot with reasonable diligence be found at the registered office, or whenever the certificate of authority of a foreign corporation is suspended or revoked, the secretary of state is an agent of the corporation upon whom any process, notice, or demand may be served. Service on the secretary of state of any process, notice, or demand must be made by delivering to and leaving with him or her, or with any clerk having charge of the corporation department of his or her office, duplicate copies of the process, notice, or demand. In the event any process, notice, or demand is served on the secretary of state, the secretary of state shall immediately forward one of the copies by registered mail, addressed to the corporation at its principal office if known to him or her, in the state or country under the laws of which it is incorporated. Any service had in this manner on the secretary of state is returnable in not less than thirty (30) days.
3. Every foreign corporation as a condition precedent to carrying on business in this state must, and by so carrying on business in this state does, consent that any process, including the process of garnishment, may be served upon the secretary of state in the manner provided by this section, except that notice of the service must be given by the plaintiff or his or her attorney in the manner as the court in which the action is commenced or pending orders as affording the corporation reasonable opportunity to defend the action or to learn of the garnishment. Notwithstanding the preceding requirements, however, once service has been made on the secretary of state as provided, the court has the authority in the event of failure to comply with the requirement of notice to the foreign corporation to order notice that is sufficient to apprise it of the pendency of the action against it, and additionally, may extend the time for answering by the foreign corporation.
4. The secretary of state shall keep a record of all processes, notices, and demands served upon him or her under this section, and record in the record the time of the service and his or her action on it.
5. Nothing contained in these provisions limits or affects the right to serve any process, notice, or demand, required or permitted by law to be served upon a corporation in any manner now or subsequently permitted by law.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1411. Amended certificate of authority.

1. A foreign corporation authorized to transact business in this state shall make application for and procure an amended certificate of authority if it changes its corporate name, increases its number of authorized shares, or desires to pursue in this state other or additional purposes than those stated in its prior application for a certificate of authority.
2. The requirements in respect to the form and contents of the application, the manner of its execution, the filing of the application with the secretary of state, the issuance of an amended certificate of authority, and the effect of it, is the same as in the case of an original application for a certificate of authority.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1411.1. Foreign application for transfer of authority.

1. A duly authorized foreign corporation in the state of Rhode Island that converts into any form of foreign other entity subject to the provisions of title 7 and the resulting entity is required to file for authority to transact business in this state may apply for a transfer of authority in the office of the secretary of state by filing:
   1. An application for transfer of authority that has been executed and filed in accordance with the provisions of § 7-1.2-105 ; and
   2. An application for authority to transact business in the state of Rhode Island for the resulting entity type; and
   3. A certificate of legal existence or good standing issued by the proper officer of the state or country under the laws of which the resulting entity has been formed.
2. The application for transfer of authority shall state:
   1. The name of the corporation;
   2. The type of other entity into which it has been converted; and
   3. The jurisdiction whose laws govern its internal affairs.
3. Upon the effective time and date of the application for transfer of authority, the authority of the corporation authorized to transact business under this chapter shall be transferred without interruption to the other entity which shall thereafter hold such authority subject to the provisions of the laws of the state of Rhode Island applicable to that type of resulting entity.

History of Section. P.L. 2012, ch. 71, § 1; P.L. 2012, ch. 79, § 1.

7-1.2-1412. Withdrawal of foreign corporation.

1. A foreign corporation authorized to transact business in this state may withdraw from this state upon procuring from the secretary of state a certificate of withdrawal. To procure a certificate of withdrawal, the foreign corporation must deliver to the secretary of state an application for withdrawal, stating:
   1. The name of the corporation and the state or country under the laws of which it is incorporated.
   2. That the corporation is not transacting business in this state.
   3. That the corporation surrenders its authority to transact business in this state.
   4. That the corporation revokes the authority of its registered agent in this state to accept service of process and consents that service of process in any action, suit, or proceeding based upon any cause of action arising in this state during the time the corporation was authorized to transact business in this state may subsequently be made on the corporation by service on the secretary of state.
   5. The post office address to which the secretary of state may mail a copy of any process against the corporation that is served on the secretary of state.
2. If the corporation is in the hands of a receiver or trustee, the application for withdrawal must be executed on behalf of the corporation by the receiver or trustee.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1413. Filing of application for withdrawal.

1. An original application for withdrawal must be delivered to the secretary of state. If the secretary of state finds that the application conforms to the provisions of this chapter, the secretary of state shall, when all fees and taxes have been paid:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in his or her office; and
   3. Issue a certificate of withdrawal.
2. The secretary of state shall deliver the certificate of withdrawal to the corporation or its representative. Upon the issuance of the certificate of withdrawal, the authority of the corporation to transact business in this state ceases.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.

7-1.2-1414. Revocation of certificate of authority.

1. The certificate of authority of a foreign corporation to transact business in this state may be revoked by the secretary of state under the conditions prescribed in this section when:
   1. The corporation fails to file its annual report within the time required by this chapter, or with respect to any corporation in good corporate standing on the records of the secretary of state on or after July 1, 2019, has failed to pay any required fees to the secretary of state when they have become due and payable, or the secretary of state has received notice from the division of taxation, in accordance with § 44-11-26.1 , that the corporation has failed to pay corporate taxes; or
   2. The corporation fails to appoint and maintain a registered agent in this state as required by this chapter; or
   3. The corporation fails, after changing its registered office or registered agent, to file in the office of the secretary of state a statement of the change as required by this chapter; or
   4. The corporation fails to file in the office of the secretary of state any amendment to its articles of incorporation or any articles of merger within the time prescribed by this chapter; or
   5. A misrepresentation has been made of any material matter in any application, report, affidavit, or other document submitted by the corporation pursuant to this chapter.
2. No certificate of authority of a foreign corporation may be revoked by the secretary of state unless the secretary of state has given the corporation notice thereof not less than sixty (60) days prior to such revocation, by regular mail addressed to the registered agent of the corporation in this state on file with the secretary of state’s office, which notice shall specify the basis for the revocation; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned as undeliverable by the United States Postal Service for any reason, or if the revocation notice is returned as undeliverable by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
   1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
   2. In the case of a foreign corporation that has not yet filed an annual report, then to the corporation at its principal office shown in its application for certificate of authority, and no further notice is required.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.

7-1.2-1415. Issuance of certificate of revocation.

1. Upon revoking any certificate of authority, the secretary of state shall:
   1. Issue a certificate of revocation.
   2. File the certificate in his or her office.
   3. Send to the corporation by regular mail the certificate of revocation, addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered agent of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the revocation certificate is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
      1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
      2. In the case of a foreign corporation that has not yet filed an annual report then to the corporation at its principal office shown in its application for certificate of authority, and no further notice is required.
2. Upon the issuance of the certificate of revocation, the authority of the corporation to transact business in this state ceases.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1416. Withdrawal of certificate of revocation.

1. Within twenty (20) years after issuing a certificate of revocation as provided in § 7-1.2-1415 , the secretary of state may withdraw the certificate of revocation and retroactively reinstate the corporation in good standing as if its certificate of incorporation had not been revoked, except as subsequently provided:
   1. Upon the filing by the corporation of the documents it had previously failed to file as set forth in subsections (a)(1) — (a)(4) of § 7-1.2-1414 ;
   2. Upon the payment by the corporation of a penalty for each year or part of a year that has elapsed since the issuance of the certificate of revocation; and
   3. Upon the filing by the corporation of a certificate of good standing from the Rhode Island division of taxation.
2. If, as permitted by the provisions of this title, another corporation, whether business or nonprofit limited partnership, limited-liability partnership or limited-liability company, or domestic or foreign, qualified to transact business in this state, bears or has filed a fictitious business name statement with respect to or reserved or registered a name that is not distinguishable upon the records of the secretary of state from the name of a corporation with respect to which the certificate of revocation is proposed to be withdrawn, then the secretary of state shall condition the withdrawal of the certificate of revocation upon the reinstated corporation’s amending its articles of incorporation or otherwise complying with the provisions of this chapter with respect to the use of a name available to it under the laws of this state so as to designate a name which is distinguishable upon the records of the secretary of state from its former name.
3. Upon the withdrawal of the certificate of revocation and reinstatement of the corporation in good standing as provided in subsection (a), title to any real estate, or any interest in real estate, held by the corporation at the time of the issuance of the certificate of revocation and not conveyed subsequent to the revocation of its certificate of incorporation, shall be deemed to be revested in the corporation without further act or deed.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005, ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2021, ch. 385, § 1, effective July 13, 2021; P.L. 2021, ch. 386, § 1, effective July 13, 2021.

7-1.2-1417. Application to corporations previously authorized to transact business in this state.

Foreign corporations which are authorized to transact business in this state as of May 14, 1969, for a purpose or purposes for which a corporation might secure authority under this chapter, are, subject to the limitations stated in their certificates of authority, entitled to all the rights and privileges applicable to foreign corporations procuring certificates of authority to transact business in this state under this chapter, and as of May 14, 1969, the corporations are subject to all the limitations, restrictions, liabilities, and duties prescribed in these provisions for foreign corporations procuring certificates of authority to transact business in this state under this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1418. Transacting business without certificate of authority.

1. No foreign corporation transacting business in this state without a certificate of authority is permitted to maintain any action, suit, or proceeding in any court of this state, until the corporation has obtained a certificate of authority. Nor may any action, suit, or proceeding be maintained in any court of this state by any successor or assignee of the corporation on any right, claim, or demand arising out of the transaction of business by the corporation in this state, until a certificate of authority has been obtained by the corporation or by its successor.
2. The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of any contract or act of the corporation, and does not prevent the corporation from defending any action, suit, or proceeding in any court of this state.
3. A foreign corporation which transacts business in this state without a certificate of authority is liable to this state, for the years or parts of years during which it transacted business in this state without a certificate of authority, in an amount equal to all fees and franchise taxes which would have been imposed upon the corporation had it duly applied for and received a certificate of authority to transact business in this state as required by this chapter and subsequently filed all reports required by this chapter, plus all penalties imposed by this chapter for failure to pay the fees and franchise taxes. The attorney general may bring proceedings to recover all amounts due this state under the provisions of this section.
4. The superior court has jurisdiction to enjoin any foreign corporation, or any agent of a foreign corporation, from transacting any business in this state if the corporation fails to comply with any section of this chapter applicable to it or if the corporation secured a certificate of the secretary of state under §§ 7-1.2-1405 and 7-1.2-1406 on the basis of false or misleading representations. The attorney general may, upon motion or upon the relation of proper parties, proceed for this purpose by complaint in any county in which the corporation is doing business.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1501. Annual reports of domestic and foreign corporations. [Effective until January 1, 2022.]

1. Each domestic corporation, and each foreign corporation authorized to transact business in this state, shall file, within the time prescribed by this chapter, an annual report stating:
   1. The name of the corporation and the state or country under the laws of which it is incorporated;
   2. A brief statement of the character of the business in which the corporation is actually engaged in this state;
   3. The names and respective addresses of the directors and officers of the corporation;
   4. A statement of the aggregate number of shares which the corporation has authority to issue, itemized by classes, par value of shares, if any, and series, if any, within a class;
   5. A statement of the aggregate number of issued shares, itemized by classes, par value of shares, if any, and series, if any, within a class;
   6. Any additional information that is required by the secretary of state.
2. The annual report must be made on forms prescribed and furnished by the secretary of state, and the information contained therein must be given as of the date of the execution of the report. It must be executed on behalf of the corporation by its authorized representative, or, if the corporation is in the hands of a receiver or trustee, it must be executed on behalf of the corporation by the receiver or trustee.
3. The annual report of a domestic or foreign corporation must be delivered to the secretary of state between January 1 and the March 1 of each year, except that the first annual report of a domestic or foreign corporation must be filed between January 1 and March 1 of the year following the calendar year in which its articles of incorporation were filed with or its certificate of authority was issued by the secretary of state. Proof to the satisfaction of the secretary of state that prior to March 1 the report was deposited in the United States mail in a sealed envelope, properly addressed, with postage prepaid, is deemed to be a compliance with this requirement.
4. If the secretary of state finds that the annual report conforms to the requirements of this chapter, the secretary of state shall file the report. If the secretary of state finds that it does not conform, the secretary of state shall promptly return the report to the corporation for any necessary corrections, in which event the penalties subsequently prescribed for failure to file the report within the time previously provided do not apply if the report is corrected to conform to the requirements of this chapter and returned to the secretary of state within thirty (30) days from the date on which it was mailed to the corporation by the secretary of state.
5. Each corporation, domestic or foreign, that fails or refuses to file its annual report for any year within thirty (30) days after the time prescribed by this chapter is subject to a penalty of twenty-five dollars ($25.00) per year.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1501. Annual reports of domestic and foreign corporations. [Effective January 1, 2022.]

1. Each domestic corporation, and each foreign corporation authorized to transact business in this state, shall file, within the time prescribed by this chapter, an annual report stating:
   1. The name of the corporation and the state or country under the laws of which it is incorporated;
   2. A brief statement of the character of the business in which the corporation is actually engaged in this state;
   3. The names and respective addresses of the directors and officers of the corporation;
   4. [Deleted by P.L. 2021, ch. 137, § 1 and P.L. 2021, ch. 138, § 1.]
   5. A statement of the aggregate number of issued shares, itemized by classes, par value of shares, if any, and series, if any, within a class; and
   6. Any additional information that is required by the secretary of state.
2. The annual report must be made on forms prescribed and furnished by the secretary of state, and the information contained therein must be given as of the date of the execution of the report. It must be executed on behalf of the corporation by its authorized representative, or, if the corporation is in the hands of a receiver or trustee, it must be executed on behalf of the corporation by the receiver or trustee.
3. The annual report of a domestic or foreign corporation must be delivered to the secretary of state between February 1 and May 1 of each year, except that the first annual report of a domestic or foreign corporation must be filed between February 1 and May 1 of the year following the calendar year in which its articles of incorporation were filed with or its certificate of authority was issued by the secretary of state. Proof to the satisfaction of the secretary of state that prior to May 1 the report was deposited in the United States mail in a sealed envelope, properly addressed, with postage prepaid, is deemed to be a compliance with this requirement.
4. If the secretary of state finds that the annual report conforms to the requirements of this chapter, the secretary of state shall file the report. If the secretary of state finds that it does not conform, the secretary of state shall promptly return the report to the corporation for any necessary corrections, in which event the penalties subsequently prescribed for failure to file the report within the time previously provided do not apply if the report is corrected to conform to the requirements of this chapter and returned to the secretary of state within thirty (30) days from the date on which it was mailed to the corporation by the secretary of state.
5. Each corporation, domestic or foreign, that fails or refuses to file its annual report for any year within thirty (30) days after the time prescribed by this chapter is subject to a penalty of twenty-five dollars ($25.00) per year.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2021, ch. 137, § 1, effective January 1, 2022; P.L. 2021, ch. 138, § 1, effective January 1, 2022.

7-1.2-1502. Books and records.

1. Each corporation shall keep correct and complete books and records of account, keep minutes of the proceedings of its shareholders and of the board of directors and committees of the board, and shall also keep at its registered office or principal place of business, legal counsel’s office, or at the office of its transfer agent or registrar, a record of its shareholders giving the names and addresses of all shareholders and the number and class of the shares held by each. Any books, records, and minutes may be in written form or any other form capable of being converted into written form within a reasonable time.
2. Any director, shareholder or holder of voting trust certificates for shares of a corporation, upon written demand stating the purpose for the demand, has the right to examine, in person, or by agent or attorney, at any reasonable time or times, for any proper purpose, its relevant books and records of account, minutes, and record of shareholders and to make extracts from those books and records of account, minutes, and record of shareholders.
3. Any officer or agent who, or a corporation which, refuses to allow any shareholder or holder of voting trust certificates, or his or her agent or attorney, to examine and make extracts from its books and records of account, minutes, and record of shareholders, for any proper purpose, is liable to the shareholder or holder of voting trust certificates in a penalty of ten percent (10%) of the value of the shares owned by the shareholder, or in respect of which the voting trust certificates are issued, in addition to any other damages or remedy afforded him or her by law. It is a defense to any action for penalties under this section that the person bringing the suit has within two (2) years sold or offered for sale any list of shareholders or of holders of voting trust certificates for shares of the corporation or any other corporation or has aided or abetted any person in procuring any list of shareholders or of holders of voting trust certificates for that purpose, or has improperly used any information secured through any prior examination of the books and records of account, or minutes, or record of shareholders, or of holders of voting trust certificates for shares of the corporation or any other corporation, or was not acting in good faith or for a proper purpose in making his or her demand.
4. Nothing contained in these provisions impairs the power of any court of competent jurisdiction, upon proof by a director, shareholder or holder of voting trust certificates of proper purpose, to compel the production for examination by the director, shareholder or holder of voting trust certificates of the books and records of account, minutes, and record of shareholders of a corporation.
5. Upon the written request of any director, shareholder or holder of voting trust certificates for shares of a corporation, the corporation shall mail to the director, shareholder or holder of voting trust certificates its most recent financial statements showing in reasonable detail its assets and liabilities and the results of its operations.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1601. The secretary of state.

1. The secretary of state has the reasonably necessary power and authority to enable him or her to administer this chapter efficiently and to perform the duties imposed upon the secretary by this chapter.
2. The secretary of state shall charge and collect in accordance with the provisions of this chapter:
   1. Fees for filing documents and issuing certificates.
   2. Miscellaneous charges.
   3. License fees.
3. The secretary of state shall, between the first (1st) and fifteenth (15th) day of each month, make an itemized return, in writing, to the state controller of the amount of all fees and charges collected by him or her in the prior month, and pay to the general treasurer all of the state moneys in his or her hands.
4. All reports required by this chapter to be filed in the office of the secretary of state must be made on forms which are prescribed and furnished by the secretary of state. Forms for all other documents to be filed in the office of the secretary of state may be furnished by the secretary of state on request for the forms, but the use of the forms, unless otherwise specifically prescribed in this chapter, is not mandatory.
5. 1. If the secretary of state fails to approve any articles of incorporation, amendment, merger, or dissolution, or any other document required by this chapter to be approved by the secretary of state before the document is filed in his or her office, the secretary of state shall, within ten (10) days after the delivery of the document to the secretary of state, give written notice of disapproval to the person or corporation, domestic or foreign, delivering the document, specifying the reasons for the disapproval. From the disapproval the person or corporation may appeal to the superior court of the county in which the registered office of the corporation is, or is proposed to be, situated by filing with the clerk of the court a petition setting forth a copy of the articles or other document sought to be filed and a copy of the written disapproval of the document by the secretary of state; at which time the matter may be tried de novo by the court, and the court shall either sustain the action of the secretary of state or direct the secretary to take any action that the court deems proper.
   2. If the secretary of state revokes the certificate of authority to transact business in this state of any foreign corporation pursuant to the provisions of §§ 7-1.2-1414 and 7-1.2-1415 , in addition to the remedy provided in § 7-1.2-1416 , the foreign corporation may likewise appeal to the superior court of the county where the registered office of the corporation in this state is situated, by filing with the clerk of the court a petition setting forth a copy of its certificate of authority to transact business in this state and a copy of the notice of revocation given by the secretary of state; at that time the matter may be tried de novo by the court, and the court shall either sustain the action of the secretary of state or direct the secretary to take any action that the court deems proper.
   3. Appeals from all final orders and judgments entered by the superior court under this section in review of any ruling or decision of the secretary of state may be taken as in other civil actions.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1602. Fees and charges payable to the secretary of state upon filing, certifying or copying of papers.

1. The secretary of state shall charge and collect for filing:
   1. Articles of incorporation and issuing a certificate of incorporation, seventy dollars ($70.00).
   2. Articles of amendment and issuing a certificate of amendment, fifty dollars ($50.00).
   3. Restated articles of incorporation, seventy dollars ($70.00).
   4. Articles of merger or consolidation and issuing a certificate of merger or consolidation, one hundred dollars ($100).
   5. An application to reserve a corporate name, fifty dollars ($50.00).
   6. A notice of transfer of a reserved corporate name, fifty dollars ($50.00).
   7. 1. Filing a statement of change of registered agent and registered office or filing a statement of change of registered agent, twenty dollars ($20.00).
      2. Filing a statement of change of registered office only, without fee.
   8. A statement of the establishment of a series of shares, ten dollars ($10.00).
   9. A statement of cancellation of shares, ten dollars ($10.00).
   10. A statement of reduction of stated capital, ten dollars ($10.00).
   11. A statement of intent to dissolve, without fee.
   12. A statement of revocation of voluntary dissolution proceedings, ten dollars ($10.00).
   13. Articles of dissolution, fifty dollars ($50.00).
   14. An application of a foreign corporation for a certificate of authority to transact business in this state and issuing a certificate of authority, one hundred fifty dollars ($150).
   15. An application of a foreign corporation for an amended certificate of authority to transact business in this state and issuing an amended certificate of authority, seventy-five dollars ($75.00).
   16. A copy of an amendment to the articles of incorporation of a foreign corporation holding a certificate of authority to transact business in this state, fifty dollars ($50.00).
   17. A copy of articles of merger of a foreign corporation holding a certificate of authority to transact business in this state, fifty dollars ($50.00).
   18. An application for withdrawal of a foreign corporation and issuing a certificate of withdrawal, fifty dollars ($50.00).
   19. An annual report, fifty dollars ($50.00).
   20. Registered name application, fifty dollars ($50.00).
   21. Certificate of good standing/letter of status, twenty dollars ($20.00).
   22. Certificate of fact, thirty dollars ($30.00).
   23. Any other statement or report, except an annual report, of a domestic or foreign corporation, ten dollars ($10.00).
   24. A certificate of conversion to a non-Rhode Island entity, fifty dollars ($50.00).
2. The secretary of state shall charge and collect:
   1. To withdraw the certificate of revocation of a corporation, whether domestic or foreign, a penalty in the amount of fifty dollars ($50.00) for each year or part of a year that has elapsed since the issuance of the certificate of revocation.
   2. For furnishing a certified copy of any document, instrument, or paper relating to a corporation, fifteen cents ($.15) per page and ten dollars ($10.00) for the certificate and affixing the seal to it.
   3. At the time of any service of process on him or her as resident agent of a corporation, fifteen dollars ($15.00), which amount may be recovered as taxable costs by the party to the suit or action making the service if the party prevails in the suit or action.
3. 1. The secretary of state shall charge and collect from each domestic corporation license fees, based on the number of shares which it has authority to issue or the increase in the number of shares which it has authority to issue, at the time of:
      1. Filing articles of incorporation;
      2. Filing articles of amendment increasing the number of authorized shares; and
      3. Filing articles of merger increasing the number of authorized shares which the surviving or new corporation, if a domestic corporation, has the authority to issue above the aggregate number of shares which the constituent domestic corporations and constituent foreign corporations authorized to transact business in this state had authority to issue.
   2. The license fees charged to a domestic corporation are as follows:
      1. One hundred sixty dollars ($160) for less than seventy-five million (75,000,000) authorized shares; and
      2. One-fifth (1/5) cent per share of each authorized share for seventy-five million (75,000,000) shares or greater.
   3. The above license fee calculations also apply when a corporation files an amendment or merger showing an increase in authorized shares.
4. 1. The secretary of state shall charge and collect from each foreign corporation license fees at the time of:
      1. Filing an application for a certificate of authority to transact business in this state;
      2. Filing articles of amendment which increased the number of authorized shares; and
      3. Filing articles of merger which increased the number of authorized shares which the surviving or new corporation, if a foreign corporation, has authority to issue above the aggregate number of shares which the constituent domestic corporations and constituent foreign corporations authorized to transact business in this state had authority to issue.
   2. The license fees charged to a foreign corporation are as follows:
      1. One hundred sixty dollars ($160) for less than seventy-five million (75,000,000) authorized shares represented in the State of Rhode Island; and
      2. One-fifth (1/5) cent per share of each authorized share for 75,000,000 shares or greater.
   3. The above license fee calculations also apply when a corporation files an amendment or merger showing an increase in authorized shares.
   4. The number of authorized shares represented in this state is that proportion of its total authorized shares which the sum of the value of its property located in this state and the gross amount of business transacted by it at or from places of business in this state bears to the sum of the value of all of its property, wherever located, and the gross amount of its business, wherever transacted. The proportion is determined from information contained in the application for a certificate of authority to transact business in this state or in the application for an amended certificate of authority to transact business in this state.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2011, ch. 52, § 2; P.L. 2011, ch. 61, § 2.

7-1.2-1603. Penalties imposed upon officers and directors.

Any individual who signs any articles, statement, report, application, or other document intended to be filed with the secretary of state that is known to the individual to be false in any material respect, is guilty of a misdemeanor, and upon conviction of it may be fined in any amount not exceeding five hundred dollars ($500). For purposes of this chapter, a document is signed whether by any manual, facsimile or electronic signature.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1604. Interrogatories.

1. The secretary of state may propound to any domestic or foreign corporation subject to the provisions of this chapter, and to any of its officers or directors, any interrogatories that may be reasonably necessary and proper to enable the secretary of state to ascertain whether the corporation has complied with all the applicable provisions of this chapter. The interrogatories must be answered within thirty (30) days after their mailing, or within any additional time that is fixed by the secretary of state, and the answers to the interrogatories must be full and complete and made in writing and under oath. If the interrogatories are directed to an individual they must be answered by him or her, and if directed to a corporation they must be answered by the president, vice president, secretary, or assistant secretary of the corporation. The secretary of state need not file any document to which the interrogatories relate until the interrogatories are answered as provided in these provisions, and not then if the interrogatory answers disclose that the document is not in conformity with the provisions of this chapter. The secretary of state shall certify to the attorney general, for any action that the attorney general deems appropriate, all interrogatories and their answers which disclose a violation of any of the provisions of this chapter.
2. Each corporation, domestic or foreign, that fails or refuses to answer truthfully and fully within the time prescribed by this chapter interrogatories propounded by the secretary of state, in accordance with the provisions of this chapter, is guilty of a misdemeanor and upon conviction of it may be fined in any amount not exceeding five hundred dollars ($500).
3. Interrogatories propounded by the secretary of state and the answers to the interrogatories are not open to public inspection, nor may the secretary of state disclose any facts or information obtained from them except insofar as the secretary’s official duty requires the facts or information to be made public or in the event the interrogatories or their answers are required for evidence in any criminal proceedings or in any other action by this state.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1605. Certificates and certain copies to be received in evidence.

All certificates issued by the secretary of state in accordance with the provisions of this chapter, and all copies of documents filed in his or her office in accordance with the provisions of this chapter when certified by the secretary, is prima facie evidence of the facts stated in them. A certificate by the secretary of state under the great seal of this state, as to the existence or nonexistence of the facts relating to corporations is prima facie evidence of the existence or nonexistence of the facts stated in them.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1701. Close corporations.

1. Provisions of the articles of incorporation or bylaws of a corporation organized under this chapter, or provisions of an agreement relating to a corporation, which would otherwise be invalid because they:
   1. Restrict, or assign to one or more shareholders or other individuals, any or all of the powers normally vested in the board of directors or provide that there is no board of directors; or
   2. Grant the right to one or more shareholders to dissolve the corporation at will or on the occurrence of a specified contingency; or
   3. Impose too great a restraint on the transfer of shares of the corporation; are nevertheless valid if the provisions have been approved by all the shareholders of the corporation and if the corporation’s original or amended articles of incorporation contain a heading immediately after the name of the corporation stating that it is a close corporation pursuant to § 7-1.2-1701 . This subsection does not invalidate any provision in articles of incorporation, bylaws, or agreements that would otherwise be valid.
2. The provisions of § 7-1.2-709 limiting the duration of a voting trust or shareholders’ agreement to ten (10) years is not applicable to a close corporation that complies with subsection (a). If close corporation status is terminated pursuant to subsection (d), the effective term of a voting trust or shareholders’ agreement is ten (10) years from the termination or the term provided therein, whichever is shorter.
3. The effect of any provision authorized by subsection (a)(1) is to relieve the directors and to impose on the individual or individuals undertaking to exercise responsibility the liability for managerial acts or omissions that would otherwise be imposed on directors to the extent that and so long as the discretion or powers of the board in its management of corporate affairs is controlled by any such provision. Action which is valid pursuant to subsection (a)(1) is deemed to be action by the board of directors for purposes of compliance with any provision of this chapter providing for action by the board of directors.
4. If a close corporation’s original or amended articles of incorporation so provide, the corporation need not hold an annual meeting of shareholders unless one or more shareholders deliver written notice to the corporation requesting a meeting at least thirty (30) days before the meeting date stated or fixed in accordance with the bylaws of the corporation.
5. 1. The articles of incorporation must be amended to terminate close corporation status pursuant to this section if:
      1. All of the shareholders, or such lessor number as may be specified in the articles of incorporation, the bylaws, or an agreement relating to the corporation, approve the termination; or
      2. There are more than thirty (30) shareholders of record and any shareholder, after thirty (30) days’ notice to the corporation of his or her intention to do so during which time the number is not reduced to thirty (30) or less, demands termination; or
      3. Any individual who acquires of record shares of the corporation without notice or knowledge of its close corporation status demands termination; provided, that notice shall be conclusively presumed if certificates representing the shares so acquired state on their face, under the name of the corporation, that it is a close corporation pursuant to this section.
   2. If the directors and shareholders fail to effect the amendment promptly, the superior court shall have jurisdiction to enter whatever order is necessary to effect the amendment. The termination shall not affect the validity of any provision relating to the corporation or its management which would be valid, notwithstanding the provisions of this section.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-1.2-1801. Unauthorized assumption of corporate powers.

All individuals who assume to act as a corporation without authority so to do are jointly and severally liable for all debts and liabilities incurred or arising as a result of that action.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1802. Application to existing corporations organized under general acts.

The provisions of this chapter apply to all existing corporations organized under any general act of this state providing for the organization of corporations for a purpose or purposes for which a corporation might be organized under this chapter, where the power has been reserved to amend, repeal, or modify the act under which the corporation was organized and where the act is repealed by this chapter.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1803. Application to foreign and interstate commerce.

The provisions of this chapter apply to commerce with foreign nations and among the several states only insofar as the provisions are permitted under the constitution of the United States.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.

7-1.2-1804. Applicability to corporations created by special acts.

The provisions of this chapter apply to all existing corporations previously or subsequently created by any special act of the general assembly of a kind that could be organized under this chapter, except insofar as the provisions are inconsistent with the provisions of any applicable special act passed after May 5, 1920, or with the provisions of any applicable special act passed that are not subject to amendment or repeal at the will of the general assembly. A corporation created by special act of the kind that could be organized under this chapter, but whose charter is not subject to amendment, repeal, or modification by the general assembly, may at a called meeting for the purpose, by a unanimous vote of its shareholders or members, adopt the provisions of this chapter upon the filing in the office of the secretary of state of a certified copy of the vote, attested by its president or vice president and its secretary or assistant secretary under its corporate seal, and the payment to the secretary of state of the fee prescribed by § 7-1.2-1602 . The corporation is subsequently governed in all respects by the provisions of this chapter and its charter shall subsequently be subject to amendment or repeal at the will of the general assembly.

History of Section. P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.

7-2-1 — 7-2-32. [Repealed.]

7-3-1 — 7-3-32. [Repealed.]

7-4-1, 7-4-2. [Repealed.]

7-4-3. Voting on stock held by fiduciaries and pledgees.

A person holding stock in a fiduciary capacity is entitled to vote the stock. In the case of stock held jointly by two (2) or more executors, administrators, guardians, conservators, trustees, or other fiduciaries, the fiduciaries may designate, in writing, one or more of their number to represent the stock and vote it, unless there is a provision to the contrary in any instrument defining their powers and duties. A person whose stock is pledged is entitled to vote the stock until the stock is transferred on the books of the corporation to the pledgee, and subsequently the pledgee is entitled to vote the stock.

History of Section. P.L. 1920, ch. 1925, § 24; G.L. 1923, ch. 248, § 24; G.L. 1938, ch. 116, § 24; G.L. 1956, § 7-4-3 .

7-4-4 — 7-4-14. [Repealed.]

7-4-15. Rights and liabilities surviving death of officer, director, or stockholder.

Except as otherwise provided in the general corporation law, any right of action against any officer, director, or stockholder of a corporation arising from any liability or penalty created or imposed by the provisions of the general corporation law survives the death of the person; and the right of contribution provided by this chapter exists in favor of the estate of the officer, director, or stockholder.

History of Section. P.L. 1920, ch. 1925, § 46; G.L. 1923, ch. 248, § 46; G.L. 1938, ch. 116, § 46; G.L. 1956, § 7-4-15 .

7-4-16. Survival of suits against officers, directors, and stockholders.

No suit against any officer, director, or stockholder for any liability or penalty created or imposed by the provisions of the general corporation law abates by reason of his or her death, but his or her estate is liable in the hands of his or her executor or administrator, who may voluntarily appear or may be summoned by the plaintiff to defend the suit.

History of Section. P.L. 1920, ch. 1925, § 47; G.L. 1923, ch. 248, § 47; G.L. 1938, ch. 116, § 47; G.L. 1956, § 7-4-16 .

7-4-17 — 7-4-19. [Repealed.]

7-5-1 — 7-5-18. [Repealed.]

7-5-19. Dissolution of quasi-municipal corporations and financial institutions.

When any quasi-municipal corporation, bank, savings bank, trust company, or loan and investment company has been liquidated in voluntary liquidation, or in receivership or otherwise, according to law, the corporation may be dissolved by decree of the superior court upon application filed, in the case of a quasi-municipal corporation, by any of its members or qualified electors or by the attorney general, and in the case of any bank, savings bank, trust company, or loan and investment company, by the administrator of banking and insurance or by any stockholder, trustee, or incorporator, with the consent, in writing, of the administrator of banking and insurance; and upon any reasonable notice in each case, that the court prescribes.

History of Section. G.L. 1923, ch. 248, § 57; P.L. 1932, ch. 1958, § 1; G.L. 1938, ch. 116, § 57; P.L. 1945, ch. 1610, § 1; G.L. 1956, § 7-5-19 .

7-5-20 — 7-5-26. [Repealed.]

7-5.1-1. Application of general corporation law.

Except as otherwise provided in this chapter, all provisions of the general corporation law, including the Rhode Island Business Corporation Act, chapter 1.2 of this title, applicable to domestic business corporations are applicable to corporations organized under this chapter.

History of Section. P.L. 1964, ch. 185, § 1; P.L. 1972, ch. 100, § 1; P.L. 2005, ch. 36, § 3; P.L. 2005, ch. 72, § 3.

7-5.1-2. Definitions.

As used in this chapter:

1. “Authorized to practice” means duly licensed, certified, or registered by the proper regulatory agency.
2. “Professional services” means the rendering of personal services by a person authorized to practice as one of the following professions as defined:
   1. Physicians;
   2. Dentists;
   3. Attorneys at law;
   4. [Deleted by P.L. 2000, ch. 328, § 1, and by P.L. 2000, ch. 513, § 1.]
   5. Professional engineers;
   6. Architects;
   7. Certified public accountants and licensed public accountants;
   8. Veterinarians;
   9. Chiropractors;
   10. Podiatrists;
   11. Registered nurses;
   12. Optometrists;
   13. Physical therapists;
   14. Landscape architects;
   15. Land surveyors;
   16. Opticians;
   17. Physician assistants;
   18. Psychologists; or
   19. Midwives or nurse-midwives.
3. “Regulatory agency” means:
   1. The professional licensing board contained within the department of health, as set forth in title 5 when referring to physicians, dentists, chiropractors, podiatrists, registered nurses, optometrists, physical therapists, opticians, physician assistants, or midwives or nurse-midwives;
   2. The Supreme Court when referring to attorneys at law;
   3. The boards of registration of professional engineers and land surveyors when referring to professional engineers or land surveyors;
   4. The board of examination and registration of architects when referring to architects;
   5. The board of accountancy when referring to certified public accountants and licensed public accountants;
   6. The board of veterinarians when referring to veterinarians;
   7. The board of examiners of landscape architects when referring to landscape architects;
   8. The board of psychology when referring to psychologists.

History of Section. P.L. 1964, ch. 185, § 1; P.L. 1969, ch. 163, § 1; P.L. 1971, ch. 171, § 24; P.L. 1972, ch. 100, § 2; P.L. 1980, ch. 268, § 1; P.L. 1981, ch. 245, § 1; P.L. 1989, ch. 537, § 1; P.L. 1992, ch. 281, § 1; P.L. 1995, ch. 259, § 1; P.L. 1995, ch. 304, § 1; P.L. 2000, ch. 328, § 1; P.L. 2000, ch. 513, § 1; P.L. 2012, ch. 101, § 1; P.L. 2012, ch. 106, § 1; P.L. 2018, ch. 346, § 3.

7-5.1-3. Authority to practice.

1. Except as specifically provided in subsection (b) of this section, any corporation organized under this chapter may engage in rendering professional services of not more than one of the professions enumerated in § 7-5.1-2 , provided that every officer, director, and shareholder of the corporation is an individual authorized to practice the profession and is employed by the corporation in that practice. No individual may be an officer, shareholder, director, or employee of any other corporation engaged in the practice of the same profession without the prior written approval of the applicable regulatory agency or agencies.
2. Nothing in these provisions is to be construed to prohibit a corporation organized under this chapter from engaging in the practice of the following combination of professions:
   1. Physicians, dentists, registered nurses, podiatrists, optometrists, physician assistants, chiropractic physicians, physical therapists, psychologists, midwives, or nurse-midwives;
   2. Landscape architects, professional engineers, architects, and land surveyors; and
   3. Certified public accountants and licensed public accountants.

History of Section. P.L. 1964, ch. 185, § 1; P.L. 1972, ch. 100, § 3; P.L. 1981, ch. 245, § 1; P.L. 1989, ch. 537, § 1; P.L. 1992, ch. 281, § 1; P.L. 1998, ch. 232, § 1; P.L. 1998, ch. 345, § 1; P.L. 2000, ch. 328, § 1; P.L. 2000, ch. 513, § 1; P.L. 2002, ch. 242, § 1; P.L. 2012, ch. 101, § 1; P.L. 2012, ch. 106, § 1.

7-5.1-4. Investments.

Nothing contained in these provisions is to be interpreted to prohibit any corporation organized under this chapter from investing its funds in real estate, mortgages, stocks, bonds, or any investment not otherwise prohibited by the general corporation law, or from owning real or personal property appropriate to the rendering of professional services.

History of Section. P.L. 1964, ch. 185, § 1.

7-5.1-5. Eligibility of personnel — Transfer of stock.

1. If any shareholder becomes ineligible, he or she shall transfer his or her shares to an eligible person or offer them to the corporation for redemption at their fair-market value. If the articles of incorporation or the bylaws of the corporation restrict transfer of its shares, and transfer of the shares to an eligible person is prevented, the corporation shall redeem the shares of the ineligible shareholder, and compensate the ineligible shareholder in full for the fair-market value of his or her shares determined as of the date that the ineligibility occurred. Nothing contained in these provisions is to be interpreted to prevent a shareholder and the corporation from making a binding agreement as to a method for determining the fair-market value or for determining what constitutes the fair-market value of his or her shares. In the event the corporation and an ineligible shareholder cannot agree as to the fair-market value, the regulatory agency excluding the division of professional regulation shall, upon application by either party, appoint a board of not less than three (3) qualified persons engaged in performing similar professional services to determine the fair-market value of the shares, and the decision of the board is final and binding upon the parties. The division of professional regulation shall, upon application by either party, appoint a neutral arbitrator with experience in business valuation whose fees will be paid by the corporation petitioner to determine the fair-market value of the shares, and the decision of the arbitrator is final and binding upon the parties. The redemption of its shares by a professional service corporation shall not be effected at a time or in a manner so as to impair or prejudice the rights or remedies of any creditor of the corporation. As used in this chapter, “ineligible shareholder” includes a shareholder electing to retire or withdraw from active employment in the corporation. Nothing contained in these provisions is to be interpreted to prohibit the temporary exercise of incidence of ownership of stock in any corporation by persons or corporate fiduciaries not authorized to practice, solely for purposes of administering estates of shareholders deceased or under legal disability to transfer their shares. For purposes of this section, “temporary incidence of ownership” means any period of time not exceeding two (2) years; and “administering estates of shareholders” shall include, but not be limited to, contracting with licensed professionals to operate the practice upon the death of the person licensed to practice.
2. Every shareholder of a corporation organized under this chapter who is entitled to vote at a meeting of the shareholders or to express consent without a meeting may authorize any other shareholder of the corporation to act for him or her by proxy executed, in writing, by the shareholder or by his or her duly authorized attorney in fact.

History of Section. P.L. 1964, ch. 185, § 1; P.L. 1972, ch. 100, § 4; P.L. 1999, ch. 406, § 1; P.L. 2000, ch. 328, § 1; P.L. 2000, ch. 513, § 1.

7-5.1-6. Qualifications of employees.

Every corporation organized under this chapter may render its professional services only through employees who are authorized to practice. However, nothing contained in these provisions is to be interpreted to prohibit any corporation from employing unlicensed persons to perform functions not constituting professional services.

History of Section. P.L. 1964, ch. 185, § 1.

7-5.1-7. Names.

The names of every professional service corporation shall end with the words “professional corporation” or “corporation” or “incorporated” or “limited” or the abbreviations “p.c.” or “pc” or “corp.” or “inc.” or “ltd.”; and that designation in the corporate name constitutes notice to every person or corporation availing himself or herself or itself of the services of any corporation, that it is organized under the provisions of this chapter. However, a corporation organized under this chapter may engage in rendering professional services under a fictitious business name subject to provisions of § 7-1.2-402 . Each regulatory agency may impose additional requirements as to the names of corporations organized to render professional services subject to its jurisdiction.

History of Section. P.L. 1964, ch. 185, § 1; P.L. 1971, ch. 171, § 25; P.L. 1972, ch. 100, § 5; P.L. 2005, ch. 36, § 3; P.L. 2005, ch. 72, § 3.

7-5.1-8. Insurance required.

