§ 1.01. Short title.

This title shall be known and may be cited as the "Vermont Nonprofit Corporation Act."

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

Cross References

Cross references. Nonprofit Hospital Service Corporations, see 8 V.S.A. §§ 4523 and 4595.

§ 1.02. Reservation of power.

Nothing contained in this title shall give the right to impair the obligation of any charter, or any amendment thereof, granted or made prior to November 19, 1851; nor shall the General Assembly enact any law that would so affect any charter or amendment passed prior to such date. Subject to the foregoing restriction, any act creating, continuing, altering, or renewing a corporation or body politic may be repealed by the General Assembly, as the public good requires; and any such act may be altered or amended by the General Assembly, as the public good requires, if within the exception specified in Vermont Constitution chapter II section 69.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 1.20. Filing requirements.

1. A document must satisfy the requirements of this section, and of any other section that adds to or varies these requirements, to be entitled to filing by the Secretary of State.
2. The document must contain the information required by this title. It may contain other information as well.
3. The document must be typewritten or printed or, if electronically transmitted, it must be in a format that can be retrieved or reproduced in typewritten or printed form or in an electronic format prescribed by the Secretary of State.
4. The document must be in the English language. However, a corporate name need not be in English if written in English letters or Arabic or Roman numerals, and the certificate of existence required of foreign corporations need not be in English if accompanied by a reasonably authenticated English translation.
5. The document must be executed:
   1. by the presiding officer of its board of directors of a domestic or foreign corporation, its president, or by another of its officers;
   2. if directors have not been selected or the corporation has not been formed by an incorporator; or
   3. if the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
6. The person executing a document shall sign it and state beneath or opposite the signature his or her name and the capacity in which he or she signs. The document may, but need not, contain:
   1. the corporate seal;
   2. an attestation by the secretary or an assistant secretary; or
   3. an acknowledgement, verification, or proof.
7. If the Secretary of State has prescribed a mandatory form or electronic format for a document under section 1.21 of this title, the document must be in or on the prescribed form.
8. The document must be delivered to the Office of the Secretary of State for filing and must be accompanied by one exact or conformed copy (except as provided in sections 5.03 and 15.09 of this title), and the correct filing fee.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 25, eff. April 15, 2010.

§ 1.21. Forms.

1. The Secretary of State may prescribe the form or electronic format of and furnish on request, forms or specifications for formats for:
   1. an application for a certificate of existence;
   2. a foreign corporation's application for a certificate of authority to transact business in this State;
   3. a foreign corporation's application for a certificate of withdrawal; and
   4. the biennial report.
2. The Secretary of State may prescribe and furnish on request forms for other documents required or permitted to be filed by this title but their use is not mandatory.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 26, eff. April 15, 2010.

§ 1.22. Filing; service and copying fees.

The Secretary of State shall collect the following fees when the documents described in this section are delivered to the Office of the Secretary of State for filing:

1. Articles of incorporation                                      $125.00      (2) Application for reserved name                                  $ 20.00      (3) Transfer of reserved name                                       No fee      (4) Application for registered name                                $ 25.00      (5) Renewal of registered name                                     $ 25.00      (6) Statement of change of registered agents or      registered office, or both                                       $ 25.00                                                                           and                                                                        not to                                                                        exceed                                                                     $1,000.00                                                                           per                                                                         filer                                                                           per                                                                        calen-                                                                           dar                                                                         year.      (7) Agent's statement of registration                               No fee      (8) Amendment of articles of association                           $ 25.00      (9) Restatement of articles of association                         $ 25.00      (10) Articles of merger                                            $ 50.00      (11) Articles of dissolution                                        No fee      (12) Articles of revocation of dissolution                         $  5.00      (13) Application for reinstatement following administrative      dissolution                                                      $ 25.00      (14) Application for certificate of authority for a foreign      corporation                                                      $100.00      (15) Application for amended certificate of authority              $ 25.00      (16) Application for certificate of withdrawal                     $  5.00      (17) Biennial report                                               $ 20.00 except that a corporation which certifies to the Secretary of State, on a form approved by the Secretary, that it did not compensate its officers, directors, or employees during the prior calendar year shall be exempt from the fee required by this subdivision.      (18) Articles of correction                                        $ 15.00      (19) Application for certificate of good standing                  $ 25.00      (20) Certified copy of any filed document                          $ 25.00

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 1997, No. 59 , § 89, eff. June 30, 1997; 2003, No. 70 (Adj. Sess.), § 16, eff. March 1, 2004; 2013, No. 72 , § 10.