1. Every professional service corporation shall maintain insurance against any liability imposed by law upon the corporation or its employees arising out of the performance of professional services, excluding liability for claims brought about or contributed to by the dishonest, fraudulent, criminal, or malicious acts or omissions of any employee. The insurance shall be maintained in a company lawfully authorized to write insurance in this state and shall be, with respect to each claim, in the aggregate amount of fifty thousand dollars ($50,000) multiplied by the number of professional employees of the corporation as of the policy anniversary date. However, in no case is the coverage to be less than one hundred thousand dollars ($100,000). Not more than five hundred thousand dollars ($500,000) coverage is to be required of any corporation. Any policy for insurance coverage may include a deductible provision in an amount not to exceed twenty-five thousand dollars ($25,000) for each claim multiplied by the number of professional employees of the corporation as of the date of the issuance of the policy.
2. Every insurance company shall furnish to the incorporators of each corporation to be insured by it a certificate reciting that application for the insurance has been duly made and that a policy of insurance as required will be issued, the amount of coverage to be provided, and the expiration date of the policy. The incorporators shall file the certificate in the office of the secretary of state at the time of filing the articles of association, and the secretary of state shall not certify the articles of association unless the certificate of insurance has been filed. Subsequently, every insurer shall notify the secretary of state and the insured of the termination of the insurance not more than thirty (30) days nor less than ten (10) days before the effective date of the termination. Upon receipt of the notice, the secretary of state shall inform the appropriate regulatory agency of the notice.

History of Section. P.L. 1964, ch. 185, § 1; P.L. 1968, ch. 236, § 1; P.L. 1972, ch. 100, § 6; P.L. 1977, ch. 250, § 1; P.L. 1986, ch. 90, § 1; P.L. 2005, ch. 36, § 3; P.L. 2005, ch. 72, § 3.

7-5.1-9. Privileged communications.

Nothing contained in this chapter requires disclosure, by any employee of a corporation organized under this chapter, of any communication previously privileged from disclosure.

History of Section. P.L. 1964, ch. 185, § 1.

7-5.1-10. Powers of regulatory agency.

Nothing contained in this chapter abolishes, repeals, modifies, restricts, or limits the powers of any state regulatory agency, to regulate the conduct of professional services pursuant to law.

History of Section. P.L. 1964, ch. 185, § 1.

7-5.1-11. Severability.

If any provision of this chapter or the application of any provisions to any person or under any circumstances is held invalid by any court of competent jurisdiction, the invalidity does not affect any other provision or the application of the provision, and it is declared to be the legislative intent that this chapter and the provisions of this chapter would have been enacted if the invalid parts had not been included in the chapter.

History of Section. P.L. 1964, ch. 185, § 1.

7-5.1-12. Short title.

This chapter may be cited as the “Professional Service Corporation Law”.

History of Section. P.L. 1964, ch. 185, § 1.

7-5.2-1. Short title.

This chapter shall be known and may be cited as the “Business Combination Act of 1990”.

History of Section. P.L. 1990, ch. 138, § 1.

7-5.2-2. Legislative findings.

The general assembly finds and declares that:

1. The hostile takeover of publicly held domestic corporations by business combinations is generally not in the public interest;
2. A permissive statutory method should be established under which domestic, publicly owned corporations can have available methods to limit hostile takeovers; and
3. In determining whether a takeover, whether by way of tender offer or other acquisition proposal, is desirable, the board of directors of a domestic corporation can review and take into consideration any factors that affect the corporation’s employees, suppliers, creditors, customers, and the community in general.

History of Section. P.L. 1990, ch. 138, § 1.

7-5.2-3. Definitions.

As used in this chapter, unless the context requires otherwise, the term:

1. “Affiliate” means a person who directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified person.
2. “Announcement date”, when used in reference to any business combination, means the date of the first public announcement of the final, definitive proposal for the business combination.
3. “Associate”, when used to indicate a relationship with any person, means:
   1. Any corporation or organization of which the person is a director, officer, or partner or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of voting stock;
   2. Any trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity; and
   3. Any relative or spouse of the person, or any relative of the spouse, who has the same residence as the person.
4. “Beneficial owner”, when used with respect to any stock, means a person who:
   1. Individually, or with or through any of the person’s affiliates or associates, beneficially owns the stock, directly or indirectly; or
   2. Individually, or with or through any of the person’s affiliates or associates, has:
      1. The right to acquire the stock, whether the right is exercisable immediately or only after the passage of time, pursuant to any agreement, arrangement, or understanding, whether or not in writing, or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise; provided, however, that a person is not deemed the beneficial owner of stock tendered pursuant to a tender or exchange offer made by the person’s affiliates or associates until the tendered stock is accepted for purchase or exchange; or
      2. The right to vote the stock pursuant to any agreement, arrangement, or understanding, whether or not in writing; provided, however, that a person is not deemed the beneficial owner of any stock under this item if the agreement, arrangement, or understanding to vote the stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made in accordance with the applicable rules and regulations under the Exchange Act, 15 U.S.C. § 78a et seq., and is not then reportable on a Schedule 13D under the Exchange Act, or any comparable or successor report; or
      3. Any agreement, arrangement, or understanding, whether or not in writing, for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in subsection (4)(ii)(B) of this section), or disposing of the stock with any other person who beneficially owns, or whose affiliate or associates beneficially own, directly or indirectly, the stock.
5. “Business combination”, when used in reference to any resident domestic corporation and any interested shareholder of the resident domestic corporation, means:
   1. Any merger or consolidation of the resident domestic corporation or any subsidiary of the resident domestic corporation with:
      1. The interested shareholder; or
      2. Any other corporation, whether or not itself an interested shareholder of the resident domestic corporation, that is, or after the merger or consolidation would be, an affiliate or associate of the interested shareholder;
   2. Any sale, lease, exchange, mortgage, pledge, transfer, or other disposition, in one transaction or a series of transactions, except proportionately as a stockholder of the corporation, to or with the interested shareholder or any affiliate or associate of the interested shareholder, whether as a part of a dissolution or otherwise, of assets of the resident domestic corporation or any subsidiary of the resident domestic corporation:
      1. Having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the assets, determined on a consolidated basis, of the resident domestic corporation;
      2. Having an aggregate market value equal to ten percent (10%) or more of the aggregate market value of all the outstanding stock of the resident domestic corporation; or
      3. Representing ten percent (10%) or more of the earning power or net income, determined on a consolidated basis, of the resident domestic corporation;
   3. 1. Any transaction that results in the issuance or transfer by the resident domestic corporation, or by any subsidiary of the resident domestic corporation, of any stock of the resident domestic corporation or of the subsidiary to the interested shareholder, except:
         1. Pursuant to the exercise, exchange, or conversion of securities exercisable for, exchangeable for, or convertible into stock of the resident domestic corporation or any subsidiary which securities were outstanding prior to the time that the interested shareholder became such;
         2. Pursuant to a dividend or distribution paid or made, or the exercise, exchange, or conversion of securities exercisable for, exchangeable for, or convertible into stock of the resident domestic corporation or any subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the resident domestic corporation subsequent to the time the interested shareholder became such;
         3. Pursuant to an exchange offer by the resident domestic corporation to purchase stock made on the same terms to all holders of the stock; or
         4. Any issuance or transfer of stock by the resident domestic corporation;
      2. Provided, however, that in no case under subsections (5)(iii)(A)(I) — (IV) shall there be an increase in the interested shareholder’s proportionate share of the stock of any class or series of the resident domestic corporation or of the voting stock of the resident domestic corporation;
   4. The adoption of any plan or proposal for the liquidation or dissolution of the resident domestic corporation proposed by, or pursuant to, any agreement, arrangement, or understanding, whether or not in writing, with the interested shareholder or any affiliate or associate of the interested shareholder;
   5. Any reclassification of securities, including, without limitation, any stock split, stock dividend, or other distribution of stock in respect to stock, any reverse stock split, or recapitalization of the resident domestic corporation, any merger or consolidation of the resident domestic corporation with any subsidiary of the resident domestic corporation, or any other transaction, whether or not with or into or otherwise involving the interested shareholder, proposed by, or pursuant to any agreement, arrangement, or understanding, whether or not in writing, with the interested shareholder or any affiliate or associate of the interested shareholder, that has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or series of voting stock or securities convertible into voting stock of the resident domestic corporation or any subsidiary of the resident domestic corporation that is directly or indirectly owned by the interested shareholder or any affiliate or associate of the interested shareholder, except as a result of immaterial changes due to fractional share adjustments; or
   6. Any receipt by the interested shareholder or any affiliate or associate of the interested shareholder of the benefit, directly or indirectly, except proportionately as a shareholder of the resident domestic corporation, of any loans, advances, guarantees, pledges, or other financial assistance, benefits, any tax credits, or other tax advantages provided by or through the resident domestic corporation, except as expressly permitted in subsections (5)(i) through (5)(vi).
6. “Common stock” means any stock other than preferred stock.
7. “Consummation date”, with respect to any business combination, means the date of consummation of the business combination, or, in the case of a business combination as to which a shareholder vote is taken, the later of the business day prior to the vote or twenty (20) days prior to the date of consummation of the business combination.
8. “Control”, including the terms “controlling”, “controlled by”, and “under common control with”, means the possession, directly or indirectly, or the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person’s beneficial ownership of ten percent (10%) or more of a corporation’s outstanding voting stock creates a presumption that the person has control of the corporation. Notwithstanding what was previously stated, above, a person is not deemed to have control of a corporation if the person holds voting stock, in good faith and not for the purpose of circumventing this chapter, as an agent, bank, broker, nominee, custodian, or trustee for one or more beneficial owners who do not individually, or as a group, have control of the corporation.
9. “Exchange Act” means the Act of Congress known as the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., as it has been, and may subsequently be, amended.
10. “Interested shareholder”, when used in reference to any resident domestic corporation, means any person, other than the resident domestic corporation or any subsidiary of the resident domestic corporation or any employee benefit plan maintained by the resident domestic corporation, that:
    1. 1. Is the beneficial owner, directly or indirectly, of ten percent (10%) or more of the outstanding voting stock of the resident domestic corporation; or
       2. Is an affiliate or associate of the resident domestic corporation and at any time within a five-year (5) period immediately prior to the date in question was the beneficial owner, directly or indirectly, of ten percent (10%) or more of the then-outstanding voting stock of the resident domestic corporation.
    2. The term “interested shareholder” does not include:
       1. Any person who:
          1. Owned shares in excess of the ten percent (10%) limitation stated in these provisions as of, or acquired the shares pursuant to a tender offer commenced prior to, July 3, 1990, or pursuant to an exchange offer announced prior to that date and commenced within ninety (90) days subsequently and continued to own shares in excess of the percent limitation or would have but for action taken by the resident domestic corporation; or
          2. Acquired the shares from a person described in subsection (10)(ii)(A)(I) by gift, inheritance, or in a transaction in which no consideration was exchanged; or
       2. Any person whose ownership of shares in excess of the ten percent (10%) limitation stated above is the result of action taken solely by the resident domestic corporation. However, the person becomes an interested shareholder if he or she subsequently acquires additional shares of voting stock of the resident domestic corporation, except as a result of further corporate action not caused, directly or indirectly, by the person.
    3. For the purpose of determining whether a person is an interested shareholder, the number of shares of voting stock of the resident domestic corporation deemed outstanding includes shares deemed beneficially owned by the person through application of subsection (4) of this section but does not include any other unissued shares of voting stock of the resident domestic corporation that are issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants, or options, or otherwise.
11. “Market value”, when used in reference to stock or property of any resident domestic corporation, means:
    1. In the case of stock, the highest closing sale price during the thirty-day (30) period immediately preceding the date in question of a share of stock on the composite tape for stocks listed on the New York Stock Exchange, or, if the stock is not quoted on the composite tape or if the stock is not listed on the exchange, on the principal United States securities exchange registered under the Exchange Act on which the stock is listed, or, if the stock is not listed on any exchange, the highest closing bid quotation with respect to a share of the stock during the thirty-day (30) period preceding the date in question on the National Association of Securities Dealers, Inc. automated quotations system or any system then in use, or if no quotations are available, the fair market value on the date in question of a share of the stock as determined in good faith by the board of directors of the resident domestic corporation; and
    2. In the case of property other than cash or stock, the fair market value of the property on the date in question as determined in good faith by the board of directors of the resident domestic corporation.
12. “Preferred stock” means any class or series of stock of a resident domestic corporation that under the bylaws or articles of incorporation of the resident domestic corporation is entitled to receive payment of dividends prior to any payment of dividends on some other class or series of stock, or is entitled in the event of any voluntary liquidation, dissolution, or winding up of the resident domestic corporation to receive payment or distribution of a preferential amount before any payments or distributions are received by some other class or series of stock.
13. “Resident domestic corporation” means an issuer of voting stock that:
    1. Is organized under the laws of this state; and
    2. Either (A) has its principal executive offices and significant business operations located in this state; or (B) has, alone or in combination with one or more of its subsidiaries, at least two hundred fifty (250) employees or twenty-five percent (25%) of the total number of all employees of itself and the subsidiaries employed primarily within the state; and
    3. Has at least five percent (5%) of its voting stock owned beneficially by residents of this state or at least five percent (5%) of its shareholders are residents of this state. For purposes of this subsection, the residence of a partnership, unincorporated association, trust, or similar organization is the principal office of the organization.
    4. No resident domestic corporation that is organized under the laws of this state ceases to be a resident domestic corporation by reason of events occurring or actions taken while the resident domestic corporation is subject to the provisions of this section.
14. “Stock” means:
    1. Any stock or similar security, any certificate of interest, any participation in any profit-sharing agreement, any voting trust certificate, or any certificate of deposit for stock; and
    2. Any security convertible, with or without consideration, into stock, or any warrant, call, or other option or privilege of buying stock without being bound to do so, or any other security carrying any right to acquire, subscribe to, or purchase stock.
15. “Stock acquisition date”, with respect to any person and any resident domestic corporation, means the date that the person first becomes an interested shareholder of the resident domestic corporation.
16. “Subsidiary” of any person means any other corporation of which a majority of the voting stock is owned, directly or indirectly, by the person.
17. “Voting stock” means shares of capital stock of a corporation entitled to vote generally in the election of directors.

History of Section. P.L. 1990, ch. 138, § 1; P.L. 1991, ch. 422, § 1; P.L. 2018, ch. 346, § 4.

7-5.2-4. Approval of acquisitions.

1. Notwithstanding anything contained in this chapter to the contrary, except the provisions of § 7-5.2-5 , no resident domestic corporation shall engage in any business combination with any interested shareholder of the resident domestic corporation for a period of five (5) years following the interested shareholder’s stock acquisition date unless the business combination or the purchase of stock made by the interested shareholder on the interested shareholder’s stock acquisition date is approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date.
2. Notwithstanding anything contained in this chapter to the contrary, except the provisions of subsection (a) and § 7-5.2-5 , no resident domestic corporation shall engage at any time in any business combination with any interested shareholder of the resident domestic corporation other than a business combination specified in any one of subsections (b)(1), (b)(2), or (b)(3):
   1. A business combination approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date, or where the purchase of stock made by the interested shareholder on the interested shareholder’s stock acquisition date had been approved by the board of directors of the resident domestic corporation prior to the interested shareholder’s stock acquisition date;
   2. A business combination approved by the affirmative vote of the holders of two-thirds (2/3) of the outstanding voting stock not beneficially owned by the interested shareholder or any affiliate or associate of the interested shareholder at a meeting called for that purpose no earlier than five (5) years after the interested shareholder’s stock acquisition date;
   3. A business combination that meets all of the following conditions:
      1. The aggregate amount of the cash and the market value as of the consummation date of consideration other than cash to be received per share by holders of outstanding shares of common stock of the resident domestic corporation in the business combination is at least equal to the higher of the following:
         1. The highest per-share price paid by the interested shareholder at a time when the interested shareholder was the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding voting stock of the resident domestic corporation, for any shares of common stock of the same class or series acquired by it within the five-year (5) period immediately prior to the announcement date concerning the business combination, or within the five-year (5) period immediately prior to, or in, the transaction in which the interested shareholder became an interested shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which the highest per-share acquisition price was paid through the consummation date at the rate for one-year United States treasury obligations from time to time in effect less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of common stock since the earliest date, up to the amount of the interest; and
         2. The market value per share of common stock on the announcement date with respect to the business combination or on the interested shareholder’s stock acquisition date, whichever is higher, plus interest compounded annually from the date through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of common stock since the date, up to the amount of the interest;
      2. The aggregate amount of the cash and the market value as of the consummation date of consideration other than cash to be received per share by holders of outstanding shares of any class or series of stock, other than common stock, of the resident domestic corporation is at least equal to the highest of the following, whether or not the interested shareholder has previously acquired any shares of the class or series of stock:
         1. The highest per-share price paid by the interested shareholder at a time when he or she was the beneficial owner, directly or indirectly, of five percent (5%) or more of the outstanding voting stock of the resident domestic corporation, for any shares of the class or series of stock acquired by it within the five-year (5) period immediately prior to the announcement date with respect to the business combination, or within the five-year (5) period immediately prior to, or in, the transaction in which the interested shareholder became an interested shareholder, whichever is higher; plus, in either case, interest compounded annually from the earliest date on which the highest per-share acquisition price was paid through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividend paid, and the market value of any dividends paid other than in cash, per share of the class or series of stock since the earliest date, up to the amount of the interest;
         2. The highest preferential amount per share to which the holders of shares of the class or series of stock are entitled in the event of any voluntary liquidation, dissolution, or winding up of the resident domestic corporation, plus the aggregate amount of any dividends declared or due to which the holders are entitled prior to payment of dividends on some other class or series of stock (unless the aggregate amount of the dividends is included in the preferential amount); and
         3. The market value per share of the class or series of stock on the announcement date with respect to the business combination or on the interested shareholder’s stock acquisition date, whichever is higher; plus interest compounded annually from the date through the consummation date at the rate for one-year United States treasury obligations from time to time in effect; less the aggregate amount of any cash dividends paid, and the market value of any dividends paid other than in cash, per share of the class or series of stock since the date, up to the amount of the interest;
      3. The consideration to be received by holders of a particular class or series of outstanding stock, including common stock, of the resident domestic corporation in the business combination is in cash or in the same form as the interested shareholder has used to acquire the largest number of shares of the class or series of stock previously acquired by it, and the consideration shall be distributed promptly;
      4. The holders of all outstanding shares of stock of the resident domestic corporation not beneficially owned by the interested shareholder immediately prior to the consummation of the business combination are entitled to receive in the business combination cash or other consideration for the shares in compliance with subsections (b)(3)(i) through (b)(3)(iii);
      5. After the interested shareholder’s stock acquisition date and prior to the consummation date of the business combination, the interested shareholder has not become the beneficial owner of any additional shares of voting stock of the resident domestic corporation except:
         1. As part of the transaction that resulted in the interested shareholder becoming an interested shareholder;
         2. By virtue of proportionate stock splits, stock dividends, or other distributions of stock in respect of stock not constituting a business combination under § 7-5.2-3(5)(v) ;
         3. Through a business combination meeting all of the conditions of this section; or
         4. Through purchase by the interested shareholder at any price which, if the price had been paid in an otherwise permissible business combination the announcement date and consummation date of which were the date of the purchase, would have satisfied the requirements of subsections (b)(3)(i) through (b)(3)(iii) of this section.

History of Section. P.L. 1990, ch. 138, § 1; P.L. 1991, ch. 422, § 1.

7-5.2-5. Exemptions.

The provisions of this chapter do not apply:

1. To any business combination of a resident domestic corporation that does not have a class of voting stock registered with the Securities and Exchange Commission pursuant to § 12 of the Securities Exchange Act of 1934, 15 U.S.C. § 78l, unless the articles of incorporation provide otherwise;
2. To any business combination of a resident domestic corporation whose articles of incorporation have been amended to provide that the resident domestic corporation is subject to the provisions of this chapter, that did not have a class of voting stock registered with the Securities and Exchange Commission pursuant to § 12 of the Securities Exchange Act of 1934, 15 U.S.C. § 78l, on the effective date of the amendment, and that is a business combination with an interested shareholder whose stock acquisition date is prior to the effective date of the amendment;
3. To any business combination of a resident domestic corporation:
   1. The original articles of incorporation of which contain a provision expressly electing not to be governed by this chapter;
   2. That adopts an amendment to the resident domestic corporation’s bylaws prior to March 31, 1991, expressly electing not to be governed by this chapter; or
   3. That adopts an amendment to the resident domestic corporation’s articles of incorporation, approved by the affirmative vote of the holders, other than interested shareholders and their affiliates and associates, of two-thirds (2/3) of the outstanding voting stock of the resident domestic corporation, excluding the voting stock of interested shareholders and their affiliates and associates, expressly electing not to be governed by this chapter, provided that the amendment to the articles of incorporation is not effective until twelve (12) months after the vote of the resident domestic corporation’s shareholders and does not apply to any business combination of the resident domestic corporation with an interested shareholder whose stock acquisition date is on or prior to the effective date of the amendment; or
4. To any business combination of a resident domestic corporation with an interested shareholder of the resident domestic corporation that became an interested shareholder inadvertently, if the interested shareholder:
   1. As soon as practicable, divests itself of a sufficient amount of the voting stock of the resident domestic corporation that it no longer is the beneficial owner, directly or indirectly, of ten percent (10%) or more of the outstanding voting stock of the resident domestic corporation; and
   2. Would not at any time within the five-year (5) period preceding the announcement date with respect to the business combination have been an interested shareholder but for the inadvertent acquisition.

History of Section. P.L. 1990, ch. 138, § 1; P.L. 1991, ch. 422, § 1; P.L. 2018, ch. 346, § 4.

7-5.2-6. Effect of invalidity of part of this chapter.

If a court of competent jurisdiction adjudges to be invalid or unconstitutional any clause, sentence, paragraph, section, or part of this chapter, the judgment or decree does not affect, impair, invalidate, or nullify the remainder of this chapter, but the effect of the judgment is confined to the clause, sentence, paragraph, section, or part of this chapter adjudged to be invalid or unconstitutional.

History of Section. P.L. 1990, ch. 138, § 1.

7-5.2-7. Validation of rights plans.

The terms and conditions of rights or options issued by a corporation, including those outstanding on the effective date of this section, may include, without limitation, restrictions or conditions that preclude or limit the exercise, transfer, receipt, or holding of the rights or options by any person or persons owning or offering to acquire a specified number or percentage of the outstanding stock of the corporation, or any transferee or transferees of any person or persons, or that invalidate or void the rights or options held by any person or persons or any transferee or transferees.

History of Section. P.L. 1990, ch. 138, § 1.

7-5.2-8. Duties in response to acquisition proposals.

1. In discharging the duties of their respective positions with respect to any proposed business combination, as defined in § 7-5.2-3 , the board of directors, committees of the board, individual directors, and individual officers may, in considering the best interest of the corporation, in addition to considering the effects on shareholders, consider any of the following:
   1. The effect on the corporation’s employees, suppliers, creditors, and customers;
   2. The effect on the communities in which the corporation operates;
   3. 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.
2. On the basis of the factors described in subsection (a), if the board of directors determines that any business combination is not in the best interests of the corporation, it may reject the business combination. If the board of directors determines to reject any business combination, the board of directors has no obligation to facilitate, to remove any barriers to, or to refrain from impeding, the business combination.

History of Section. P.L. 1990, ch. 138, § 1.

7-5.3-1. Application and effect of chapter.

1. This chapter shall be applicable to all benefit corporations.
2. The existence of a provision of this chapter shall not of itself create an implication that a contrary or different rule of law is applicable to a corporation that is not a benefit corporation. This chapter shall not affect a statute or rule of law that is applicable to a corporation that is not a benefit corporation.
3. Except as otherwise provided in this chapter, all provisions of the general corporation law, including the Rhode Island Business Corporation Act, chapter 1.2 of this title, applicable to domestic business corporations are applicable to corporations organized under this chapter. A benefit corporation may be subject simultaneously to this chapter and chapter 5.1 of this title. The provisions of this chapter shall control over the provisions of any other chapter of this title to which a benefit corporation is subject.
4. A provision of the articles of incorporation or bylaws of a benefit corporation may not limit, be inconsistent with, or supersede a provision of this chapter.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1; P.L. 2018, ch. 346, § 5.

7-5.3-2. Definitions.

As used in this chapter:

1. “Benefit corporation” means a corporation for profit with purposes set forth in § 7-5.3-6 that is subject to this chapter.
2. “Benefit director” means either:
   1. The director designated as the benefit director of a benefit corporation under § 7-5.3-8 ; or
   2. A person with one or more of the powers, duties, or rights of a benefit director to the extent provided in the articles of incorporation under § 7-5.3-8 (f).
3. “Benefit enforcement proceeding” means any claim or action or proceeding for:
   1. Failure of a benefit corporation to pursue or create general public benefit or a specific public benefit purpose set forth in its articles; or
   2. Violation of any obligation, duty, or standard of conduct under this chapter.
4. “Benefit officer” means the individual, if any, designated as the benefit officer of a benefit corporation under § 7-5.3-10 .
5. “General public benefit” means a material positive impact on society and the environment, taken as a whole, assessed against a third-party standard, from the business and operations of a benefit corporation.
6. “Independent” means having no material relationship with a benefit corporation or a subsidiary of the benefit corporation. Serving as benefit director or benefit officer does not make an individual not independent. A material relationship between an individual and a benefit corporation, or any of its subsidiaries, will be conclusively presumed to exist if any of the following apply:
   1. The individual is, or has been within the last three (3) years, an employee other than a benefit officer of the benefit corporation or a subsidiary.
   2. An immediate family member of the individual is, or has been within the last three (3) years, an executive officer other than a benefit officer of the benefit corporation or a subsidiary.
   3. There is beneficial or record ownership of five percent (5%) or more of the outstanding shares of the benefit corporation, calculated as if all outstanding rights to acquire equity interests in the benefit corporation had been exercised, by:
      1. The individual; or
      2. An entity:
         1. Of which the individual is a director, an officer, or a manager; or
         2. In which the individual owns beneficially, or of record, five percent (5%) or more of the outstanding equity interests, calculated as if all outstanding rights to acquire equity interests in the entity had been exercised.
7. “Minimum status vote” means:
   1. In the case of a corporation, in addition to any other required approval or vote, the satisfaction of the following conditions:
      1. The shareholders of every class or series shall be entitled to vote as a class on the corporate action regardless of a limitation stated in the articles of incorporation or bylaws on the voting rights of any class or series.
      2. The corporate action must be approved by vote of the shareholders of each class or series entitled to cast at least two-thirds (2/3) of the votes that all shareholders of the class or series are entitled to cast on the action.
   2. In the case of a domestic entity other than a corporation, in addition to any other required approval, vote, or consent, the satisfaction of the following conditions:
      1. The holders of every class or series of equity interest in the entity that are entitled to receive a distribution of any kind from the entity shall be entitled to vote on or consent to the action regardless of any otherwise applicable limitation on the voting or consent rights of any class or series.
      2. The action must be approved by vote or consent of the holders described in subsection (7)(ii)(A) entitled to cast at least two-thirds (2/3) of the votes or consents that all of those holders are entitled to cast on the action.
8. “Publicly traded corporation” means a corporation that has shares listed on a national securities exchange or traded in a market maintained by one or more members of a national securities association.
9. “Specific public benefit” includes:
   1. Providing low-income or underserved individuals or communities with beneficial products or services;
   2. Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business;
   3. Protecting or restoring the environment;
   4. Improving human health;
   5. Promoting the arts, sciences, or advancement of knowledge;
   6. Increasing the flow of capital to entities with a purpose to benefit society or the environment; and
   7. Conferring any other particular benefit on society or the environment.
10. “Subsidiary” means, in relation to a person, an entity in which the person owns beneficially, or of record, fifty percent (50%) or more of the outstanding equity interests, calculated as if all outstanding rights to acquire equity interests in the entity had been exercised.
11. “Third-party standard” means a recognized standard for defining, reporting, and assessing corporate social and environmental performance that is:
    1. Comprehensive because it assesses the effect of the business and its operations upon the interests listed in § 7-5.3-7(a)(1)(ii) , (iii), (iv) and (v).
    2. Developed by an entity that is not controlled by the benefit corporation.
    3. Credible because it is developed by an entity that both:
       1. Has access to necessary expertise to assess overall corporate social and environmental performance; and
       2. Uses a balanced, multi-stakeholder approach to develop the standard, including a reasonable public comment period.
    4. Transparent because the following information is publicly available:
       1. About the standard:
          1. The criteria considered when measuring the overall social and environmental performance of a business.
          2. The relative weightings, if any, of those criteria.
       2. About the development and revision of the standard:
          1. The identity of the directors, officers, material owners, and the governing body of the entity that developed and controls revisions to the standard.
          2. The process by which revisions to the standard and changes to the membership of the governing body are made.
          3. An accounting of the revenue and sources of financial support for the entity, with sufficient detail to disclose any relationships that could reasonably be considered to present a potential conflict of interest.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1; P.L. 2018, ch. 346, § 5.

7-5.3-3. Incorporation of benefit corporation.

A benefit corporation shall be incorporated in accordance with § 7-1.2-202 , and, if applicable, chapter 5.1 of this title but its articles of incorporation must also state that it is a benefit corporation and disclose the fiscal year end of the corporation.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-4. Election of benefit corporation status.

1. An existing corporation may become a benefit corporation under this chapter by amending its articles of incorporation so that they contain, in addition to the requirements of § 7-1.2-202 , a statement that the corporation is a benefit corporation. In order to be effective, the amendment must be adopted by at least the minimum status vote.
2. If an entity that is not a benefit corporation is a party to a merger or conversion and the surviving or resulting entity in the merger or consolidation is to be a benefit corporation, the merger or conversion must be approved by the entity by at least the minimum status vote.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-5. Termination of benefit corporation status.

1. A benefit corporation may terminate its status as such and cease to be subject to this chapter by amending its articles of incorporation to delete the provision required by § 7-5.3-3 or § 7-5.3-4 to be stated in the articles of a benefit corporation. In order to be effective, the amendment must be adopted by at least the minimum status vote.
2. If a merger or conversion would have the effect of terminating the status of a business corporation as a benefit corporation, the merger or conversion must be adopted by at least the minimum status vote in order to be effective. Any sale, lease, exchange, or other disposition of all or substantially all of the assets of a benefit corporation, unless the transaction is in the usual and regular course of business, shall not be effective unless the transaction is approved by at least the minimum status vote.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-6. Corporate purposes.

1. A benefit corporation shall have a purpose of creating general public benefit. This purpose is in addition to its purpose under § 7-1.2-301 .
2. The articles of incorporation of a benefit corporation may identify one or more specific public benefits that it is the purpose of the benefit corporation to create in addition to its purposes under § 7-1.2-301 and subsection (a). The identification of a specific public benefit under this subsection does not limit the purpose of a benefit corporation to create general public benefit under subsection (a).
3. The creation of general public benefit and specific public benefit under subsections (a) and (b) is in the best interests of the benefit corporation.
4. A benefit corporation may amend its articles of incorporation to add, amend, or delete the identification of a specific public benefit that it is the purpose of the benefit corporation to create. In order to be effective, the amendment must be adopted by at least the minimum status vote.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-7. Standard of conduct for directors.

1. In discharging the duties of their respective positions and in considering the best interests of the benefit corporation, the board of directors, committees of the board, and individual directors of a benefit corporation:
   1. Shall consider the effects of any action or inaction upon:
      1. The shareholders of the benefit corporation;
      2. The employees and workforce of the benefit corporation, its subsidiaries, and its suppliers;
      3. The interests of customers as beneficiaries of the general public benefit or specific public benefit purposes of the benefit corporation;
      4. Community and societal factors, including those of each community in which offices or facilities of the benefit corporation, its subsidiaries, or its suppliers are located;
      5. The local and global environment;
      6. The short-term and long-term interests of the benefit corporation, including benefits that may accrue to the benefit corporation from its long-term plans and the possibility that these interests may be best served by the continued independence of the benefit corporation; and
      7. The ability of the benefit corporation to accomplish its general public benefit purpose and any specific public benefit purpose; and
   2. May consider other pertinent factors or the interests of any other group that they deem appropriate; but
   3. Need not give priority to the interests of a particular person or group referred to in subsection (a)(1) or (a)(2) over the interests of any other person or group unless the benefit corporation has stated in its articles of incorporation its intention to give priority to certain interests related to its accomplishment of its general public benefit purpose or of a specific public benefit purpose identified in its articles.
2. The consideration of interests and factors in the manner required by subsection (a) does not constitute a violation of § 7-1.2-801 .
3. Except as provided in the articles of incorporation, a director is not personally liable for monetary damages for:
   1. Any action or inaction in the course of performing the duties of a director under subsection (a) if the director performed the duties of office in compliance with § 7-1.2-801 and this section; or
   2. Failure of the benefit corporation to pursue or create a general public benefit or a specific public benefit.
4. A director does not have a duty to a person that is a beneficiary of the general public benefit purpose or a specific public benefit purpose of a benefit corporation arising from the status of the person as a beneficiary.
5. A director who makes a business judgment in good faith fulfills the duty under this section if the director:
   1. Is not interested in the subject of the business judgment;
   2. Is informed with respect to the subject of the business judgment to the extent the director reasonably believes to be appropriate under the circumstances; and
   3. Rationally believes that the business judgment is in the best interests of the benefit corporation.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-8. Benefit director.

1. The board of directors of a benefit corporation that is a publicly traded corporation shall, and the board of any other benefit corporation may, include a director who:
   1. Shall be designated the benefit director; and
   2. Shall have, in addition to the powers, duties, rights, and immunities of the other directors of the benefit corporation, the powers, duties, rights, and immunities provided in this chapter.
2. The benefit director shall be elected, and may be removed, in the manner provided by chapter 1.2 of this title. Except as provided in subsections (f) and (g), the benefit director shall be an individual who is independent. The benefit director may serve as the benefit officer at the same time as serving as the benefit director. The articles of incorporation or bylaws of a benefit corporation may prescribe additional qualifications of the benefit director not inconsistent with this subsection.
3. The benefit director shall prepare, and the benefit corporation shall include in the annual benefit report to shareholders required by § 7-5.3-12 , the opinion of the benefit director on all of the following:
   1. Whether the benefit corporation acted in accordance with its general public benefit purpose and any specific public benefit purpose in all material respects during the period covered by the report.
   2. Whether the directors and officers complied with §§ 7-5.3-7(a) and 7-5.3-9(a) , respectively.
   3. If, in the opinion of the benefit director, the benefit corporation or its directors or officers failed to act or comply in the manner described in subsections (c)(1) and (c)(2), a description of the ways in which the benefit corporation or its directors or officers failed to act or comply.
4. The act or inaction of an individual in the capacity of a benefit director shall constitute for all purposes an act or inaction of that individual in the capacity of a director of the benefit corporation.
5. Regardless of whether the articles of incorporation of a benefit corporation include a provision eliminating or limiting the personal liability of directors authorized by § 7-1.2-202(b)(3) , a benefit director shall not be personally liable for an act or omission in the capacity of a benefit director unless the act or omission constitutes self-dealing, willful misconduct, or a knowing violation of law.
6. If the articles of incorporation of a benefit corporation provide that the powers and duties conferred or imposed upon the board of directors shall be exercised or performed by a person other than the directors as permitted by § 7-1.2-801(a) , the articles must provide that the persons or shareholders who perform the duties of the board of directors include a person with the powers, duties, rights and immunities of a benefit director. A person that exercises one or more of the powers, duties, or rights of a benefit director under this subsection:
   1. Does not need to be independent of the benefit corporation;
   2. Shall have the immunities of a benefit director; and
   3. May share the powers, duties, and rights of a benefit director with one or more other persons.
7. The benefit director of a professional corporation or consumer cooperative does not need to be independent.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-9. Standard of conduct for officers.

1. Each officer of a benefit corporation shall consider the interests and factors described in § 7-5.3-7(a) in the manner provided in that subsection if:
   1. The officer has discretion to act with respect to a matter; and
   2. It reasonably appears to the officer that the matter may have a material effect on the creation by the benefit corporation of general public benefit or a specific public benefit identified in the articles of incorporation of the benefit corporation.
2. The consideration by an officer of interests and factors in the manner described in subsection (a) shall not constitute a violation of the duties of the officer.
3. Except as provided in the articles of incorporation, an officer is not personally liable for monetary damages for:
   1. An action or inaction as an officer in the course of performing the duties of an officer under subsection (a) if the officer performed the duties of the position in compliance with § 7-1.2-812(b) and this section; or
   2. Failure of the benefit corporation to pursue or create a general public benefit or a specific public benefit.
4. An officer does not have a duty to a person that is a beneficiary of the general public benefit purpose or a specific public benefit purpose of a benefit corporation arising from the status of the person as a beneficiary.
5. An officer who makes a business judgment in good faith fulfills the duty under this section if the officer:
   1. Is not interested in the subject of the business judgment;
   2. Is informed with respect to the subject of the business judgment to the extent the officer reasonably believes to be appropriate under the circumstances; and
   3. Rationally believes that the business judgment is in the best interests of the benefit corporation.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-10. Benefit officer.

1. A benefit corporation may have an officer designated as the benefit officer.
2. A benefit officer shall have:
   1. The powers and duties relating to the purpose of the corporation to create general public benefit or specific public benefit provided:
      1. By the bylaws; or
      2. Absent controlling provisions in the bylaws, by resolutions or orders of the board of directors.
   2. The duty to prepare the benefit report required by § 7-5.3-12 .

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-11. Right of action.

1. Except in a benefit enforcement proceeding, no person may bring an action or assert a claim against a benefit corporation or its directors or officers with respect to:
   1. Failure to pursue or create general public benefit or a specific public benefit set forth in its articles of incorporation; or
   2. Violation of an obligation, duty, or standard of conduct under this chapter.
2. A benefit corporation shall not be liable for monetary damages under this chapter for any failure of the benefit corporation to pursue or create general public benefit or a specific public benefit.
3. A benefit enforcement proceeding may be commenced or maintained only:
   1. Directly by the benefit corporation; or
   2. Derivatively in accordance with the procedures in § 7-1.2-711 by:
      1. A person or group of persons that owned beneficially, or of record, at least two percent (2%) of the total number of shares of a class or series outstanding at the time of the act or omission complained of;
      2. A director;
      3. A person or group of persons that owned beneficially, or of record, five percent (5%) or more of the outstanding equity interests in an entity of which the benefit corporation is a subsidiary at the time of the act or omission complained of; or
      4. Other persons as specified in the articles of incorporation or bylaws of the benefit corporation.
4. For purposes of this section, a person is the beneficial owner of shares or equity interests if the shares or equity interests are held in a voting trust or by a nominee on behalf of the beneficial owner.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-12. Preparation of annual benefit report.

1. A benefit corporation shall prepare an annual benefit report including all of the following:
   1. A narrative description of:
      1. The ways in which the benefit corporation pursued general public benefit during the year and the extent to which general public benefit was created.
      2. Both:
         1. The ways in which the benefit corporation pursued a specific public benefit that the articles of incorporation state it is the purpose of the benefit corporation to create; and
         2. The extent to which that specific public benefit was created.
      3. Any circumstances that have hindered the creation by the benefit corporation of general public benefit or specific public benefit.
      4. The process and rationale for selecting or changing the third-party standard used to prepare the benefit report.
   2. An assessment of the overall social and environmental performance of the benefit corporation against a third-party standard:
      1. Applied consistently with any application of that standard in prior benefit reports; or
      2. Accompanied by an explanation of the reasons for:
         1. Any inconsistent application; or
         2. The change to that standard from the one used in the immediately prior report.
   3. The name of the benefit director and the benefit officer, if any, and the address to which correspondence to each of them may be directed.
   4. The compensation paid by the benefit corporation during the year to each director in the capacity of a director.
   5. The statement of the benefit director described in § 7-5.3-8(c) .
   6. A statement of any connection between the organization that established the third-party standard, or its directors, officers, or any holder of five percent (5%) or more of the governance interests in the organization, and the benefit corporation or its directors, officers, or any holder of five percent (5%) or more of the outstanding shares of the benefit corporation, including any financial or governance relationship that might materially affect the credibility of the use of the third-party standard.
   7. If the benefit corporation has dispensed with or restricted the discretion or powers of the board of directors, a description of:
      1. The persons that exercise the powers, duties, and rights and who have the immunities of the board of directors; and
      2. The benefit director, as required by § 7-5.3-8(f) .
2. If, during the year covered by a benefit report, a benefit director resigned from or refused to stand for reelection to the position of benefit director, or was removed from the position of benefit director, and the benefit director furnished the benefit corporation with any written correspondence concerning the circumstances surrounding the resignation, refusal, or removal, the benefit report shall include that correspondence as an exhibit.
3. Neither the benefit report nor the assessment of the performance of the benefit corporation in the benefit report required by subsection (a)(2) needs to be audited or certified by a third party.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1.

7-5.3-13. Availability of annual benefit report.

1. A benefit corporation shall send its annual benefit report to each shareholder within one hundred twenty (120) days following the end of the fiscal year of the benefit corporation, except that the first report shall be recorded the year following the calendar year in which its articles of incorporation or its certificate of authority was issued by the secretary of state.
2. A benefit corporation shall post all of its benefit reports on the public portion of its internet website, if any, but the compensation paid to directors and financial or proprietary information included in the benefit reports may be omitted from the benefit reports as posted.
3. If a benefit corporation does not have an internet website, the benefit corporation shall provide a copy of its most recent benefit report, without charge, to any person that requests a copy, but the compensation paid to directors and financial or proprietary information included in the benefit report may be omitted from the copy of the benefit report provided.
4. Concurrently with the delivery of the benefit report to shareholders under subsection (c), the benefit corporation shall deliver an annual report as specified in § 7-1.2-1501 together with a copy of the benefit report specified in § 7-5.3-12 to the secretary of state for filing. The compensation paid to directors and financial or proprietary information included in the benefit report may be omitted from the benefit report as delivered to the secretary of state. The secretary of state shall charge a fee of sixty dollars ($60.00) for filing the combined reports. Benefit corporations will not be subject to the annual report filing period outlined in § 7-1.2-1501 (c).
5. If the secretary of state finds that the annual report conforms to the requirements of this section, the secretary of state shall file the report. If the secretary of state finds that it does not conform, the secretary of state shall promptly return the report to the corporation for any necessary corrections, in which event the penalties subsequently prescribed for failure to file the report within the time previously provided do not apply if the report is corrected to conform to the requirements of this section and returned to the secretary of state within thirty (30) days from the date on which it was mailed to the corporation by the secretary of state.
6. Each corporation, domestic or foreign, that fails or refuses to file its annual report for any year within thirty (30) days after the time prescribed by this chapter is subject to a penalty of twenty-five dollars ($25.00) per year.