§ 1.23. Effective date of document.

1. Except as provided in subsection (b) of this section, subsection 1.24(c) of this title, and section 2.03 of this title, a document is effective:
   1. at the time of filing on the date it is filed, as evidenced by any means the Secretary of State may use for the purpose of recording the date and time of filing; or
   2. at the time specified in the document as its effective time on the date it is filed.
2. A document may specify a delayed effective time and date, and if it does so the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document is effective at the close of business on that date. A delayed effective date for a document may not be later than the 90th day after the date filed.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 27, eff. April 15, 2010.

§ 1.24. Correcting filed document.

1. A domestic or foreign corporation may correct a document filed by the Secretary of State if the document:
   1. contains an incorrect statement; or
   2. was defectively executed, attested, sealed, verified, or acknowledged; or
   3. was undeliverable because the electronic transmission was defective.
2. A document is corrected:
   1. by preparing articles of correction that
      1. describe the document (including its filing date) or attach a copy of it to the articles;
      2. specify the incorrect statement and the reason it is incorrect or the manner in which the execution was defective; and
      3. correct the incorrect statement or defective execution; and
   2. by delivering the articles of correction to the Secretary of State.
3. Articles of correction are effective on the effective date of the document they correct except as to persons relying on the uncorrected document and adversely affected by the correction. As to those persons, articles of correction are effective when filed.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 28, eff. April 15, 2010.

§ 1.25. Filing duty of Secretary of State.

1. If a document delivered to the Office of the Secretary of State for filing satisfies the requirements of section 1.20 of this title, the Secretary of State shall file it.
2. The Secretary of State files a document by recording it as "Filed," together with the Secretary of State's name and official title on the date and the time of receipt, on both the document and on the record of the receipt for the filing fee. After filing a document, except as provided in sections 5.03 and 15.10 of this title, the Secretary of State shall deliver a copy of the document to the domestic or foreign corporation or its representative.
3. Upon refusing to file a document, the Secretary of State shall return it to the domestic or foreign corporation or its representative within five days after the document was delivered, together with a brief, written explanation of the reason or reasons for the refusal.
4. The Secretary of State's duty to file documents under this section is ministerial. Filing or refusal to file a document does not:
   1. affect the validity or invalidity of the document in whole or in part;
   2. relate to the correctness or incorrectness of information contained in the document; or
   3. create a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 29, eff. April 15, 2010.

§ 1.26. Appeal from Secretary of State's refusal to file document.

1. If the Secretary of State refuses to file a document delivered for filing to the Secretary of State's Office, the domestic or foreign corporation may appeal the refusal to the Superior Court in the county where the corporation's principal office, or if there is none in this State, its registered office, is or will be located. The appeal is commenced by petitioning the court to compel filing the document and by attaching to the petition the document and the Secretary of State's explanation of the refusal to file.
2. The court may summarily order the Secretary of State to file the document or take other action the court considers appropriate.
3. The court's final decision may be appealed as in other civil proceedings.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 1.27. Evidentiary effect of copy of filed document.

A certificate from the Secretary of State delivered with a copy of a document filed with the Secretary of State is conclusive evidence that the document is on file with the Secretary of State.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 30, eff. April 15, 2010.

§ 1.28. Certificate of good standing.