History of Section. P.L. 2013, ch. 487, § 1; P.L. 2013, ch. 500, § 1; P.L. 2015, ch. 61, § 1; P.L. 2015, ch. 65, § 1.

7-6-1. Short title.

This chapter shall be known and may be cited as the “Rhode Island Nonprofit Corporation Act”.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-2. Definitions.

As used in this chapter, unless the context otherwise requires, the term:

1. “Articles of incorporation” means the original or restated articles of incorporation or articles of consolidation and all amendments to it, including articles of merger and special acts of the general assembly creating corporations and/or entities.
2. “Authorized representative” means a person who is duly authorized by a nonprofit corporation’s board of directors to act on behalf of the nonprofit corporation.
3. “Board of directors” means the group of persons vested with the management of the affairs of the corporation (including, without being limited to, a board of trustees) regardless of the name by which the group is designated.
4. “Bylaws” means the code or codes of rules adopted for the regulation or management of the affairs of the corporation regardless of the name, or names, by which the rules are designated.
5. “Corporation” or “Domestic corporation” means a nonprofit corporation subject to the provisions of this chapter, except a foreign corporation.
6. “Delivering/Delivered” means either physically transferring a paper document to the secretary of state or transferring a document to the secretary of state by electronic transmission through a medium provided and authorized by the secretary of state.
7. “Director” means a member of a board of directors.
8. “Electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof and that may be directly reproduced in paper form by such a recipient through an automated process.
9. “Entity” includes a domestic or foreign business corporation, domestic or foreign nonprofit corporation, domestic or foreign unincorporated entity, estate, trust, state, the United States, a foreign government, or a governmental subdivision.
10. “Filing” means delivered to the secretary of state in either paper format or electronic transmission through a medium provided and authorized by the secretary of state.
11. “Foreign corporation” means a nonprofit corporation organized under laws other than the laws of this state.
12. “Insolvent” means inability of a corporation to pay its debts as they become due in the usual course of its affairs.
13. “Member” means one having membership rights in a corporation in accordance with the provisions of its articles of incorporation or bylaws regardless of the name by which the person is designated.
14. “Nonprofit corporation” means a corporation of which no part of the income or profit is distributable to its members, directors, or officers, except as otherwise expressly permitted by this chapter.
15. “Signature” or “signed” or “executed” means an original signature, facsimile, or an electronically transmitted signature submitted through a medium provided and authorized by the secretary of state.
16. “Unincorporated entity” means an organization or artificial legal person that either has a separate legal existence or has the power to acquire an estate in real property in its own name and that is not any of the following: a domestic or foreign business or nonprofit corporation, an estate, a trust, a governmental subdivision, a state, the United States, or a foreign government. The term includes a general partnership, limited-liability company, limited partnership, business or statutory trust, joint stock association, and unincorporated nonprofit association.
17. “Volunteer” means an individual performing services for a nonprofit corporation without compensation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1987, ch. 472, § 1; P.L. 1989, ch. 186, § 1; P.L. 2008, ch. 57, § 3; P.L. 2008, ch. 123, § 3; P.L. 2014, ch. 25, § 1; P.L. 2014, ch. 40, § 1; P.L. 2021, ch. 232, § 1, effective July 8, 2021; P.L. 2021, ch. 335, § 1, effective July 9, 2021.

7-6-3. Corporations to which this chapter applies.

1. The provisions of this chapter relating to domestic corporations apply to:
   1. All corporations organized under these provisions;
   2. All corporations previously organized under any act hereby or previously repealed for a purpose or purposes for which a corporation might be organized under this chapter; and
   3. All corporations previously or subsequently created by any special act of the general assembly for a purpose or purposes for which a corporation might be organized under this chapter, except insofar as the provisions of this chapter are inconsistent with the provisions of any special act.
2. The provisions of this chapter relating to the amendment of articles of incorporation of domestic corporations apply to all corporations previously or subsequently created by special act of the general assembly whose charters are subject to amendment, repeal, or modification at the pleasure of the general assembly.
3. The provisions of this chapter notwithstanding, incorporation authorized by an act entitled “An Act to Incorporate the Bishop and Vicar General of the Diocese of Hartford, Together with the Pastor and Two Laymen of any Roman Catholic Church or Congregation in Rhode Island” passed at the January session, 1869, and any acts in amendment of it or in addition to it may be continued to be made under it and nothing in this chapter or in the general corporation law contained is to be construed as repealing the acts.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-4. Purposes.

Corporations may be organized under this chapter for any lawful purpose or purposes subject to the condition that no part of the net income or profit of any corporation will be distributable to its members, directors, or officers. Subject to that condition, the purpose or purposes for which corporations may be organized under this chapter include, but are not limited to, any one or more of the following purposes or activities:

1. Charitable; benevolent; eleemosynary; educational; civic; patriotic; political; religious; social; recreational; fraternal; literary; cultural; athletic; scientific; agricultural; horticultural; animal husbandry; health services; and professional, commercial, industrial, or trade association;
2. Libraries; and fire engine companies;
3. Constructing, acquiring, leasing, fostering, encouraging, and assisting the physical location, settlement, or resettlement of industrial, manufacturing, commercial, or recreational facilities or enterprises within the state;
4. Planning, constructing, erecting, maintaining, operating, and managing land, buildings, and improvements in projects undertaken pursuant to chapters 31 — 33 of title 45;
5. Engaging in municipal projects authorized by the governing body of the municipality; and
6. Providing housing and related facilities and services for elderly persons.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-5. General powers.

Each corporation has power to:

1. Have perpetual succession by its corporate name unless a limited period of duration is stated in its articles of incorporation;
2. Sue and be sued, complain and defend, in its corporate name;
3. Have a corporate seal that may be altered at pleasure, and to use that seal by causing it, or a facsimile of it, to be impressed or affixed or in any other manner reproduced;
4. Purchase, take, receive, lease, take by gift, devise, or bequest, or otherwise acquire, own, hold, improve, use, and otherwise deal in and with real or personal property, or any interest in real or personal property, wherever situated, and without restriction as to amount;
5. Sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise dispose of all or any part of its property and assets;
6. Lend money to and use its credit to assist its employees (other than employees who are also directors) and otherwise assist its employees;
7. Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign corporations, whether for profit or not for profit, associations, partnerships, or individuals, or direct or indirect obligations of the United States, or of any other government, state, territory, governmental district or municipality, or of any instrumentality of those entities;
8. Make contracts and guarantees and incur liabilities; borrow money at the rates of interest that the corporation determines; issue its notes, bonds, and other obligations; guarantee debts and secure any of its obligations by mortgage or pledge of all or any of its property, franchises, and income;
9. Lend money for its corporate purposes; invest and reinvest its funds; and take and hold real and personal property as security for the payments of funds loaned or invested in that manner;
10. Conduct its affairs, carry on its operations, have offices, and exercise the powers granted by this chapter within or without this state;
11. Elect or appoint officers and agents of the corporation, who may be directors or members, and define their duties and fix their compensation;
12. Make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for the administration and regulation of the affairs of the corporation;
13. Unless otherwise provided in the articles of incorporation, make donations for the public welfare or for charitable, scientific, or educational purposes;
14. Pay pensions and establish pension plans or pension trusts for any or all of its directors, officers, and employees;
15. Have and exercise all powers necessary or convenient to effect any or all of the purposes for which the corporation is organized.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-6. Indemnification.

1. As used in this section:
   1. “Corporation” includes:
      1. Any corporation whether foreign or domestic, and whether a nonprofit or a for-profit corporation all of the profits of which go to a nonprofit corporation; and
      2. Any domestic or foreign predecessory entity of the corporation in a merger, consolidation, or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.
   2. “Director” means any person who is or was a director of the corporation and any person who, while a director of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan.
   3. “Expenses” include attorneys’ fees.
   4. “Official capacity” means:
      1. When used with respect to a director, the office of director in the corporation.
      2. When used with respect to a person other than a director, as contemplated in subsection (i), the elective or appointive office in the corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan.
   5. “Party” includes a person who was, is, or is threatened to be made, a named defendant or respondent in a proceeding.
   6. “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative.
2. 1. A corporation has power to indemnify any person made a party to any proceeding by reason of the fact that the person is or was a director if:
      1. He or she conducted himself or herself in good faith; and
      2. He or she reasonably believed:
         1. In the case of conduct in his or her official capacity with the corporation, that his or her conduct was in its best interests; and
         2. In all other cases, that his or her conduct was at least not opposed to its best interests; and
      3. In the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful.
   2. Indemnification may be made against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by the person in connection with the proceeding; except that if the proceeding was by or in the right of the corporation, indemnification may be made only against the reasonable expenses and shall not be made in respect of any proceeding in which the person has been adjudged to be liable to the corporation. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the person did not meet the requisite standard of conduct set forth in this subsection.
3. A director is not indemnified under subsection (b) in respect of any proceeding charging improper personal benefit to him or her, whether or not involving action in his or her official capacity, in which he or she has been adjudged to be liable on the basis that personal benefit was improperly received by him or her.
4. 1. Unless limited by the articles of incorporation:
      1. A director who is wholly successful, on the merits or otherwise, in the defense of any proceeding referred to in subsection (b) is indemnified against reasonable expenses incurred by the director in connection with the proceeding; and
      2. A court of appropriate jurisdiction, upon application of a director and any notice that the court requires, has authority to order indemnification in the following circumstances:
         1. If it determines a director is entitled to reimbursement under subsection (d)(1)(i), the court shall order indemnification, in which case the director is also entitled to recover the expenses of securing the reimbursement; or
         2. If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director has met the standard of conduct described in subsection (b) or has been adjudged liable in the circumstances described in subsection (c), the court may order any indemnification that it deems proper, except that indemnification with respect to any proceeding by or in the right of the corporation or in which liability has been adjudged in the circumstances described in subsection (c) is limited to expenses.
   2. A court of appropriate jurisdiction may be the same court in which the proceeding involving the director’s liability took place.
5. 1. No indemnification under subsection (b) shall be made by the corporation unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct described in subsection (b). The determination shall be made:
      1. By the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding;
      2. If a quorum cannot be obtained, then by a majority vote of a committee of the board, duly designated to act in the matter by a majority vote of the full board (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding;
      3. By special legal counsel, selected by the board of directors or a committee of the board by vote as described in subsection (e)(1)(i) or (e)(1)(ii), or, if the requisite quorum of the full board cannot be obtained for the vote and the committee cannot be established, by a majority vote of the full board (in which selection directors who are parties may participate); or
      4. By the members.
   2. Authorization of indemnification and determination as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses shall be made in a manner specified in subsection (e)(1)(iii) for the selection of counsel. Directors who are parties to the proceeding shall not, as members, vote on the subject matter under this subsection (e).
6. Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of the proceedings upon receipt by the corporation of:
   1. A written affirmation by the director of the director’s good-faith belief that the director has met the standard of conduct necessary for indemnification by the corporation as authorized in this section; and
   2. A written undertaking by or on behalf of the director to repay the amount if it is ultimately determined that the director has not met the standard of conduct, and after a determination that the facts then known to those making the determination would not preclude indemnification under this section. The undertaking required by this subsection (f)(2) is an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. Determinations and authorizations of payments under this subsection (f) shall be made in the manner specified in subsection (e).
7. The indemnification provided by this section is not deemed exclusive of any other rights to which those seeking indemnification are entitled under any bylaw, agreement, vote of members or disinterested directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office, and continues as to a person who ceases to be a director, officer, partner, trustee, employee, or agent and inures to the benefit of the heirs, executors, and administrators of the person. Nothing contained in this section limits the corporation’s power to pay or reimburse expenses incurred by a director in connection with his or her appearance as a witness in a proceeding at a time when he or she has not been named a defendant or respondent in the proceeding.
8. For purposes of this section, the corporation is deemed to have requested a director to service an employee benefit plan whenever the performance by the director of the director’s duties to the corporation also imposes duties on, or otherwise involves services by, the director to the plan or participants or beneficiaries of the plan; excise taxes assessed on a director regarding an employee benefit plan pursuant to applicable law are deemed “fines”; and action taken or omitted by the director regarding an employee benefit plan in the performance of the director’s duties for a purpose reasonably believed by the director to be in the interest of the participants and beneficiaries of the plan are deemed to be for a purpose that is not opposed to the best interests of the corporation.
9. Unless limited by the articles of incorporation:
   1. An officer of the corporation is indemnified to the same extent provided in subsection (d) for a director and is entitled to the same extent as a director to seek indemnification pursuant to the provisions of subsection (d);
   2. A corporation has the power to indemnify and to advance expenses to an officer, employee, or agent of the corporation to the same extent that it may indemnify and advance expenses to directors pursuant to this section; and
   3. A corporation, in addition, has the power to indemnify and to advance expenses to an officer, employee, or agent who is not a director to any further extent, consistent with law, that is provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.
10. A corporation has power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan, against any liability asserted against the director and incurred by the director in any capacity or arising out of the director’s status as director, whether or not the corporation would have the power to indemnify the director against liability under the provisions of this section.
11. Any indemnification of, or advance of expenses to, a director in accordance with this section, if arising out of a proceeding by or in the right of the corporation, shall be reported, in writing, to the members with or before the notice of the next members’ meeting.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1987, ch. 472, § 1.

7-6-7. Guarantee authorized by members.

Each corporation has the power to make guarantees, although not in furtherance of its corporate purposes, when authorized at a meeting of members by the affirmative vote of a majority of the members entitled to vote on the guarantees, or a greater percentage that may be provided by the articles of incorporation or bylaws, or if there are no members, or no members entitled to vote on the guarantees, by the affirmative vote of a majority of the directors in office, or a greater percentage that is provided by the articles of incorporation or bylaws. If authorized by a like vote, a corporation has the power to mortgage, pledge, or give a security interest in all or any of its property, franchises, and income to secure the guarantee or to secure obligations other than its own.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-8. Limiting powers of certain corporations.

1. No corporation that is a “private foundation” as defined in § 509(a) (26 U.S.C. § 509(a)) of the Internal Revenue Code of 1954 shall:
   1. Engage in any act of “self-dealing”, as defined in § 4941(d) (26 U.S.C. § 4941(d)) of the Internal Revenue Code of 1954, which would give rise to any liability for the tax imposed by § 4941(a) (26 U.S.C. § 4941(a)) of the code;
   2. Retain any “excess business holdings”, as defined in § 4943(c) (26 U.S.C. § 4943(c)) of the Internal Revenue Code of 1954, which would give rise to any liability for the tax imposed by § 4943(a) (26 U.S.C. § 4943(a)) of the code;
   3. Make any investment which would jeopardize the carrying out of any of the exempt purposes of the trust, within the meaning of § 4944 (26 U.S.C. § 4944) of the Internal Revenue Code of 1954, so as to give rise to any liability for the tax imposed by § 4944(a) (26 U.S.C. § 4944(a)) of the code; and
   4. Make any “taxable expenditures”, as defined in § 4945(d) (26 U.S.C. § 4945(d)) of the Internal Revenue Code of 1954, which would give rise to any liability for the tax imposed by § 4945(a) (26 U.S.C. § 4945(a)) of the code.
2. Each corporation which is a “private foundation” as defined in § 509(a) (26 U.S.C. § 509(a)) of the Internal Revenue Code of 1954 shall distribute for the purposes specified in articles of organization for each taxable year, amounts at least sufficient to avoid liability for the tax imposed by § 4942(a) (26 U.S.C. § 4942(a)) of the code.
3. The provisions of subsections (a) and (b) of this section do not apply to any corporation to the extent that a court of competent jurisdiction determines that the application would be contrary to the terms of the articles of organization or other instrument governing the corporation or governing the administration of charitable funds held by it and that the articles of incorporation may not properly be changed to conform to the sections.
4. All references to sections of the Internal Revenue Code of 1954 include future amendments to the sections and corresponding provisions of future internal revenue laws.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-9. Exemption from liability.

Notwithstanding any other provisions of this chapter:

1. No person serving without compensation as a volunteer, director, officer, or trustee of a nonprofit corporation, including a corporation qualified as a tax-exempt corporation under § 501(c) of the United States Internal Revenue Code, 26 U.S.C. § 501(c), or of an unincorporated nonprofit organization or an unincorporated public charitable institution qualified as a tax-exempt organization under § 501(c) of the United States Internal Revenue Code, is liable to any person based solely on his or her conduct in the execution of the office or duty unless the conduct of the director, officer, trustee, or volunteer regarding the person asserting the liability constituted malicious, willful, or wanton misconduct. As used in this section, “compensation” does not include a per diem or per meeting allowance, health insurance benefits, or reimbursement for out of pocket costs and expenses incurred in the service. Nothing in these provisions is construed to exempt a volunteer from liability based upon his or her ownership and/or operation of a motor vehicle.
2. Officers, directors, agents, servants, volunteers, and employees of a corporation are not liable for bodily injury to any person incurred while the person is practicing for, or participating in, any contest or exhibition of an athletic or sports nature sponsored by the corporation; provided, that the person has, or in the case of a minor, a parent or guardian of the minor has, signed a written waiver of liability of the corporation and acknowledgment of assumption of risk regarding the practicing for, or participating in, any contest or exhibition of an athletic or sports nature sponsored by the corporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1987, ch. 472, § 1; P.L. 1987, ch. 522, § 3; P.L. 1988, ch. 573, § 1; P.L. 1989, ch. 186, § 1; P.L. 1989, ch. 380, § 1.

7-6-10. Defense of ultra vires.

No act of a corporation and no conveyance or transfer of real or personal property to or by a corporation shall be invalid because the corporation was without capacity or power to do the act or to make or receive the conveyance or transfer, but the lack of capacity or power may be asserted:

1. In a proceeding by a member or a director against the corporation to enjoin the doing or continuation of unauthorized acts, or the transfer of real or personal property by or to the corporation. If the unauthorized acts or transfer sought to be enjoined are being, or are to be, performed pursuant to any contract to which the corporation is a party, the court may, if all of the parties to the contract are parties to the proceeding and if it deems it to be equitable, set aside and enjoin the performance of the contract, and in doing so may allow to the corporation or the other parties to the contract compensation for the loss or damage sustained by either of them that results from the action of the court in setting aside and enjoining the performance of the contract, but anticipated profits to be derived from the performance of the contract are not to be awarded by the court as a loss or damage sustained.
2. In a proceeding by the corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through members in a representative suit, against the officers or directors of the corporation for exceeding their authority.
3. In a proceeding by the secretary of state, as provided in this chapter, to revoke the certificate of incorporation of the corporation, or in a proceeding by the secretary of state to enjoin the corporation from performing unauthorized acts, or in any other proceeding by the secretary of state.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-11. Corporate name.

1. The corporate name:
   1. Shall not contain any word or phrase that indicates or implies that it is organized for any purpose other than one or more of the purposes contained in its articles of incorporation.
   2. Shall be distinguishable upon the records of the secretary of state from:
      1. The name of any corporation, whether for profit or not for profit, limited partnership, or domestic or foreign limited-liability company organized under the laws of, or registered or qualified or authorized to do business or conduct affairs in this state; or
      2. Any name that is filed, reserved, or registered under this title, or as permitted by the laws of this state, subject to the following:
         1. This provision shall not apply if the applicant files with the secretary of state a certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to the use of the name in this state; and
      3. The name may be the same as the name of a corporation, non-business corporation, or other association the certificate of incorporation or organization of which has been revoked by the secretary of state as permitted by law, and the revocation has not been withdrawn within one year from that date.
   3. Shall be translated into letters of the English alphabet, if it is not in English.
   4. Words and/or abbreviations that are required by statute to identify the particular type of business entity shall be disregarded when determining if a name is distinguishable upon the records of the secretary of state.
   5. The secretary of state shall promulgate rules and regulations defining the term “distinguishable upon the record” for the administration of this chapter.
2. 1. Any nonprofit corporation organized under the laws of, or registered or qualified to do business in this state, may transact its affairs in this state under a fictitious name if it files a fictitious business name statement in accordance with this subsection (b).
   2. A fictitious business name statement shall be filed with the secretary of state accompanied by a fee of twenty dollars ($20.00), and shall be executed by an authorized person of the nonprofit corporation or by a person with authority to do so under the laws of the state or other jurisdiction of the organization of the nonprofit corporation and shall describe:
      1. The fictitious business name to be used; and
      2. The name of the nonprofit corporation, the state or other jurisdiction in which the nonprofit corporation is organized, and date of the nonprofit corporation’s organization.
   3. The fictitious business name statement expires upon the filing of a statement of abandonment of use of a fictitious business name registered in accordance with this subsection (b) or upon the dissolution of the domestic corporation or the cancellation of registration of the foreign corporation.
   4. The statement of abandonment of use of a fictitious business name under this subsection (b) shall be filed with the secretary of state; shall be executed in the same manner as provided in subsection (b)(2); and shall describe:
      1. The fictitious business name being abandoned;
      2. The date on which the original fictitious business name statement being abandoned was filed; and
      3. The information described in subsection (b)(2)(ii).
   5. No domestic or foreign nonprofit corporation conducting its affairs under a fictitious business name contrary to the provisions of this section, or its assignee, may maintain any action upon or because of any contract made, or transaction had, in the fictitious business name in any court of the state or until a fictitious business name statement has been filed in accordance with this section.
   6. No nonprofit corporation may conduct its affairs under a fictitious business name pursuant to this section that is not distinguishable upon the records of the secretary of state from the name of any corporation, limited partnership, or domestic or foreign limited-liability company organized under the laws of, or registered or qualified to do business in this state or any name that is filed, reserved, or registered under this title or as permitted by the laws of this state, subject to the following:
      1. This provision does not apply if the applicant files with the secretary of state:
      2. A certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to the use of the name in this state; and
      3. The name may be the same as the name of a corporation, non-business corporation, or other association the certificate of incorporation or organization of which has been revoked by the secretary of state as permitted by law, and the revocation has not been withdrawn within one year from that date.
      4. Words and/or abbreviations that are required by statute to identify the particular type of business entity shall be disregarded when determining if a name is distinguishable upon the records of the secretary of state.
      5. The secretary of state shall promulgate rules and regulations defining the term “distinguishable upon the record” for the administration of this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1989, ch. 380, § 1; P.L. 1997, ch. 188, § 2; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2011, ch. 54, § 2; P.L. 2011, ch. 60, § 2.

7-6-11.1. Reservation of name — Transfer of reserved name.

1. The exclusive right to use a specified name for a domestic or foreign nonprofit corporation may be reserved by:
   1. A person who intends to organize a domestic nonprofit corporation;
   2. A domestic nonprofit corporation or foreign nonprofit corporation authorized to conduct affairs in this state that, in either case, proposes to change its name;
   3. A foreign nonprofit corporation that intends to make applications for a certificate of authority to conduct affairs in this state; or
   4. Any person intending to organize a foreign nonprofit corporation and intending to have it registered in this state and adopt that name.
2. A person may reserve a specified name by filing a signed application with the secretary of state accompanied by a fee of twenty dollars ($20.00) and, if the secretary of state finds that the name is available, the secretary of state shall reserve the name for one hundred twenty (120) days for the exclusive use of the applicant.
3. The exclusive right to use a reserved name may be transferred to another person by filing with the secretary of state a notice of the transfer, specifying the name and address of the transferee and signed by the applicant for whom the name was reserved.

History of Section. P.L. 1997, ch. 188, § 3.

7-6-12. Registered office and registered agent.

Each corporation shall have and continuously maintain in this state:

1. A registered office, which may be the same as its principal office;
2. A registered agent, who may be either an individual resident in this state whose business office is identical with the registered office, or a domestic corporation, whether for profit or not for profit, or a foreign corporation, whether for profit or not for profit, authorized to transact business or conduct affairs in this state, having an office identical with the registered office.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-13. Change of registered office or registered agent.

1. A corporation may change its registered office or change its registered agent, or both, upon filing in the office of the secretary of state a statement stating:
   1. The name of the corporation;
   2. The address of its then-registered office;
   3. If the address of its registered office is changed, the address to which the registered office is to be changed;
   4. The name of its then-registered agent;
   5. If its registered agent is changed, the name of its successor registered agent;
   6. That the address of its registered office and the address of the office of its registered agent, as changed, will be identical;
   7. That the change was authorized by a duly adopted resolution by its board of directors.
2. The statement shall be executed by the corporation by its president or a vice president and delivered to the secretary of state. If the secretary of state finds that the statement conforms to the provisions of this chapter, the secretary of state shall file the statement in the secretary of state’s office, and upon filing, the change of address of the registered office, or the appointment of a new registered agent, or both, becomes effective.
3. Any registered agent of a corporation may resign as the agent upon filing a written notice of resignation, executed in duplicate, with the secretary of state, who shall immediately mail a copy of it to the corporation in care of an officer, who is not the resigning registered agent, at the address of the officer as shown by the most recent annual report of the corporation. The appointment of the agent terminates upon the expiration of thirty (30) days after receipt of the notice by the secretary of state.
4. If a registered agent changes his, her, or its business address to another place within the state, the registered agent may change the address and the address of the registered office of any corporations of which the registered agent is registered agent by filing a statement as required in this section except that it need be signed only by the registered agent and need not be responsive to subsection (a)(5) or (a)(7) and must recite that a copy of the statement has been mailed to each corporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-14. Service of process on corporation.

1. The registered agent appointed by a corporation shall be an agent of the corporation upon whom any process, notice, or demand required or permitted by law to be served upon the corporation may be served.
2. Whenever a corporation fails to appoint or maintain a registered agent in this state, or whenever its registered agent cannot with reasonable diligence be found at the registered office, the secretary of state shall be an agent of the corporation upon whom any process, notice, or demand may be served. Service on the secretary of state of any process, notice, or demand is made by delivering to and leaving with the secretary of state or with any clerk having charge of the corporation department of the secretary of state’s office, duplicate copies of the process, notice, or demand. In the event any process, notice, or demand is served on the secretary of state, the secretary of state shall immediately forward one of the copies by registered mail, addressed to the corporation at its registered office. Any service upon the secretary of state is returnable in not less than thirty (30) days.
3. The secretary of state shall keep a record of all processes, notices, and demands served upon the secretary of state under this section, and shall record in the record the time of service and his or her action with reference to it.
4. Nothing contained in these provisions limits or affects the right to serve any process, notice, or demand required or permitted by law to be served upon a corporation in any other manner now or subsequently permitted by law.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-15. Members.

A corporation may have one or more classes of members or may have no members. If the corporation has one or more classes of members, the designation of the class or classes; the manner of election or appointment; and the qualifications and rights of the members of each class shall be stated in the articles of incorporation or the bylaws. If the corporation has no members, that fact shall be stated in the articles of incorporation or the bylaws. A corporation may issue certificates evidencing membership. The directors, officers, employees, and members of the corporation are not liable on its obligations.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-16. Bylaws.

The initial bylaws of a corporation shall be adopted by its board of directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws is vested in the board of directors unless otherwise provided in the articles of incorporation or the bylaws. The bylaws may contain any provisions for the regulation and management of the affairs of a corporation not inconsistent with law or the articles of incorporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-17. Bylaws and other powers in emergency.

1. The board of directors of any corporation may adopt emergency bylaws, that are, notwithstanding any different provision contained in this chapter or in the articles of incorporation or bylaws, operative during any emergency in the conduct of the affairs of the corporation resulting from an attack on the United States or any nuclear or atomic disaster. The emergency bylaws may make any provision that may be practical and necessary for the circumstances of the emergency, including provisions that:
   1. A meeting of the board of directors may be called by any officer or director in the manner and under the conditions that are prescribed in the emergency bylaws;
   2. The director or directors in attendance at the meeting, or any greater number fixed by the emergency bylaws, constitutes a quorum; and
   3. The officers or other persons designated on a list approved by the board of directors before the emergency, all in the order of priority and subject to the conditions and for the period of time (not longer than reasonably necessary after the termination of the emergency) as is provided in the emergency bylaws or in the resolution approving the list, are, to the extent required to provide a quorum at any meeting of the board of directors, deemed directors for the meeting.
2. The board of directors, either before or during any emergency, may provide, and from time to time modify, lines of succession in the event that during any emergency any or all officers or agents of the corporation are for any reason rendered incapable of discharging their duties.
3. The board of directors, either before or during any emergency, may, effective in the emergency, change the head office or designate several alternative head offices or regional offices, or authorize the officers to do so.
4. To the extent not inconsistent with any emergency bylaws adopted, the bylaws of the corporation remain in effect during any emergency and upon its termination the emergency bylaws cease to be operative.
5. Unless otherwise provided in emergency bylaws, notice of any meeting of the board of directors during any emergency may be given only to the directors that it may be feasible to reach at the time and by the means that may be feasible at the time, including publication or radio.
6. To the extent required to constitute a quorum at any meeting of the board of directors during any emergency, the officers of the corporation who are present are, unless otherwise provided in emergency bylaws, deemed, in order of rank and within the same rank in order of seniority, directors for the meeting.
7. No officer, director, or employee acting in accordance with any emergency bylaws is liable except for willful misconduct. No officer, director, or employee is liable for any action taken by him or her in good faith in any emergency in furtherance of the ordinary affairs of the corporation even though not authorized by the bylaws then in effect.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-18. Meetings of members.

1. Meetings of members may be held at any place, either within or without this state, that is provided in the bylaws. In the absence of any provision, all meetings shall be held at the registered office of the corporation in this state.
2. An annual meeting of the members shall be held at the time that is provided in the bylaws. Failure to hold the annual meeting at the designated time does not work a forfeiture or dissolution of the corporation.
3. Special meetings of the members may be called by the president or by the board of directors. Special meetings of the members may also be called by any other officers or persons or number or proportion of members that is provided in the articles of incorporation or the bylaws. In the absence of a provision fixing the number or proportion of members entitled to call a meeting, a special meeting of members may be called by members having one-twentieth (1/20) of the votes entitled to be cast at the meeting.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-19. Notice of members’ meetings.

Unless otherwise provided in the articles of incorporation or the bylaws, written notice stating the place, day, and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than 60 days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officers or persons calling the meeting, to each member entitled to vote at the meeting. If mailed, the notice is deemed to be delivered when deposited in the United States mail addressed to the member at his or her address as it appears on the records of the corporation, with postage prepaid.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-20. Voting.

1. The right of the members, or any class or classes of members, to vote may be limited, enlarged, or denied to the extent specified in the articles of incorporation or the bylaws. Unless limited, enlarged, or denied, each member, regardless of class, is entitled to one vote on each matter submitted to a vote of members.
2. A member entitled to vote may vote in person or, unless the articles of incorporation or the bylaws provide otherwise, may vote by proxy executed in writing by the member or by his or her authorized attorney in fact. No proxy is valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. Where directors or officers are to be elected by members, the bylaws may provide that the elections may be conducted by mail.
3. The articles of incorporation or the bylaws may provide that in all elections for directors every member entitled to vote has the right to cumulate his or her vote and to give one candidate a number of votes equal to his or her vote multiplied by the number of directors to be elected, or by distributing the votes on the same principle among any number of candidates.
4. If a corporation has no members or its members have no right to vote, the directors have the sole voting power.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-21. Quorum.

The bylaws may provide the number or percentage of members entitled to vote represented in person or by proxy, or the number or percentage of votes represented in person or by proxy, that constitutes a quorum at a meeting of members. In the absence of any provision, members holding one-tenth (1/10) of the votes entitled to be cast on the matter to be voted upon represented in person or by proxy constitute a quorum. If a quorum is present, the affirmative vote of a majority of the members present or represented by proxy is the act of the members unless a greater proportion or voting by classes is required by this chapter, the articles of incorporation, or the bylaws.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-22. Board of directors.

1. The affairs of a corporation are managed by a board of directors. Directors need not be residents of this state or members of the corporation unless the articles of incorporation or the bylaws requires it. The articles of incorporation or the bylaws may prescribe other qualifications for directors.
2. A director shall discharge his or her duties as a director, including his or her duties as a member of a committee:
   1. In good faith;
   2. With the care an ordinarily prudent person in a similar position would exercise under similar circumstances; and
   3. In a manner he or she reasonably believes to be in the best interests of the corporation.
3. In discharging his or her duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
   1. One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;
   2. Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person’s professional or expert competence; or
   3. A committee of the board of directors of which he or she is not a member if the director reasonably believes the committee merits confidence.
4. A director is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (c) unwarranted.
5. A director is not liable for any action taken as a director, or any failure to take any action, if he or she performed the duties of his or her office in compliance with this section.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1987, ch. 472, § 1.

7-6-23. Number and election of directors.

1. The number of directors of a corporation shall be not less than three (3). Subject to limitation, the number of directors shall be fixed by the bylaws, except as to the number of the first board of directors, which number shall be fixed by the articles of incorporation. The number of directors may be increased or decreased from time to time by amendment to or as provided by the bylaws, unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment of the articles of incorporation. No decrease in number has the effect of shortening the term of any incumbent director. In the absence of a bylaw fixing the number of directors, the number shall be the same as that stated in the articles of incorporation.
2. The directors constituting the first board of directors shall be named in the articles of incorporation and hold office until the first annual election of directors or for any other period that may be specified in the articles of incorporation or the bylaws. Subsequently, directors shall be elected or appointed in the manner and for the terms provided in the articles of incorporation or the bylaws. In the absence of a provision fixing the term of office, the term of office of a director is one year.
3. Directors may be divided into classes and the terms of office of the several classes need not be uniform. Each director shall hold office for the term for which he or she is elected or appointed and until his or her successor has been elected or appointed and qualified.
4. A director may be removed from office pursuant to any procedure for removal that is provided in the articles of incorporation or in bylaws and that has been approved by the members of the corporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-24. Vacancies on board of directors.

1. Any vacancy occurring on the board of directors and any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of a majority of the remaining directors, unless the articles of incorporation or the bylaws provide that a vacancy or created directorship shall be filled in some other manner, in which case the provision shall control.
2. A director elected or appointed to fill a vacancy shall be elected or appointed for the unexpired term of the director’s predecessor in office.
3. Any directorship to be filled by reason of an increase in the number of directors may be filled by the board of directors for a term of office continuing only until the next election of directors.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-25. Quorum of directors.

1. A majority of the number of directors fixed by the bylaws, or in the absence of a bylaw fixing the number of directors, then of the number stated in the articles of incorporation, constitutes a quorum for the transaction of business, unless otherwise provided in the articles of incorporation or the bylaws; but in no event does a quorum consist of less than one-quarter (1/4) of the number of the directors fixed or stated.
2. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by this chapter, the articles of incorporation, or the bylaws.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1987, ch. 472, § 1.

7-6-26. Committees.

1. The board of directors, by resolution adopted by a majority of the directors in office, may designate and appoint one or more committees, each of which shall consist of two (2) or more directors. These committees, to the extent provided in the resolution, in the articles of incorporation, or in the bylaws of the corporation, have and exercise all the authority of the board of directors, except that no committee has the authority of the board of directors in reference to:
   1. Amending, altering, or repealing the bylaws;
   2. Electing, appointing, or removing any member of any committee or any director or officer of the corporation;
   3. Amending the articles of incorporation, restating articles of incorporation, adopting a plan of merger, or adopting a plan of consolidation with another corporation;
   4. Authorizing the sale, lease, exchange, or mortgage of all or substantially all of the property and assets of the corporation;
   5. Authorizing the voluntary dissolution of the corporation or revoking proceedings for voluntary dissolution; adopting a plan for the distribution of the assets of the corporation; or
   6. Amending, altering, or repealing any resolution of the board of directors which by its terms provides that it shall not be amended, altered, or repealed by the committee.
2. The designation and appointment of any committee and the delegation to it of authority does not operate to relieve the board of directors, or any individual director of any responsibility imposed upon it or him or her by law.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-26.1. Director conflicts of interest.

1. No contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, is void or voidable nor are the directors or officers liable regarding the contract or transaction solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee of the board that authorizes the contract or transaction, or solely because his, her, or their votes are counted for the purpose, if:
   1. The material facts as to his, her, or their interest or relationship are disclosed or are known to the board of directors or the committee, and the board of directors or committee authorizes, approves, or ratifies the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or
   2. The material facts as to his, her, or their interest or relationship are disclosed or are known to the members entitled to vote on the contract or transaction, and the contract or transaction is specifically authorized, approved, or ratified by vote of the members; or
   3. The contract or transaction is fair and reasonable to the corporation.
2. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee that authorizes the contract or transaction.

History of Section. P.L. 1989, ch. 380, § 2.

7-6-27. Place and notice of directors’ meetings.

1. Regular or special meetings of the board of directors may be held either within or without this state, and on the notice that the bylaws prescribe. Attendance of a director at any meeting constitutes a waiver of notice of the meeting, except when a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of the meeting.
2. Except as may be otherwise restricted by the articles of incorporation or bylaws, members of the board of directors or any committee designated by the board may participate in a meeting of the board or committee by means of a conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other at the same time, and participation by that means constitutes presence in person at a meeting.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1998, ch. 329, § 1.

7-6-28. Officers.

1. The officers of a corporation consist of a president, one or more vice presidents, if prescribed by the bylaws, a secretary, a treasurer, and any other officers and assistant officers who are deemed necessary, each of whom shall be elected or appointed at the time and in the manner and for the terms not exceeding three (3) years that are prescribed in the articles of incorporation or the bylaws. In the absence of any provision, all officers shall be elected or appointed annually by the board of directors. Any two (2) or more offices may be held by the same person, except the offices of president and secretary.
2. The articles of incorporation or the bylaws may provide that any one or more officers of the corporation are ex officio members of the board of directors.
3. The officers of a corporation may be designated by any additional titles that may be provided in the articles of incorporation or the bylaws.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-29. Removal of officers.

Any officer elected or appointed may be removed by the persons authorized to elect or appoint the officer whenever, in their judgment, the best interests of the corporation will be served by removal. The removal of an officer is without prejudice to the contract rights, if any, of the officer removed. Election or appointment of an officer or agent does not of itself create contract rights.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-30. Books and records.

Each corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its members, board of directors, and committees having any of the authority of the board of directors; and shall keep at its registered office or principal office in this state a record of the names and addresses of its members entitled to vote. All books and records of a corporation may be inspected by any member, or his or her agent or attorney, for any proper purpose at any reasonable time.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-31. Dividends prohibited.

A corporation may issue shares to its members, but no dividend shall be paid on the shares and no part of the income or profit of a corporation shall be distributed to its members, directors, or officers, except that dividends may be paid and income or profit may be distributed to its members by a corporation all of the members of which are corporations to which this chapter applies. A corporation may pay compensation in a reasonable amount to its members, directors, or officers for services rendered; may confer benefits upon its members in conformity with its purposes; and upon dissolution or final liquidation, may make distributions to its members as permitted by this chapter; and no payment, benefit, or distribution is deemed to be a dividend or a distribution of income or profit.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1987, ch. 472, § 1.

7-6-32. Loans to directors prohibited.

No loans shall be made by a corporation to its directors. Any director who assents to or participates in the making of any loan is liable to the corporation for the amount of loan until its repayment.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-33. Incorporators.

1. One or more persons may incorporate a corporation by signing and delivering articles of incorporation in duplicate to the secretary of state.
2. Until the corporation has duly qualified members, or if it is intended that the corporation will have no members, until the first meeting of its board of directors, the incorporator or incorporators, at any meeting or meetings that may be held for the purposes provided for in this section, shall manage the affairs of the corporation and for that purpose will have the powers otherwise vested by this chapter in the board of directors or members.
3. The incorporator or incorporators calling a meeting under this section shall give at least three (3) days’ notice of the meeting by mail to each incorporator, which notice shall state the time and place of the meeting.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-34. Articles of incorporation.

1. The articles of incorporation shall set forth:
   1. The name of the corporation;
   2. The period of duration, which may be perpetual;
   3. The purpose or purposes for which the corporation is organized;
   4. 1. Any provisions, not inconsistent with the law, that the incorporators elect to set forth in the articles of incorporation for the regulation of the internal affairs of the corporation, including a provision eliminating or limiting the personal liability of a director to the corporation or to its members for monetary damages for breach of the director’s duty as a director. However, the provision does not eliminate or limit the liability of a director:
         1. For any breach of the director’s duty of loyalty to the corporation or its members;
         2. For acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; or
         3. For any transaction from which the director derived an improper personal benefit, and also including any provision that under this chapter is required or permitted to be set forth in the bylaws.
      2. No provision eliminating or limiting the personal liability of a director will be effective with respect to causes of action arising prior to the inclusion of the provision in the articles of incorporation of the corporation;
   5. The address of its initial registered office, and the name of its initial registered agent at the address;
   6. The number of directors constituting the initial board of directors, and the names and addresses of the persons who are to serve as the initial directors;
   7. The name and residence or business address of each incorporator.
2. It is not necessary to set forth in the articles of incorporation any of the corporate powers enumerated in this chapter.
3. Unless the articles of incorporation provide that a change in the number of directors shall be made only by amendment to the articles of incorporation, a change in the number of directors made by amendment to the bylaws is controlling. In all other cases, whenever a provision of the articles of incorporation is inconsistent with a bylaw, the provision of the articles of incorporation is controlling.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1987, ch. 472, § 1; P.L. 2018, ch. 346, § 6.

7-6-35. Filing of articles of incorporation.

1. The articles of incorporation shall be delivered to the secretary of state. If the secretary of state finds that the articles of incorporation conform to law, the secretary of state shall, when all fees have been paid as in this chapter prescribed:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office; and
   3. Issue a certificate of incorporation.
2. The certificate of incorporation shall be delivered to the incorporators or their representative.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4.

7-6-36. Effect of issuance of certificate of incorporation.

Upon the issuance of the certificate of incorporation, or upon a later date, not more than 30 days after the filing of articles of incorporation, that is set forth in the articles, the corporate existence begins, and the certificate of incorporation is conclusive evidence that all conditions precedent required to be performed by the incorporators have been complied with and that the corporation has been incorporated under this chapter, except as against the state in a proceeding to cancel or revoke the certificate of incorporation or for involuntary dissolution of the corporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-37. Organization meetings.

1. After the issuance of the certificate of incorporation an organizational meeting of the board of directors named in the articles of incorporation may be held, either within or without this state, at the call of a majority of the incorporators, for the purpose of adopting bylaws, electing officers, and the transaction of any other business that may come before the meeting. The incorporators calling the meeting shall give at least three (3) days’ notice of the meeting by mail to each named director, which notice states the time and place of the meeting.
2. A first meeting of the members may be held at the call of the directors, or a majority of them, upon at least three (3) days’ notice, for any purposes that are stated in the notice of the meeting.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-38. Right to amend articles of incorporation.

A corporation may amend its articles of incorporation, from time to time, in any respect desired, as long as its articles of incorporation, as amended, contain only provisions that are lawful under this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-39. Procedure to amend articles of incorporation.

1. Amendments to the articles of incorporation are made in the following manner:
   1. If there are members entitled to vote on the amendments, the board of directors shall adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote at a meeting of members entitled to vote on it, which may be either an annual or a special meeting. Written notice setting forth the proposed amendment or a summary of the changes to be effected by the amendment shall be given to each member entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of meetings of members. The proposed amendment is adopted upon receiving at least a majority of the votes that members present at the meeting or represented by proxy are entitled to cast.
   2. If there are no members, or no members entitled to vote on it, an amendment is adopted at a meeting of the board of directors upon receiving the vote of a majority of the directors in office.
2. Any number of amendments may be submitted and voted upon at any one meeting.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-40. Articles of amendment.

The articles of amendment shall be executed in duplicate by the corporation by its president or a vice president and by its secretary or an assistant secretary and shall set forth:

1. The name of the corporation;
2. The amendment so adopted;
3. If there are members entitled to vote on the amendment:
   1. A statement setting forth the date of the meeting of members at which the amendment was adopted, that a quorum was present at the meeting, and that the amendment received at least a majority of the votes that members present at the meeting or represented by proxy were entitled to cast; or
   2. A statement that the amendment was adopted by a consent in writing signed by all members entitled to vote on it; and
4. If there are no members, or no members entitled to vote on the amendment, a statement of the fact, the date of the meeting of the board of directors at which the amendment was adopted, and a statement of the fact that the amendment received the vote of a majority of the directors in office.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-41. Effectiveness of amendment.

1. The articles of amendment shall be delivered to the secretary of state. If the secretary of state finds that the articles of amendment conform to law, the secretary of state shall, when all fees have been paid as in this chapter prescribed:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office; and
   3. Issue a certificate of amendment.
2. The certificate of amendment shall be delivered to the corporation or its representative.
3. Upon the issuance of the certificate of amendment by the secretary of state, or upon any later date, not more than 30 days after the filing of articles of amendment, that is set forth in the articles, the amendment becomes effective and the articles of incorporation are deemed to be amended accordingly.
4. No amendment affects any existing cause of action in favor of or against the corporation, or any pending action to which the corporation is a party, or the existing rights of persons other than members; and, in the event the corporate name is changed by amendment, no action brought by or against the corporation under its former name abates for that reason.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4.

7-6-41.1. Certificate of correction.

1. Whenever any instrument authorized to be filed with the secretary of state under any provision of this chapter has been so filed and is an inaccurate record of the corporate action therein referred to, or was defectively or erroneously executed, sealed, or acknowledged, the instrument may be corrected by filing with the secretary of state a certificate of correction, which must be executed, acknowledged, and filed in accordance with this section.
2. The corrected instrument must be specifically designated as such in its heading, specify the inaccuracy or defect to be corrected, and set forth the entire instrument in corrected form.
3. The certificate of correction shall be executed by the corporation, by its president or vice president, and by its secretary or an assistant secretary and shall set forth:
   1. The name of the corporation.
   2. The inaccuracy or defect to be corrected and set forth the portion of the instrument in corrected form.
   3. If there are members entitled to vote on the correction:
      1. A statement setting forth the date of the meeting of members at which the correction was adopted, that a quorum was present at the meeting, and that the correction received at least a majority of the votes that members present at the meeting or represented by proxy were entitled to cast; or
      2. A statement that the correction was adopted by a consent in writing signed by all members entitled to vote on it.
   4. If there are no members, or no members entitled to vote on the correction, a statement of the fact, the date of the meeting of the board of directors at which the correction was adopted, and a statement of the fact that the correction received the vote of a majority of the directors in office.
   5. The entire instrument in corrected form attached.
4. An instrument corrected in accordance with this section is effective as of the date the original instrument was filed, except as to those individuals who are substantially and adversely affected by the correction and as to those individuals the instrument as corrected is effective from its filing date.

History of Section. P.L. 2012, ch. 81, § 1; P.L. 2012, ch. 103, § 1; P.L. 2018, ch. 346, § 6.

7-6-42. Restated articles of incorporation.

1. A domestic corporation may at any time restate its articles of incorporation as previously amended by filing with the secretary of state restated articles of incorporation. The restated articles of incorporation may include one or more amendments to the articles of incorporation adopted in accordance with the provisions of § 7-6-39 . The corporation may restate articles of incorporation in the following manner:
   1. If there are members entitled to vote on the restated articles, the board of directors shall adopt a resolution setting forth the proposed restated articles of incorporation and directing that they be submitted to a vote at a meeting of members entitled to vote on them, which may be either an annual or a special meeting.
   2. Written notice setting forth the proposed restated articles or a summary of their provisions shall be given to each member entitled to vote on them, within the time and in the manner provided in this chapter for the giving of notice of meetings of members. If the meeting is an annual meeting, the proposed restated articles or a summary of their provisions may be included in the notice of the annual meeting.
   3. At the meeting, a vote of the members entitled to vote on the restated articles shall be taken on them, which shall be adopted upon receiving the affirmative vote of a majority of the members entitled to vote on them present at the meeting or represented by proxy.
   4. If there are no members, or no members entitled to vote on them, the proposed restated articles shall be adopted at a meeting of the board of directors upon receiving the affirmative vote of a majority of the directors in office.
2. Upon approval, restated articles of incorporation shall be executed by the corporation by its president or vice president and by its secretary or assistant secretary and shall set forth:
   1. The name of the corporation;
   2. The period of its duration;
   3. The purpose or purposes that the corporation is authorized to pursue;
   4. Any other provisions, not inconsistent with law, that are then set forth in the articles of incorporation as previously amended, except that it is not necessary to set forth in the restated articles of incorporation the registered office of the corporation, its registered agent, its directors, or its incorporators.
3. The restated articles of incorporation shall state that they correctly set forth the provisions of the articles of incorporation as previously amended, that they have been duly adopted as required by law, and the additional amendments to the articles of incorporation, if any, together with a statement that such additional amendments were adopted in accordance with the provisions of § 7-6-39 , and a further statement that, except for the designated amendments, if any, the restated articles of incorporation correctly set forth without change the corresponding provisions of the articles of incorporation as previously amended, and that the restated articles of incorporation, together with the designated amendments, if any, supersede the original articles of incorporation and all previous amendments to the articles of incorporation.
4. The restated articles of incorporation shall be delivered to the secretary of state. If the secretary of state finds that the restated articles conform to law, the secretary of state shall, when all fees have been paid as in this chapter prescribed:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office;
   3. Issue a restated certificate of incorporation.
5. The restated certificate of incorporation shall be delivered to the corporation or its representative.
6. Upon the issuance of the restated certificate of incorporation by the secretary of state, the restated articles of incorporation become effective and supersede the original articles of incorporation and all amendments to them.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2012, ch. 81, § 2; P.L. 2012, ch. 103, § 2; P.L. 2018, ch. 346, § 6.

7-6-43. Procedure for merger.

1. Notwithstanding anything to the contrary contained in any general or public law, rule, or regulation, any two (2) or more entities, whether defined in § 7-6-2 , § 7-1.2-106 , § 7-13-1 , or § 7-16-2 , may merge into one of the entities pursuant to a plan of merger approved in the manner provided in this chapter. This section does not apply to insurance holding company systems as defined in § 27-35-1 .
2. Each entity shall adopt a plan of merger setting forth:
   1. The names of the entities proposing to merge, and the name of the entity into which they propose to merge, which is subsequently designated as the surviving entity;
   2. The terms and conditions of the proposed merger;
   3. A statement of any changes in the articles of incorporation of the surviving entity to be effected by the merger; and
   4. Such other provisions regarding the proposed merger that are deemed necessary or desirable.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2021, ch. 232, § 1, effective July 8, 2021; P.L. 2021, ch. 335, § 1, effective July 9, 2021.

7-6-44. Procedure for consolidation.

1. Notwithstanding anything to the contrary contained in any general or public law, rule, or regulation, any two (2) or more entities, whether defined in § 7-6-2 , § 7-1.2-106 , § 7-13-1 , or § 7-16-2 , may consolidate into one of the entities pursuant to a plan of consolidation approved in the manner provided in this chapter. This section does not apply to insurance holding company systems as defined in § 27-35-1 .
2. Each entity shall adopt a plan of consolidation setting forth:
   1. The names of the entities proposing to consolidate, and the name of the new entity into which they propose to consolidate, which is subsequently designated as the new entity;
   2. The terms and conditions of the proposed consolidation;
   3. Regarding the new entity, all of the statements required to be set forth in articles of incorporation for entities organized under this chapter; and
   4. Any other provisions regarding the proposed consolidation that are deemed necessary or desirable.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2021, ch. 232, § 1, effective July 8, 2021; P.L. 2021, ch. 335, § 1, effective July 9, 2021.

7-6-45. Approval of merger or consolidation.

1. A plan of merger or consolidation is adopted in the following manner:
   1. If the members of any merging or consolidating corporation are entitled to vote on it, the board of directors of the corporation shall adopt a resolution approving the proposed plan and directing that it be submitted to a vote at a meeting of members entitled to vote on it, which may be either an annual or a special meeting. Written notice setting forth the proposed plan or a summary of the plan shall be given to each member entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of meetings of members. The proposed plan shall be adopted upon receiving at least a majority of the votes that members present at each meeting or represented by proxy are entitled to cast.
   2. If any merging or consolidating corporation has no members, or no members entitled to vote on it, a plan of merger or consolidation shall be adopted at a meeting of the board of directors of the corporation upon receiving the vote of a majority of the directors in office.
   3. A limited-liability company party to a proposed merger or consolidation shall have the plan of merger or consolidation authorized and approved in the manner and by the vote required by § 7-16-21 .
   4. A domestic limited partnership party to a proposed merger or consolidation shall have the plan of merger or consolidation, unless otherwise provided in the limited partnership agreement, authorized and approved in the manner and by the vote required by the laws of this state for mergers or consolidations of a domestic limited partnership with other limited partnerships or other business entities.
2. After approval, and at any time prior to the filing of the articles of merger or consolidation, the merger or consolidation may be abandoned pursuant to any provisions for abandonment set forth in the plan of merger or consolidation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2021, ch. 232, § 1, effective July 8, 2021; P.L. 2021, ch. 335, § 1, effective July 9, 2021.

7-6-46. Articles of merger or consolidation.

1. Upon approval, articles of merger or articles of consolidation shall duly be executed and shall set forth:
   1. The plan of merger or the plan of consolidation;
   2. If the members of any merging or consolidating corporation are entitled to vote on the plan, then as to each corporation:
      1. A statement setting forth the date of the meeting of members at which the plan was adopted, that a quorum was present at the meeting, and that the plan received at least a majority of the votes that members present at the meeting or represented by proxy were entitled to cast; or
      2. A statement that the plan was adopted by a consent in writing signed by all members entitled to vote on it;
   3. If any merging or consolidating corporation has no members, or no members entitled to vote on the plan, then as to each corporation a statement of the fact, the date of the meeting of the board of directors at which the plan was adopted, and a statement of the fact that the plan received the vote of a majority of the directors in office;
   4. A statement that the plan of merger was authorized and approved by each other constituent entity;
   5. The effective date of the merger or consolidation if later than the date of filing of the articles of merger or consolidation;
   6. The identity of the surviving entity or the new entity by name, type, and state or other jurisdiction under whose laws it is organized or formed.
2. The articles of merger or articles of consolidation shall be delivered to the secretary of state. If the secretary of state finds that the articles conform to law, he or she shall, when all fees have been paid as prescribed in this chapter:
   1. Endorse on the original the word “Filed,” and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office;
   3. Issue a certificate of merger or a certificate of consolidation.
3. The certificate of merger or certificate of consolidation shall be delivered to the surviving or new entity, as the case may be, or its representative.
4. The articles of merger or consolidation shall act as a certificate of cancellation for each party to the merger or consolidation that is not the surviving entity or the new entity.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2021, ch. 232, § 1, effective July 8, 2021; P.L. 2021, ch. 335, § 1, effective July 9, 2021.

7-6-47. Effect of merger or consolidation.

1. Upon the issuance of the certificate of merger, or the certificate of consolidation by the secretary of state, the merger or consolidation is effected.
2. When the merger or consolidation has been effected:
   1. The several parties to the plan of merger or consolidation are a single entity, that, in the case of a merger, is that entity designated in the plan of merger as the surviving entity, and, in the case of a consolidation, is the new entity provided for in the plan of consolidation.
   2. The separate existence of all parties to the plan of merger or consolidation, except the surviving or new entity, ceases.
   3. The surviving or new entity has all the rights, privileges, immunities, and powers and is subject to all the duties and liabilities of an entity organized under this chapter.
   4. The surviving or new entity at that time and subsequently possesses all the rights, privileges, immunities, and franchises, of a public as well as of a private nature, of each of the merging or consolidating entities; and all property, real, personal, and mixed, and all debts due on any account, and all other choses in action. Every other interest, of or belonging to or due to each of the entities merged or consolidated, is deemed to be transferred to and vested in the single entity without further act or deed. The title to any real estate, or any interest in it, vested in any of the entities does not revert or become in any way impaired because of the merger or consolidation.
   5. The surviving or new entity is from that time on responsible and liable for all the liabilities and obligations of each of the entities merged or consolidated. Any claim existing or action or proceeding pending by or against any of the entities may be prosecuted as if the merger or consolidation had not taken place, or the surviving or new entity may be substituted in its place. Neither the rights of creditors nor any liens upon the property of any entity is impaired by the merger or consolidation.
   6. In the case of a merger, the articles of incorporation of the surviving entity are deemed to be amended to the extent that changes in its articles of formation are stated in the plan of merger. In the case of a consolidation, the statements set forth in the articles of consolidation and that are required or permitted to be set forth in the articles of incorporation of entities organized under this chapter are deemed to be the articles of incorporation of the new entity.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2021, ch. 232, § 1, effective July 8, 2021; P.L. 2021, ch. 335, § 1, effective July 9, 2021.

7-6-48. Merger or consolidation of domestic and foreign corporations.

1. Notwithstanding anything to the contrary contained in any general or public law, rule, or regulation, any two (2) or more entities, whether defined in § 7-6-2 , § 7-1.2-106 , § 7-13-1 , or § 7-16-2 , may be merged or consolidated in the following manner, if the merger or consolidation is permitted by the laws of the state under which each foreign entity is organized:
   1. Each domestic entity shall comply with the provisions of this chapter regarding the merger or consolidation of domestic entities and each foreign entity shall comply with the applicable provisions of the laws of the state under which it is organized.
   2. If the surviving or new entity is to be governed by the laws of any state other than this state, it shall comply with the provisions of this chapter with respect to foreign entities if it is to conduct affairs in this state, and in every case it shall file with the secretary of state of this state:
      1. An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation of any domestic entity that is a party to the merger or consolidation; and
      2. An irrevocable appointment of the secretary of state of this state as its agent to accept service of process in any proceeding.
2. The effect of the merger or consolidation shall be the same as in the case of the merger or consolidation of domestic entities, if the surviving or new entity is to be governed by the laws of this state. If the surviving or new entity is to be governed by the laws of any state other than this state, the effect of the merger or consolidation is the same as in the case of the merger or consolidation of domestic entities except insofar as the laws of the other state provide otherwise.
3. After approval by the members or, if there are no members entitled to vote on it, by the board of directors, and at any time prior to the filing of the articles of merger or consolidation, the merger or consolidation may be abandoned pursuant to provisions for abandonment set forth in the plan of merger or consolidation.
4. This section does not apply to insurance holding company systems as defined in § 27-35-1 .

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2021, ch. 232, § 1, effective July 8, 2021; P.L. 2021, ch. 335, § 1, effective July 9, 2021.

7-6-48.1. Conversion of other entities to a domestic nonprofit corporation.

1. As used in this section, the term “other entity” means a foreign corporation or domestic or foreign unincorporated entity no part of the income or profit of which is distributable to its members, directors, or officers.
2. Any other entity may convert to a nonprofit corporation of this state by complying with subsection (h) of this section and filing in the office of the secretary of state:
   1. A certificate of conversion to corporation (nonprofit) that has been executed in accordance with subsection (i) of this section and filed in the office of the secretary of state in accordance with § 7-6-48.2 ; and
   2. Articles of incorporation that have been executed, acknowledged and filed in accordance with § 7-6-35 .
3. The certificate of conversion to corporation (nonprofit) shall state:
   1. The date on which, and the jurisdiction where, the other entity was first created, incorporated, formed, or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic corporation;
   2. The name and type of the other entity immediately prior to the filing of the certificate of conversion to corporation (nonprofit); and
   3. The name of the corporation as set forth in its articles of incorporation filed in accordance with subsection (b) of this section.
4. Upon the effective time of the certificate of conversion to corporation (nonprofit) and the articles of incorporation, the other entity shall be converted to a corporation of this state and the corporation shall thereafter be subject to all of the provisions of this title, except that notwithstanding § 7-6-36 , the existence of the corporation shall be deemed to have commenced on the date the other entity commenced its existence in the jurisdiction in which the other entity was first created, formed, incorporated, or otherwise came into being.
5. The conversion of any other entity to a corporation of this state shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a corporation of this state or the personal liability of any person incurred prior to  the conversion.
6. When another entity has been converted to a corporation of this state pursuant to this section, the corporation of this state shall, for all purposes of the laws of the state, be deemed to be the same entity as the converting other entity. When any conversion shall have become effective under this section, for all purposes of the laws of the state, all of the rights, privileges and powers of the other entity that has converted, and all property, real, personal, and mixed, and all debts due to  the other entity, as well as all other things and causes of action belonging to  the other entity, shall remain vested in the domestic corporation to which  the other entity has converted and shall be the property of  the domestic corporation and  title to any real property vested by deed or otherwise in  the other entity shall not revert to  the other entity or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of  the other entity shall be preserved unimpaired, and all debts, liabilities, and duties of the other entity that has converted shall remain attached to the corporation of this state to which  the other entity has converted, and may be enforced against it to the same extent as if  the debts, liabilities, and duties had originally been incurred or contracted by it in its capacity as a corporation of this state. The rights, privileges, powers, and interests in property of the other entity, as well as the debts, liabilities, and duties of the other entity, shall not be deemed, as a consequence of the conversion, to have been transferred to the domestic corporation to which  the other entity has converted for any purpose of the laws of the state.
7. Unless otherwise agreed for all purposes of the laws of the state, or as required under applicable non-Rhode Island law, the converting other entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of  the other entity and shall constitute a continuation of the existence of the converting other entity in the form of a corporation of this state.
8. Prior to filing a certificate of conversion to corporation (nonprofit) with the office of the secretary of state, the conversion shall be approved in the manner provided for by the document, instrument, agreement, or other writing, as the case may be, governing the internal affairs of the other entity and the conduct of its business or by applicable law, as appropriate, and articles of incorporation shall be approved by the same authorization required to approve the conversion.
9. The certificate of conversion to corporation (nonprofit) shall be signed by any person who is authorized to sign the certificate of conversion to corporation (nonprofit) on behalf of the other entity.

History of Section. P.L. 2021, ch. 232, § 2, effective July 8, 2021; P.L. 2021, ch. 335, § 2, effective July 9, 2021.

7-6-48.2. Filing of certificate of conversion to corporation (nonprofit).

1. The certificate of conversion to corporation (nonprofit) shall be delivered to the secretary of state. If the secretary of state finds that the certificate of conversion to corporation (nonprofit) conforms to law, the secretary of state shall, when all fees have been paid as prescribed in subsection (b) of this section:
   1. Endorse on the original the word “Filed,” and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office; and
   3. Issue a certificate of conversion to corporation (nonprofit).
2. The secretary of state shall charge and collect for filing a certificate of conversion (nonprofit), twenty-five dollars ($25.00).
3. The certificate of conversion to corporation (nonprofit) shall be delivered to the corporation.

History of Section. P.L. 2021, ch. 232, § 2, effective July 8, 2021; P.L. 2021, ch. 335, § 2, effective July 9, 2021.

7-6-48.3. Conversion of a domestic nonprofit corporation to other entities.

1. A nonprofit corporation of this state may, upon the authorization of  a conversion in accordance with this section, convert to a limited-liability company, business trust or association, real estate investment trust, common-law trust, or any other unincorporated business or entity, including a partnership (whether general or limited, including a registered limited-liability partnership) or a foreign corporation.
2. If the members of the converting corporation are entitled to vote on it, the board of directors of the corporation shall adopt a resolution, specifying the type of entity into which the corporation shall be converted, the terms and conditions of the conversion, and recommending the approval of such conversion by directing that it be submitted to a vote at a meeting of members entitled to vote on it, which may be either an annual or a special meeting. Written notice setting forth the proposed conversion shall be given to each member entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of meetings of members. The conversion shall be adopted upon receiving at least a majority of the votes that members present at each meeting or represented by proxy are entitled to cast.
3. If any converting corporation has no members, or no members entitled to vote on it, a resolution for conversion shall be adopted at a meeting of the board of directors of the corporation upon receiving the vote of a majority of the directors in office.
4. The corporation shall file with the secretary of state a certificate of conversion to non-Rhode Island entity, executed by its president and vice president and by its secretary or an assistant secretary, that certifies:
   1. The name of the corporation, and if it has been changed, the name under which it was originally incorporated;
   2. The date of filing of its original articles of incorporation with the secretary of state;
   3. The name and jurisdiction of the entity and type of entity to which the corporation shall be converted;
   4. That the conversion has been approved in accordance with the provisions of this section;
   5. The agreement of the corporation that it may be served with process in the state of Rhode Island in any action, suit, or proceeding for enforcement of any obligation of the corporation arising while it was a corporation of this state, and that it irrevocably appoints the secretary of state as its agent to accept service of process in any such action, suit, or proceeding; and
   6. The address to which a copy of the process referred to in subsection (d)(5) of this section shall be mailed to it by the secretary of state. In the event of  service upon the secretary of state in accordance with subsection (d)(5) of this section, the secretary of state shall forthwith notify  the corporation that has converted out of the state of Rhode Island by letter, certified mail, return receipt requested, directed to  the corporation that has converted out of the state of Rhode Island at the address so specified, unless  the corporation shall have designated in writing to the secretary of state a different address for  this purpose, in which case it shall be mailed to the last address designated.  The letter shall enclose a copy of the process and any other papers served on the secretary of state pursuant to this subsection. It shall be the duty of the plaintiff in the event of  service to serve process and any other papers in duplicate; to notify the secretary of state that service is being effected pursuant to this subsection; and to pay the secretary of state the sum of fifteen dollars ($15.00) for the use of the state, which sum shall be taxed as part of the costs in the proceeding, if the plaintiff shall prevail therein. The secretary of state shall maintain an alphabetical record of any  service setting forth the name of the plaintiff and the defendant; the title, docket number, and nature of the proceeding in which process has been served; the fact that service has been effected pursuant to this subsection; the return date thereof; and the day and hour service was made. The secretary of state shall not be required to retain such information longer than five (5) years from receipt of the service of process.
5. Upon the filing in the office of the secretary of state of a certificate of conversion to non-Rhode Island entity in accordance with subsection (d) of this section, or upon the future effective date or time of the certificate of conversion to non-Rhode Island entity and payment to the secretary of state of all fees prescribed under this title, the secretary of state shall certify that the corporation has filed all documents and paid all fees required by this title, and thereupon the corporation shall cease to exist as a corporation of this state at the time the certificate of conversion becomes effective.  The certificate of the secretary of state shall be prima facie evidence of the conversion by  the corporation out of the state.
6. The conversion of a corporation out of the state in accordance with this section and the resulting cessation of its existence as a corporation of this state pursuant to a certificate of conversion to non-Rhode Island entity shall not be deemed to affect any obligations or liabilities of the corporation incurred prior to such conversion or the personal liability of any person incurred prior to such conversion, nor shall it be deemed to affect the choice of law applicable to the corporation with respect to matters arising prior to such conversion.
7. Unless otherwise provided in a resolution of conversion adopted in accordance with this section, the converting corporation shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not constitute a dissolution of such corporation.
8. When a corporation has been converted to another entity or business form pursuant to this section, the other entity or business form shall, for all purposes of the laws of the state, be deemed to be the same entity as the corporation. When any conversion shall have become effective under this section, for all purposes of the laws of the state, all of the rights, privileges, and powers of the corporation that has converted, and all property, real, personal, and mixed, and all debts due to  the corporation, as well as all other things and causes of action belonging to  the corporation, shall remain vested in the other entity or business form to which  the corporation has converted and shall be the property of  the other entity or business form, and the title to any real property vested by deed or otherwise in  the corporation shall not revert to  the corporation or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of  the corporation shall be preserved unimpaired, and all debts, liabilities, and duties of the corporation that has converted shall remain attached to the other entity or business form to which  the corporation has converted, and may be enforced against it to the same extent as if  the debts, liabilities, and duties had originally been incurred or contracted by it in its capacity as  the other entity or business form. The rights, privileges, powers, and interest in property of the corporation that has converted, as well as the debts, liabilities, and duties of  the corporation, shall not be deemed, as a consequence of the conversion, to have been transferred to the other entity or business form to which such corporation has converted for any purposes of the laws of the state.

History of Section. P.L. 2021, ch. 232, § 2, effective July 8, 2021; P.L. 2021, ch. 335, § 2, effective July 9, 2021.

7-6-48.4. Filing of certificate of conversion to corporation (nonprofit).

1. The certificate of conversion to corporation (nonprofit) shall be delivered to the secretary of state. If the secretary of state finds that the certificate of conversion to corporation (nonprofit) conforms to law, the secretary of state shall, when all fees have been paid as prescribed in subsection (b) of this section:
   1. Endorse on the original the word “Filed,” and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office; and
   3. Issue a certificate of conversion to corporation (nonprofit).
2. The secretary of state shall charge and collect for filing a certificate of conversion (nonprofit), twenty-five dollars ($25.00).
3. The certificate of conversion to corporation (nonprofit) shall be delivered to the corporation.

History of Section. P.L. 2021, ch. 232, § 2, effective July 8, 2021; P.L. 2021, ch. 335, § 2, effective July 9, 2021.

7-6-49. Sale, lease, exchange, or mortgage of assets.

A sale, lease, exchange, mortgage, pledge, or other disposition of all, or substantially all, the property and assets of a corporation may be made upon the terms and conditions and for the consideration, which may consist in whole or in part of money or property, real or personal, including shares of any corporation for profit, domestic or foreign, that is authorized in the following manner:

1. If there are members entitled to vote on it, the board of directors shall adopt a resolution recommending the sale, lease, exchange, mortgage, pledge, or other disposition and directing that it be submitted to a vote at a meeting of members entitled to vote on it, which may be either an annual or a special meeting. Written notice stating that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, mortgage, pledge, or other disposition of all, or substantially all, the property and assets of the corporation shall be given to each member entitled to vote at the meeting, within the time and in the manner provided by this chapter for the giving of notice of meetings of members. At the meeting the members may authorize the sale, lease, exchange, mortgage, pledge, or other disposition and may fix, or may authorize the board of directors to fix, any or all of the terms and conditions of the disposition and the consideration to be received by the corporation for it. The authorization shall require at least a majority of the votes that members present at the meeting or represented by proxy are entitled to cast. After the authorization by a vote of members, the board of directors, nevertheless, in its discretion, may abandon the sale, lease, exchange, mortgage, pledge, or other disposition of assets, subject to the rights of third parties under any contracts relating to the disposition of the assets, without further action or approval by members.
2. If there are no members, or no members entitled to vote on it, a sale, lease, exchange, mortgage, pledge, or other disposition of all, or substantially all, the property and assets of a corporation is authorized upon receiving the vote of a majority of the directors in office.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-50. Voluntary dissolution.

1. A corporation may dissolve and wind up its affairs in the following manner:
   1. If there are members entitled to vote on dissolution, the board of directors shall adopt a resolution recommending that the corporation be dissolved, and directing that the question of the dissolution be submitted to a vote at a meeting of members entitled to vote on it, which may be either an annual or special meeting. Written notice stating that the purpose, or one of the purposes, of the meeting is to consider the advisability of dissolving the corporation, shall be given to each member entitled to vote at the meeting, within the time and in the manner provided by this chapter for the giving of notice of meetings of members. A resolution to dissolve the corporation is adopted upon receiving at least a majority of the votes that members present at the meeting or represented by proxy are entitled to cast.
   2. If there are no members, or no members entitled to vote on dissolution, the dissolution of the corporation shall be authorized at a meeting of the board of directors upon the adoption of a resolution to dissolve by the vote of a majority of the directors in office.
2. Upon the adoption of the resolution by the members, or by the board of directors if there are no members or no members entitled to vote on dissolution, the corporation shall cease to conduct its affairs except to the extent necessary for the winding up of its affairs, shall immediately mail a notice of the proposed dissolution to each known creditor of the corporation, and shall proceed to collect its assets and apply and distribute them as provided in this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-51. Distribution of assets.

The assets of a corporation in the process of dissolution shall be applied and distributed as follows:

1. All liabilities and obligations of the corporation shall be paid and discharged, or adequate provision shall be made for their payment and discharge;
2. Assets held by the corporation upon condition requiring return, transfer, or conveyance, which condition occurs by reason of the dissolution, shall be returned, transferred, or conveyed in accordance with the requirements;
3. Assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, eleemosynary, benevolent, educational, or similar purposes, but not held upon a condition requiring return, transfer, or conveyance by reason of the dissolution, shall be transferred or conveyed to one or more domestic or foreign corporations, societies, or organizations engaged in activities substantially similar to those of the dissolving corporation, pursuant to a plan of distribution adopted as provided in this chapter or as otherwise provided in its articles of incorporation or bylaws;
4. Any other assets shall be distributed in accordance with the provisions of the articles of incorporation or the bylaws to the extent that the articles of incorporation or bylaws determine the distributive rights of members, or any class or classes of members, or provide for distribution to others;
5. Any remaining assets may be distributed to any persons, societies, organizations, or domestic or foreign corporations, whether for profit or nonprofit, that may be specified in a plan of distribution adopted as provided in this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-52. Plan of distribution.

A plan providing for the distribution of assets, not inconsistent with the provisions of this chapter, may be adopted by a corporation in the process of dissolution and shall be adopted by a corporation for the purpose of authorizing any transfer or conveyance of assets for which this chapter requires a plan of distribution, in the following manner:

1. If there are members entitled to vote on the plan, the board of directors shall adopt a resolution recommending a plan of distribution and directing its submission to a vote at a meeting of members entitled to vote on it, which may be either an annual or a special meeting. Written notice setting forth the proposed plan of distribution or a summary of it shall be given to each member entitled to vote at the meeting, within the time and in the manner provided in this chapter for the giving of notice of meetings of members. The plan of distribution shall be adopted upon receiving at least a majority of the votes that members present at the meeting or represented by proxy are entitled to cast.
2. If there are no members, or no members entitled to vote on it, a plan of distribution shall be adopted at a meeting of the board of directors upon receiving a vote of a majority of the directors in office.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-53. Revocation of voluntary dissolution proceedings.

1. A corporation may, at any time prior to the issuance of a certificate of dissolution by the secretary of state, revoke the action previously taken to dissolve the corporation, in the following manner:
   1. If there are members entitled to vote on it, the board of directors shall adopt a resolution recommending that the voluntary dissolution proceedings be revoked, and directing that the question of the revocation be submitted to a vote at a meeting of members entitled to vote on it, which may be either an annual or a special meeting. Written notice stating that the purpose, or one of the purposes, of the meeting is to consider the advisability of revoking the voluntary dissolution proceedings, shall be given to each member entitled to vote at the meeting, within the time and in the manner provided in this chapter for the giving of notice of meetings of members. A resolution to revoke the voluntary dissolution proceedings shall be adopted upon receiving at least a majority of the votes that members present at the meeting or represented by proxy are entitled to cast.
   2. If there are no members, or no members entitled to vote on it, a resolution to revoke the voluntary dissolution proceedings shall be adopted at a meeting of the board of directors upon receiving the vote of a majority of the directors in office.
2. Upon the adoption of the resolution by the members, or by the board of directors where there are no members or no members entitled to vote on it, the corporation may at that time again conduct its affairs.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-54. Articles of dissolution.

If voluntary dissolution proceedings have not been revoked, then when all debts, liabilities, and obligations of the corporation have been paid and discharged, or adequate provision has been made for them, and all of the remaining property and assets of the corporation have been transferred, conveyed, or distributed in accordance with the provisions of this chapter, articles of dissolution shall be executed in duplicate by the corporation by its president or a vice president, and by its secretary or an assistant secretary, and shall set forth:

1. The name of the corporation;
2. If there are members entitled to vote on the dissolution:
   1. A statement setting forth the date of the meeting of members at which the resolution to dissolve was adopted, that a quorum was present at the meeting, and that the resolution received at least a majority of the votes that members present at the meeting or represented by proxy were entitled to cast; or
   2. A statement that the resolution was adopted by a consent in writing signed by all members entitled to vote on it;
3. If there are no members, or no members entitled to vote on the dissolution, a statement of the fact, the date of the meeting of the board of directors at which the resolution to dissolve was adopted, and a statement of the fact that the resolution received the vote of a majority of the directors in office;
4. That all debts, obligations, and liabilities of the corporation have been paid and discharged or that adequate provision has been made for their payment;
5. A copy of the plan of distribution as adopted by the corporation, or a statement that no plan was adopted;
6. That all the remaining property and assets of the corporation have been transferred, conveyed, or distributed in accordance with the provisions of this chapter;
7. That there are no suits pending against the corporation in any court, or that adequate provision has been made for the satisfaction of any judgment, order, or decree that may be entered against it in any pending suit.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-55. Filing of articles of dissolution.

1. The articles of dissolution shall be delivered to the secretary of state. If the secretary of state finds that the articles of dissolution conform to law, the secretary of state shall, when all fees have been paid as prescribed in this chapter:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office;
   3. Issue a certificate of dissolution.
2. The certificate of dissolution shall be delivered to the representative of the dissolved corporation. Upon the issuance of the certificate of dissolution the existence of the corporation ceases, except for the purpose of suits, other proceedings, and appropriate corporate action by members, directors, and officers as provided in this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4.

7-6-56. Revocation of certificate of incorporation.

1. The certificate of incorporation of a corporation may be revoked by the secretary of state upon the conditions prescribed in this section when it is established that:
   1. The corporation procured its articles of incorporation through fraud;
   2. The corporation has continued to exceed or abuse the authority conferred upon it by law;
   3. The corporation has failed to file its annual report within the time required by this chapter, or has failed to pay any fees, when they have become due and payable;
   4. The corporation has failed for 30 days to appoint and maintain a registered agent in this state as required by this chapter;
   5. The corporation has failed, after change of its registered office or registered agent, to file in the office of the secretary of state a statement of the change as required by this chapter;
   6. The corporation has failed to file in the office of the secretary of state any amendment to its articles of incorporation or any articles of merger within the time prescribed by this chapter; or
   7. A misrepresentation has been made of any material matter in any application, report, affidavit, or other document submitted by the corporation pursuant to this chapter.
2. No certificate of incorporation of a corporation shall be revoked by the secretary of state unless:
   1. The secretary of state shall have given the corporation not less than sixty (60) days notice thereof by regular mail addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the revocation notice is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
      1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice shall be required; or
      2. In the case of a domestic corporation that has not yet filed an annual report, then to any one of the incorporators listed on the articles of incorporation, and no further notice shall be required; and
   2. The corporation fails prior to revocation to file the annual report or pay the fees, or file the required statement of change of registered agent or registered office, or file the articles of amendment or articles of merger, or correct the misrepresentation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2001, ch. 26, § 2; P.L. 2001, ch. 268, § 2.

7-6-57. Issuance of certificate of revocation.

1. Upon revoking any certificate of incorporation, the secretary of state shall:
   1. Issue a certificate of revocation in duplicate;
   2. File one of the certificates in the secretary of state’s office;
   3. Send to the corporation by regular mail a certificate of revocation, addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the certificate of revocation is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
      1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice shall be required; or
      2. In the case of a domestic corporation that has not yet filed an annual report, then to any one of the incorporators listed on the articles of incorporation, and no further notice shall be required.
2. Upon the issuance of the certificate of revocation, the authority of the corporation to transact business in this state ceases.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2001, ch. 26, § 2; P.L. 2001, ch. 268, § 2; P.L. 2018, ch. 346, § 6.

7-6-58. Withdrawal of certificate of revocation.

1. Within twenty (20) years after issuing a certificate of revocation as provided in § 7-6-57 , the secretary of state may withdraw the certificate of revocation and reinstate the corporation in good standing:
   1. Upon filing by the corporation of the documents it had previously failed to file as set forth in § 7-6-56(a)(3) — (a)(6); and
   2. Upon the payment by the corporation of a penalty in the amount of twenty-five dollars ($25.00) for each year or part of a year that has elapsed since the issuance of the certificate of revocation.
2. If as permitted by § 7-6-11(b)(2) another corporation, whether business or nonprofit, or domestic or foreign qualified to transact business in this state, bears or has filed a fictitious business name statement with respect to or reserved or registered in a name that is the same as the name of a corporation regarding which the certificate of revocation is proposed to be withdrawn, the secretary of state shall condition the withdrawal of the certificate of revocation upon the reinstated corporation’s amending its articles of incorporation so as to designate a name that is distinguishable upon the records of the secretary of state from its former name.
3. Upon the withdrawal of the certificate of revocation and reinstatement of the corporation in good standing as provided in subsection (a), title to any real estate, or any interest in real estate, held by the corporation at the time of the issuance of the certificate of revocation and not conveyed subsequent to the revocation of its certificate of incorporation shall be deemed to be re-vested in the corporation without further act or deed.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1989, ch. 380, § 1; P.L. 2000, ch. 70, § 2; P.L. 2000, ch. 354, § 2; P.L. 2003, ch. 247, § 2; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2018, ch. 346, § 6; P.L. 2021, ch. 385, § 2, effective July 13, 2021; P.L. 2021, ch. 386, § 2, effective July 13, 2021.

7-6-59. Appeal from revocation of articles of incorporation.

Any corporation aggrieved by the action of the secretary of state in revoking its articles of incorporation may appeal from the action in the manner provided in § 7-6-99 .

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-60. Jurisdiction of court to liquidate assets and affairs of the corporation.

1. The superior court has full power to liquidate the assets and affairs of a corporation:
   1. In an action by a member or director when it is made to appear:
      1. That the directors are deadlocked in the management of the corporate affairs and that irreparable injury to the corporation is being suffered or is threatened because of the deadlock, and either that the members are unable to break the deadlock or there are no members having voting rights;
      2. That the acts of the directors or those in control of the corporation are illegal, oppressive, or fraudulent;
      3. That the members entitled to vote in the election of directors are deadlocked in voting power and have failed for at least two (2) years to elect successors to directors whose terms have expired or would have expired upon the election of their successors;
      4. That the corporate assets are being misapplied or wasted; or
      5. That the corporation is unable to carry out its purposes;
   2. In an action by a creditor:
      1. When the claim of the creditor has been reduced to judgment and an execution on it has been returned unsatisfied and it is established that the corporation is insolvent; or
      2. When the corporation has admitted in writing that the claim of the creditor is due and owing and it is established that the corporation is insolvent;
   3. Upon application by a corporation to have its dissolution continued under the supervision of the court;
   4. When the corporation’s certificate of incorporation is subject to revocation by the secretary of state and it is established that liquidation of its affairs should precede the issuance of a certificate of revocation.
2. Proceedings under this section shall be brought in the county in which the registered office or the principal office of the corporation is situated.
3. It is not necessary to make directors or members parties to any action or proceedings unless relief is sought against them personally.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2018, ch. 346, § 6.

7-6-61. Procedure in liquidation of corporation by court.

1. In proceedings to liquidate the assets and affairs of a corporation the court shall have the power to issue injunctions, to appoint a receiver or receivers pendente lite, with such powers and duties as the court directs, and to take such other proceedings as may be requisite to preserve the corporate assets wherever situated, and carry on the affairs of the corporation until a full hearing can be had.
2. After a hearing upon any notice that the court directs to be given to all parties to the proceedings and to any other parties in interest designated by the court, the court may appoint a liquidating receiver or receivers with authority to collect the assets of the corporation. The liquidating receiver or receivers have authority, subject to court order, to sell, convey, and dispose of all or any part of the assets of the corporation wherever situated, either at public or private sale. The order appointing the liquidating receiver or receivers shall state their powers and duties. The powers and duties may be increased or diminished at any time during the proceedings.
3. The assets of the corporation or the proceeds resulting from a sale, conveyance, or other disposition of the assets shall be applied and distributed as follows:
   1. All costs and expenses of the court proceedings and all liabilities and obligations of the corporation shall be paid, satisfied, and discharged, or adequate provision shall be made for that;
   2. Assets held by the corporation upon condition requiring return, transfer, or conveyance, which condition occurs because of the dissolution or liquidation, shall be returned, transferred, or conveyed in accordance with the requirements;
   3. Assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, eleemosynary, benevolent, educational, or similar purposes, but not held upon a condition requiring return, transfer, or conveyance by reason of the dissolution or liquidation, shall be transferred or conveyed to one or more domestic or foreign corporations, societies, or organizations engaged in activities substantially similar to those of the dissolving or liquidating corporation as the court directs;
   4. Any other assets shall be distributed in accordance with the provisions of the articles of incorporation or the bylaws to the extent that the articles of incorporation or bylaws determine the distributive right of members, or any class or classes of members, or provide for distribution to others;
   5. Any remaining assets may be distributed to such persons, societies, organizations, or domestic or foreign corporations, whether for profit or not for profit, specified in the plan of distribution adopted as provided in this chapter, or where no plan of distribution has been adopted, as the court may direct.
4. The court has power to allow as expenses of the liquidation, compensation to the receiver or receivers and to attorneys in the proceeding, and to direct the payment of the compensation out of the assets of the corporation or the proceeds of any sale or disposition of the assets.
5. A receiver of a corporation appointed under the provisions of this section has authority to sue and defend in all courts in his or her own name as receiver of the corporation. The court appointing the receiver has exclusive jurisdiction of the corporation and its property, wherever situated.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-62. Qualification of receivers.