1. Any person may apply to the Secretary of State to furnish a certificate of good standing for a domestic or foreign corporation.
2. The certificate of good standing sets forth:
   1. the domestic corporation's corporate name or the foreign corporation's corporate name used in this State;
   2. that:
      1. the domestic corporation is duly incorporated under the law of this State, the date of its incorporation, and the period of its duration if less than perpetual; or
      2. the foreign corporation is authorized to transact business in this State;
   3. that all fees and penalties owed to this State under section 1.22 of this title have been paid if:
      1. payment is reflected in the records of the Secretary of State; and
      2. nonpayment affects the good standing of the domestic or foreign corporation;
   4. that its most recent biennial report required by section 16.22 of this title has been delivered to the Secretary of State; and
   5. that articles of dissolution have not been filed.
3. Subject to any qualification stated in the certificate, a certificate of good standing issued by the Secretary of State may be relied upon as conclusive evidence that the domestic or foreign corporation is in existence or is authorized to transact business in this State.
4. Subject to any qualification stated in the certificate, a certificate of good standing issued by the Secretary of State may be taken as prima facie evidence of the facts stated therein.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 1.29. Signing false documents.

1. No person may sign a document, knowing that the document is false in any material respect, and intending that the document be delivered to the Secretary of State for filing.
2. A person who violates the provisions of subsection (a) of this section shall be fined not more than $1,000.00.
3. A person harmed by reliance on a false document filed in violation of the provisions of subsection (a) of this section may bring an action against the person signing and filing such document for damages and such further relief as the court deems proper.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 1.30. Powers.

The Secretary of State has the power reasonably necessary to perform the duties required of the Secretary of State's Office by this title.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 1.40. Definitions.

As used in this title:

1. "Approved by (or approval by) the members" means approved or ratified when the votes cast by the members favoring the action exceed the votes cast opposing the action, at a duly held meeting at which a quorum is present or by a written ballot or written consent in conformity with this title or by the affirmative vote, written ballot or written consent of such greater proportion, including the votes of all the members of any class, unit or grouping as may be provided in the articles, bylaws or this title for any specified member action.
2. "Articles of incorporation" or "articles" include amended and restated articles of incorporation and articles of merger.
3. "Board" or "board of directors" means the board of directors except that no person or group of persons are the board of directors because of powers delegated to that person or group pursuant to section 8.01 of this title.
4. "Bylaws" means the code or codes of rules (other than the articles) adopted pursuant to this title for the regulation or management of the affairs of the corporation, stored or depicted in any tangible or electronic medium, and irrespective of the name or names by which such rules are designated.
5. "Class" refers to a group of memberships which have the same rights with respect to voting, dissolution, redemption, and transfer. For the purpose of this section, rights shall be considered the same if they are determined by a formula applied uniformly.
6. "Corporation" means public benefit and mutual benefit corporation.
7. "Delegates" means those persons elected or appointed to vote in a representative assembly for the election of a director or directors or on other matters.
8. "Deliver" or "delivery" means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and electronic transmission.
9. "Directors" means individuals, designated in the articles or bylaws or elected by the incorporators, and their successors and individuals elected or appointed by any other name or title to act as members of the board. The term "trustees" may be used instead of "directors" and shall have the same meaning.
10. "Distribution" means the payment of a dividend or any part of the income or profit of a corporation to its members, directors, or officers.
11. "Domestic corporation" means a corporation.
12. "Effective date of notice" is defined in section 1.41 of this title.
13. "Employee" includes an officer but not a director. A director may accept duties that make the director an employee.
14. "Entity" includes corporation and foreign corporation; business corporation and foreign business corporation; profit and nonprofit unincorporated association; business trust, estate, partnership, trust, and two or more persons having a joint or common economic interest; and state, United States; and foreign government.
15. "File," "filed," or "filing" means filed in the Office of the Secretary of State.
16. "Foreign corporation" means a corporation organized under a law other than the law of this State which would be a nonprofit corporation if formed under the laws of this State.
17. "Governmental subdivision" includes authority, county, district, and municipality.
18. "Includes" denotes a partial definition.
19. "Individual" includes the estate of an individual who is incompetent.
20. "Means" denotes a complete definition.
21. "Member" means (without regard to what a person is called in the articles or bylaws) any person or persons who on more than one occasion, pursuant to a provision of a corporation's articles or bylaws, have the right to vote for the election of a director or directors. A person is not a member by virtue of any of the following:
    1. any rights such person has as a delegate;
    2. any rights such person has to designate a director or directors;
    3. any rights such person has as a director; or
    4. any rights of association, not including the right to vote for the election of a director or directors, created in the corporation's articles of incorporation or bylaws for persons who participate in the activities of the corporation.
22. "Membership" refers to the rights and obligations a member or members have pursuant to a corporation's articles, bylaws, and this title.
23. "Mutual benefit corporation" means a domestic corporation which is required to be a mutual benefit corporation pursuant to section 17.05 of this title or is formed as a mutual benefit corporation pursuant to chapter 2 of this title.
24. "Notice" is defined in section 1.41 of this title.
25. "Person" includes any individual or entity.
26. "Principal office" means the office (in or outside this State) so designated in the biennial report filed pursuant to section 16.22 of this title where the principal office of a domestic or foreign corporation is located.
27. "Proceeding" includes civil suit and criminal, administrative, and investigatory action.
28. "Public benefit corporation" means a domestic corporation which is required to be a public benefit corporation pursuant to section 17.05 of this title or is formed as a public benefit corporation pursuant to chapter 2 of this title.
29. "Record date" means the date established under chapter 6 or 7 of this title on which a corporation determines the identity of its members for the purposes of this title.
30. "Secretary" means the corporate officer to whom the board of directors has delegated responsibility under subsection 8.40(b) of this title for custody of the minutes of the directors' and members' meetings and for authenticating the records of the corporation.
31. "State," when referring to a part of the United States, includes a state and commonwealth (and their agencies and governmental subdivisions) and a territory, and insular possession (and their agencies and governmental subdivisions) of the United States.
32. "United States" includes district, authority, bureau, commission, department, and any other agency of the United States.
33. "Vote" includes authorization by written ballot and written consent.
34. "Voting power" means the total number of votes entitled to be cast for the election of directors at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event that has not occurred at the time. Where a class is entitled to vote as a class for directors, the determination of voting power of the class shall be based on the percentage of the number of directors the class is entitled to elect out of the total number of authorized directors.
35. "Electronic transmission" or "electronically transmitted" means a process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient.
36. "Meeting" means any structured communications conducted by participants in person or through the use of an electronic or telecommunications medium permitting simultaneous or sequentially structured communications.
37. "Sign" or "signature" includes any manual, facsimile, conformed, or electronic signature.

    Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 31, eff. April 15, 2010; 2013, No. 96 (Adj. Sess.), § 43.

§ 1.41. Notice.

1. Notice under this title must be in writing unless oral notice is authorized in the bylaws of the corporation and is reasonable under the circumstances.
2. Notice may be communicated in person; by telephone, voice mail, telegraph, teletype, facsimile, or other form of wire, wireless, or electronic communication; or by mail or private carrier, or other method of delivery. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communication.
3. Notice to members.  Written notice by a domestic or foreign corporation to its members, if in a comprehensible form, is effective when:
   1. mailed first class postpaid and correctly addressed to the member's address as shown in the corporation's current record of member's; or
   2. electronically transmitted to the member in a manner authorized by the member.
4. Notice to corporations.  Written notice to a domestic or foreign corporation (authorized to transact business in this State) may be addressed to:
   1. its registered agent at its registered office;
   2. the corporation or its secretary at its principal office shown in its most recent biennial report; or
   3. in the case of a foreign corporation that has not yet delivered a biennial report, the corporation or its secretary at its principal office shown in its application for a certificate of authority.
5. Except as provided in subsection (c) of this section, written notice, if in a comprehensible form, is effective at the earliest of the following:
   1. when received;
   2. five days after its deposit in the U.S. mail, as evidenced by the postmark, if mailed postpaid and correctly addressed;
   3. on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.
6. Oral notice is effective when communicated if communicated in a comprehensible manner.
7. If this title prescribes notice requirements for particular circumstances, those requirements govern. If articles of incorporation or bylaws prescribe notice requirements, not inconsistent with this section or other provisions of this title, those requirements govern.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 32, eff. April 15, 2010.

§ 1.42. Judicial relief.