A receiver shall in all cases be a citizen of the United States or a business corporation authorized to act as receiver, which corporations may be a domestic corporation or a foreign corporation authorized to transact business in this state, and shall in all cases give any bond that the court directs with any sureties that the court requires.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-63. Filing of claims in liquidation proceedings.

In proceedings to liquidate the assets and affairs of a corporation, the court may require all creditors of the corporation to file with the clerk of the court or with the receiver, in any form that the court prescribes, proofs under oath of their respective claims. If the court requires the filing of claims it shall fix a date of not less than four (4) months from the date of the order, as the last day of the filing of claims, and shall prescribe the notice that shall be given to creditors and claimants of the fixed date. Prior to the fixed date, the court may extend the time for the filing of claims. Creditors and claimants failing to file proofs of claim on or before the fixed date may be barred, by order of court, from participating in the distribution of the assets of the corporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-64. Discontinuance of liquidation proceedings.

The liquidation of the assets and affairs of a corporation may be discontinued at any time during the liquidation proceedings when it is established that cause for liquidation no longer exists. In that event the court shall dismiss the proceedings and direct the receiver to redeliver to the corporation all its remaining property and assets.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-65. Decree of involuntary dissolution.

In proceedings to liquidate the assets and affairs of a corporation, when the costs and expenses of the proceedings and all debts, obligations, and liabilities of the corporation shall have been paid and discharged and all of its remaining property and assets distributed in accordance with the provisions of this chapter, or in case its property and assets are not sufficient to satisfy and discharge the costs, expenses, debts, and obligations, and all the property and assets have been applied so far as they will go to their payment, the court shall enter a decree dissolving the corporation, at which time the existence of the corporation ceases.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-66. Filing of decree of dissolution.

In case the court enters a decree dissolving a corporation, it is the duty of the clerk of the court to file a certified copy of the decree with the secretary of state. No fee shall be charged by the secretary of state for that filing.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-67. Deposits with general treasurer.

Upon the voluntary or involuntary dissolution of a corporation, the portion of the assets distributable to any person who is unknown or cannot be found, or who is under disability and for whom there is no person legally competent to receive the distributive portion, shall be reduced to cash and deposited with the general treasurer and shall be paid over to the person or to that person’s legal representative upon satisfactory proof to the general treasurer of that person’s right to the cash.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-68. Survival of remedy after dissolution.

The dissolution of a corporation either: (1) By the issuance of a certificate of dissolution by the secretary of state; or (2) By a decree of court when the court has not liquidated the assets and affairs of the corporation as provided in this chapter; or (3) By expiration of its period of duration; shall not take away or impair any remedy available to or against the corporation, its directors, officers, or members, for any right or claim existing, or any liability incurred, prior to the dissolution if action or other proceeding on the right, claim, or liability is commenced within two (2) years after the date of the dissolution. Any action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name. The members, directors, and officers have power to take any corporate or other action that is appropriate to protect the remedy, right, or claim. If the corporation was dissolved by the expiration of its period of duration, the corporation may amend its articles of incorporation at any time during the period of two (2) years so as to extend its period of duration.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-69. Continuation of certain corporate powers.

Any corporation dissolved in any manner under this chapter or any corporation whose certificate of incorporation is revoked by the secretary of state under § 7-6-56 nevertheless continues for five (5) years after the date of the dissolution or revocation for the purpose of enabling it to settle and close out its affairs, to dispose of and convey its property, to discharge its liabilities, and to distribute its assets, but not for the purpose of continuing the activities for which it was organized. The members, directors, and officers have power to take any corporate or other action that is appropriate to carry out the purposes of this section.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2000, ch. 70, § 2; P.L. 2000, ch. 354, § 2.

7-6-70. Admission of foreign corporation.

1. No foreign corporation has the right to conduct affairs in this state until it has procured a certificate of authority to do so from the secretary of state. No foreign corporation is entitled to procure a certificate of authority under this chapter to conduct any affairs in this state that a corporation organized under this chapter is prohibited from conducting. A foreign corporation shall not be denied a certificate of authority because of the fact that the laws of the state or country under which the corporation is organized governing its organization and internal affairs differ from the laws of this state, and nothing contained in this chapter is construed to authorize this state to regulate the organization or the internal affairs of the corporation.
2. Without excluding other activities that may not constitute conducting affairs in this state, a foreign corporation is not considered to be conducting affairs in this state, for the purposes of this chapter, by reason of carrying on in this state any one or more of the following activities:
   1. Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement of claims or disputes;
   2. Holding meetings of its directors or members or carrying on other activities concerning its internal affairs;
   3. Maintaining bank accounts;
   4. Creating evidences of debt, mortgages, or liens on real or personal property;
   5. Securing or collecting debts due to it or enforcing any rights in property securing the debts;
   6. Conducting its affairs in interstate commerce;
   7. Granting funds;
   8. Distributing information to its members;
   9. Conducting an isolated transaction completed within a period of 30 days and not in the course of a number of repeated transactions of like nature.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-71. Powers of foreign corporation.

A foreign corporation that has received a certificate of authority under this chapter shall, until a certificate of revocation or of withdrawal has been issued as provided in this chapter, enjoy the same, but no greater, rights and privileges as a domestic corporation organized for the purposes set forth in the application pursuant to which the certificate of authorization is issued; and, except as otherwise provided in this chapter, is subject to the same duties, restrictions, penalties, and liabilities now or subsequently imposed upon a similar domestic corporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-72. Corporate name of foreign corporation.

No certificate of authority shall be issued to a foreign corporation unless the corporate name of the corporation:

1. Does not contain any word or phrase that indicates or implies that it is organized for any purpose other than one or more of the purposes contained in its articles of incorporation.
2. Is distinguishable upon the records of the secretary of state from the name of any corporation, whether for-profit or not-for-profit, domestic or foreign limited partnership, or domestic or foreign limited-liability company organized under the laws of, or registered or qualified or authorized to transact business or conduct affairs in this state, or that is filed, reserved, or registered under this title.
3. Is translated into letters of the English alphabet, if it is not in English.
4. Words and/or abbreviations that are required by statute to identify the particular type of business entity shall be disregarded when determining if a name is distinguishable upon the records of the secretary of state.
5. The secretary of state shall promulgate rules and regulations defining the term “distinguishable upon the record” for the administration of this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1989, ch. 380, § 1; P.L. 1993, ch. 187, § 1; P.L. 1997, ch. 188, § 2; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2011, ch. 54, § 2; P.L. 2011, ch. 60, § 2; P.L. 2018, ch. 346, § 6.

7-6-73. Change of name by foreign corporation.

Whenever a foreign corporation that is authorized to conduct affairs in this state changes its name to one under which a certificate of authority would not be granted to it on application for a certificate, the certificate of authority of the corporation shall be suspended and it shall not thereafter conduct any affairs in this state until it has changed its name to a name that is available to it under the laws of this state.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-74. Application by foreign corporation for certificate of authority.

1. A foreign corporation, in order to procure a certificate of authority to conduct affairs in this state, shall apply for it with the secretary of state. The application shall set forth:
   1. The name of the corporation and the state or country under the laws of which it is incorporated;
   2. The date of incorporation and the period of duration of the corporation;
   3. The street address of the principal office of the corporation;
   4. The address of the proposed registered office of the corporation in this state, and the name of its proposed registered agent in this state at the address;
   5. The purpose or purposes of the corporation that it proposes to pursue in conducting its affairs in this state;
   6. The names and respective addresses of the directors and officers of the corporation;
   7. The additional information as is necessary or appropriate to enable the secretary of state to determine whether the corporation is entitled to a certificate of authority to conduct affairs in this state.
2. The application shall be made on forms prescribed and furnished by the secretary of state and shall be executed in duplicate by the corporation by its president or a vice president and by its secretary or an assistant secretary.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2011, ch. 53, § 2; P.L. 2011, ch. 64, § 2; P.L. 2017, ch. 9, § 1; P.L. 2017, ch. 20, § 1.

7-6-75. Filing of application by foreign corporation for certificate of authority.

1. The application of the corporation for a certificate of authority shall be delivered to the secretary of state, together with a certificate of good standing or legal existence issued by the proper officer of the state or country under the laws of which it is incorporated.
2. If the secretary of state finds that the application conforms to law, the secretary of state shall, when all fees have been paid as prescribed in this chapter:
   1. Endorse on the documents the word “Filed”, and the month, day, and year of the filing;
   2. File in the secretary of state’s office the original of the application and certificate of good standing or legal existence issued by the proper officer of the state or country under the laws of which it is incorporated;
   3. Issue a certificate of authority to conduct affairs in this state.
3. The certificate of authority shall be delivered to the corporation or its representative.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2017, ch. 9, § 1; P.L. 2017, ch. 20, § 1.

7-6-76. Effect of certificate of authority by foreign corporation.

Upon the issuance of a certificate of authority by the secretary of state, the corporation is authorized to conduct affairs in this state for those purposes set forth in its application, subject, however, to the right of the state to suspend or to revoke the authority as provided in this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2017, ch. 9, § 1; P.L. 2017, ch. 20, § 1.

7-6-77. Registered office and registered agent of foreign corporation.

Each foreign corporation authorized to conduct affairs in this state shall have and continuously maintain in this state:

1. A registered office, which may be the same as its principal office;
2. A registered agent, which agent may be either an individual resident in this state whose business office is identical with the registered office, or a domestic corporation, whether for profit or not for profit, or a foreign corporation, whether for profit or not for profit, authorized to transact business or conduct affairs in this state, having an office identical with the registered office.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2018, ch. 346, § 6.

7-6-78. Change of registered office or registered agent of foreign corporation.

1. A foreign corporation authorized to conduct affairs in this state may change its registered office or its registered agent, or both, upon filing in the office of the secretary of state a statement setting forth:
   1. The name of the corporation;
   2. The address of its then-registered office;
   3. If the address of its registered office be changed, the address to which the registered office is to be changed;
   4. The name of its registered agent;
   5. If its registered agent be changed, the name of its successor registered agent;
   6. That the address of its registered office and the address of the office of its registered agent, as changed, will be identical;
   7. That the change was authorized by an adopted resolution of its board of directors.
2. The statement shall be executed by the corporation by its president or a vice president and delivered to the secretary of state. If the secretary of state finds that the statement conforms to the provisions of this chapter, the secretary of state shall file the statement in his or her office, and upon filing the change of address of the registered office, or the appointment of a new registered agent, or both, becomes effective.
3. Any registered agent in this state appointed by a foreign corporation may resign as the agent upon filing a written notice of resignation, executed in duplicate, with the secretary of state who shall immediately mail a copy of it to the foreign corporation at its principal office in the state or country under the laws of which it is incorporated as shown by its most recent annual report. The appointment of the agent terminates upon the expiration of 30 days after receipt of the notice by the secretary of state.
4. If a registered agent changes the registered agent’s business address to another place within the state, the registered agent may change the address and the address of the registered office of any corporations of which he, she, or it is registered agent by filing a statement as required above except that it need be signed only by the registered agent, need not be responsive to subsections (a)(5) and (a)(7), and must recite that a copy of the statement has been mailed to each corporation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-79. Service of process on foreign corporation.

1. The registered agent appointed by a foreign corporation authorized to conduct affairs in this state shall be an agent of the corporation upon whom any process, notice, or demand required or permitted by law to be served upon the corporation may be served.
2. Whenever a foreign corporation authorized to conduct affairs in this state fails to appoint or maintain a registered agent in this state, or whenever any registered agent cannot with reasonable diligence be found at the registered office or whenever the certificate of authority of a foreign corporation is suspended or revoked, the secretary of state shall be an agent of the corporation upon whom any process, notice, or demand may be served. Service on the secretary of state of any process, notice, or demand shall be made by delivering to and leaving with the secretary of state, or with any clerk having charge of the corporation department of the secretary of state’s office, duplicate copies of the process, notice, or demand. If any process, notice, or demand is served on the secretary of state, the secretary of state shall immediately forward one of the copies by registered or certified mail, addressed to the corporation at its principal office in the state or country under the laws of which it is incorporated. Any service upon the secretary of state is returnable in not less than 30 days.
3. The secretary of state shall keep a record of all processes, notices, and demands served upon the secretary of state under this section, and shall record in the record the time of the service and the secretary of state’s action with reference to the service.
4. Nothing contained in this section limits or affects the right to serve any process, notice, or demand, required or permitted by law to be served upon a corporation in any other manner now or subsequently permitted by law.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-80. Amendment to articles of incorporation of foreign corporation.

Whenever the articles of incorporation of a foreign corporation authorized to conduct affairs in this state are amended, the foreign corporation shall, within 30 days after the amendment becomes effective, file in the office of the secretary of state a copy of the amendment duly certified by the proper officer of the state or country under the laws of which it is incorporated; but the filing of the articles does not of itself enlarge or alter the purpose or purposes that the corporation is authorized to pursue in conducting its affairs in this state, or authorize the corporation to conduct affairs in this state under any other name than the name set forth in its certificate of authority.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-80.1. Foreign application for transfer of authority.

1. A duly authorized foreign nonprofit corporation in the state of Rhode Island that converts into any form of foreign other entity subject to the provisions of Title 7 and the resulting entity is required to file for authority to transact business in this state may apply for a transfer of authority in the office of the secretary of state by filing:
   1. An application for transfer of authority that has been executed and filed in accordance with § 7-6-2.1; and
   2. An application for authority to transact business in the state of Rhode Island for the resulting entity type; and
   3. A certificate of legal existence or good standing issued by the proper officer of the state or country under the laws of which the resulting entity has been formed.
2. The application for transfer of authority shall state:
   1. The name of the nonprofit corporation;
   2. The type of other entity into which it has been converted; and
   3. The jurisdiction whose laws govern its internal affairs.
3. Upon the effective time and date of the application for transfer of authority, the authority of the nonprofit corporation authorized to transact business under this chapter shall be transferred without interruption to the other entity which shall thereafter hold such authority subject to the provisions of the laws of the state of Rhode Island applicable to that type of resulting entity.

History of Section. P.L. 2012, ch. 81, § 1; P.L. 2012, ch. 103, § 1.

7-6-81. Merger of foreign corporation authorized to conduct affairs in this state.

Whenever a foreign corporation authorized to conduct affairs in this state is a party to a statutory merger permitted by the laws of the state or country under the laws of which it is incorporated, and the corporation is the surviving corporation, it shall, within thirty (30) days after the merger becomes effective, file with the secretary of state a copy of the articles of merger duly certified by the proper officer of the state or country under the laws of which the statutory merger was effected. It is not necessary for the corporation to procure either a new or amended certificate of authority to conduct affairs in this state unless the name of the corporation is changed by the merger or unless the corporation desires to pursue in this state other or additional purposes than those that it is then authorized to pursue in this state.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-82. Amended certificate of authority.

1. A foreign corporation authorized to conduct affairs in this state shall procure an amended certificate of authority by making application for one with the secretary of state if it changes its corporate name or desires to pursue in this state other or additional purposes than those set forth in its prior application for a certificate of authority.
2. The requirements as to the form and contents of the application, the manner of its execution, the filing of the original with the secretary of state, the issuance of an amended certificate of authority and its effect, are the same as in the case of an original application for a certificate of authority.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1999, ch. 354, § 19; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4.

7-6-83. Withdrawal of foreign corporation.

1. A foreign corporation authorized to conduct affairs in this state may withdraw from this state upon procuring from the secretary of state a certificate of withdrawal. In order to procure a certificate of withdrawal, the foreign corporation shall deliver to the secretary of state an application for withdrawal, setting forth:
   1. The name of the corporation and the state or country under the laws of which it is incorporated;
   2. That the corporation is not conducting affairs in this state;
   3. That the corporation surrenders its authority to conduct affairs in this state;
   4. That the corporation revokes the authority of its registered agent in this state to accept service of process and consents that service of process in any action, suit, or proceeding based upon any cause of action arising in this state during the time the corporation was authorized to conduct affairs in this state may subsequently be made on the corporation by service on the secretary of state;
   5. A post office address to which the secretary of state may mail a copy of any process against the corporation that may be served on the secretary of state.
2. The application for withdrawal shall be made on forms prescribed and furnished by the secretary of state and shall be executed by the corporation by its president or a vice president and by its secretary or an assistant secretary, or, if the corporation is in the hands of a receiver or trustee, shall be executed on behalf of the corporation by the receiver or trustee.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-84. Filing of application for withdrawal.

1. The application for withdrawal shall be delivered to the secretary of state. If the secretary of state finds that the application conforms to the provisions of this chapter, the secretary of state shall, when all fees have been paid as prescribed in this chapter:
   1. Endorse on the original the word “Filed”, and the month, day, and year of the filing;
   2. File the original in the secretary of state’s office;
   3. Issue a certificate of withdrawal.
2. The certificate of withdrawal shall be delivered to the corporation or its representative. Upon the issuance of the certificate of withdrawal, the authority of the corporation to conduct affairs in this state ceases.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4.

7-6-85. Revocation of certificate of authority.

1. The certificate of authority of a foreign corporation to conduct affairs in this state may be revoked by the secretary of state upon the conditions prescribed in this section when:
   1. The corporation has failed to file its annual report within the time required by this chapter or has failed to pay any fees or penalties prescribed by this chapter when they have become due and payable;
   2. The corporation has failed for 30 days to appoint and maintain a registered agent in this state as required by this chapter;
   3. The corporation has failed, after change of its registered agent, to file in the office of the secretary of state a statement of the change as required by this chapter;
   4. The corporation has failed to file in the office of the secretary of state any amendment to its articles of incorporation or any articles of merger within the time prescribed by this chapter;
   5. The certificate of authority of the corporation was procured through fraud practiced upon the state;
   6. The corporation has continued to exceed or abuse the authority conferred upon it by this chapter; or
   7. A misrepresentation has been made of any material matter in any application, report, affidavit, or other document submitted by the corporation pursuant to this chapter.
2. No certificate of authority of a foreign corporation shall be revoked by the secretary of state unless:
   1. The secretary of state shall have given the corporation not less than sixty (60) days notice thereof by regular mail addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the revocation notice is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
      1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice shall be required; or
      2. In the case of a foreign corporation that has not yet filed an annual report, then to the corporation at its principal office shown in its application for certificate of authority, and no further notice shall be required; and
   2. The corporation fails prior to revocation to file the annual report, pay the fees or penalties, file the required statement of change of registered agent, file the articles of amendment or articles of merger, or correct the misrepresentation.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2001, ch. 26, § 2; P.L. 2001, ch. 268, § 2.

7-6-86. Issuance of certificate of revocation.

1. Upon revoking any certificate of authority, the secretary of state shall:
   1. Issue a certificate of revocation in duplicate;
   2. File one of the certificates in the secretary of state’s office;
   3. Send to the corporation by regular mail a certificate of revocation, addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the revocation certificate is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
      1. To the corporation at its principal office of record as shown in its most recent annual report, and no further notice shall be required; or
      2. In the case of a foreign corporation that has not yet filed an annual report, then to the corporation at its principal office shown in its application for certificate of authority, and no further notice shall be required.
2. Upon the issuance of the certificate of revocation, the authority of the corporation to conduct affairs in this state ceases.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2001, ch. 26, § 2; P.L. 2001, ch. 268, § 2.

7-6-87. Withdrawal of certificates of revocation.

Within twenty (20) years after issuing a certificate of revocation as provided in § 7-6-86 , the secretary of state may withdraw the certificate of revocation and reinstate the corporation in good standing:

1. Upon the filing by the corporation of the documents it had previously failed to file as set forth in § 7-6-85(a)(1) — (a)(4), inclusive; and
2. 1. Upon the payment by the corporation of a penalty of twenty-five dollars ($25.00) for each year or part of a year that has elapsed since the issuance of the certificate of revocation.
   2. If as permitted by § 7-6-72(2) another corporation, whether business or nonprofit, or domestic or foreign, qualified to transact business in this state, bears or has filed a fictitious business name statement regarding or reserved or registered a name that is the same as the name of a corporation regarding which the certificate of revocation is proposed to be withdrawn, the secretary of state shall condition the withdrawal of a certificate of revocation upon the reinstated corporation’s amending its articles of incorporation so as to designate a name that is distinguishable upon the records of the secretary of state from its former name.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1989, ch. 380, § 1; P.L. 2003, ch. 247, § 2; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4; P.L. 2021, ch. 385, § 2, effective July 13, 2021; P.L. 2021, ch. 386, § 2, effective July 13, 2021.

7-6-88. Appeal from revocation of certificate of authority.

Any foreign corporation aggrieved by the action of the secretary of state in revoking its certificate of authority may appeal from the revocation in the manner provided in § 7-6-99 .

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-89. Conducting affairs without certificate of authority.

1. No foreign corporation that is conducting affairs in this state without a certificate of authority shall be permitted to maintain any action, suit, or proceeding in any court of this state until the corporation has obtained a certificate of authority. Nor shall any action, suit, or proceeding be maintained in any court of this state by any successor or assignee of the corporation on any right, claim, or demand arising out of the conduct of affairs by the corporation in this state, until a certificate of authority has been obtained by the corporation or by a corporation that has acquired all or substantially all of its assets.
2. The failure of a foreign corporation to obtain a certificate of authority to conduct affairs in this state does not impair the validity of any contract or act of the corporation, and does not prevent the corporation from defending any action, suit, or proceeding in any court of this state.
3. A foreign corporation that conducts affairs in this state without a certificate of authority is liable to this state, for the years or parts of years during which it conducted affairs in this state without a certificate of authority, in an amount equal to all fees that would have been imposed by this chapter upon the corporation had it duly applied for and received a certificate of authority to conduct affairs in this state as required by this chapter and subsequently filed all reports required by this chapter, plus all interest and penalties imposed by this chapter for failure to pay the fees. The attorney general shall bring proceedings to recover all amounts due this state under the provisions of this section.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-90. Annual report of domestic and foreign corporations. [Effective until January 1, 2022.]

1. Each domestic corporation, and each foreign corporation authorized to conduct affairs in this state, shall file, within the time prescribed by this chapter, an annual report setting forth the following information as of the date of the report:
   1. The name of the corporation and the state or country under the laws of which it is incorporated;
   2. The address of the registered office of the corporation in this state and the name of its registered agent in this state at the address;
   3. The address of the principal office of the corporation;
   4. A brief statement of the character of the affairs that the corporation is actually conducting, or, in the case of a foreign corporation, that the corporation is actually conducting in this state;
   5. The names and respective addresses of the directors and officers of the corporation.
2. The annual report shall be made on forms prescribed and furnished by the secretary of state and the information contained in the report shall be given as of the date of the execution of the report. It shall be executed by the corporation by its president, a vice president, secretary, an assistant secretary, treasurer, or authorized representative, or, if the corporation is in the hands of a receiver or trustee, it shall be executed on behalf of the corporation by the receiver or trustee.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2012, ch. 81, § 2; P.L. 2012, ch. 103, § 2; P.L. 2014, ch. 25, § 1; P.L. 2014, ch. 40, § 1.

7-6-90. Annual report of domestic and foreign corporations. [Effective January 1, 2022.]

1. Each domestic corporation, and each foreign corporation authorized to conduct affairs in this state, shall file, within the time prescribed by this chapter, an annual report setting forth the following information as of the date of the report:
   1. The name of the corporation and the state or country under the laws of which it is incorporated;
   2. [Deleted by P.L. 2021, ch. 137, §  2 and P.L. 2021, ch. 138, §  2.]
   3. The address of the principal office of the corporation;
   4. A brief statement of the character of the affairs that the corporation is actually conducting, or, in the case of a foreign corporation, that the corporation is actually conducting in this state; and
   5. The names and respective addresses of the directors and officers of the corporation.
2. The annual report shall be made on forms prescribed and furnished by the secretary of state and the information contained in the report shall be given as of the date of the execution of the report. It shall be executed by the corporation by its president, a vice president, secretary, an assistant secretary, treasurer, or authorized representative, or, if the corporation is in the hands of a receiver or trustee, it shall be executed on behalf of the corporation by the receiver or trustee.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2012, ch. 81, § 2; P.L. 2012, ch. 103, § 2; P.L. 2014, ch. 25, § 1; P.L. 2014, ch. 40, § 1; P.L. 2021, ch. 137, § 2, effective January 1, 2022; P.L. 2021, ch. 138, § 2, effective January 1, 2022.

7-6-91. Filing of annual report of domestic and foreign corporations. [Effective until January 1, 2022.]

1. The annual report of a domestic or foreign corporation shall be delivered to the secretary of state during the month of June of each year, except that the first annual report of a domestic or foreign corporation shall be filed during the month of June of the year following the calendar year in which its certificate of incorporation or its certificate of authority was issued by the secretary of state.
2. Proof to the satisfaction of the secretary of state that prior to the first day of July the report was deposited in the United States mail in a sealed envelope, properly addressed, with postage prepaid, is deemed a compliance with this requirement.
3. If the secretary of state finds that the report conforms to the requirements of this chapter, the secretary of state shall file the report.
4. If the secretary of state finds that it does not conform, the secretary of state shall promptly return the report to the corporation for any necessary corrections, in which case the penalties subsequently prescribed for failure to file the report within the time above provided do not apply if the report is corrected to conform to the requirements of this chapter and returned to the secretary of state within thirty (30) days from the date on which it was mailed to the corporation by the secretary of state.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-91. Filing of annual report of domestic and foreign corporations. [Effective January 1, 2022.]

1. The annual report of a domestic or foreign corporation shall be delivered to the secretary of state between February 1 and May 1 of each year, except that the first annual report of a domestic or foreign corporation shall be filed between February 1 and May 1 of the year following the calendar year in which its certificate of incorporation or its certificate of authority was issued by the secretary of state.
2. Proof to the satisfaction of the secretary of state that prior to the first day of May the report was deposited in the United States mail in a sealed envelope, properly addressed, with postage prepaid, is deemed a compliance with this requirement.
3. If the secretary of state finds that the report conforms to the requirements of this chapter, the secretary of state shall file the report.
4. If the secretary of state finds that it does not conform, the secretary of state shall promptly return the report to the corporation for any necessary corrections, in which case the penalties subsequently prescribed for failure to file the report within the time above provided do not apply if the report is corrected to conform to the requirements of this chapter and returned to the secretary of state within thirty (30) days from the date on which it was mailed to the corporation by the secretary of state.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 2021, ch. 137, § 2, effective January 1, 2022; P.L. 2021, ch. 138, § 2, effective January 1, 2022.

7-6-92. Fees for filing documents and issuing certificates.

The secretary of state shall charge and collect for:

1. Filing articles of incorporation and issuing a certificate of incorporation, thirty-five dollars ($35.00).
2. Filing articles of amendment and issuing a certificate of amendment, ten dollars ($10.00).
3. Filing certificate of correction and issuing a certificate of correction, ten dollars ($10.00).
4. Filing restated articles of incorporation and issuing restated certificate of incorporation, ten dollars ($10.00).
5. Filing articles of merger or consolidation and issuing a certificate of merger or consolidation, twenty-five dollars ($25.00).
6. 1. Filing a statement of change of registered agent and registered office or filing a statement of change of registered agent, ten dollars ($10.00).
   2. Filing a statement of change of registered office only, without fee.
7. Filing articles of dissolution, ten dollars ($10.00).
8. Filing an application of a foreign corporation for a certificate of authority to conduct affairs in this state and issuing a certificate of authority, fifty dollars ($50.00).
9. Filing an application of a foreign corporation for an amended certificate of authority to conduct affairs in this state and issuing an amended certificate of authority, twenty-five dollars ($25.00).
10. Filing a copy of an amendment to the articles of incorporation of a foreign corporation holding a certificate of authority to conduct affairs in this state, twenty-five dollars ($25.00).
11. Filing a copy of articles of merger of a foreign corporation holding a certificate of authority to conduct affairs in this state, twenty-five dollars ($25.00).
12. Filing an application for withdrawal of a foreign corporation and issuing a certificate of withdrawal, ten dollars ($10.00).
13. Filing any other statement or report, including an annual report, of a domestic or foreign corporation, twenty dollars ($20.00).

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1990, ch. 65, art. 43, § 8; P.L. 2001, ch. 26, § 2; P.L. 2001, ch. 268, § 2; P.L. 2012, ch. 81, § 2; P.L. 2012, ch. 103, § 2.

7-6-93. Miscellaneous charges.

The secretary of state shall charge and collect:

1. For furnishing a certified copy of any document, instrument, or paper relating to a corporation, fifteen cents ($.15) per page and five dollars ($5.00) for the certificate and affixing the seal to it.
2. At the time of any service of process on the secretary of state as resident agent of a corporation, fifteen dollars ($15.00), which is recoverable as taxable costs by the party to the suit or action causing the service to be made if the party prevails in the suit or action.
3. For issuing a certificate of good standing/letter of status, five dollars ($5.00).
4. For issuing a certificate of fact, five dollars ($5.00).

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1990, ch. 65, art. 43, § 8; P.L. 2005, ch. 36, § 4; P.L. 2005, ch. 72, § 4.

7-6-94. Penalties imposed upon corporation.

1. Each domestic or foreign corporation that fails or refuses to file its annual report for any year within the time prescribed by this chapter is subject to a penalty of twenty-five dollars ($25.00) for each year to be assessed by the secretary of state.
2. Each domestic or foreign corporation that fails or refuses to answer truthfully and fully within the time prescribed by this chapter interrogatories propounded by the secretary of state in accordance with the provisions of this chapter, is guilty of a misdemeanor and upon conviction may be fined in any amount not exceeding five hundred dollars ($500).

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1990, ch. 77, § 1.

7-6-95. Penalties imposed upon directors and officers.

Each director and officer of a domestic or foreign corporation who fails or refuses within the time prescribed by this chapter to answer truthfully and fully interrogatories propounded to the director or officer by the secretary of state in accordance with the provisions of this chapter, or who signs any articles, statement, report, application, or other document filed with the secretary of state that is known to the director or officer to be false in any material respect, is guilty of a misdemeanor, and upon conviction may be fined in any amount not exceeding five hundred dollars ($500).

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-96. Interrogatories by secretary of state.

The secretary of state may propound to any domestic or foreign corporation, subject to the provisions of this chapter, and to any officer or director of the corporation, any interrogatories that are reasonably necessary and proper to enable the secretary of state to ascertain whether the corporation has complied with all the applicable provisions of this chapter. The interrogatories shall be answered within thirty (30) days after their mailing, or within any additional time that is fixed by the secretary of state. The answers to the interrogatories shall be full and complete and shall be made in writing and under oath. If the interrogatories are directed to an individual, they shall be answered by that individual and if directed to a corporation they shall be answered by the president, vice president, secretary or assistant secretary, or treasurer or assistant treasurer of the corporation. The secretary of state need not file any document to which the interrogatories relate until the interrogatories are answered as provided in this section, and not then if the interrogatory answers disclose that the document is not in conformity with the provisions of this chapter. The secretary of state shall certify to the attorney general, for any action that the attorney general deems appropriate, all interrogatories and answers to them that disclose a violation of any of the provisions of this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-97. Information disclosed by interrogatories.

Interrogatories propounded by the secretary of state and the answers to them shall not be open to public inspection nor shall the secretary of state disclose any facts or information obtained from them except insofar as the secretary of state’s official duty may require the facts or information to be made public or if the interrogatories or the answers to them are required for evidence in any criminal proceedings or in any other action by this state.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-98. Powers of secretary of state.

The secretary of state has the power and authority reasonably necessary to enable him or her to administer this chapter efficiently and to perform the duties imposed on him or her by this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-99. Appeal from secretary of state.

1. If the secretary of state fails to approve the articles of incorporation, amendment, merger, consolidation or dissolution, or any other document required by this chapter to be approved by the secretary of state before the document is filed in the secretary of state’s office, the secretary of state shall, within ten (10) days after the delivery of the document to him or her, give written notice of his or her disapproval to the domestic or foreign person or corporation delivering the document, specifying the reasons for the disapproval. From the disapproval, or from the revocation of a certificate of incorporation pursuant to the provisions of this chapter, the person or corporation may appeal to the superior court of the county in which the registered office of the corporation is, or is proposed to be, situated by filing with the clerk of the court a petition setting forth a copy of the articles or other document sought to be filed and a copy of the written disapproval by the secretary of state; at which time the matter shall be tried de novo by the court, and the court shall either sustain the action of the secretary of state or direct the secretary of state to take any action that the court deems proper.
2. If the secretary of state revokes the certificate of authority to conduct affairs in this state of any foreign corporation, pursuant to the provisions of this chapter, the foreign corporation may similarly appeal to the superior court of the county where the registered office of the corporation in this state is situated, by filing with the clerk of the court a petition setting forth a copy of its certificate of authority to conduct affairs in this state and a copy of the notice of revocation given by the secretary of state; at which time the matter shall be tried de novo by the court, and the court shall either sustain the action of the secretary of state or direct the secretary of state to take any action that the court deems proper.
3. Appeals from all final orders and judgments entered by the superior court under this section in review of any ruling or decision of the secretary of state may be taken as in other civil actions.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-100. Certificates and certified copies to be received in evidence.

All certificates issued by the secretary of state in accordance with the provisions of this chapter, and all copies of documents filed in the secretary of state’s office in accordance with the provisions of this chapter when certified by the secretary of state, shall be taken and received in all courts, public offices, and official bodies as prima facie evidence of the facts stated in them. A certificate by the secretary of state under the great seal of this state, as to the existence or nonexistence of the facts relating to corporations that would not appear from a certified copy of any of the preceding documents or certificates, shall be taken and received in all courts, public offices, and official bodies as prima facie evidence of the existence or nonexistence of the facts stated in them.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-101. Forms to be furnished by secretary of state.

All reports required by this chapter to be filed in the office of the secretary of state shall be made on forms that shall be prescribed and furnished by the secretary of state. Forms for all other documents to be filed in the office of the secretary of state shall be furnished by the secretary of state on request for them, but their use, unless otherwise specifically prescribed in this chapter, is not mandatory.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-102. Greater voting requirements.

Whenever, with respect to any action to be taken by the members or directors of a corporation, the articles of incorporation or bylaws require the vote or concurrence of a greater proportion of the directors or members or any class of members than required by this chapter, the provisions of the articles of incorporation or bylaws control.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-103. Waiver of notice.

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

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-104. Action by incorporators, members, or directors without a meeting.

1. Any action required by this chapter to be taken at a meeting of the incorporators, members, or directors of a corporation, or any action that may be taken at a meeting of the incorporators, members, or directors, may be taken without a meeting if a consent in writing, setting forth the action taken, is signed by all of the incorporators, by all the members entitled to vote with respect to the subject matter of the action, or by all of the directors.
2. The consent has the same force and effect as a unanimous vote, and that may be stated in any articles or document filed with the secretary of state under this chapter.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-105. Unauthorized assumption of corporate powers.

All persons who assume to act as a corporation without authority so to do are jointly and severally liable for all debts and liabilities incurred or arising as a result thereof.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-106. Reservation of power.

The general assembly at all times has the power to prescribe any regulations, provisions, and limitations that it deems advisable, which regulations, provisions, and limitations are binding on any corporations subject to the provisions of this chapter, and the general assembly has power to amend, repeal, or modify this chapter at pleasure.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6-107. Effect of repeal of prior chapters.

1. The repeal of a prior chapter by this chapter does not affect any right accrued or established, or any liability or penalty incurred, under the provisions of the prior chapter, prior to its repeal.
2. The limitation formerly set forth in § 7-6-8 , as amended, which is repealed hereby, and any similar limitation does not subsequently apply to any existing corporation whether created by special act of the general assembly or otherwise, even if the corporation’s articles of incorporation or any special act of the general assembly contain a reference to § 7-6-8 or a recitation of the limitation previously contained in that section or any similar limitation.
3. Each existing corporation has the powers set forth in § 7-6-5 of this chapter even if its articles of incorporation contain other or different powers or contain a reference to or recitation of the powers granted by any act at this time or subsequently repealed.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1; P.L. 1994, ch. 437, § 1; P.L. 1997, ch. 188, § 2; P.L. 2018, ch. 346, § 6.

7-6-108. Effect of invalidity of part of this chapter.

If a court of competent jurisdiction adjudges any clause, sentence, paragraph, section, or part of this chapter to be invalid or unconstitutional, the judgment or decree does not affect, impair, invalidate, or nullify the remainder of this chapter, but the effect of the judgment or decree is confined to the clause, sentence, paragraph, section, or part of this chapter adjudged to be invalid or unconstitutional.

History of Section. P.L. 1984, ch. 380, § 1; P.L. 1984, ch. 444, § 1.

7-6.1-1. Purpose of chapter.

The purpose of this chapter is to foster safe, decent, and affordable housing in the state by enabling individuals to form cooperative housing corporations for the purpose of developing, acquiring, owning, and operating multifamily housing on a cooperative plan.

History of Section. P.L. 1986, ch. 256, § 1.

7-6.1-2. Applicability of chapter — Amendment of articles of incorporation to comply with chapter.

This chapter applies to all cooperative housing corporations organized under it. Any corporation organized under any other chapter of the general laws may become a cooperative housing corporation by adopting an amendment to its articles electing to become subject to this chapter and by adopting any further amendment necessary to comply with this chapter. The amendment must be adopted and filed and is effective according to the chapter under which the corporation was organized before acceptance of this chapter.

History of Section. P.L. 1986, ch. 256, § 1.

7-6.1-3. Cooperative housing corporations subject to certain laws.

All cooperative housing corporations are subject to laws that are enacted affecting or altering their corporate rights or duties or dissolving them.

History of Section. P.L. 1986, ch. 256, § 1.

7-6.1-4. Definitions.

In this chapter, the following words have the following meanings:

1. “Board” means board of directors;
2. “Bylaws” means the bylaws of a cooperative housing corporation as they exist from time to time;
3. “Cooperative housing corporation” means a corporation organized or existing under this chapter;
4. “Limited-equity cooperative housing corporation” means a cooperative housing corporation organized and operated primarily for the benefit of low- and moderate-income persons and whose equity, after allowance for maximum transfer value of its stock, is permanently dedicated to providing housing to persons of low or moderate income or to a charitable purpose;
5. “Member” means a person who holds voting rights in a non-business cooperative housing corporation by virtue of a membership certificate issued by that corporation;
6. “Non-business cooperative housing corporation” means a limited-equity housing cooperative that, pursuant to § 7-6.1-5 , elects to apply chapter 6 of this title to the corporation’s operations. All other cooperative housing corporations are business cooperative housing corporations;
7. “Proprietary lease” means an agreement between a cooperative housing corporation and its stockholders or members for occupancy of a dwelling unit owned by the cooperative housing corporation;
8. “Stock” means shares of stock issued by a business cooperative housing corporation or membership certificates issued by a non-business cooperative housing corporation;
9. “Transfer value” means the value that may be paid or received upon the sale or transfer of the stock of a cooperative housing corporation.

History of Section. P.L. 1986, ch. 256, § 1; P.L. 1987, ch. 185, § 1.

7-6.1-5. Applicability of other laws — Conflict of laws.

The provisions of chapter 1.2 of this title are applicable to cooperative housing corporations. However, a limited-equity housing corporation may elect to apply the provisions of chapter 6 of this title to the corporation’s operation in lieu of chapter 1.2 of this title. All cooperative housing corporations shall enjoy the powers and privileges, and be subject to the duties, restrictions, and liabilities of other corporations, except where inconsistent with the letter and purpose of this chapter. This chapter takes precedence in the event of any conflict with provisions of chapter 1.2 or 6 of this title.

History of Section. P.L. 1986, ch. 256, § 1; P.L. 1987, ch. 185, § 1; P.L. 2005, ch. 36, § 5; P.L. 2005, ch. 72, § 5.

7-6.1-6. Articles of organization.

Three (3) or more persons who are residents of the state may organize a cooperative housing corporation by filing articles of organization with the secretary of the state. The articles must meet the requirements of chapter 1.2 of this title and shall additionally state:

1. Whether transfer of its stock is restricted;
2. Whether or not it is authorized to pay dividends on its stock, but no cooperative corporation may pay a dividend of more than ten percent (10%), noncumulative, upon its stock;
3. Whether the transfer value of its stock is restricted;
4. Whether it is organized as a business or non-business cooperative housing corporation.

History of Section. P.L. 1986, ch. 256, § 1; P.L. 2005, ch. 36, § 5; P.L. 2005, ch. 72, § 5.

7-6.1-7. Name.

The name of each cooperative housing corporation must comply with the relevant provisions of chapter 1.2 or 6 of this title and, in addition, must contain the word “cooperative”.

History of Section. P.L. 1986, ch. 256, § 1; P.L. 2005, ch. 36, § 5; P.L. 2005, ch. 72, § 5.

7-6.1-8. Name — Forfeiture — Judicial action.

Any domestic or foreign person, partnership, association, or corporation, except producers’ cooperatives, consumers’ cooperatives, cooperative banks and corporations, transacting business in the state under any name or title containing the word “cooperative” or any close variation, forfeits to the state one hundred dollars ($100) for every day the name or title is used. The forfeiture may be recovered by an information brought in the supreme court or superior court by the attorney general or any other person. The court may enjoin the unlawful use and may make any other orders and decrees that justice and equity require.

History of Section. P.L. 1986, ch. 256, § 1.

7-6.1-9. Power to make, amend, or repeal bylaws.

The power to make, amend, or repeal bylaws is reserved to the stockholders or members in the case of a non-business cooperative housing corporation.

History of Section. P.L. 1986, ch. 256, § 1.

7-6.1-10. Articles or bylaws.

The articles or bylaws may provide:

1. For election of directors and other officials by unit or district;
2. For voting by stockholders or members on the basis of one vote per stockholder or member, or one vote per dwelling unit rather than one vote per share or certificate;
3. That any action required or permitted to be taken at a meeting of stockholders or members may be taken by mail ballot;
4. For a method of membership representation of stockholders or members at meetings by delegates from units or districts; provided, that delegates must be proportional to the number of stockholders or members in each unit district;
5. For redemption or recall of stock;
6. For termination of membership rights and privileges of a stockholder;
7. Standards for eligibility to become a stockholder or member;
8. For the allocation of its net savings among the uses permitted in § 7-6.1-11 .