1. If for any reason it is impractical or impossible for any corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, in the manner prescribed by its articles, bylaws, or this title, then upon petition of a director, officer, delegate, member, or the Attorney General, the Superior Court may order that such a meeting be called or that a written ballot or other form of obtaining the vote of members, delegates, or directors be authorized, in such a manner as the court finds fair and equitable under the circumstances.
2. The court shall, in an order issued pursuant to this section, provide for a method of notice reasonably designed to give actual notice to all persons who would be entitled to notice of a meeting held pursuant to the articles, bylaws, and this title, whether or not the method results in actual notice to all such persons or conforms to the notice requirements that would otherwise apply. In a proceeding under this section the court may determine who the members or directors are.
3. The order issued pursuant to this section may dispense with any requirement relating to the holding of or voting at meetings or obtaining votes, including any requirement as to quorums or as to the number or percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or this title.
4. Whenever practical, any order issued pursuant to this section shall limit the subject matter of meetings or other forms of consent authorized to items, including amendments to the articles or bylaws, the resolution of which will or may enable the corporation to continue managing its affairs without further resort to this section; provided, however, that an order under this section may also authorize the obtaining of whatever votes and approvals are necessary for the dissolution, merger, or sale of assets.
5. Any meeting or other method of obtaining the vote of members, delegates, or directors conducted pursuant to an order issued under this section, and which complies with all the provisions of such order, is for all purposes a valid meeting or vote, as the case may be, and shall have the same force and effect as if it complied with every requirement imposed by the articles, bylaws, and this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 2.01. Incorporators.

One or more persons of majority age may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the Secretary of State for filing.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 2.02. Articles of incorporation.

1. The articles of incorporation must set forth:
   1. a corporate name for the corporation that satisfies the requirements of section 4.01 of this title;
   2. one of the following statements:
      1. This corporation is a public benefit corporation.
      2. This corporation is a mutual benefit corporation.
   3. the street address of the corporation's initial registered office and the name of its initial registered agent at that office;
   4. the name and address of each incorporator;
   5. whether or not the corporation will have members; and
   6. provisions not inconsistent with law regarding the distribution of assets on dissolution.
2. The articles of incorporation may set forth:
   1. the purpose or purposes for which the corporation is organized, which may be, either alone or in combination with other purposes, the transaction of any lawful activity;
   2. the names and addresses of the individuals who are to serve as the initial directors;
   3. provisions not inconsistent with law regarding:
      1. managing and regulating the affairs of the corporation;
      2. defining, limiting, and regulating the powers of the corporation, its board of directors, and members (or any class of members);
      3. the characteristics, qualifications, rights, limitations, and obligations attaching to each or any class of members; and
   4. any provision that under this title is required or permitted to be set forth in the bylaws.
3. Each incorporator and director named in the articles must sign the articles.
4. The articles of incorporation need not set forth any of the corporate powers enumerated in this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 2.03. Incorporation.

1. Unless a delayed effective date is specified, the corporate existence begins when the Secretary of State issues a certificate of incorporation, after finding that the articles of incorporation conform to law, and that all fees imposed under section 1.22 of this title have been paid.
2. The Secretary of State's filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the State to cancel or revoke the incorporation or involuntarily dissolve the corporation.
3. The Secretary of State shall maintain a separate record of the number of corporations that deliver articles of incorporation to the Secretary for filing by electronic transmission.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 44d, eff. April 15, 2010.

§ 2.04. Liability for preincorporation transactions.

All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this title, are jointly and severally liable for all liabilities created while so acting.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 2.05. Organization of corporation.

1. 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 carrying on any other business brought before the meeting;
   2. if initial directors are not named in the articles, the incorporator or incorporators shall hold an organizational meeting at the call of a majority of the incorporators:
      1. to elect directors and complete the organization of the corporation; or
      2. to elect a board of directors who shall complete the organization of the corporation.
2. Action required or permitted by this title to be taken by incorporators at an organizational meeting may be taken without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator.
3. An organizational meeting may be held in or outside of this State in accordance with section 8.21 of this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 2.06. Bylaws.

1. The incorporators or board of directors of a corporation shall adopt bylaws for the corporation.
2. The bylaws may contain any provision for regulating and managing the affairs of the corporation that are not inconsistent with law or the articles of incorporation.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 3.01. Purposes.