History of Section. P.L. 1986, ch. 256, § 1.

7-6.1-11. Net savings — Apportionment.

At least once a year, the board of every cooperative housing corporation shall, after first setting aside an adequate portion of the net savings in a reserve fund for the general operation of the business, apportion the remainder of the net savings in one or more of the following ways:

1. As a dividend not to exceed ten percent (10%), noncumulative, upon one or more classes of stock;
2. As an equitable distribution or refund to all patrons in proportion to their individual patronage except that:
   1. In the case of a subscriber patron, the distribution or refund may be credited to the subscriber’s account until the subscription has been fully paid; and
   2. In the case of a nonmember patron, the amount otherwise distributable may be retained by the cooperative housing corporation;
3. This section does not prevent a cooperative housing corporation from disposing of the net savings by reducing the cost of goods, facilities, or services or by applying the net savings otherwise for the common benefit of members or stockholders;
4. This section does not prevent a cooperative housing corporation from adopting a system by which the payment of net savings is deferred for a fixed period of time, nor from adopting a system in which the net savings distributed are partly in cash and partly in stock.

History of Section. P.L. 1986, ch. 256, § 1; P.L. 2018, ch. 346, § 7.

7-6.1-12. Termination of proprietary leases.

A cooperative housing corporation may terminate all of its proprietary leases, but only by agreement of proprietary lessees holding at least eighty percent (80%) of its stock or any larger percentage than specified in the articles or bylaws.

History of Section. P.L. 1986, ch. 256, § 1.

7-6.1-13. Loans.

Any financial institution organized, incorporated, chartered, or licensed to conduct business under the laws of the state of Rhode Island shall be authorized to make loans secured by a pledge of a proprietary lease and the appurtenant stock of a cooperative housing corporation upon the same terms and with the same limitations as loans secured by mortgages of real property.

History of Section. P.L. 1986, ch. 256, § 1; P.L. 2018, ch. 346, § 7.

7-6.2-1. Legislative purpose.

The purpose of this chapter is to promote the creation of workers’ cooperatives by incentivizing workers to create enterprises that are democratically controlled and operated by their own workers.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-2. Definitions.

As used in this chapter, the following words and terms have the following meaning:

1. “Member” means a natural person who has been accepted in and owns a membership share issued by a workers’ cooperative.
2. “Paid-in capital” means money or other property contributed by a member to a workers’ cooperative that is exclusive of any membership fee.
3. “Patronage” means the amount of work performed as a member of a workers’ cooperative that is measured in accordance with the certificate of incorporation and bylaws.
4. “Person” means an individual, a partnership, a corporation, an association, or two (2) or more persons having a joint or common interest.
5. “Workers’ cooperative” means a corporation that has elected to be governed by the provisions of this chapter.
6. “Written notice of allocation” means the amount of work performed as a member of a workers’ cooperative that is measured in accordance with the certificate of incorporation and bylaws.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-3. Corporations organized under general corporation law; election to be governed as workers’ cooperative.

Any corporation organized under chapter 1.2 of title 7 may elect to be governed as a workers’ cooperative under the provisions of this chapter, by so stating in its certificate of incorporation filed in accordance with §§ 7-1.2-201 and 7-1.2-202 of the Rhode Island business corporation act, or amendments to its certificate of incorporation filed in accordance with §§ 7-1.2-901 — 7-1.2-907 .

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-4. Application of general corporation law — Business corporation tax — Other taxes and programs.

1. The provisions of chapter 1.2 of title 7 are applicable to workers’ cooperatives.
2. All workers’ cooperatives shall enjoy the powers and privileges, and be subject to the duties, restrictions, and liabilities of other corporations organized under chapter 1.2 of title 7, except where inconsistent with the intent and purpose of this chapter.
3. This chapter takes precedence in the event of a conflict with the provisions of chapter 1.2 of title 7.
4. All workers’ cooperatives shall be subject to the provisions of chapter 11 of title 44 dealing with the taxation of corporations and chapters 29 through 44 of title 28.
5. Except as provided in subsection (f) of this section, workers’ cooperatives shall be subject to the provisions of title 28 as employers.
6. To the extent that a workers’ cooperative has shareholders (owners) who are employees (members), the workers’ cooperative shall be subject to the provisions of title 28 related to employees including, but not limited to: department of labor and training payroll taxes, temporary disability insurance, state unemployment insurance and workers’ compensation insurance.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-5. Revocation of election.

A workers’ cooperative may revoke its election under this chapter by a vote of two-thirds (2/3) of the members and through articles of amendment filed in accordance with §§ 7-1.2-901 — 7-1.2-907 .

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-6. Members — Membership shares — Fees — Rights and responsibilities.

1. The certificate of incorporation or the bylaws shall establish qualifications and the method of acceptance and termination of members. Upon completion of their probationary period, all regular full-time or part-time employees shall be offered membership in the workers’ cooperative. Acceptance as a member in a workers’ cooperative shall be evidenced by a membership share, which shall be issued for a fee, to be paid in such terms and conditions as are provided in the bylaws.
2. A workers’ cooperative shall issue a class of voting stock designated as “membership shares”. Each member shall own only one membership share, and only members may own membership shares.
3. Membership shares shall be issued for a fee as shall be determined from time to time by the directors. No certificate for a membership share shall be issued until its fee has been paid in full. Each member is entitled to a certificate for his or her membership share upon fulfilling the requirements in the cooperative’s articles of incorporation and bylaws.
4. Members of a workers’ cooperative shall have all the rights and responsibilities of stockholders of a corporation organized under the provisions of chapter 1.2 of title 7, except as otherwise provided in this chapter.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-7. Voting shares — Bylaws — Amendment of certificate of incorporation.

1. No capital stock other than membership shares shall be given voting power in a workers’ cooperative, except as otherwise provided in this chapter.
2. Notwithstanding the provisions of §§ 7-1.2-201 and 7-1.2-202 and §§ 7-1.2-901 — 7-1.2-907 , the power to amend or repeal bylaws of a workers’ cooperative shall be vested in the members only, except to the extent that directors are authorized to amend or repeal the bylaws in accordance with the certificate of incorporation.
3. The provisions of §§ 7-1.2-901 — 7-1.2-907 shall be construed to limit voting on any amendment of the certificate of incorporation of a workers’ cooperative to the members, except that nonmember stockholders shall participate in such voting in accordance with § 7-1.2-903 where a proposed amendment would adversely affect the rights of such nonmember stockholders as provided in § 7-1.2-904 .

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-8. Net earnings or losses — Apportionment, distribution, and payment.

1. The net retained proceeds or losses of a workers’ cooperative shall be apportioned and distributed at such times and in such manner as the certificate of incorporation or bylaws shall specify. Net retained proceeds declared as patronage allocations with respect to a period of time, and paid or credited to members, shall be apportioned among the members in accordance with the ratio which each member’s patronage during the period involved bears to patronage by all members during that period. As used in this section, “patronage” means the amount of work performed as a member of a workers’ cooperative, measured in accordance with the certificate of incorporation and bylaws.
2. The apportionment, distribution, and payment of net retained proceeds required by subsection (a) of this section may be in cash credits, written notices of allocation, or capital stock issued by the workers’ cooperative. If the distribution and payment of net retained proceeds is made in cash credits, such distribution and payments shall be subject to pass-through withholding under § 44-11-2.2 .

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-9. Directors; officers.

1. The bylaws of a workers’ cooperative shall provide for the election, terms, classifications, if any, and removal of directors and officers in accordance with the provisions of this chapter or the provisions of chapter 1.2 of title 7.
2. In the absence of any bylaw provision, elections, terms, classifications, and removal procedures shall be governed by the provisions of chapter 1.2 of title 7.
3. Nonmembers may serve as directors or officers of a workers’ cooperative, but at no time shall there be a majority of nonmember directors.
4. Vacancies in director positions resulting from death, resignation, or removal shall be filled by a vote of the member directors.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-10. Internal capital accounts — Recall or redemption of shares — Interest — Collective reserve account.

1. Any workers’ cooperative may establish through its certificate of incorporation or bylaws a system of internal capital accounts, to reflect the book value and to determine the redemption price of membership shares, capital stock, and written notices of allocation. As used in this section, “written notice of allocation” means a written instrument that discloses to a member the stated dollar amount of the member’s patronage allocation, and the terms for a payment amount by the workers’ cooperative.
2. The certificate of incorporation or bylaws of a workers’ cooperative may permit the periodic redemption of written notices of allocation and capital stock, and must provide for recall and redemption of the membership share upon termination of membership in the cooperative. No redemption shall be made if the redemption would result in the liability of any director or officer of the workers’ cooperative under §§ 7-1.2-801 — 7-1.2-814 .
3. The certificate of incorporation or bylaws may authorize assignment of a portion of net retained proceeds and net losses to a collective reserve account. Net retained proceeds assigned to the collective reserve account may be used for any and all corporate purposes as determined by the board of directors.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-11. Conversion of membership shares and internal capital accounts upon revocation of election; consolidation or merger.

When any workers’ cooperative revokes its election in accordance with § 7-6.2-5 , an amendment of the certificate of incorporation shall provide for the conversion of membership shares and internal capital accounts, or their conversion to securities or other property in a manner consistent with the provisions of chapter 1.2 of title 7.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-6.2-12. Severability.

If any provision of this chapter or any rule or regulation created under this chapter, or the application of any provision of this chapter to any person or circumstance shall be held invalid in any court of competent jurisdiction, the remainder of the chapter, rule, or regulation and the application of such provision to other persons or circumstances shall not be affected thereby. The invalidity of any section or sections of this chapter and to this end the provisions of the chapter are declared to be severable.

History of Section. P.L. 2017, ch. 370, § 1; P.L. 2017, ch. 378, § 1.

7-7-1. Definitions.

In this chapter, unless the context requires otherwise, the term:

1. “Agricultural products” or “products” means field crops, horticultural, viticultural, forestry, nut, dairy, livestock, poultry, bee, and all farm products and the byproducts derived from any of them; and words used import the singular or the plural as the context demands;
2. “Association” means any corporation formed under this chapter;
3. “Member” means a person who owns a common stock in an association formed with capital stock, or who owns a certificate of membership in an association formed without capital stock;
4. “Person” means an individual, a partnership, a corporation, an association, or two (2) or more persons having a joint or common interest.

History of Section. P.L. 1928, ch. 1202, § 1; G.L. 1938, ch. 117, § 1; G.L. 1956, § 7-7-1 .

7-7-2. Power to form associations.

Five (5) or more persons of lawful age engaged in the production of agricultural products, or two (2) or more nonprofit cooperative associations of producers, organized under the provisions of this chapter, may form a nonprofit cooperative association with or without capital stock for the purpose of producing, handling, processing, preparing for market, warehousing, financing, preserving, drying, canning, packing, manufacturing, utilizing, and marketing the agricultural products of its members or for engaging in any activity pertaining to any of the things enumerated, including the financing, purchasing, or otherwise securing for its members supplies, equipment, machinery, or commodities of any character.

History of Section. P.L. 1928, ch. 1202, § 2; G.L. 1938, ch. 117, § 2; G.L. 1956, § 7-7-2 .

7-7-3. Contents and filing of articles of association.

The persons shall sign and file in duplicate written articles of association, which shall be signed by all of the incorporators and which shall be acknowledged by them in the manner in which deeds of real estate are required to be acknowledged within this state, and the residences of the incorporators shall be stated opposite their names. In the articles of association, the incorporators shall recite that they desire to become incorporated under the provisions of this chapter and shall state:

1. The name of the association, which shall contain the word “cooperative” and which shall not be the same as that of any other association or corporation formed or doing business in this state or so similar in name as to be likely to be confused with it.
2. The objects or purposes for which it is formed.
3. The place where its principal office is to be located.
4. The term for which it is to exist.
5. Whether formed with or without capital stock, and if formed with capital stock, the total amount of the authorized capital stock of the corporation, the number of shares into which the stock is divided and the par value of each share, except in the case of a corporation having stock or any class of stock without par value, in which case the articles of association regarding the stock, in lieu of the above, shall state the total number of shares authorized and that they are without par value; the restrictions, if any, imposed on the transfer of stock; and, if there be two (2) or more classes of stock, a description of the different classes and a statement of the terms on which they are created.
6. In addition to the above, the articles of incorporation of any association incorporated under this chapter may contain any provision consistent with law with respect to management, regulation, government, financing, indebtedness, membership, the establishment of voting districts and the election of delegates for representative purposes, the issuance, retirement, and transfer of its stock, if formed with capital stock, or any provisions relative to the manner in which it operates or as to its members, officers, or directors and any other provisions relating to its affairs.

History of Section. P.L. 1928, ch. 1202, § 3; G.L. 1938, ch. 117, § 3; G.L. 1956, § 7-7-3 .

7-7-4. Incorporation fee — Certificate — Articles as evidence.

Upon the filing of the articles of association and a duplicate of the articles with the secretary of state, together with an incorporation fee of fifty dollars ($50.00) and the duplicate copy certified to by the secretary of state and returned to the incorporator, the original articles of incorporation, or certified copies of them, shall be received in all the courts of this state and elsewhere as prima facie evidence of the facts contained in them and of the due incorporation of the association.

History of Section. P.L. 1928, ch. 1202, § 4; G.L. 1938, ch. 117, § 4; G.L. 1956, § 7-7-4 ; P.L. 1960, ch. 71, art. 3, § 28; P.L. 1971, ch. 164, § 1.

7-7-5. Associations deemed nonprofit.

Associations organized under this chapter are deemed nonprofit, insofar as they are not organized as to make profits for themselves as such or for their members as such but only for their members as producers.

History of Section. P.L. 1928, ch. 1202, § 1; G.L. 1938, ch. 117, § 1; G.L. 1956, § 7-7-5 .

7-7-6. General powers of associations.

Each association incorporated under this chapter has power and authority to:

1. Have perpetual succession in its corporate name unless a period for its duration is limited in its articles of association;
2. Sue and be sued in its corporate name;
3. Have and use a common seal and alter the seal at pleasure;
4. Elect any officers and appoint any agents that its business requires and to fix their compensation and define their duties;
5. Issue shares of capital stock or certificates of membership to its members, and to transfer, retire, or cancel them, as authorized by law, or by the articles of association or bylaws adopted in conformity with law;
6. Buy, lease, or hold any real or personal property necessary or convenient for the conduct and operation of the business or incidental to it;
7. Enter into contracts with its members for periods not over ten (10) years requiring them to sell or market all or a specified part of their products to or through the association;
8. Employ any lawful means or methods for financing its transactions or operations;
9. Borrow money and to make advance payments and other advances to members;
10. Act as agent or representative of any member or members in carrying out the objects of the association;
11. Receive and employ warehouse receipts or other written instruments covering products of members stored on farms or elsewhere under suitable conditions issued or executed by any warehouseman, warehousing association, or other entity, which products may or may not have been inspected by inspectors licensed or authorized to inspect, sample, classify, grade, or weigh agricultural products under state or federal laws and which warehouse receipts or other written instruments may or may not be accompanied by the certificate or certificates issued by the inspectors on the products;
12. Form or become a member or stockholder of other nonprofit associations of producers, and to admit to membership or to sell stock to, other nonprofit associations of producers;
13. Adopt bylaws consistent with law providing for any matter or thing relative to the control, operation, maintenance, management, regulation, government, financing, indebtedness, the establishment of voting districts and the election of delegates for representative purposes; membership, the termination of it; stock (if formed with capital stock), its issuance, retirement, purchase, or transfer; or with respect to members, directors, or officers; and any other bylaws pertaining to its affairs;
14. Do everything necessary, suitable, or proper for the accomplishment of any one or more of the purposes; or the attainment of any one or more of the objects enumerated in these provisions; or the objects or purposes for which formed, and to contract and act accordingly.

History of Section. P.L. 1928, ch. 1202, § 5; G.L. 1938, ch. 117, § 5; G.L. 1956, § 7-7-6 .

7-7-7. Bylaws.

Each association incorporated under this chapter shall, within thirty (30) days after its incorporation, adopt for its government and management a code of bylaws consistent with these provisions. A two-thirds (2/3) vote of the members present at any meeting at which a quorum is present is necessary to adopt bylaws or make any change or amendment of them if notice of the adoption, change, or amendment was included in the call of the meeting.

History of Section. P.L. 1928, ch. 1202, § 7; P.L. 1932, ch. 1917, § 1; G.L. 1938, ch. 117, § 7; G.L. 1956, § 7-7-7 .

7-7-8. Qualifications of members.

Only persons, or associations of persons, engaged in the production of the agricultural products as the association is authorized to handle, including lessees and landlords receiving these products as rent, shall be eligible to membership therein, subject to the terms and conditions prescribed in its articles of incorporation or bylaws consistent herewith. Following the ascertainment through procedure set forth in its bylaws that a member has ceased to be eligible to membership in an association, his or her rights therein may be suspended.

History of Section. P.L. 1928, ch. 1202, § 6; G.L. 1938, ch. 117, § 6; G.L. 1956, § 7-7-8 ; P.L. 2018, ch. 346, § 8.

7-7-9. Membership certificates — Settlement on termination of membership.

Every association formed under this chapter without capital stock shall issue a certificate of membership to each member which, unless otherwise provided in its articles of incorporation or bylaws, is nontransferable. In the case of associations organized without capital stock, in the event of the death, withdrawal, or expulsion of a member, the board of directors shall, within a reasonable time, equitably and conclusively ascertain the amount of the member’s interest in the association, which shall be paid him or her or his or her legal representative by the association in whole or in yearly partial payments within five (5) years from ascertainment.

History of Section. P.L. 1928, ch. 1202, § 6; G.L. 1938, ch. 117, § 6; G.L. 1956, § 7-7-9 .

7-7-10. Voting rights.

Only members of an association have the right to vote; and no member is entitled to more than one vote on any question or matter affecting the association or relating to its affairs. Proxy voting is prohibited.

History of Section. P.L. 1928, ch. 1202, § 6; G.L. 1938, ch. 117, § 6; G.L. 1956, § 7-7-10 .

7-7-11. Limited liability of members and stockholders.

No member or stockholder of an association is liable for its debts or obligations beyond the unpaid amount, if any, due by him or her on his or her membership dues or stock issued to him or her.

History of Section. P.L. 1928, ch. 1202, § 6; G.L. 1938, ch. 117, § 6; G.L. 1956, § 7-7-11 .

7-7-12. Transfer of stock.

The transfer of common stock of an association is restricted to persons engaged in the production of the products handled by an association subject to any provisions in its articles or bylaws consistent with this chapter. An association may provide in its articles or bylaws that it is to have the prior right to purchase, on any terms that it determines, any of its common stock that may be offered for sale.

History of Section. P.L. 1928, ch. 1202, § 6; G.L. 1938, ch. 117, § 6; G.L. 1956, § 7-7-12 .

7-7-13. Restriction on dividends.

No association formed under this chapter shall pay over eight percent (8%) per annum on its capital stock or membership capital.

History of Section. P.L. 1928, ch. 1202, § 6; G.L. 1938, ch. 117, § 6; G.L. 1956, § 7-7-13 .

7-7-14. Directors — Meetings of association.

The bylaws of each association shall provide for the management of the association by a board of not less than five (5) directors, who shall be elected by the members in any manner, at any times, and for any terms that the bylaws prescribe. Regular meetings of the association shall be held at any places and at any times that the bylaws prescribe. The board of directors may hold special and adjourned meetings and may call a special meeting of the association at any time. Ten percent (10%) of the members may file a petition stating the specific business to be brought before the association and demand a special meeting at any time. The meeting must at that time be called by the directors. Notice of all meetings, together with a statement of the purposes of the meeting, shall be mailed to each member at least five (5) days prior to the meeting. However, the bylaws may require instead that the notice may be given by publication in a newspaper or newspapers of general circulation in the territory in which the association has its membership.

History of Section. P.L. 1928, ch. 1202, § 8; P.L. 1932, ch. 1917, § 1; G.L. 1938, ch. 117, § 8; G.L. 1956, § 7-7-14 .

7-7-15. Amendment of articles.

The articles of association of any association formed under this chapter may be changed or amended. Any change or amendment must first be approved by two-thirds (2/3) of the directors of an association and then must be adopted by a majority of its members through their vote on it or their written assent to it. An original and a duplicate of any amendment adopted, with a statement showing that the amendment has been adopted by vote of the members and the date of adoption, signed and sworn to by the president or vice-president and the secretary or assistant secretary of the corporation, shall be filed in the office of the secretary of state, who shall, upon the payment to him or her of a fee of five dollars ($5.00), certify the duplicate and issue the certificate to the corporation.

History of Section. P.L. 1928, ch. 1202, § 9; G.L. 1938, ch. 117, § 9; G.L. 1956, § 7-7-15 ; P.L. 1971, ch. 164, § 2.

7-7-16. Marketing contract — Enforcement.

The marketing contract of any association formed under this chapter may fix as liquidated damages, specific, reasonable sums to be paid by a member to the association upon the breach by him or her of any provisions of the marketing contract regarding the sale or delivery or withholding of products. It may also provide that the member will pay all costs, premiums for bonds, expenses, and fees in case any action is brought upon the contract by the association, and any provisions are valid and enforceable in the courts of this state. In the event of a breach, or threatened breach, of the marketing contract by a member, the board of directors may authorize one of the executive officers of the association to apply to the superior court for the counties of Providence and Bristol for an injunction to prevent the further breach of the contract and for a decree for the specific performance of the contract. Pending the adjudication of the petition, the court, upon the filing of a sufficient bond by the association, may grant any temporary relief that seems to it just and proper.

History of Section. P.L. 1928, ch. 1202, § 10; G.L. 1938, ch. 117, § 10; G.L. 1956, § 7-7-16 .

7-7-17. Annual report — Examination of books.

Every association formed under this chapter shall submit an annual statement, sworn to by one of the officers of the association, to the director of environmental management, subject to any regulations that he or she prescribes, on forms furnished by or satisfactory to him or her, showing the number of members of the association, the amount of money received by it from every source, an itemized list of all expenses of the association, the amount of its indebtedness or liabilities, and its balance sheets. The director of the department of environmental management, or his or her representative, has the right to examine and audit the books of any association at any time.

History of Section. P.L. 1928, ch. 1202, § 11; G.L. 1938, ch. 117, § 11; G.L. 1956, § 7-7-17 ; impl. am. P.L. 1965, ch. 137, § 1.

7-7-18. Federation and cooperation between associations.

To effectuate the formation of federations of nonprofit associations of producers, any association of producers is authorized to acquire membership or stock in any other association of producers and any association is authorized to grant membership or sell stock to the associations. Any association may, upon resolution adopted by its board of directors, enter into all necessary and proper contracts and agreements, and make all necessary and proper stipulations, agreements, and contracts with any other cooperative corporation, association, or associations, formed in this or in any other state, for the cooperative and more economical carrying on of its business, or any part of carrying on business. Any two (2) or more associations may, by agreement, unite in employing and using, or may separately employ and use, the same methods, means, and agencies for carrying on and conducting their respective businesses.

History of Section. P.L. 1928, ch. 1202, § 12; G.L. 1938, ch. 117, § 12; G.L. 1956, § 7-7-18 .

7-7-19. Use of name restricted to associations under chapter.

No corporation or other organization dealing in agricultural products, or engaged in any of the purposes enumerated in § 7-7-2 , shall use the term “cooperative” as part of its name unless organized under the provisions of this chapter.

History of Section. P.L. 1928, ch. 1202, § 13; G.L. 1938, ch. 117, § 13; G.L. 1956, § 7-7-19 .

7-7-20. Application of general corporation law.

The provisions of the general corporation law of this state, and all powers and rights under that law, apply to the associations organized under this chapter, except where the provisions are in conflict with, or inconsistent with, the express provisions of this chapter.

History of Section. P.L. 1928, ch. 1202, § 14; G.L. 1938, ch. 117, § 14; G.L. 1956, § 7-7-20 .

7-7-21. Annual tax.

Each association organized under the provisions of this chapter shall pay to the state an annual tax of five dollars ($5.00) that shall be assessed by the tax administrator at the same time and in the same manner, and is due and payable to, and may be collected by, the general treasurer at the same time and in the same manner as the annual corporation franchise tax provided for by § 44-12-1 [repealed] is assessed, due, payable, and collected; and the association is exempt from all state taxes except the one prescribed in this section.

History of Section. P.L. 1928, ch. 1202, § 15; G.L. 1938, ch. 117, § 15; impl. am. P.L. 1939, ch. 660, § 70; G.L. 1956, § 7-7-21 .

7-7-22. Previously incorporated associations.

A cooperative corporation or association previously formed under, or subject to, a law repealed by this chapter, is subject to the provisions of this chapter as if incorporated under this chapter, and the corporation or association may continue its corporate existence and name, subject to the provisions.

History of Section. P.L. 1928, ch. 1202, § 16; G.L. 1938, ch. 117, § 16; G.L. 1956, § 7-7-22 .

7-8-1. Short title.

This chapter may be cited as the “Consumer Cooperative Association Law”.

History of Section. P.L. 1947, ch. 1976, § 1; G.L. 1956, § 7-8-1 .

7-8-2. Definitions.

As used in this chapter, unless the context otherwise requires:

1. “Association” means any corporation formed under this chapter.
2. “Capital”, in the case of an association formed without capital stock, means the aggregate amount of consideration for which the total number of memberships in the association were issued.
3. “Cooperative basis”, as applied to any incorporated or unincorporated group referred to in these provisions, means that:
   1. Each member has only one vote, except as is altered in the articles of association or bylaws by provision for voting by member organizations. However, voting by member organizations shall not be on the basis of the number of shares held by the organizations.
   2. The maximum rate of return on share or membership capital is not more than eight percent (8%) per year.
   3. The net savings, or net income, after making provision for payment of return on capital, and for any separate funds and purposes that are not inconsistent with its cooperative character, are allocated or distributed to member patrons, or to all patrons, in proportion to their patronage.
4. “Member” means not only a member in a nonshare association but also a member in a share association.
5. “Membership” means, in the case of a share association, the status whereby a shareholder becomes entitled to all the rights, including, but not limited to, the right of voting and of receiving dividends on shares, and apportionment of net savings in cash, which accrue to him or her under the articles of association and bylaws upon the acquisition of the minimum number of shares of stock required by the articles of association for membership and upon fulfillment of the eligibility requirements of the association.
6. “Par value”, in the case of membership in an association formed without shares, means the consideration, in terms of money, for which the membership was issued.

History of Section. P.L. 1947, ch. 1976, § 2; G.L. 1956, § 7-8-2 .

7-8-3. Authorized purposes.

An association may be incorporated, with or without capital stock, under this chapter for the purpose of carrying on any lawful business permitted by § 7-1.2-301 for the mutual benefit of its patrons, or their patrons, or any patrons’ patrons, as ultimate consumers, or for the purpose of doing business for the benefit of its member patrons in all things relating directly or indirectly to the catching, processing, storing, transporting, marketing, and distributing of fish and other aquatic products of all kinds.

History of Section. P.L. 1947, ch. 1976, § 3; G.L. 1956, § 7-8-3 ; P.L. 1985, ch. 2, § 1; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6.

7-8-4. Application of general corporation law.

1. The provisions of chapter 1.2 of this title apply to associations formed under this chapter, except insofar as they are inconsistent with this chapter.
2. Wherever, in chapter 1.2 the word “stockholder” or “stockholders” is used, the word shall be construed, where appropriate, to include within its meaning members in associations formed without capital stock. Nothing contained in these chapters, however, shall be construed to permit associations formed under the provisions of this chapter to issue stock without par value.

History of Section. P.L. 1947, ch. 1976, § 4; G.L. 1956, § 7-8-4 ; P.L. 1985, ch. 2, § 1; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6.

7-8-5. Federation and cooperation between associations.

In addition to the powers granted to it by § 7-1.2-302 , an association has power to:

1. Own and hold membership in other associations formed under any laws of this state, or of any other state, country, nation, or government, and while the holder thereof, to exercise all the rights of membership;
2. Make agreements of mutual aid or federation with other associations, other groups organized on a cooperative basis, and other nonprofit groups.

History of Section. P.L. 1947, ch. 1976, § 5; G.L. 1956, § 7-8-5 ; P.L. 1985, ch. 2, § 1; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6; P.L. 2018, ch. 346, § 9.

7-8-6. Contents of articles of association.

The articles of association shall contain, in addition to the information required by §§ 7-1.2-202(a)(1) , 7-1.2-202(a)(3) and 7-1.2-202(a)(4) , the following:

1. A statement that the corporation is formed as a cooperative association under the provisions of this chapter;
2. A statement whether the association is organized with or without shares;
3. If organized with shares, the information required by § 7-1.2-202(a)(2) ;
4. The minimum number or value of shares that must be owned in order to qualify for membership; if organized without shares, a statement whether the property rights of members are equal or unequal, and if unequal, the rule by which their rights are determined;
5. The maximum amount or percentage of capital that may be owned or controlled by any member;
6. The method by which any surplus, upon dissolution of the association, is distributed.

History of Section. P.L. 1947, ch. 1976, § 6; G.L. 1956, § 7-8-6 ; P.L. 1985, ch. 2, § 1; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6.

7-8-7. Name of association.

The name of the association shall include the word “cooperative”.

History of Section. P.L. 1947, ch. 1976, § 7; G.L. 1956, § 7-8-7 .

7-8-8. Fee payable to secretary of state by nonstock corporation.

In the case of an association formed without shares, by virtue of this chapter, the fees payable to the secretary of state for the incorporation is fifty dollars ($50.00).

History of Section. P.L. 1947, ch. 1976, § 32; G.L. 1956, § 7-8-8 ; P.L. 1960, ch. 71, art. 3, § 29; P.L. 1971, ch. 163, § 1.

7-8-9. Amendment of articles.

1. The articles of association may be amended, as provided in chapter 1.2 of this title, by an affirmative vote of two-thirds (2/3) of the members voting at a meeting duly called for the purpose. If the amendment is to alter the preferences of outstanding shares of any type, or to authorize the issuance of shares having preferences superior to outstanding shares of any type, the affirmative vote of two-thirds (2/3) of the members owning the outstanding shares affected by the change is also required for the adoption of the amendment. If the amendment is to alter the rule by which members’ property rights in a nonshare association are determined, a vote of two-thirds (2/3) of the entire membership is required.
2. Notice of any meeting to consider amendments to the articles of association must be sent at least three (3) weeks in advance of the meeting to each member at his or her last known address, accompanied by the full text of the proposal and the part of the articles to be amended.
3. There shall be paid to the secretary of state, upon the filing and certification of the articles of amendment, a fee of five dollars ($5.00).

History of Section. P.L. 1947, ch. 1976, § 9; G.L. 1956, § 7-8-10 ; P.L. 1971, ch. 163, § 2; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6; P.L. 2018, ch. 346, § 9.

7-8-10. Contents of bylaws.

The bylaws may, in addition to the provisions permitted by § 7-1.2-203(a) , except where inconsistent with this chapter, provide for:

1. The method and terms of admission to membership and the disposal of members’ interests on cessation of membership for any reason;
2. The method of distributing the net savings of the association.

History of Section. P.L. 1947, ch. 1976, § 9; G.L. 1956, § 7-8-10 ; P.L. 1985, ch. 2, § 1; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6.

7-8-11. Meetings of members.

1. Regular meetings of members shall be held at least once a year. Special meetings may be demanded by a written petition of at least one-tenth (1/10) of the membership, in which case it is the duty of the secretary to call the meeting to take place within thirty (30) days after the demand. Meetings of the members may be held within or without this state.
2. The articles of association or bylaws may provide for meetings by units of the membership and may provide for a method of transmitting the votes there cast to the central meeting, or for a method of representation by the election of delegates to the central meeting, or for a combination of both methods.

History of Section. P.L. 1947, ch. 1976, § 10; G.L. 1956, § 7-8-11 .

7-8-12. Voting rights.

Each member of an association shall have only one vote, except that where an association includes among its members any number of other associations or groups organized on a cooperative basis, the voting rights of the member associations or groups may be as prescribed in the articles of association or bylaws. However, voting by the member organizations shall in no case be on the basis of the number of shares held by the organization.

History of Section. P.L. 1947, ch. 1976, § 11; G.L. 1956, § 7-8-12 .

7-8-13. Proxy and mail votes.

1. No member is permitted to vote by proxy, except that the articles of association or bylaws may provide for the casting of ballots by mail and may include in the provisions a provision allowing ballots to be sent to members absent from a meeting. However, the voting shall be only upon candidates for office, or upon propositions the text of which shall have been sent to the members entitled so to vote a specified number of days in advance of the date by which the ballots must be returned.
2. The articles of association or bylaws may also determine whether and to what extent mail votes are counted in computing a quorum.

History of Section. P.L. 1947, ch. 1976, § 12; G.L. 1956, § 7-8-13 .

7-8-14. Mail voting included in statutory provisions.

If an association has provided for voting by mail, or by delegates, any provision of this chapter referring to votes cast by members is construed to include votes cast by mail, or by delegates, but this does not permit delegates to vote by mail.

History of Section. P.L. 1947, ch. 1976, § 13; G.L. 1956, § 7-8-14 .

7-8-15. Apportionment of directors among units.

The bylaws may provide for a method of apportioning the number of directors among the units into which the association may be divided, and for the election of directors by the respective units to which they are apportioned.

History of Section. P.L. 1947, ch. 1976, § 14; G.L. 1956, § 7-8-15 .

7-8-16. Restriction on dividends.

The return upon capital shall not exceed six percent (6%) per year upon the paid up capital and is noncumulative.

History of Section. P.L. 1947, ch. 1976, § 15; G.L. 1956, § 7-8-16 .

7-8-17. Membership of organizations — Payment of capital as prerequisite to membership.

No corporation or organization or group of any kind shall be eligible to membership in an association unless it is organized on a cooperative or nonprofit basis, and no person, association, or organization or group of any kind shall be deemed a member of an association until the association has received payment in full for the par value of the minimum amount of share or membership capital stated in the articles as necessary to qualify for membership.

History of Section. P.L. 1947, ch. 1976, § 16; G.L. 1956, § 7-8-17 ; P.L. 2018, ch. 346, § 9.

7-8-18. Share and membership certificates.

1. No certificate for share or membership capital shall be issued until its par value has been paid for in full. There shall be printed on each certificate issued by an association a full or condensed statement of the requirements of § 7-8-12 , the first clause of the first sentence of § 7-8-13 , and §§ 7-8-20 — 7-8-24 .
2. Each member, upon fulfilling the requirements of § 7-8-17 , and of the articles of association, and/or bylaws of the association, including approval of his or her membership by the board of directors, if required, is entitled to a certificate for the amount of his paid-up share or membership capital.

History of Section. P.L. 1947, ch. 1976, § 17; G.L. 1956, § 7-8-18 .

7-8-19. Application of corporation and franchise taxes to associations without stock.

1. For the purposes of taxation, under chapters 11 and 12 [repealed] of title 44, of an association formed under this chapter without capital stock, the words “share” and “stock” and “capital stock” are construed to include within their meaning memberships in the association.
2. For the purposes of taxation, under chapter 11 of title 44, of an association formed under this chapter without capital stock, the tax, if any, is based on the number of memberships outstanding in the association.
3. The par value of the memberships shall, for the purposes of computing the amount of tax due under chapters 11 and 12 [repealed] of title 44, be taken as the amount for which the memberships were issued.

History of Section. P.L. 1947, ch. 1976, § 33; G.L. 1956, § 7-8-19 .

7-8-20. Association’s preemptive right to repurchase shares.

If any holder of shares desires to dispose of any or all of his or her holdings in the association, he or she shall offer the holdings to the association, and the directors have the power to purchase, within ninety (90) days of the offer, the holdings by paying the member the par value of any or all of the holdings offered.

History of Section. P.L. 1947, ch. 1976, § 18; G.L. 1956, § 7-8-20 .

7-8-21. Transfer of holdings.

If the association fails, within ninety (90) days, to purchase all or any part of the holdings offered, their holder may dispose of the unpurchased interest elsewhere. No transferee of holdings in an association is entitled to the rights of membership until the transferee fulfills the requirements of eligibility of the association, including approval of his or her membership by the board of directors, if required.

History of Section. P.L. 1947, ch. 1976, § 18; G.L. 1956, § 7-8-21 .

7-8-22. Recall of shares.

The bylaws may give the directors the power to use the reserve funds to recall, at par value, the holdings of any member in excess of the amount requisite for membership. The bylaws may also provide that if any member has failed to patronize the association during a period of time specified in the bylaws, the directors may use reserve funds to recall all of his or her holdings, and he or she at that time ceases to be a member of the association.

History of Section. P.L. 1947, ch. 1976, § 19; G.L. 1956, § 7-8-22 .

7-8-23. Impairment of solvency prohibited.

No purchase or recall shall be made by the directors under § 7-8-20 or any other section if to do so would impair the solvency of the association.

History of Section. P.L. 1947, ch. 1976, § 18; G.L. 1956, § 7-8-23 .

7-8-24. Expulsion of members.

The bylaws may make provision for the expulsion of members by a two-thirds (2/3) vote of the members present at a regular or special meeting. The bylaws shall provide for the giving to a member of written notice of the charges against him or her at least three (3) weeks in advance of the meeting. The member shall have opportunity to be heard in person, or by counsel, at the meeting. On decision of the association to expel a member, the board of directors shall purchase the member’s holdings at par value, when there are sufficient reserve funds.

History of Section. P.L. 1947, ch. 1976, § 20; G.L. 1956, § 7-8-24 .

7-8-25. Exemption of holdings from attachment.

The holdings of any member of an association, to the extent of the minimum amount necessary for membership, but not to exceed fifty dollars ($50.00), is exempt from attachment, execution, or garnishment for the debts of the owner.

History of Section. P.L. 1947, ch. 1976, § 21; G.L. 1956, § 7-8-25 .

7-8-26. Apportionment of net savings.

At least once a year, the members and/or directors, as provided in the articles of association or bylaws, shall apportion the net savings of the association, after payment of return on capital, and after deduction of sums retained for proper corporate purposes, which may include an educational fund and a fund for the general welfare of the members, among member patrons, or to all patrons of the association in proportion to their patronage. However:

1. Not less than ten percent (10%) shall be placed in a reserve fund until such time as the fund equals at least fifty percent (50%) of the paid-up capital, and the fund may be used in the general conduct of business.
2. Sums allocated to subscribers and nonmembers as a result of the apportionment need not be paid in cash but may, if the articles of association or bylaws provide, be credited on the books of the association toward the payment of the minimum amount of share or membership capital subscribed for, or necessary for membership.
3. If, within any period of time specified in the bylaws:
   1. Any subscriber has not accumulated and paid in the amount of capital subscribed for, or necessary for membership, whichever is specified in the articles of association or bylaws; or
   2. Any nonmember has not accumulated in his or her account the sum necessary for membership, or has accumulated the sum but neither requests nor agrees to become a member, or fails to comply with any provisions of the bylaws for admission to membership, then the amount accumulated or paid in may, if the articles of association or bylaws provide, be added to the general funds of the association, and subsequently no member, subscriber, or nonmember has any further rights in the paid-in capital or accumulated credits.

History of Section. P.L. 1947, ch. 1976, § 22; G.L. 1956, § 7-8-26 ; P.L. 1985, ch. 2, § 1.

7-8-27. Contents of annual report.

The annual report of an association shall include a statement of the receipts, expenditures, assets, and liabilities of the association, and shall, in the case of a nonshare association, include, in lieu of the statement concerning its authorized and issued capital stock required by § 7-1.2-1501 , a statement of the total number of members, the number admitted and withdrawn during the year, and the amount of membership fees received.

History of Section. P.L. 1947, ch. 1976, § 23; G.L. 1956, § 7-8-27 ; P.L. 1985, ch. 2, § 1; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6.

7-8-28. Distribution of assets on dissolution.

Upon dissolution of an association, its assets, if any, after payment of the expenses of dissolution and the debts of the association, shall be distributed as follows:

1. By returning to the members the par value of their shares or of their membership certificates, returning to subscribers the amounts paid on their subscriptions, and returning to those entitled to them the amounts allocated in distribution of net savings as contemplated by § 7-8-26 ; and
2. By distributing any surplus as provided in the articles of association.

History of Section. P.L. 1947, ch. 1976, § 24; G.L. 1956, § 7-8-28 .

7-8-29. Bonding of officers and employees.

Every individual acting as officer or employee of an association, and handling funds or securities amounting to one thousand dollars ($1,000) or more in any one year, shall be covered by an adequate bond as determined by the board of directors, and at the expense of the association.

History of Section. P.L. 1947, ch. 1976, § 25; G.L. 1956, § 7-8-29 .

7-8-30. Annual audit of books.

Every association shall have its books audited at the end of its fiscal year by an experienced bookkeeper or accountant, who shall not be an officer or director. Where the annual business amounts to less than ten thousand dollars ($10,000), the audit may be performed by a committee of three (3), who shall not be directors, officers, or employees. A written report of the audit, the balance sheet, and the income and expenses, shall be submitted to the annual meeting of the association.

History of Section. P.L. 1947, ch. 1976, § 26; G.L. 1956, § 7-8-30 .

7-8-31. Exemption from securities law.

The provisions of chapter 11 of this title do not apply to shares of stock of, or memberships in, associations formed under this chapter, or associations formed under like laws of other states, territories, the District of Columbia, or the United States, or to persons selling shares of stock of, or memberships in, the associations.

History of Section. P.L. 1947, ch. 1976, § 27; G.L. 1956, § 7-8-31 .

7-8-32. Acceptance of chapter by cooperatives formed under other law.

Any corporation incorporated under another law of this state and operating on a cooperative basis may elect, by a vote of a majority of its members voting, to secure the benefits of and be bound by this chapter, and shall subsequently amend any of its articles of association and bylaws that are not in conformity with this chapter. A certified copy of the amended articles of association shall be filed with the secretary of state, and a certified copy of the above vote and a fee of five dollars ($5.00) paid to the secretary of state. Upon the filing and the payment of the fee, the corporation is subsequently, in all respects, governed by the provisions of this chapter.

History of Section. P.L. 1947, ch. 1976, § 28; G.L. 1956, § 7-8-32 .

7-8-33. Use of word “cooperative”.

1. Only associations organized under this chapter, corporations organized on a cooperative basis under any other law of this state, credit unions, unincorporated groups operating on a cooperative basis, and foreign corporations operating on a cooperative basis and authorized to do business in this state, are entitled to use the term “cooperative”, or any abbreviation or derivation of the term, as part of their business name, or to represent themselves as conducting business on a cooperative basis. However, any firm or corporation using the word “cooperative” as part of its business name prior to January 1, 1947, is not subject to the provisions of this section.
2. Any person, firm, or corporation violating the above provision shall, upon conviction of the offense, be punished by a fine of not less than twenty-five dollars ($25.00), with an additional fine of not more than two hundred dollars ($200) for each month during which a violation occurs, or by imprisonment for not less than thirty (30) days nor more than one year, or by both fine and imprisonment.

History of Section. P.L. 1947, ch. 1976, § 29; G.L. 1956, § 7-8-33 .

7-8-34. Inapplicable law.

No law in this state that is conflicting or inconsistent with any part of this chapter shall to the extent of the conflict or inconsistency, be construed as applicable to associations formed by authority of this chapter. Sections 7-1.2-613 and 7-1.2-708 do not apply to associations organized by authority of this chapter.

History of Section. P.L. 1947, ch. 1976, § 30; G.L. 1956, § 7-8-34 ; P.L. 1985, ch. 2, § 1; P.L. 2005, ch. 36, § 6; P.L. 2005, ch. 72, § 6.

7-8-35. Severability.

If any provision of this chapter, or the application of it to any person or circumstance is held unconstitutional or otherwise invalid for any reason, the validity of the remainder of this chapter and the application of the provision to other persons or circumstances is not affected by the invalidity.

History of Section. P.L. 1947, ch. 1976, § 31; G.L. 1956, § 7-8-35 .

7-9-1. Power to enter guaranty and suretyship contracts.

Any company incorporated and organized under the laws of any state of the United States, that has a paid up capital of at least two hundred fifty thousand dollars ($250,000), and that has charter authority to transact business as surety on obligations of persons or corporations, may, upon compliance with all the requirements of law regulating the admission of the companies to transact business in this state, and to the extent of its corporate powers, enter into any contract of guaranty or may be accepted as sole surety upon the bond, undertaking, or obligation of any person or corporation giving bond in this state or required by law to give bond in this state, except as otherwise provided, whether the bond is given in civil or criminal judicial proceedings or for the due performance of the duties of any office or employment, or however otherwise the guaranty, bond, undertaking, or obligation is given; and the company may also be accepted as sole surety upon any recognizance or other obligation of record that any person or corporation may be required by law in any way to enter into in this state.

History of Section. G.L. 1896, ch. 186, § 1; P.L. 1902, ch. 1053, § 1; G.L. 1909, ch. 226, § 1; P.L. 1911, ch. 667, § 1; G.L. 1923, ch. 264, § 1; G.L. 1938, ch. 119, § 1; P.L. 1939, ch. 659, § 2; G.L. 1956, § 7-9-1 .

7-9-2. Power to execute bonds and obligations.

Any company authorized to do business in this state may make, sign, seal, execute, acknowledge, and deliver any bond, guaranty, undertaking, or any other obligation in this state, or may enter into any recognizance or other obligation of record in this state, by its attorney in fact or by its officer or officers, agent or authorized agents; and the authority from the company may be shown in the same manner that similar authority may be shown in the case of other corporations.

History of Section. G.L., ch. 186, § 1, as enacted by P.L. 1902, ch. 1053, § 1; G.L. 1909, ch. 226, § 1; P.L. 1911, ch. 667, § 1; G.L. 1923, ch. 264, § 1; G.L. 1938, ch. 119, § 1; G.L. 1956, § 7-9-2 ; P.L. 2018, ch. 346, § 10.

7-9-3. Acceptance of corporate bond as sole surety.

No additional surety is required upon any judicial or official bond or upon any recognizance or other obligation of record, by the judge, head of department, or other officer approving the bond or taking the recognizance, if he or she deems the surety sufficient, but additional surety may be required by him or her, if in his or her discretion necessary. In all bonds, undertakings, or other obligations, and in all recognizances or other obligations of record in which “sureties” are required by law or otherwise in this state, the sole suretyship of any company duly authorized to do business in this state, if deemed sufficient surety by the person, judge, or official approving or accepting the bond, undertaking, or other obligation, or taking the recognizance or other obligation of record, is deemed a full compliance with any requirement for “sureties”.

History of Section. G.L. 1896, ch. 186, § 1; P.L. 1902, ch. 1053, § 1; G.L. 1909, ch. 226, § 1; P.L. 1911, ch. 667, § 1; G.L. 1923, ch. 264, § 1; G.L. 1938, ch. 119, § 1; G.L. 1956, § 7-9-3 .

7-9-4. Purpose of provisions.

It is declared to be the true intent and meaning of §§ 7-9-1 — 7-9-7 to enable any company, incorporated and authorized to do business under the laws of this state, to the extent of its corporate powers, to become guarantor in this state, or to become surety upon any bond, undertaking, or other obligation, or to enter into any recognizance or other obligation of record, in any way, to the same extent, with the same rights, and under the same liabilities as any natural person.

History of Section. G.L. 1896, ch. 186, § 1; P.L. 1902, ch. 1053, § 1; G.L. 1909, ch. 226, § 1; P.L. 1911, ch. 667, § 1; G.L. 1923, ch. 264, § 1; G.L. 1938, ch. 119, § 1; G.L. 1956, § 7-9-4 .

7-9-5. Allowance of bonding costs in accounts.

Any court or officer whose duty it is to pass upon the account of any person or corporation required by law to give bond, may, whenever the person or corporation has given any company as surety upon the bond, allow in the settlement of the account a reasonable sum for the expense of procuring the surety.

History of Section. G.L. 1896, ch. 186, § 2; P.L. 1902, ch. 1053, § 1; G.L. 1909, ch. 226, § 2; P.L. 1911, ch. 667, § 1; G.L. 1923, ch. 264, § 2; G.L. 1938, ch. 119, § 2; G.L. 1956, § 7-9-5 .

7-9-6. Premiums for bonds payable to state.

Whenever, by the laws of this state, any officer is required to give bond to the state, the bond shall be taken by the general treasurer, in the name of the state, from a company authorized to do business in the state, at the state’s expense; and the state controller shall draw his or her order for the payment of the cost of the bond out of any money in the treasury not otherwise appropriated, upon the receipt of vouchers for it approved by the general treasurer.

History of Section. G.L. 1896, ch. 186, § 4; P.L. 1902, ch. 1053, § 1; G.L. 1909, ch. 226, § 4; P.L. 1911, ch. 667, § 1; G.L. 1923, ch. 264, § 4; G.L. 1938, ch. 119, § 4; impl. am. P.L. 1939, ch. 660, § 65; G.L. 1956, § 7-9-6 .

7-9-7. Estoppel of corporation to deny authority.

Any company that makes, signs, seals, executes, acknowledges, or delivers any bond, guaranty, undertaking, or other obligation of record in this state, or that enters into any recognizance or other obligation of record whatsoever in this state, under the provisions of §§ 7-9-1 — 7-9-7 , is estopped, in any proceedings to enforce the liability which it has assumed to incur, to deny its corporate power to make, sign, seal, execute, acknowledge, or deliver the bond, guaranty, undertaking, or other obligation, or to enter into the recognizance or other obligation of record.

History of Section. G.L. 1896, ch. 186, § 3; P.L. 1902, ch. 1053, § 1; G.L. 1909, ch. 226, § 3; P.L. 1911, ch. 667, § 1; G.L. 1923, ch. 264, § 3; G.L. 1938, ch. 119, § 3; G.L. 1956, § 7-9-7 .

7-9-8 — 7-9-12. [Repealed.]

7-10-1 — 7-10-23. [Repealed.]

7-11-101. Definitions.

In this chapter:

1. “Broker-dealer” means a person engaged in the business of effecting transactions in securities for the account of others or for the person’s own account. “Broker-dealer” does not include:
   1. A sales representative;
   2. An issuer, except when effecting transactions other than as to its own securities;
   3. Any other person that the director, by rule or order, designates; or
   4. A depository institution if the depository institution is not considered to be a “broker” or “dealer” within the meaning of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78c(a)(4) and (5)) or any regulation or rule adopted by the Securities and Exchange Commission under the Act (the “Act”) because the depository institution engages in any one or more of the activities described in the following provisions of the Act, under the conditions set forth in:
   1. Sections 3(a)(4)(B)(i) through (vi);
   2. Section 3(a)(4)(B)(vii), so long as the depository institution is a regulated financial institution as defined in § 19-1-1(10) and the offer and sale is made to a sophisticated or institutional investor;
   3. Sections 3(a)(4)(B)(viii) through (x);
   4. Section 3(a)(4)(B)(xi), if limited to unsolicited transactions; or
   5. Section 3(a)(5)(C).
2. “Depository institution” means:
   1. A person which is organized, chartered, or holding an authorization certificate under the laws of a state or of the United States which authorizes the person to receive deposits, including a savings, share, certificate, or deposit account, and which is supervised and examined for the protection of depositors by an official or agency of a state or the United States;
   2. A trust company or other institution that is authorized by federal or state law to exercise fiduciary powers of the type a national bank is permitted to exercise under the authority of the comptroller of the currency and is supervised and examined by an official or agency of a state or the United States; and
   3. “Depository institution” does not include an insurance company or other organization primarily engaged in the insurance business, or a Morris plan bank, industrial loan company, or a similar bank or company unless its deposits are insured by a federal agency.
3. “Director” means the director of the department of business regulation.
4. “Federal covered adviser” means a person who is:
   1. Registered under § 203 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-3; or
   2. Is excluded from the definition of “investment adviser” under § 202(a)(11) of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-2(a)(11).
5. “Federal covered security” means any security that is a covered security under § 18(b) of the Securities Act of 1933, 15 U.S.C. § 77r(b), or rules or regulations promulgated under that section.
6. “Filed” means the actual delivery of a document or application to the director or designee of the director or to the principal office of the director.
7. “Financial or institutional investor” means any of the following, whether acting for itself or another in a fiduciary capacity:
   1. A depository institution;
   2. An insurance company;
   3. A separate account of an insurance company;
   4. An investment company as defined in the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq.;
   5. An employee pension, profit sharing or benefit plan if the plan has total assets in excess of five million dollars ($5,000,000), or if investment decisions are made by a plan fiduciary, as defined in the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., which is either a broker-dealer registered under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., a depository institution, or an insurance company; and
   6. Any other institutional buyer.
8. “Fraud”, “deceit”, and “defraud” are not limited to common law fraud or deceit.
9. For purposes of § 7-11-401 , “guaranteed” means guaranteed as to payment of all or substantially all of principal and interest or dividends.
10. For purposes of § 7-11-401 , “insured” means insured as to payment of all or substantially all of principal and interest or dividends.
11. “Investment adviser” means a person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities. “Investment adviser” does not include:
    1. An investment adviser representative;
    2. A trust company or other institution described in subsection (2)(ii) of this section;
    3. A lawyer, accountant, engineer, or teacher whose performance of investment advisory services is solely incidental to the practice of the person’s profession;
    4. A broker-dealer or its agent whose performance of investment advisory services is solely incidental to the conduct of business as a broker-dealer and who receives no special compensation for the investment advisory services;
    5. A publisher of any bona fide newspaper, news column, newsletter, news magazine, or business or financial publication or service, whether communicated in hard copy form, or by electronic means, or otherwise, that does not consist of the rendering of advice on the basis of the specific investment situation of each client;
    6. A person whose advice, analyses, or reports relate only to securities exempt under § 7-11-401(1) ;
    7. Any person as the director, by rule or order, designates; and
    8. A person who is a federal covered adviser.
12. 1. “Investment adviser representative” means any partner, officer, director of (or a person occupying a similar status or performing similar functions) or other individual, except clerical or ministerial personnel, who is employed by or associated with:
       1. An investment adviser that is registered or required to be registered under this chapter and who does any of the following:
          1. Makes any recommendations or otherwise renders advice regarding securities to clients;
          2. Manages accounts or portfolios of clients;
          3. Determines which recommendation or advice regarding securities should be given;
          4. Solicits, offers, or negotiates for the sale of or sells investment advisory services;
          5. Supervises employees who perform any of the preceding; or
       2. A federal covered adviser, subject to the limitations of § 203A of the Investment Advisors Act of 1940, 15 U.S.C. § 80b-3a, as the director may designate by rule or order.
    2. Notwithstanding subsections (12)(i)(A) and (12)(i)(B), an investment adviser representative shall not include any other persons employed by or associated with either an investment adviser or a federal covered adviser not within the intent of subsection (12) that the director may designate by rule or order or as otherwise specifically excluded by rule of the U.S. Securities and Exchange Commission.
13. 1. Except as provided in subsections (13)(ii) through (13)(iv), “issuer” means a person who issues or proposes to issue a security.
    2. The “issuer” of a collateral trust certificate, voting trust certificate, certificate of deposit for a security, or share in an investment company without a board of directors or persons performing similar functions, is a person performing the acts and assuming the duties of depositor or manager pursuant to the trust or other agreement or instrument under which the security is issued.
    3. The “issuer” of an equipment trust certificate, including a conditional sales contract or similar security serving the same purpose, is the person to whom the equipment or property is or is to be leased or conditionally sold.
    4. The “issuer” of a fractional undivided interest to an oil, gas, or other mineral lease or in payments out of production under a lease, right, or royalty, is the owner of an interest in the lease or in payments out of production under a lease, right, or royalty, whether whole or fractional, who creates fractional interests for the purpose of sale.
14. “Nonissuer transaction” means a transaction not directly or indirectly for the benefit of the issuer.
15. “Person” means a natural person, corporation, business trust, estate, trust, partnership, association, joint venture, government in its private or public capacity, governmental subdivision or agency, or any other legal or commercial entity.
16. “Person associated with” a named party or parties or “associated person of” a named party or parties means any partner, officer, director, or branch manager of the named party or parties (or any person occupying a similar status or performing similar functions), any person directly or indirectly controlling, controlled by, or under common control with the named party or parties or any employee of the named party or parties, except that any associated person whose functions are solely clerical or ministerial is not included in the meaning of the term for purposes of this chapter.
17. “Price amendment” means the amendment to a registration statement filed under the Securities Act of 1933, 15 U.S.C. § 77a et seq., or, if no amendment is filed, the prospectus or prospectus supplement filed under the Securities Act of 1933, which includes a statement of the offering price, underwriting and selling discounts or commissions, amounts of proceeds, conversion rates, call prices, and other matters dependent on the offering price.
18. “Promoter” includes:
    1. A person who, acting alone or in concert with one or more other persons, takes the entrepreneurial initiative in founding or organizing the business or enterprise of an issuer;
    2. An officer or director owning securities of an issuer or a person who owns, beneficially or of record, ten percent (10%) or more of a class of securities of the issuer if the officer, director, or person acquires any of those securities in a transaction within three (3) years before the filing by the issuer of a registration statement under this chapter and the transaction does not possess the indicia of arms length bargaining; and
    3. A member of the immediate family of a person within subsection (18)(i) or (18)(ii) if the family member receives securities of the issuer from that person in a transaction within three (3) years before the filing by the issuer of a registration statement under this chapter and the transaction does not possess the indicia of arms length bargaining.
19. 1. “Sale” or “sell” includes every contract of sale, contract to sell, or other disposition, of a security or interest in a security for value.
    2. “Offer to sell” includes every attempt to offer to dispose of, or solicitation of an offer to purchase, a security or interest in a security for value.
    3. “Offer to purchase” includes every attempt or offer to obtain, or solicitation of an offer to sell, a security or interest in a security for value, but the term does not include a transaction that is subject to § 14(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(d).
    4. A security given or delivered with or as a bonus on account of a purchase of securities or other item is considered to constitute part of the subject of the purchase and to have been offered and sold for value.
    5. A gift of assessable stock is deemed to involve an offer and sale.
    6. A sale or offer of a warrant or right to purchase or subscribe to another security of the same or another issuer, or a sale or offer of a security that gives the holder a present or future right or privilege to convert into another security of the same or another issuer, is deemed to include an offer of the other security.
    7. The terms defined in subsection (19) do not include:
       1. the creation of a security interest or a loan;
       2. a stock dividend, whether or not the corporation distributing the dividend is the issuer of the stock, if nothing of value is given by stockholders for the dividend other than the surrender of a right to a cash or property dividend and each stockholder may elect to take the dividend in cash, property, or stock; or
       3. an act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding securities, claims, or property interests, or partly in exchange and partly for cash.
20. “Sales representative” means a person, other than a broker-dealer, associated with a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities.
21. “Securities Act of 1933”, 15 U.S.C. § 77a et seq., “Securities Exchange Act of 1934”, 15 U.S.C. § 78a et seq., “Public Utility Holding Company Act of 1935”, 15 U.S.C. § 79 et seq. [repealed], “Investment Company Act of 1940”, 15 U.S.C. § 80a-1 et seq., “Investment Advisers Act of 1940”, 15 U.S.C. § 80b-1 et seq., “Employee Retirement Income Security Act of 1974”, 29 U.S.C. § 1001 et seq., “National Housing Act”, 12 U.S.C. § 1701 et seq., and “Commodity Exchange Act”, 7 U.S.C. § 2 et seq., mean the federal statutes of those names as amended before or after July 6, 1990.
22. Unless the context requires otherwise, “security” means a note; stock; treasury stock; bond; debenture; evidence of indebtedness; certificate of interest or participation in a profit sharing agreement; a limited partnership interest; collateral trust certificate; variable annuity; preorganization certificate or subscription; transferable share; investment contract; voting trust certificate; certificate of deposit for a security; fractional undivided interest in an oil, gas, or other mineral lease or in payments out of production under a lease, right, or royalty; a put, call, straddle, or option entered into on a national securities exchange relating to foreign currency; a put, call, straddle, or option on a security, certificate of deposit, or group or index of securities, including an interest in or based on the value of any of the preceding; or, in general, an interest or instrument commonly known as a “security”, or a certificate of interest or participation in, temporary or interim certificate for, receipt for, whole or partial guarantee of, or warrant or right to subscribe to or purchase, any of the preceding. The term does not include:
    1. An insurance or endowment policy or annuity contract under which an insurance company promises to pay a fixed sum of money either in a lump sum or periodically for life or some other specified period; or
    2. An interest in a contributory or noncontributory pension or welfare plan subject to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.
23. “Self-regulatory organization” means a national securities exchange registered under § 7 of the Securities Exchange Act of 1934, 15 U.S.C. § 78g, a national securities association of brokers and dealers registered under § 15A of the Securities Exchange Act of 1934, 15 U.S.C. § 78o-3, a clearing agency registered under § 17A of the Securities Exchange Act of 1934, 15 U.S.C. § 78q-1, or the municipal securities rulemaking board established under § 15B(b)(1) of the Securities Exchange Act of 1934, 15 U.S.C. § 78o-4(b)(1).
24. “State” means a state, commonwealth, territory, or possession of the United States, including both the District of Columbia and the Commonwealth of Puerto Rico.
25. “Willfully” means intentionally committing the act which constitutes a violation; there being no requirement that the actor also be aware that he or she is violating any provision of this chapter or any rule or order under this chapter.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 1997, ch. 69, § 1; P.L. 1999, ch. 50, § 1; P.L. 2002, ch. 422, § 1; P.L. 2003, ch. 118, § 1; P.L. 2003, ch. 363, § 1.

7-11-201. Broker-dealer and sales representative licensing.

1. No person may transact business in this state as a broker-dealer or sales representative unless licensed or exempt from licensing under this chapter.
2. No broker-dealer licensed under this chapter and no issuer may employ a person as a sales representative in this state unless the sales representative is licensed or exempt from licensing under this chapter.
3. No broker-dealer or issuer engaged in offering securities in this state may employ, directly or indirectly, a person to engage in any activity in this state contrary to a suspension or bar from association with a broker-dealer or investment adviser imposed against that person by the director. No broker-dealer or issuer violates this subsection unless the broker-dealer or issuer knows or in the exercise of reasonable care should know of the suspension or bar. Upon request from a broker-dealer or issuer and for good cause shown, the director, by order, may waive the prohibition of this subsection regarding a person suspended or barred.

History of Section. P.L. 1990, ch. 460, § 2.

7-11-202. Exempt broker-dealers and sales representatives.

1. The following broker-dealers are exempt from the licensing requirements of § 7-11-201 :
   1. A broker-dealer who either is registered or, except as provided in subsection (b) of this section, is not required to be registered under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., and who has no place of business in this state if:
      1. The transactions effected by the broker-dealer in this state are exclusively with the issuer of the securities involved in the transactions, other broker-dealers licensed or exempt under this chapter, and financial or institutional investors;
      2. The broker-dealer is licensed under the securities act of a state in which the broker-dealer maintains a place of business and the broker-dealer offers and sells in this state to a person who is an existing customer of the broker-dealer and whose principal place of residence is not in this state; and
   2. Other broker-dealers the director, by rule or order, exempts.
2. The exemption provided in subsection (a)(1)(i) of this section is not available to a broker-dealer who deals solely in governmental securities and is not registered under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., unless the broker-dealer is subject to supervision as a dealer in government securities by the federal reserve board.
3. The following sales representatives are exempt from the licensing requirements of § 7-11-201 :
   1. A sales representative acting for a broker-dealer exempt under subsection (a) of this section;
   2. A sales representative acting exclusively for an issuer in effecting transactions in a security exempted by § 7-11-401(1) — (4) and (10) — (12);
   3. A sales representative acting for an issuer effecting offers or sales of securities in transactions exempted by § 7-11-402 ;
   4. A sales representative acting for an issuer effecting transactions with employees, partners, officers, or directors of the issuer, a parent or a wholly owned subsidiary of the issuer, if no commission or other similar compensation is paid or given directly or indirectly to the sales representative for soliciting an employee, partner, officer, or director in this state;
   5. A sales representative acting for an issuer effecting offers or sales of securities that are covered securities under § 18(b)(3) or § 18(b)(4)(D) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(3) or 77r(b)(4)(D), provided that no commission or other remuneration is paid or given directly or indirectly for soliciting any person in this state;
   6. A sales representative whose transactions in this state are limited to only those transactions set forth in § 15(h)(2) of the Securities Exchange Act of 1934, 15 U.S.C. § 78o(h)(2); and
   7. Other sales representatives that the director exempts by rule or order.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1; P.L. 2002, ch. 422, § 1.

7-11-203. Investment adviser and investment adviser representative licensing.

1. No person may transact business in this state as an investment adviser or an investment adviser representative unless licensed or exempt from licensing under this chapter.
2. No investment adviser licensed under this chapter may employ a person as an investment adviser representative in this state unless the investment adviser representative is licensed or exempt from licensing under this chapter.
3. No investment adviser may directly or indirectly employ a person to engage in any activity in this state contrary to a suspension or bar from association with a broker-dealer or investment adviser imposed against that person by the director. A federal covered adviser may not directly or indirectly employ a person having a place of business in this state to engage in any activity in this state if that person is currently subject to a suspension or bar from association with a broker-dealer or investment adviser against that person by the director. No investment adviser or federal covered adviser violates this subsection unless the investment adviser or federal covered adviser knows or in the exercise of reasonable care should know of the suspension or bar. Upon request from an investment adviser or a federal covered adviser and for good cause shown, the director may by order waive the prohibition of this subsection regarding a suspended or barred person.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1.

7-11-204. Exempt investment advisers and investment adviser representatives.

The following investment advisers and investment adviser representatives are exempt from the licensing requirements of § 7-11-203 :

1. An investment adviser who is not required to be registered as an investment adviser under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., if:
   1. Its only clients in this state are other investment advisers, federal covered advisers, broker-dealers, financial or institutional investors; and the investment adviser has no place of business in this state and the investment adviser directs business communications in this state to a person who is an existing client of the investment adviser and whose principal place of residence is not in this state; or
   2. The investment adviser has no place of business in this state and the investment adviser, during the preceding twelve (12) month period, has had not more than five (5) clients, other than those specified in subsection (1)(i), who are residents of this state;
2. An investment adviser representative if the investment adviser with whom it is associated is exempt under subsection (1) of this section; and
3. Other investment advisers or investment adviser representatives the director exempts by rule or order.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1; P.L. 2001, ch. 118, § 1.

7-11-205. Application.

1. An applicant for licensing as a broker-dealer, sales representative, investment adviser, or investment adviser representative shall file with the director an application for licensing and a consent to service of process under § 7-11-708 . The application for licensing must contain the information that the director, by rule, determines is necessary.
2. The requirements of subsection (a) are satisfied by an applicant who has filed and maintains a completed and current registration with the Securities and Exchange Commission or a self-regulatory organization by filing with the director notice of the registration in the form and content determined by rule by the director and a consent to service of process under § 7-11-708 . The registration information filed with the Securities and Exchange Commission or self-regulatory organization must be available to the director through a central registration depository system approved by the director. The director may require by order the submission of additional information by an applicant.

History of Section. P.L. 1990, ch. 460, § 2.

7-11-206. Licensing and notice fees; and filing requirements for federal covered advisers.

1. A federal covered adviser or an applicant for licensing shall pay an annual fee as follows:
   1. Broker-dealer three hundred dollars ($300) and for each branch office one hundred dollars ($100);
   2. Sales representative one hundred dollars ($100.00);
   3. Investment adviser three hundred dollars ($300);
   4. Investment adviser representative sixty dollars ($60.00); and
   5. Federal covered adviser three hundred dollars ($300).
2. Except with respect to federal covered advisers whose only clients are those described in § 7-11-204(1)(i) , a federal covered adviser shall file any documents filed with the U.S. Securities and Exchange Commission with the director, that the director requires by rule or order, together with any notice fee and consent to service of process that the director requires by rule or order. The notice filings under this subsection expire annually on December 31, unless renewed.
3. A notice filing under this section is effective from receipt until the end of the calendar year. A notice filing may be renewed by filing any documents that have been filed with the U.S. Securities and Exchange Commission as required by the director along with a renewal fee of three hundred dollars ($300).
4. A federal covered adviser may terminate a notice filing upon providing the director notice of the termination, which is effective upon receipt by the director.
5. Notwithstanding the provisions of this section, until October 11, 1999, the director may require the registration as an investment adviser of any federal covered adviser who has failed to promptly pay the fees required by this section after written notification from the director of the nonpayment or underpayment of the fees. A federal covered adviser is considered to have promptly paid the fees if they are remitted to the director within fifteen (15) days following the federal covered adviser’s receipt of written notice from the director.
6. For purposes of this section, “branch office” means any location where one or more associated persons of a broker-dealer regularly conducts the business of effecting any transactions in, or inducing or attempting to induce the purchase or sale of any security, or is held out as such, excluding:
   1. Any location that is established solely for customer service and/or back office type functions where no sales activities are conducted and that is not held out to the public as a branch office;
   2. Any location that is the associated person’s primary residence; provided that:
      1. Only one associated person, or multiple associated persons who reside at that location and are members of the same immediate family, conduct business at the location;
      2. The location is not held out to the public as an office and the associated person does not meet with customers at the location;
      3. Neither customer funds nor securities are handled at that location;
      4. The associated person is assigned to a designated branch office, and such designated branch office is reflected on all business cards, stationery, advertisements, and other communications to the public by such associated person;
      5. The associated person’s correspondence and communications with the public are subject to the firm’s supervision in accordance with Rule 3010 of the Financial Industry Regulatory Authority;
      6. Electronic communications are made through the broker-dealer’s electronic system;
      7. All orders are entered through the designated branch office or an electronic system established by the broker-dealer that is reviewable at the branch office;
      8. Written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the broker-dealer; and
      9. A list of the residence locations is maintained by the broker-dealer;
   3. Any location, other than a primary residence, that is used for securities business for less than thirty (30) business days in any one calendar year, provided the broker-dealer complies with the provisions of subsections (f)(2)(i) through (ix) above;
   4. Any office of convenience, where associated person(s) occasionally and exclusively by appointment meet with customers, that is not held out to the public as an office;
   5. Any location that is used primarily to engage in non-securities activities and from which the associated person(s) effects no more than twenty-five (25) securities transactions in any one calendar year; provided that any advertisement or sales literature identifying such location also sets forth the address and telephone number of the location from which the associated person(s) conducting business at the non-branch locations are directly supervised;
   6. The floor of a registered national securities exchange where a broker-dealer conducts a direct access business with public customers;
   7. A temporary location established in response to the implementation of a business continuity plan.
7. Notwithstanding the exclusions in subsection (f), any location that is responsible for supervising the activities of persons associated with the broker-dealer at one or more non-branch locations of the broker-dealer is considered to be a branch office.
8. The term “business day” as used in subsection (f) shall not include any partial business day provided that the associated person spends at least four (4) hours on such business day at his or her designated branch office during the hours that such office is normally open for business.
9. Where the office of convenience is located on bank premises, signage necessary to comply with applicable federal and state laws, rules, and regulations and applicable rules and regulations of the New York Stock Exchange, other self-regulatory organizations, and securities and banking regulators may be displayed and shall not be deemed “holding out” for purposes of subsection (f)(4).
10. If an application is denied or withdrawn or the license is revoked, suspended, or withdrawn, the director is not required to refund the fee paid.
11. The director may issue a stop order suspending the activities of a federal covered adviser in this state if the director reasonably believes there has been a violation of the provisions of this section.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1; P.L. 2008, ch. 32, § 1; P.L. 2008, ch. 73, § 1; P.L. 2009, ch. 68, art. 12, § 3; P.L. 2011, ch. 151, art. 19, § 12; P.L. 2021, ch. 162, art. 6, § 3, effective July 1, 2021.

7-11-207. Examinations.

1. The director may by rule or order impose an examination requirement upon an applicant or class of applicants for licensing under this chapter.
2. An examination may be administered by the director or a designee of the director. An examination may be oral or written or both and may differ for each class of applicants.
3. The director may by rule or order waive an examination requirement imposed under subsection (a) as to a person or class of persons if the director determines that the examination is not necessary for the protection of investors.

History of Section. P.L. 1990, ch. 460, § 2.

7-11-208. Licensing.

1. Unless a proceeding under § 7-11-212 is instituted or the applicant is notified that the application is incomplete, the license of a broker-dealer, sales representative, investment adviser, or investment adviser representative becomes effective thirty (30) days after the later of the date an application for licensing is filed and is completed or the date an amendment to an application is filed and is complete. In either case the license becomes effective only if all examination requirements imposed under § 7-11-207 are satisfied. An application is complete when the applicant has furnished information responsive to each applicable item of the application. The director may by order authorize an earlier effective date of licensing.
2. The license of a broker-dealer, sales representative, investment adviser, or investment adviser representative is effective until terminated by expiration, revocation, or withdrawal.
3. The license of a sales representative is only effective with respect to transactions effected on behalf of the broker-dealer or issuer for whom the sales representative is licensed.
4. No person may act at any one time as a sales representative for more than one broker-dealer or for more than one issuer, unless the broker-dealers or issuers for whom the sales representative acts are affiliated by direct or indirect common control or the director authorizes multiple licenses by rule or order.
5. If a person licensed as a sales representative terminates association with a broker-dealer or issuer, or terminates activities that make the person a sales representative, the sales representative and the broker-dealer or issuer on whose behalf the sales representative was acting shall promptly notify the director.
6. The license of an investment adviser representative is only effective as to transactions effected as an associated person of the investment adviser or federal covered adviser as to whom the investment adviser representative is licensed.
7. No person may act at any one time as an investment adviser or federal covered adviser representative for more than one investment adviser, unless the investment advisers or federal covered advisers for whom the investment adviser representative acts are affiliated by direct or indirect common control or the director authorizes multiple licenses by rule or order.
8. If a person licensed as an investment adviser representative terminates association with an investment adviser or terminates activities that make the person an investment adviser representative, the investment adviser representative and the investment adviser on whose behalf the investment adviser representative was acting shall promptly notify the director.
9. The director may authorize by rule one or more special classifications of licenses as a broker-dealer, sales representative, investment adviser, or investment adviser representative to be issued to applicants subject to limitations and conditions on the nature of the activities that may be conducted by persons so licensed.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1; P.L. 1999, ch. 354, § 20.

7-11-209. Post-licensing requirements.

1. 1. The director may require by rule a licensed broker-dealer who is not registered under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., to maintain minimum net capital and a prescribed ratio between net capital and aggregate indebtedness that may vary with the type or class of broker-dealer.
   2. The director may require by rule a licensed investment adviser who is not registered under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., to maintain a minimum net worth subject to the limitations set forth in § 222 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-18a.
   3. If a licensed broker-dealer or investment adviser knows, or has reasonable cause to know, that a requirement imposed on it under subsection (a) is not being met, the broker-dealer or investment adviser shall promptly notify the director of its current financial condition.
2. The director may require by rule the furnishing of a fidelity bond from a broker-dealer who is not registered under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq.
3. 1. A licensed broker-dealer or investment adviser shall file with the director the financial and other information the director determines, by rule or order, to be necessary.
   2. A licensed broker-dealer required to file financial reports under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., may satisfy periodic financial report requirements of subsection (c) by filing with the director a copy of the financial reports filed under the Securities Exchange Act of 1934.
   3. A licensed investment adviser shall file with the director any financial reports, subject to the limitations of § 222 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-18a, that the director by rule or order requires.
4. 1. A licensed broker-dealer or sales representative shall comply with the recordkeeping requirements of the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq. A licensed investment adviser subject to the limitations of § 222 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-18a, shall maintain records the director requires by rule or order.
   2. Required records may be maintained in any form of data storage if the records are readily accessible to the director.
   3. Required records must be preserved for any period that the director may require by rule or order, subject to the limitations of § 15 of the Securities Exchange Act of 1934, 15 U.S.C. § 78o, and § 222 of the Investment Advisers Act of 1940, 15 U.S.C. § 80b-18a, for broker-dealers and investment advisers, respectively.
5. If the information contained in a document filed with the director as part of the application for licensing or under this section, except information the director excludes by rule or order, is inaccurate or incomplete in a material respect, the licensed person shall promptly file correcting information, unless notification of termination has been given under § 7-11-208(e) .

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1.

7-11-210. Licensing of successor firms.

1. A licensed broker-dealer or investment adviser may file an application for licensing of a successor, whether or not the successor is in existence, if the fee the director prescribes for the application is submitted with the application.
2. When a broker-dealer or investment adviser succeeds to and continues the business of a licensed broker-dealer or investment adviser, the license of the predecessor remains effective as the license of the successor for sixty (60) days after the succession, if an application for licensing is filed by the successor within thirty (30) days after the succession.
3. Licensing of each then licensed sales representative of the broker-dealer or of each then licensed investment adviser representative of the investment adviser filing an application under subsection (a) or (b) continues automatically without a separate filing or fee upon the licensing of the successor.

History of Section. P.L. 1990, ch. 460, § 2.

7-11-211. Inspection power.

1. Without previous notice, the director may examine or investigate in a manner reasonable under the circumstances the records, within or without this state, of a broker-dealer, sales representative, investment adviser, or investment adviser representative licensed by the state or entitled to an exemption from licensing as well as any person who may be acting as a broker, dealer, sales representative, investment adviser, or investment adviser representative without a license or exemption to engage in such activity(ies) in order to determine compliance with this chapter. Broker-dealers, sales representatives, investment advisers, and investment adviser representatives must make their records available to the director in legible form.
2. The director may copy records or require a licensed person to copy records and provide the copies to the director to the extent and in a manner reasonable under these circumstances.
3. The director may impose a reasonable fee for the expense of conducting an examination or an investigation under this section.
4. Upon receipt of a report or complaint, the director may conduct an inspection to determine whether any violation or unlicensed activity has occurred.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 2001, ch. 190, § 1.

7-11-212. Grounds for denial, suspension, and revocation.

1. The director may by order:
   1. Deny, suspend, or revoke a license;
   2. Limit the securities activities that an applicant or licensed person may perform in this state;
   3. Bar a broker-dealer or investment adviser from conducting any securities activities in this state;
   4. Bar an applicant or licensed person from association with a licensed broker-dealer or investment adviser; or
   5. Bar from employment with a licensed broker-dealer or investment adviser a person who is a partner, officer, director, or a person occupying a similar status or performing a similar function for an applicant or licensed person.
2. These actions may be taken only if the director finds that the order is in the public interest and that the applicant or licensed person or, in the case of a broker-dealer or investment adviser, a partner, officer, or director, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling the broker-dealer or investment adviser has done any of the following:
   1. Filed an application for licensing with the director which, as of its effective date or any date after filing in the case of an order denying effectiveness, contained any untrue statement of material fact or omitted to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
   2. Willfully violated or willfully failed to comply with this chapter, a predecessor act, or a rule or order under this chapter or a predecessor act;
   3. Is the subject of an adjudication or determination, after notice and opportunity for hearing, within the last five (5) years by a securities agency or administrator of another state or a court of competent jurisdiction that the person has willfully violated the Securities Act of 1933, 15 U.S.C. § 77a et seq., the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 et seq., or the Commodity Exchange Act, 7 U.S.C. § 2 et seq., or the securities law of any other state but only if the acts constituting the violation of that state’s law would constitute a violation of this chapter had the acts occurred in this state;
   4. Within the last ten (10) years, has been convicted of a felony or misdemeanor which the director finds:
      1. Involves the purchase or sale of a security; the taking of a false oath, the making of a false report, bribery, perjury, burglary, robbery, or attempt or conspiracy to commit any of the foregoing offenses;
      2. Arises out of the conduct of business as a broker-dealer, investment adviser, depository institution, insurance company, or fiduciary; or
      3. Involves the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities or attempt or conspiracy to commit any of the above offenses;
   5. Is permanently or temporarily enjoined by a court of competent jurisdiction from acting as an investment adviser, underwriter, broker-dealer, or as an affiliated person or employee of an investment company, depository institution, or insurance company, or from engaging in or continuing conduct or practice in connection with any of the foregoing activities, or in connection with the purchase or sale of a security;
   6. Is the subject of an order of the director denying, suspending, or revoking the person’s license as a broker-dealer, sales representative, investment adviser, or investment adviser representative;
   7. Is the subject of any of the following orders that are currently effective and were issued within the last five (5) years:
      1. An order by the securities agency or administrator of another state or Canadian province or territory, or by the Securities and Exchange Commission, entered after notice and opportunity for hearing, denying, suspending, or revoking the person’s license as a broker-dealer, sales representative, investment adviser, or investment adviser representative, or the substantial equivalent of those terms as defined in this chapter;
      2. A suspension or expulsion from membership in or association with a member of a self-regulatory organization registered under the Securities Exchange Act of 1934 or the Commodity Exchange Act;
      3. A United States postal service fraud order;
      4. A cease and desist order entered after notice and opportunity for hearing by the director, the securities agency or administrator of another state, or a Canadian province or territory, the Securities and Exchange Commission, or the commodity futures trading commission; or
      5. An order by the commodity futures trading commission denying, suspending, or revoking registration under the Commodity Exchange Act;
   8. Has engaged in unethical or dishonest practices in the securities business;
   9. Is insolvent, either in the sense that liabilities exceed assets, or in the sense that obligations cannot be met as they mature, but the director may not enter an order against a broker-dealer or investment adviser under this subsection without a finding of insolvency as to the broker-dealer or investment adviser;
   10. Is determined by the director in compliance with § 7-11-213 not to be qualified on the basis of the lack of training, experience, and knowledge of the securities business;
   11. Has failed reasonably to supervise a sales representative, investment adviser representative, or an employee; or
   12. Has failed to pay the proper filing fee within thirty (30) days after being notified by the director of a deficiency, but the director shall vacate an order under this subsection when the deficiency is corrected.
3. The director may not begin a proceeding on the basis of a fact or transaction known to the director when the license became effective unless the proceeding is begun within the ninety (90) days after issuance of the license.
4. If the director finds that an applicant or licensed person is no longer in existence, has ceased to do business as a broker-dealer, sales representative, investment adviser, or investment adviser representative, is adjudicated mentally incompetent or subjected to the control of a committee, conservator, or guardian, or cannot be located after reasonable search, the director may by order deny the application or revoke the license.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 1997, ch. 56, § 1.

7-11-213. Denial, suspension, or revocation on grounds of lack of qualification.

The director’s determination that an applicant or licensed person lacks qualification under § 7-11-212 is limited by the following provisions. The director:

1. May not enter an order against a broker-dealer on the basis of the lack of qualification of:
   1. A person other than the broker-dealer if the broker-dealer is an individual; or
   2. A sales representative of the broker-dealer.
2. May not enter an order against an investment adviser on the basis of the lack of qualification of:
   1. A person other than the investment adviser if the investment adviser is an individual;
   2. Any other person who represents the investment adviser in doing an act that makes the person an investment adviser; or
   3. An investment adviser representative of the investment adviser.
3. May not enter an order solely on the basis of lack of experience of the applicant or licensed person if the applicant or licensed person is qualified by training or knowledge, or both.
4. Shall consider that a sales representative who will work under the supervision of a licensed broker-dealer need not have the same qualifications as a broker-dealer.
5. Shall consider that an investment adviser is not necessarily qualified solely on the basis of experience as a broker-dealer or sales representative.
6. Shall consider that an investment adviser representative who will work under the supervision of a licensed investment adviser need not have the same qualifications as an investment adviser.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, 1.

7-11-214. Withdrawal.

1. An application for a license may be withdrawn by the applicant without prejudice before the license becomes effective.
2. Withdrawal from licensing as a broker-dealer, sales representative, investment adviser, or investment adviser representative becomes effective thirty (30) days after receipt by the director of an application to withdraw or within any shorter period the director determines by order, unless:
   1. A revocation or suspension proceeding is pending when the application is filed;
   2. A proceeding to revoke or suspend or to impose conditions upon the withdrawal is instituted within thirty (30) days after the application is filed; or
   3. Additional information is requested by the director regarding the withdrawal application.
3. If a proceeding is pending or instituted under subsection (b), withdrawal becomes effective at the time and upon the conditions the director determines by order. If additional information is requested, withdrawal is effective thirty (30) days after the additional information is filed. Although no proceeding is pending or instituted and withdrawal becomes effective, the director may institute a proceeding under § 7-11-212 within one year after withdrawal became effective and enter an order as of the last date on which licensing was effective.

History of Section. P.L. 1990, ch. 460, § 2.

7-11-215. Custody of clients’ securities and funds.