1. A corporation may be organized under this chapter for any lawful purpose or purposes, including, without being limited to, any one or more of the following purposes: charitable; benevolent; eleemosynary; educational; civic; patriotic; political; religious; social; fraternal; sororal; literary; cultural; athletic; scientific; agricultural; horticultural; animal husbandry; and professional, commercial, industrial, or trade association.
2. A corporation engaging in an activity that is subject to regulation under another statute of this State may incorporate under this chapter only if incorporation under this chapter is not prohibited by the other statute. The corporation shall be subject to all limitations of the other statute.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 3.02. General powers.

Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its affairs, including without limitation, power:

1. to sue and be sued, complain, and defend in its corporate name;
2. to have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing it or in any other manner reproducing it;
3. to make and amend bylaws not inconsistent with its articles of incorporation or with the laws of this State, for regulating and managing the affairs of the corporation;
4. to purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property, or any legal or equitable interest in property, wherever located, in its own name and for its own benefit, or in a fiduciary capacity;
5. to sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of any property in which it has a legal or equitable interest;
6. to purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of, and deal in and with, securities or other interests in, or obligations of any entity;
7. to make contracts and guarantees, incur liabilities, borrow money, issue notes, bonds, and other obligations, and secure any of its obligations by covenants requiring the consent of another person to an action to be taken by the corporation, or by mortgage or pledge of any of its property, franchises, or income;
8. to lend money, invest and reinvest its funds and other property, and receive and hold real and personal property as security for repayment, except as limited by this chapter;
9. to be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust, or other entity;
10. to conduct its activities, locate offices, and exercise the powers granted by this title within or outside State;
11. to elect or appoint directors, officers, employees, and agents of the corporation, define their duties, and fix their compensation;
12. to pay or contribute to pensions and establish pension plans, pension trusts, and other benefit and incentive plans for any or all of its current or former directors, officers, employees, and agents;
13. to make donations for the public welfare or for charitable, scientific, or educational purposes and for other purposes, not inconsistent with law, that further the corporate interest;
14. to impose dues, assessments, and admission and transfer fees upon its members;
15. to establish conditions for admission to membership, admit members, and issue memberships;
16. to carry on a business in the furtherance of its purposes;
17. to delegate to any other person the authority to act for or in the name of the corporation;
18. to do all things necessary or convenient, not inconsistent with law, to further the activities and affairs of the corporation.

    Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 3.03. Ultra vires.

1. Except as provided in subsection (b) of this section, the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
2. A corporation's power to act may be challenged in a proceeding against the corporation to enjoin an act where a third party has not acquired rights. The proceeding may be brought by the Attorney General, a director, or by a member or members in a derivative proceeding.
3. A corporation's power to act may be challenged in a proceeding against an incumbent or former director, officer, employee, or agent of the corporation. The proceeding may be brought by a director, the corporation, directly, derivatively, or through a receiver, a trustee, or other legal representative, or in the case of a public benefit corporation, by the Attorney General.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 4.01. Corporate name.

1. A corporate name:
   1. shall contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," or words or abbreviations of like import in another language;
   2. may not contain language stating or implying that the corporation is organized for a purpose other than that permitted by section 3.01 of this title and its articles of incorporation;
   3. shall not have the word "cooperative" or any abbreviation thereof as part of its name; and
   4. shall not include any word not otherwise authorized by law.
2. Except as authorized by subsections (c) and (d) of this section, a corporate name shall be distinguishable in the records of the Secretary of State from any name granted, registered, or reserved under this chapter, or the name of any other entity, whether domestic or foreign, that is reserved, registered, or granted by or with the Secretary of State.
3. A corporation may apply to the Secretary of State for authorization to use a name that is not distinguishable in the records from one or more of the names described in subsection (b) of this section. The Secretary of State shall authorize use of the name applied for if:
   1. the other corporation or business consents to the use in writing and submits an undertaking in form satisfactory to the Secretary of State to change its name to a name that is distinguishable in the records from the name of the applying corporation; or
   2. the applicant delivers to the Secretary of State a certified copy of the final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this State.
4. A corporation may use the name, including the fictitious name, of another domestic or foreign corporation that is used in this State if the other corporation is incorporated or authorized to transact business in this State and the proposed user corporation:
   1. has merged with the other corporation;
   2. has been formed by reorganization of the other corporation; or
   3. has acquired all or substantially all of the assets, including the corporate name, of the other corporation.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2015, No. 17 , § 11.

§ 4.02. Reserved name.

1. A person may reserve the exclusive use of a corporate name, including a fictitious name for a foreign corporation whose corporate name is not available, by delivering an application to the Secretary of State for filing. Upon finding that the corporate name applied for is available, the Secretary of State shall reserve the name for the applicant's exclusive use for a 120-day period. Such 120-day period may be renewed no more than twice.
2. The owner of a reserved corporate name may transfer the reservation to another person by delivering to the Secretary of State a signed notice of the transfer that states the name and address of the transferee.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 4.03. Registered name.

1. A foreign corporation may register its corporate name or its corporate name with any addition required by section 15.06 of this title, if the name is distinguishable upon the records of the Secretary of State from:
   1. the corporate name of a nonprofit or business corporation incorporated or authorized to do business in this State; and
   2. a corporate name reserved under section 4.02 of this title or 11A V.S.A. § 4.02 or registered under this section.
2. A foreign corporation registers its corporate name, or its corporate name with any addition required by section 15.06 of this title, by delivering to the Secretary of State an application:
   1. setting forth its corporate name, or its corporate name with any addition required by section 15.06 of this title, the state or country and date of its incorporation, and a brief description of the nature of the activities in which it is engaged; and
   2. accompanied by a certificate of existence (or a document of similar import) from the state or country of incorporation.
3. The name is registered for the applicant's exclusive use upon the effective date of the application.
4. A foreign corporation whose registration is effective may renew it for successive years by delivering to the Secretary of State for filing a renewal application, which complies with the requirements of subsection (b) of this section, between October 1 and December 31 of the preceding year. The renewal application when filed renews the registration for the following calendar year.
5. A foreign corporation whose registration is effective may thereafter qualify as a foreign corporation under the registered name or consent in writing to the use of that name by a corporation thereafter incorporated under this title or by another foreign corporation thereafter authorized to transact business in this State. The registration terminates when the domestic corporation is incorporated or the foreign corporation qualifies or consents to the qualification of another foreign corporation under the registered name.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 5.02. Change of registered office or registered agent.

1. A corporation may change its registered office or registered agent by delivering to the Secretary of State for filing a statement of change that sets forth:
   1. the name of the corporation;
   2. the street address of its current registered office;
   3. if the current registered office is to be changed, the street address of the new registered office;
   4. the name of its current registered agent;
   5. if the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent (either on the statement or attached to it) to the appointment; and
   6. that after the change or changes are made, the street addresses of its registered office and the office of its registered agent will be identical.
2. If the street address of a registered agent's office is changed, the registered agent may change the street address of the registered office of any corporation for which the registered agent is the registered agent by notifying the corporation in writing of the change and by signing (either manually or in facsimile) and delivering to the Secretary of State for filing a statement that complies with the requirements of subsection (a) of this section and recites that the corporation has been notified of the change.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 5.03. Resignation of registered agent.

1. A registered agent may resign as registered agent by signing and delivering to the Secretary of State the original and two exact or conformed copies of a statement of resignation. The statement may include a statement that the registered office is also discontinued.
2. After filing the statement, the Secretary of State shall mail one copy to the registered office (if not discontinued) and the other copy to the corporation at its principal office as shown in the most recent biennial report filed pursuant to section 16.22 of this title.
3. The agency appointment is terminated, and the registered office discontinued if so provided, on the 31st day after the date on which the statement is filed.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 5.04. Service on corporation.