Unless prohibited by rule or order of the director, an investment adviser registered under this chapter may take or retain custody of securities or funds of a client.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1.

7-11-301. Registration requirement.

A person may not offer to sell or sell a security in this state unless the security:

1. Is registered under this chapter;
2. The security or transaction is exempt under this chapter; or
3. It is a federal covered security.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1.

7-11-302. Registration by filing.

1. Securities for which a registration statement has been filed under the Securities Act of 1933, 15 U.S.C. § 77a et seq., in connection with the offering of the securities, may be registered by filing, whether or not they are also eligible for registration under § 7-11-303 or § 7-11-304 , if the following conditions are satisfied:
   1. The issuer is organized under the laws of the United States or a state or, if the issuer is not organized under the laws of the United States or a state, it has appointed a duly authorized agent in the United States for service of process;
   2. The issuer has actively engaged in business operations in the United States for a period of at least thirty-six (36) consecutive calendar months immediately before the filing of the federal registration statement;
   3. The issuer has registered a class of equity securities under § 12(b) or 12(g) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78l(b) or (g), which class of securities is held of record by five hundred (500) or more persons;
   4. The issuer has:
      1. 1. A total net worth of four million dollars ($4,000,000); or
         2. A total net worth of two million dollars ($2,000,000) and net, pretax income from operations before allowances for extraordinary items, for at least two (2) of the three (3) preceding fiscal years;
      2. Not less than four hundred thousand (400,000) units of the class of security registered under § 12 of the Securities Exchange Act of 1934, 15 U.S.C. § 78l, held by the public, excluding securities held by officers and directors of the issuer, underwriters, and persons beneficially owning ten percent (10%) or more of that class of security; and
      3. Outstanding warrants and options held by the underwriters and executive officers and directors of the issuer in an amount not exceeding ten percent (10%) of the total number of shares to be outstanding after completion of the offering of the securities being registered;
   5. The issuer has been subject to the requirements of § 12 of the Securities Exchange Act of 1934 and has filed all the material required to be filed under §§ 13 and 14 of that Act, 15 U.S.C. §§ 78m and 78n, for at least thirty-six (36) calendar months immediately before the filing of the federal registration statement and the issuer has filed in a timely manner all reports required to be filed during the twelve (12) calendar months immediately before the filing of the federal registration statement;
   6. For a period of at least thirty (30) days during the three (3) months preceding the offering of the securities registered, there have been at least four (4) market makers for the class of equity securities registered under § 12 of the Securities Exchange Act of 1934;
   7. Each of the underwriters participating in the offering of the securities, and each broker-dealer who will offer the securities in this state, is a member of, or is subject to the rules of fair practice of, a national association of securities dealers with respect to the offering, and the underwriters have contracted to purchase the securities offered in a principal capacity;
   8. The aggregate commissions or discounts to be received by the underwriters will not exceed ten percent (10%) of the aggregate price at which the securities being registered are offered to the public;
   9. Neither the issuer, nor any of its subsidiaries, since the end of the last fiscal year preceding the filing of the registration statement, have:
      1. Failed to pay a dividend or sinking-fund installment on preferred stock;
      2. Defaulted on indebtedness for borrowed money; or
      3. Defaulted on the rental of one or more long-term leases; which defaults in the aggregate are material to the financial position of the issuer and its subsidiaries, taken as a whole; and
   10. In the case of equity securities, the price at which the securities will be offered to the public is not less than five dollars ($5.00) per share.
2. A registration statement under this section must contain the following information and be accompanied by the following documents, in addition to the information specified in § 7-11-305(c) and the consent to service of process required by § 7-11-708 :
   1. A statement demonstrating eligibility for registration by filing;
   2. The name, address, and form of organization of the issuer;
   3. With respect to a person on whose behalf a part of the offering is to be made in a nonissuer distribution: name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; and a statement of the reasons for making the offering;
   4. A description of the securities being registered; and
   5. A copy of the latest prospectus filed with the registration statement under, and satisfying the requirements of, § 10 of the Securities Exchange Act of 1933, 15 U.S.C. § 77j.
3. If the information and documents required to be filed by subsection (b) have been on file with the director for at least five (5) business days, or any shorter period as the director allows by rule or order, and the applicable registration fee has been paid before the effectiveness of the federal registration statement, a registration statement under this section automatically becomes effective concurrently with the effectiveness of the federal registration statement. If the federal registration statement becomes effective before the conditions in this subsection are satisfied and they are not waived, the registration statement becomes effective when the conditions are satisfied. The registrant shall promptly notify the director by telephone or electronic mail of the date and time when the federal registration statement becomes effective, and any content of the price amendment, and shall promptly file a post-effective amendment containing the information and documents in the price amendment. The director shall promptly acknowledge receipt of notification and effectiveness of the registration statement as of the date and time the registration statement became effective with the Securities and Exchange Commission.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch 69, § 1; P.L. 2016, ch. 153, § 1; P.L. 2016, ch. 159, § 1.

7-11-303. Registration by coordination.

1. Securities for which a registration statement has been filed under the Securities Act of 1933, 15 U.S.C. § 77a et seq., in connection with the offering of the securities, may be registered by coordination.
2. A registration statement under this section contains the following information and is accompanied by the following documents, in addition to the information specified in § 7-11-305(c) and the consent to service of process required by § 7-11-708 :
   1. An electronically filed copy or paper copy of the latest form of prospectus filed under the Securities Act of 1933, 15 U.S.C. § 77a et seq.;
   2. If the director requires by rule or order: a copy of the articles of incorporation and bylaws or their substantial equivalents, currently in effect; a copy of any agreement with or among underwriters; a copy of an indenture or other instrument governing the issuance of the securities to be registered; and a specimen, copy, or description of the securities;
   3. If the director requests, and subject to § 7-11-703(b)(2) , any other information, or copies of any other document, filed under the Securities Act of 1933; and
   4. An undertaking to forward promptly, and not later than the first business day after the day they are forwarded to or filed with the Securities and Exchange Commission, all future amendments to the federal registration statement and/or prospectus, other than an amendment that delays the effective date of the registration statement.
3. A registration statement under this section automatically becomes effective when the federal registration statement becomes effective if all the following conditions are satisfied:
   1. No stop order is in effect and no proceeding is pending under § 7-11-306 ;
   2. The registration statement has been on file with the director for at least ten (10) days, or any shorter period the director specifies by rule or order, but if the registration statement is not filed with the director within ten (10) days after the initial filing under the Securities Act of 1933, 15 U.S.C. § 77a et seq., the registration statement has been on file with the director for thirty (30) days, or any shorter period the director specifies by rule or order; and
   3. A statement of the maximum and minimum proposed offering prices and the maximum underwriting discounts and commission has been on file for two (2) full business days, or any shorter period the director specifies by rule or order, and the offering is made within those limitations.
4. The registrant shall promptly notify the director by telephone or electronic mail of the date and time when the federal registration statement became effective, and any content of the price amendment, and shall promptly file a post-effective amendment containing the information and documents in the price amendment.
5. Upon failure to receive the required notification and post-effective amendment with respect to the price amendment, the director may enter a stop order, without notice or hearing, retroactively denying effectiveness to the registration statement or suspending its effectiveness until the registrant complies with subsection (d). The director shall promptly notify the registrant by telephone or electronic mail, and promptly confirm by letter or electronic mail if the director notifies by telephone, of the issuance of the order. If the registrant proves compliance with the requirements of subsection (d) as to notice and post-effective amendment, the stop order is void as of its entry.
6. The director may waive by rule or order either or both of the conditions specified in subsections (c)(2) and (c)(3).
7. If the federal registration statement becomes effective before all the conditions in subsection (c) are satisfied and they are not waived, the registration statement automatically becomes effective when all the conditions are satisfied. If the registrant advises the director of the date when the federal registration statement is expected to become effective, the director shall promptly advise the registrant by telephone or electronic mail whether all the conditions are satisfied and whether the director then contemplates the institution of a proceeding under § 7-11-306 ; but the advice by the director does not preclude the institution of a proceeding for a stop order suspending the effectiveness of the registration statement. A stop order issued under this subsection is not retroactive.
8. The director may waive or modify, by rule or order, the application of a requirement of this section if a provision of an amendment, repeal, or other alteration of the securities registration provisions of the Securities Act of 1933, 15 U.S.C. § 77a et seq., or the regulations adopted under that act, render the waiver or modification appropriate for further coordination of state and federal registration.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 2016, ch. 153, § 1; P.L. 2016, ch. 159, § 1.

7-11-304. Registration by qualification.

1. A security may be registered by qualification.
2. A registration statement under this section contains the following information and is accompanied by the following documents in addition to the information specified in § 7-11-305(c) and the consent to service of process required by § 7-11-708 :
   1. With respect to the issuer and any significant subsidiary: its name, address, and form of organization; the state or foreign jurisdiction and date of its organization; the general character and location of its business; a description of its physical property and equipment; and a statement of the general competitive conditions in the industry or business in which it is or will be engaged;
   2. With respect to every director and officer of the issuer, or person occupying a similar status or performing similar functions: name, address, and principal occupation for the last five (5) years; the amount of securities of the issuer held by the person as of a specified date within thirty (30) days before the filing of the registration statement, the amount of the securities covered by the registration statement to which the person has indicated an intention to subscribe; and a description of any material interest in any material transaction with the issuer or a significant subsidiary effected within the last three (3) years or proposed to be effected;
   3. With respect to persons covered by subsection (b)(2): the compensation paid or given, directly or indirectly, during the last twelve (12) months and estimated to be paid during the next twelve (12) months, by the issuer, together with all predecessors, parents, subsidiaries, and affiliates, to all those persons in the aggregate;
   4. With respect to a person owning of record, or beneficially if known, ten percent (10%) or more of the outstanding shares of a class of equity security of the issuer: the information specified in subsection (b)(2) other than occupation;
   5. With respect to a promoter if the issuer was organized within the last three (3) years: the information specified in subsection (b)(2), the amount paid to the person within that period or intended to be paid, and the consideration for the payment;
   6. With respect to a person on whose behalf a part of the offering is to be made in a nonissuer distribution: name and address; the amount of securities of the issuer held by the person as of the date of the filing of the registration statement; a description of any material interest in any material transaction with the issuer or any significant subsidiary effected within the last three (3) years or proposed to be effected; and a statement of the reasons for making the offering;
   7. The capitalization and long-term debt, on both a current and pro forma basis, of the issuer and any significant subsidiary, including a description of each security outstanding or being registered or otherwise offered, and a statement of the amount and kind of consideration, whether in the form of cash, physical assets, services, patents, goodwill, or anything else, for which the issuer or a subsidiary has issued its securities within the last two (2) years or is obligated to issue its securities;
   8. The kind and amount of securities to be offered; the proposed offering price or the method by which it is to be computed; any variation from the proposed offering price at which a proportion of the offering is to be made to a person or class of persons other than the underwriters, with a specification of the person or class; the basis upon which the offering is to be made if other than for cash; the estimated aggregate underwriting and selling discounts or commissions and finders’ fees, including separately cash, securities, contracts, or anything else of value to accrue to the underwriters or finders in connection with the offering, or, if the selling discounts or commissions are variable, the basis of determining them and their maximum and minimum amounts; the estimated amounts of other selling expenses, including legal, engineering, and accounting charges; the name and address of every underwriter and every recipient of a finder’s fee; a copy of any underwriting or selling group agreement pursuant to which the distribution is to be made, or the proposed form of the agreement whose terms have not yet been determined; and a description of the plan of distribution of securities that are to be offered otherwise than through an underwriter;
   9. The estimated cash proceeds to be received by the issuer from the offering; the purposes for which the proceeds are to be used by the issuer; the amount to be used for each purpose; the order or priority in which the proceeds will be used for the purposes stated; the amount of funds to be raised from other sources to achieve the purposes stated; the sources of the funds; and, if part of the proceeds is to be used to acquire property, including goodwill, other than in the ordinary course of business, the names and addresses of the vendors, the purchase price, the names of the persons who have received commissions in connection with the acquisition, and the amounts of commissions and any other expense in connection with the acquisition, including the cost of borrowing money to finance the acquisition;
   10. A description of the stock options or other security options outstanding, or to be created in connection with the offering, and the amount of the options held or to be held by every person required to be named in subsection (b)(2), (b)(4), (b)(5), (b)(6), or (b)(8) and by a person who holds or will hold ten percent (10%) or more in the aggregate of the options;
   11. The dates of, parties to, and general effect concisely stated of, every management or other material contract made or to be made other than in the ordinary course of business if it is to be performed in whole or in part at or after the filing of the registration statement or was made within the last two (2) years; and a copy of the contract;
   12. A description of pending litigation or proceedings to which the issuer is a party and that materially affect its business or assets, including any litigation or proceeding known to be contemplated by a governmental authority;
   13. A copy of any prospectus, pamphlet, circular, form letter, advertisement, or other sales literature intended as of the effective date to be used in connection with the offering;
   14. A specimen, copy, or description of the securities being registered; a copy of the issuer’s articles of incorporation and bylaws, or their substantial equivalents, as currently in effect; and a copy of any indenture or other instrument covering the securities to be registered;
   15. A signed or conformed copy of an opinion of counsel as to the legality of the securities being registered, with an English translation if it is in a foreign language, which states whether the securities when sold will be legally issued, fully paid, and nonassessable, and, if debt securities, a binding obligation of the issuer;
   16. The written consent of an accountant, engineer, appraiser, or other person whose profession gives authority to a statement made by the person, if the person is named as having prepared or certified a report or valuation, other than a public and official document or statement, which is used in connection with the registration statement;
   17. A statement of financial condition of the issuer as of a date within four (4) months before the filing of the registration statement; a statement of results of operations and analysis of surplus for each of the three (3) fiscal years before the date of the statement of financial condition and for any period between the close of the last fiscal year and the date of the statement of financial condition, or for the period of the issuer’s and any predecessors’ existence if less than three (3) years; and, if part of the proceeds of the offering is to be applied to the purchase of a business, the same financial statements that would be required if the business were the registrant; and
   18. Any additional information the director specifies by rule or order.
3. Simplified registration for small businesses.
   1. For purposes of simplifying the registration statement for smaller offerings and promoting uniformity with other states, the director may adopt a form to be used as the registration statement for securities being registered under this section and sold in offerings in which the aggregate offering price does not exceed a maximum amount which the director may determine. The form need not require all the information included in this section and may require information not included in this section. The director at his or her discretion may also provide for expedited consideration or automatic approval of small offerings exempt from registration with the Securities and Exchange Commission under 15 U.S.C. § 77c(b) which have been approved by another state with a review process substantially equivalent to the review process of the director provided that the other state agrees to provide similar expedited consideration or automatic approval to securities of Rhode Island issuers.
   2. The maximum amount that may be raised under the simplified registration procedures authorized by this subsection (c) does not exceed the aggregate offering price in Regulation D, Rule 230.504, or Regulation A, Rule 230.254 of the Securities Act of 1933 rules of the Securities and Exchange Commission, or successor rules, whichever aggregate offering price is greater.
   3. An issuer listed in this subsection (c)(3) is not eligible to file applications for simplified registration under subsection (c):
      1. Investment companies subject to the federal Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq.
      2. An issuer subject to the reporting requirements of § 13 or 15(d) of the federal Securities Exchange Act of 1934, 15 U.S.C. § 78m or 78o(d).
      3. An issuer seeking to register securities for sale by persons other than the issuer.
      4. An issuer subject to any of the disqualifications described in Regulation A, Rule 230.252, subsections (c), (d), and (e) of the Securities Act of 1933 rules of the Securities and Exchange Commission, or subject to any of the actions described in § 7-11-212(b)(3) through (b)(7). For purposes of this subsection (c)(3)(iv), an issuer includes an issuer’s director, officer, ten percent shareholder, promoter or selling agent of the securities to be offered or any officer, director, or partner of the selling agent. The director for good cause shown may waive the provisions of this subsection (c)(3)(iv).
   4. Only an issuer organized as a corporation is eligible for simplified registration under subsection (c).
4. A registration statement under this section becomes effective thirty (30) calendar days, or any shorter period as the director specifies by rule or order, after the date the registration statement or the last amendment other than a price amendment is filed, if:
   1. No stop order is in effect and no proceeding is pending under § 7-11-306 ;
   2. The director has not ordered under subsection (e) that effectiveness be delayed; and
   3. The registrant has not requested that effectiveness be delayed.
5. 1. The director may delay effectiveness for a single period of not more than ninety (90) days if the director determines the registration statement is not complete in all material respects and promptly notifies the registrant of that determination.
   2. The director may delay effectiveness for a single period of not more than thirty (30) days if the director determines that the delay is necessary, whether or not the director previously delayed effectiveness under subsection (e)(1).

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 1993, ch. 247, § 1.

7-11-305. Provisions applicable to registration generally.

1. A registration statement may be filed by the issuer, any other person on whose behalf the offering is to be made, or a registered broker-dealer.
2. A person filing a registration statement shall pay a nonrefundable fee of one-tenth of one percent (0.1%) of the maximum aggregate offering price at which the registered securities are to be offered in this state, but not less than three hundred dollars ($300) or more than one thousand dollars ($1,000).
3. A registration statement must specify the amount of securities to be offered in this state and the states in which a registration statement or similar document in connection with the offering has been or is to be filed and any adverse order, judgment, or decree entered by the securities agency or administrator in any state or by a court or the Securities and Exchange Commission in connection with the offering.
4. A document filed under this chapter or a predecessor act within five (5) years before the filing of a registration statement may be incorporated by reference in the registration statement if the document is currently accurate.
5. The director may permit by rule or order the omission of any item of information or document from a registration statement.
6. In the case of a nonissuer offering, the director may not require information under subsection (m) or § 7-11-304 unless it is known to the person filing the registration statement or to the person on whose behalf the offering is to be made, or can be furnished by the person without unreasonable effort or expense.
7. In the case of a registration under § 7-11-303 or § 7-11-304 by an issuer who has no public market for its shares or no significant earnings from continuing operations during the last five (5) years, or any shorter period of its existence, the director may require by rule or order as a condition of registration that the following securities be deposited in escrow for not more than three (3) years:
   1. Securities issued to a promoter within the three (3) years immediately before the offering or to be issued to a promoter for a consideration substantially less than the offering price; and
   2. Securities issued to a promoter for a consideration other than cash, unless the registrant demonstrates that the value of the non-cash consideration received in exchange for the securities is substantially equal to the offering price for the securities.
8. The director may determine by rule or order the conditions of an escrow required under subsection (g), but the director may not reject a depository solely because of location in another state.
9. The director may require by rule or order as a condition of registration under § 7-11-303 or § 7-11-304 that the proceeds from the sale of the registered securities in this state be impounded until the issuer receives a specified amount from the sale of the securities. The director may by rule or order determine the conditions of an impound arrangement required under this subsection, but the director may not reject a depository solely because of location in another state.
10. If securities are registered under § 7-11-302 or § 7-11-303 , the prospectus filed under the Securities Act of 1933, 15 U.S.C. § 77a et seq., must be delivered to each purchaser in accordance with the prospectus delivery requirements of the Securities Act of 1933, 15 U.S.C. § 77a et seq.
11. If securities are registered under § 7-11-304 , an offering document containing information the director designates by rule or order must be delivered to each purchaser with or before the earliest of:
    1. The first written offer to sell made to the purchaser by or for the account of the issuer or another person on whose behalf the offering is being made, or by an underwriter or broker-dealer who is offering part of an unsold allotment or subscription taken by it as a participant in the distribution;
    2. Confirmation of a sale made by or for the account of a person named in subsection (k)(1);
    3. Payment pursuant to a sale; or
    4. Delivery pursuant to a sale.
12. A registration statement remains effective for one year after its effective date unless the director extends the period of effectiveness by rule or order. All outstanding securities of the same class as the registered securities are considered to be registered for the purpose of a nonissuer transaction while the registration statement is effective, unless the director, by rule or order, provides otherwise. A registration statement may not be withdrawn after its effective date if any of the securities registered have been sold in this state, unless the director, by rule or order, provides otherwise. No registration statement is effective while a stop order is in effect under § 7-11-306(a) .
13. During the period that an offering is being made pursuant to an effective registration statement, the director may require by rule or order the person who filed the registration statement to file reports not more often than quarterly to keep reasonably current the information contained in the registration statement and to disclose the progress of the offering.
14. A registration statement filed under § 7-11-302 or 7-11-303 may be amended after its effective date to increase the securities specified being offered and sold. The amendment becomes effective upon filing of the amendment and payment of an additional filing fee, calculated in the manner specified in subsection (b), with respect to the additional securities to be offered and sold. The effectiveness of the amendment relates back to the date of sale of the additional securities being registered.
15. A registration statement filed under § 7-11-304 may be amended after its effective date to increase the securities specified to be offered and sold, if the public offering price and underwriters’ discounts and commissions are not changed from the respective amounts of which the director was informed. The amendment becomes effective when the director so orders and relates back to the date of sale of the additional securities being registered. A person filing an amendment pays an additional filing fee equal to two (2) times the fee otherwise payable, calculated in the manner specified in subsection (b), regarding the additional securities to be offered and sold.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 2003, ch. 376, art. 24, § 1.

7-11-306. Denial, suspension, and revocation of registration.

1. The director may issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, a registration statement if the director finds:
   1. That the order is in the public interest; and
   2. That:
      1. The registration statement as of the effective date or as of the proposed effective date in the case of an order denying effectiveness, an amendment under § 7-11-305(n) or 7-11-305(o) as of its effective date, or a report under § 7-11-305(m) contains any untrue statement of material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
      2. This chapter or a rule, order, or condition lawfully imposed under this chapter has been willfully violated, in connection with the offering, by the person filing the registration statement; by the issuer, a partner, officer, or director of the issuer, a person occupying a similar status or performing similar functions, or a person directly or indirectly controlling or controlled by the issuer, but only if the person filing the registration statement is directly or indirectly controlled by or acting for the issuer; or by an underwriter;
      3. The security registered or sought to be registered is the subject of a permanent or temporary injunction of a court of competent jurisdiction or an administrative stop order or similar order entered under any other federal or state law applicable to the offering; but the director may not institute a proceeding against an effective registration statement under this subsection (a)(2)(iii) more than one year after the date of the order or injunction relied on, and the director may not enter an order under this subsection (a)(2)(iii) on the basis of an order or injunction entered under the securities act of another state unless the order or injunction was based on facts that currently would constitute a ground for a stop order under this section;
      4. The issuer’s enterprise or method of business includes or would include activities that are illegal where performed;
      5. A security sought to be registered under § 7-11-302 is not eligible for registration under § 7-11-302 ;
      6. With respect to a security sought to be registered under § 7-11-303 , there has been a failure to comply with the undertaking required by § 7-11-303 (b)(4); or
      7. The applicant or registrant has failed to pay the proper filing fee; but the director may enter only a denial order under this subsection (a)(2)(vii) and vacate the order if the deficiency is corrected.
2. The director may not institute a stop order proceeding against an effective registration statement on the basis of a fact or transaction known to the director when the registration statement became effective unless the proceeding is begun within thirty (30) days after the registration statement became effective.
3. The director, by order under § 7-11-712 , may summarily postpone or suspend the effectiveness of the registration statement pending final determination of an administrative proceeding. As more fully set forth in § 7-11-712 upon the entry of the order, the director shall promptly notify each person specified in subsection (d) that the order has been entered and of the reasons for the postponement or suspension and that within thirty (30) days after the receipt of a written request from the person, the matter will be set down for hearing. If no hearing is requested and none is ordered by the director, the order remains in effect until it is modified or vacated by the director. If a hearing is requested or ordered, the director, after notice of an opportunity for hearing to each person specified in subsection (d), may modify or vacate the order or extend it until final determination.
4. No stop order may be entered under this section except subsection (c) without appropriate prior notice to the applicant or registrant, the issuer, and the person on whose behalf the securities are to be or have been offered, opportunity for hearing, and written findings of fact and conclusions of law in accordance with the state administrative procedures act.
5. The director may modify or vacate a stop order entered under this section if the director finds that the conditions which prompted entry have changed or that it is otherwise in the public interest.

History of Section. P.L. 1990, ch. 460, § 2.

7-11-307. Federal covered securities.

1. The director may require by rule or order the filing of any or all of the following documents with respect to a covered security under § 18(b)(2) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(2):
   1. Prior to the initial offer of a federal covered security in this state, all documents that are part of a current federal registration statement filed with the U.S. Securities and Exchange Commission under the Securities Act of 1933, 15 U.S.C. § 77a et seq., or, in lieu of filing the registration statement, a notice as prescribed by the director by rule or otherwise, together with a consent to service of process signed by the issuer and with a nonrefundable fee of one-tenth of one percent (0.1%) of the maximum aggregate offering price at which the federal covered securities are to be offered in this state, but not less than three hundred dollars ($300) or more than one thousand seven hundred fifty dollars ($1,750).
   2. An open end management company, a face amount certificate company, or a unit investment trust, as defined in the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq., shall file a notice for an indefinite amount of securities. The issuer, at the time of filing, shall pay a nonrefundable fee of one thousand seven hundred fifty dollars ($1,750).
   3. After the initial offer of the federal covered security in this state, all documents that are part of an amendment to a current federal registration statement filed with the U.S. Securities and Exchange Commission under the Securities Act of 1933, are filed concurrently with the director.
   4. Unless otherwise extended by the director, an initial notice filing under subsection (a) or subsection (b) is effective for one year commencing upon the date the notice or registration statement, as applicable, is received by the director unless a later date is indicated by the issuer. A notice filing may be renewed by filing a renewal notice as prescribed by the director and paying a renewal fee of one thousand seven hundred fifty dollars ($1,750).
2. Regarding any security that is a covered security under § 18(b)(3) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(3), unless the security is exempted by § 7-11-401 or is sold in an exempt transaction under § 7-11-402 , the issuer shall file a notice prior to the initial offer of such security in this state. Such notice filing shall include a uniform application adopted by the director, a consent to service of process, and the payment of a nonrefundable fee as prescribed in subsection (a)(1) of this section.
3. Regarding any security that is a covered security under § 18(b)(4)(D) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(4)(D), the director may by rule or otherwise require the issuer to file a notice on SEC Form D and a consent to service of process signed by the issuer no later than fifteen (15) days after the first sale of the federal covered security in this state, together with Form U-2, Form D and a nonrefundable fee of three hundred dollars ($300).
4. The director may by rule or otherwise require the filing of any document filed with the U.S. Securities and Exchange Commission under the Securities Act of 1933, 15 U.S.C. § 77a et seq., with respect to a covered security under § 18(b)(3) or (4) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(3) or (4), together with a notice and fees as defined in subsection (a)(1).
5. The director may issue a stop order suspending the offer and sale of a federal covered security, except a covered security under § 18(b)(1) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(1), if the director finds that (1) the order is in the public interest and (2) there is a failure to comply with any condition established under this section.
6. The director may by rule or order waive any or all of the provisions of this section.

History of Section. P.L. 1997, ch. 69, § 2; P.L. 2003, ch. 376, art. 24, § 1; P.L. 2018, ch. 47, art. 7, § 1.

7-11-401. Exempt securities.

The following securities are exempt from §§ 7-11-301 and 7-11-404 :

1. A security, including a revenue obligation, issued, insured, or guaranteed by the United States, an agency or corporate or other instrumentality of the United States, an international agency or corporate or other instrumentality of which the United States and one or more foreign governments are members, a state, a political subdivision of a state, or an agency or corporate or other instrumentality of one or more states or their political subdivisions; or a certificate of deposit for any of the foregoing, but this exemption does not include a security payable solely from revenues to be received from a nongovernmental industrial or commercial enterprise unless the payments are insured or guaranteed by a person described as the issuer, insurer or guarantor of securities under subsection (2), (3), (4), (5), (7), or (8) of this section, or unless the revenues from which the payments are to be made are a direct obligation of a person;
2. A security issued, insured, or guaranteed by Canada, a Canadian province or territory, a political subdivision of Canada or a Canadian province or territory, an agency or corporation or other instrumentality of one or more of the foregoing, or any other foreign government or governmental combination or entity with which the United States maintains diplomatic relations, if the security is recognized as a valid obligation by the issuer, insurer, or guarantor;
3. A security issued by and representing an interest in or a direct obligation of, or guaranteed by, a depository institution if the deposit or share accounts of the depository institution are insured by the federal deposit insurance corporation, the federal savings and loan insurance corporation, the national credit union share insurance fund, or a successor to the applicable agency authorized by federal law;
4. A security issued by and representing an interest in or a direct obligation of, or insured or guaranteed by, an insurance company organized under the laws of any state and authorized to do business in this state;
5. A security issued or guaranteed by a railroad, other common carrier, public utility, or holding company that is:
   1. Subject to the jurisdiction of the Interstate Commerce Commission;
   2. A registered holding company under the Public Utility Holding Company Act of 1935, 15 U.S.C. § 79 et seq. [repealed], or a subsidiary of a registered holding company within the meaning of that act;
   3. Regulated as to its rates and charges by a governmental authority of the United States or a state; or
   4. Regulated as to the issuance or guarantee of the security by a governmental authority of the United States, a state, Canada, or a Canadian province or territory;
6. Equipment trust certificates as to equipment leased or conditionally sold to a person, if securities issued by the person would be exempt under this section;
7. A security listed or approved for listing upon notice of issuance on a national securities exchange registered under § 6 of the Securities Exchange Act of 1934, 15 U.S.C. § 78f; any other security of the same issuer which is of senior or substantially equal rank; a security called for by subscription right or warrant so listed or approved; or a warrant or right to purchase or subscribe to any of the securities in this subsection;
8. A security designated or approved for designation upon notice of issuance as a national market system security by the National Association of Securities Dealers, Inc.; any other security of the same issuer which is of senior or substantially equal rank; a security called for by subscription right or warrant so designated; or a warrant or a right to purchase or subscribe to any of the securities in this subsection;
9. An option issued by a clearing agency registered under the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., other than an off exchange futures contract or substantially similar arrangement, if the security, currency, commodity, or other interest underlying the option:
   1. Is registered under § 7-11-302 , 7-11-303 , or 7-11-304 ;
   2. Is exempt under this section; or
   3. Is not otherwise required to be registered under this chapter;
10. A security issued by a person organized and operated not for private profit but exclusively for a religious, educational, benevolent, charitable, fraternal, social, athletic, or reformatory purpose, or as a chamber of commerce or trade or professional association;
11. A promissory note, draft, bill of exchange, or bankers’ acceptance that evidences an obligation to pay cash within nine (9) months after the date of issuance, exclusive of days of grace, is issued in denominations of at least fifty thousand dollars ($50,000) and receives a rating in one of the three (3) highest rating categories from a nationally recognized statistical rating organization; or a renewal of an obligation that is likewise limited, or a guarantee of an obligation or of a renewal;
12. A security issued in connection with an employee’s stock purchase, savings, option, profit sharing, pension, or similar employees’ benefit plan;
13. A membership or equity interest in, or a retention certificate or like security given in lieu of a cash patronage dividend issued by, a cooperative organized and operated as a nonprofit membership cooperative under the cooperative laws of any state if not traded to the public;
14. A security issued by an issuer registered as an open end management investment company or unit investment trust pursuant to § 8 of the Investment Company Act of 1940, 15 U.S.C. § 80a-8, if:
    1. The issuer is advised by an investment adviser that is a depository institution exempt from registration under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., or that is currently registered as an investment adviser and has been registered, or is affiliated with an adviser that has been registered as an investment adviser under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-1 et seq., for at least three (3) years immediately before an offer or sale of a security claimed to be exempt under this subsection (14)(i) and has acted, or is affiliated with an investment adviser that has acted, as investment adviser to one or more registered investment companies or unit investment trusts for at least three (3) years immediately before an offer or sale of a security claimed to be exempt under this subsection (14)(i); or
    2. The issuer has a sponsor that has at all times throughout the three (3) years before an offer or sale of a security claimed to be exempt under this subsection (14)(ii) sponsored one or more registered investment companies or unit investment trusts the aggregate total assets of which have exceeded one hundred million dollars ($100,000,000).
    3. The director has received prior to any sale exempted in this section:
       1. A notice of intention to sell which has been executed by the issuer which states the name and address of the issuer and the title of the securities to be offered in this state; and
       2. A filing fee of one thousand dollars ($1,000).
    4. In the event any offer or sale of an open end management investment company is to be made more than twelve (12) months after the date notice under subsection (14)(iii) is received by the director, another notice and payment of the applicable fee is required.

       For the purpose of subsection (14) an investment adviser is affiliated with another investment adviser if it controls, is controlled by, or is under common control with the other investment adviser.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 2003, ch. 376, art. 24, § 1.

7-11-402. Exempt transactions.

The following transactions are exempt from §§ 7-11-301 and 7-11-404 :

1. An isolated nonissuer transaction, whether or not effected through a broker-dealer;
2. A nonissuer transaction in an outstanding security if the issuer of the security has a class of securities subject to registration under § 12 of the Securities Exchange Act of 1934, 15 U.S.C. § 78l, and has been subject to the reporting requirements of § 13 or § 15(d) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78m and 78o(d), for not less than ninety (90) days before the transaction; or has filed and maintained with the director for not less than ninety (90) days before the transaction information, in any form that the director, by rule, specifies, substantially comparable to the information which the issuer would be required to file under § 12(b) or § 12(g) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78l(b) or 78l(g), were the issuer to have a class of its securities registered under § 12 of the Securities Exchange Act of 1934 and paid a fee with the filing of three hundred dollars ($300);
3. A nonissuer transaction in a security:
   1. Of a class outstanding in the hands of the public for not less than ninety (90) days before the transaction if a nationally recognized securities manual designated by the director, by rule or order, contains the names of the issuer’s officers and directors, a statement of financial condition of the issuer as of a date within the last eighteen (18) months, and a statement of income or operations for either the last fiscal year before that date or the most recent year of operation; or
   2. If the security has a fixed maturity or a fixed interest or dividend provision and there has been no default during the current fiscal year or within the three (3) preceding years, or during the existence of the issuer and any predecessors if less than three (3) years, in the payment of principal, interest, or dividends on the security;
4. A nonissuer transaction effected by or through a registered broker-dealer pursuant to an unsolicited order or offer to purchase; but the director may by rule require that the customer acknowledge upon a specified form that the sale was unsolicited, and that a signed copy of each form be preserved by the broker-dealer for a specified period;
5. A transaction between the issuer or other person on whose behalf the offering of a security is made and an underwriter, or a transaction among underwriters;
6. A transaction in a bond or other evidence of indebtedness secured by a real estate mortgage, deed of trust, personal property security agreement, or by an agreement for the sale of real estate or personal property, if the entire mortgage, deed of trust, or agreement, together with all the bonds or other evidences of indebtedness secured by them, is offered and sold as a unit;
7. A transaction by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator;
8. A transaction executed by a bona fide secured party without a purpose of evading this chapter;
9. An offer to sell or sale of a security to a financial or institutional investor or to a broker-dealer;
10. A transaction pursuant to an offer directed by the offeror to no more than twenty-five (25) purchasers in this state, other than those designated in subsection (9), during any twelve (12) consecutive months; no general solicitation or general advertising is used in connection with the offer to sell or sale of the securities; and no commission or other similar compensation is paid or given, directly or indirectly, to a person, other than a broker-dealer licensed or not required to be licensed under this chapter, for soliciting a prospective purchaser in this state; and either:
    1. The seller reasonably believes that all the purchasers in this state, other than those designated in subsection (9) are purchasing for investment; or
    2. Immediately before and immediately after the transaction, the issuer reasonably believes that the securities of the issuer are held by fifty (50) or fewer beneficial owners, other than those designated in subsection (9) and the transaction is part of an aggregate offering that does not exceed one million dollars ($1,000,000) during any twelve (12) consecutive months;
11. An offer to sell or sale of a preorganization certificate or subscription if no commission or other similar compensation is paid or given, directly or indirectly, for soliciting a prospective subscriber; no public advertising or general solicitation is used in connection with the offer to sell or sale; the number of subscribers does not exceed ten (10); and no payment is made by a subscriber;
12. An offer to sell or sale of a preorganization certificate or subscription agreement issued in connection with the organization of a depository institution if that organization is under the supervision of an official or agency of any state or of the United States that has and exercises the authority to regulate and supervise the organization of the depository institution. For the purposes of this subsection, supervision of the organization by an official or agency means that the official or agency by law has authority to require disclosures to prospective investors similar to that required under § 7-11-304 , impound proceeds from the sale of preorganization certificates or subscription agreements until organization of the depository institution is completed, and require refund to investors if the depository institution does not obtain a grant of authority from the appropriate official or agency;
13. A transaction pursuant to an offer to sell to existing security holders of the issuer, including persons who at the time of the transaction are holders of transferable warrants exercisable within not more than ninety (90) days after their issuance, convertible securities, or nontransferable warrants, if:
    1. No commission or other similar compensation, other than a standby commission, is directly or indirectly paid or given, for soliciting a security holder in this state; or
    2. The issuer first files a notice specifying the terms of the offer to sell and the director does not by order disallow the exemption within the next five (5) full business days;
14. A transaction involving an offer to sell, but not a sale, of a security not exempt from registration under the Securities Act of 1933, 15 U.S.C. § 77a et seq., if:
    1. A registration or offering statement or similar document as required under the Securities Act of 1933, 15 U.S.C. § 77a et seq., has been filed, but is not effective;
    2. A registration statement, if required, has been filed under this chapter, but is not effective; and
    3. No stop order of which the offeror is aware has been entered by the director or the Securities and Exchange Commission, and no examination or public proceeding that may culminate in that kind of order is known by the offeror to be pending;
15. A transaction involving an offer to sell, but not a sale, of a security exempt from registration under the Securities Act of 1933, 15 U.S.C. § 77a et seq., if:
    1. A registration statement has been filed under this chapter, but is not effective; and
    2. No stop order of which the offeror is aware has been entered by the director and no examination or public proceeding that may culminate in that kind of order is known by the offeror to be pending;
16. A transaction involving the distribution of the securities of an issuer to the security holders of another person in connection with a merger, consolidation, exchange of securities, sale of assets, or other reorganization to which the issuer, or its parent or subsidiary, and the other person, or its parent or subsidiary, are parties, if:
    1. The securities to be distributed are registered under the Securities Act of 1933, 15 U.S.C. § 77a et seq., before the consummation of the transaction; or
    2. The securities to be distributed are not required to be registered under the Securities Act of 1933, 15 U.S.C. § 77a et seq., written notice of the transaction and a copy of the materials, if any, by which approval of the transaction will be solicited is given to the director at least ten (10) days before the consummation of the transaction and the director does not disallow by order the exemption within the next ten (10) days;
17. 1. A transaction involving the offer to sell or sale of one or more promissory notes each of which is directly secured by a first lien on a single parcel of real estate, or a transaction involving the offer to sell or sale of participation interests in the notes if the notes and participation interests are originated by a depository institution and are offered and sold subject to the following conditions:
       1. The minimum aggregate sales price paid by each purchaser may not be less than two hundred and fifty thousand dollars ($250,000);
       2. Each purchaser must pay cash either at the time of the sale or within sixty (60) days after the sale; and
       3. Each purchaser may buy for that person’s own account only;
    2. A transaction involving the offer to sell or sale of one or more promissory notes directly secured by a first lien on a single parcel of real estate or participation interests in the notes, if the notes and participation interests are originated by a mortgagee approved by the Secretary of Housing and Urban Development under §§ 203 and 211 of the National Housing Act, 12 U.S.C. §§ 1709 and 1715b, and are offered or sold, subject to the conditions specified in subsection (17)(i), to a depository institution or insurance company, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Government National Mortgage Association; and
    3. A transaction between any of the persons described in subsection (17)(ii) involving a nonassignable contract to buy or sell the securities described in subsection (17)(i) which contract is to be completed within two (2) years if:
       1. The seller of the securities pursuant to the contract is one of the parties described in subsection (17)(i) or (17)(ii) who may originate securities;
       2. The purchaser of securities pursuant to a contract is any other person described in subsection (17)(ii); and
       3. The conditions described in subsection (17)(i) are fulfilled; and
18. Any offer or sale of securities made in reliance on the exemptions provided by Rule 505 or 506 of regulation D as may be amended from time to time, under the Securities Act of 1933, 15 U.S.C. § 77a et seq., and the provisions of the rules under that Act as amended from time to time; provided:
    1. No commission or other remuneration may be paid or given directly or indirectly, to any person for soliciting or selling to any person in this state in reliance on this exemption, except to persons registered under §§ 7-11-201 — 7-11-204 ;
    2. Not later than ten (10) days, or a shorter period that may be permitted by order of the director, prior to the first sale of securities in reliance on this exemption, there is filed with the director:
       1. A Uniform Consent to Service of Process (Form U2);
       2. A notice of original filing on Form D; and
       3. A fee of three hundred dollars ($300). No exemption is available for the securities of any issuer if any of the parties described in Securities and Exchange Commission regulation A. Rule 230.252, Section (c), (d), (e) or (f) under the Securities Act of 1933 are disqualified pursuant to a rule adopted by the director.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1991, ch. 69, § 1; P.L. 2018, ch. 346, § 11.

7-11-403. Provisions applicable to exemptions generally.

1. The director may by order deny or revoke an exemption specified in § 7-11-401 or 7-11-402 regarding a specific security or transaction if the director reasonably believes, after inquiry, that there is about to be or has been a violation of this chapter and that the action is necessary or appropriate for the protection of investors. Following entry of any order, the procedures set forth in § 7-11-710 shall be followed. No order under this subsection may operate retroactively.
2. In any civil, criminal, or administrative proceeding under this chapter, the burden of proving an exemption or an exception from a definition is upon the person claiming it.
3. The director may by rule exempt any other class of securities or transactions from §§ 7-11-301 and 7-11-404 . Exemptions are subject to restrictions and conditions imposed by rule that the director determines are necessary for the protection of investors.

History of Section. P.L. 1990, ch. 460, § 2.

7-11-404. Filing of sales and advertising literature.

The director may require by rule or order the filing of a prospectus, pamphlet, circular, form letter, advertisement, or other sales literature or advertising communication addressed or intended for distribution to prospective investors, including clients or prospective clients of an investment adviser or federal covered adviser, unless the security or transaction is exempt under § 7-11-401 or 7-11-402 or is a federal covered security.

History of Section. P.L. 1990, ch. 460, § 2; P.L. 1997, ch. 69, § 1.