1. The corporation's registered agent shall be an agent of such 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 shall fail to appoint or maintain a registered agent in this State, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then the Secretary of State shall be an agent of such corporation upon whom any such process, notice, or demand may be served. Service on the Secretary of State of any such process, notice, or demand shall be made by delivering to and leaving with him or her, or with any clerk having charge of the corporation department of his or her office, duplicate copies of such process, notice, or demand. In the event any such process, notice, or demand is served on the Secretary of State, he or she shall immediately cause one of the copies thereof to be forwarded by registered or certified mail, return receipt requested, addressed to the corporation at its registered office.
3. The Secretary of State shall keep a record of all processes, notices, and demands served upon the Secretary under this section, and shall record therein the time of such service and the Secretary's action with reference thereto.
4. Nothing herein contained shall limit or affect the right to serve any process, notice, or demand required or permitted by law to be served upon a corporation in any other manner now or hereafter permitted by law, or by rule.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.01. Admission.

1. A corporation may admit any person as a member. The articles or bylaws may establish criteria or procedures for admission.
2. No person shall be admitted as a member without his or her consent.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.02. Consideration.

Except as provided in its articles or bylaws, a corporation may admit members for no consideration or for such consideration as is determined by the board.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.03. No requirement of members.

A corporation is not required to have members.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.20. Differences in rights and obligations of members.

All members shall have the same rights and obligations with respect to voting, dissolution, redemption, and transfer, unless the articles or bylaws establish classes of membership with different rights or obligations. All members shall have the same rights and obligations with respect to any other matters, except as set forth in or authorized by the articles or bylaws.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.21. Transfers.

1. Except as set forth in or authorized by the articles or bylaws, no member of a mutual benefit corporation may transfer a membership or any right arising therefrom.
2. No member of a public benefit corporation may transfer a membership or any right arising therefrom.
3. Where transfer rights have been provided, no restriction on them shall be binding with respect to a member holding a membership issued prior to the adoption of the restriction unless the restriction is approved by the members and the affected member.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.22. Member's liability to third parties.

A member of a corporation is not, as such, personally liable for the acts, debts, liabilities, or obligations of the corporation.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.23. Member's liability for dues, assessments, and fees.

A member may become liable to the corporation for dues, assessments, or fees; provided, however, that an article or bylaw provision or a resolution adopted by the board authorizing or imposing dues, assessments, or fees does not, of itself, create liability.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.24. Creditor's action against member.

1. No proceeding may be brought by a creditor to reach the liability, if any, of a member to the corporation unless final judgment has been rendered in favor of the creditor against the corporation and execution has been returned unsatisfied in whole or in part or unless such proceeding would be useless.
2. All creditors of the corporation, with or without reducing their claims to judgment, may intervene in any creditor's proceeding brought under subsection (a) of this section to reach and apply unpaid amounts due the corporation. Any or all members who owe amounts to the corporation may be joined in such proceeding.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.30. Resignation.

1. A member may resign at any time.
2. The resignation of a member does not relieve the member from any obligations the member may have to the corporation.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.31. Termination; expulsion and suspension.

1. No member of a public benefit or mutual benefit corporation may be expelled or suspended, and no membership or memberships may be terminated or suspended except pursuant to a procedure which is fair and reasonable and is carried out in good faith.
2. A procedure is fair and reasonable when either:
   1. the articles or bylaws set forth a procedure that provides:
      1. not less than 15 days prior written notice of the expulsion, suspension or termination and the reasons therefor; and
      2. an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension, or termination by a person or persons authorized to decide that the proposed expulsion, termination, or suspension not take place; or
   2. it is fair and reasonable taking into consideration all of the relevant facts and circumstances.
3. Any written notice given by mail must be given by first class or certified mail sent to the last address of the member shown on the corporation's records.
4. Any proceeding challenging an expulsion, suspension, or termination, including a proceeding in which defective notice is alleged, must be commenced within one year after the effective date of the expulsion, suspension, or termination.
5. A member who has been expelled or suspended may be liable to the corporation for dues, assessments, or fees as a result of obligations incurred or commitments made prior to expulsion or suspension.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.32. Purchase of memberships.

1. A public benefit corporation may not purchase any of its memberships or any right arising therefrom.
2. A mutual benefit corporation may purchase the membership of a member who resigns or whose membership is terminated for the amount and pursuant to the conditions set forth in or authorized by its articles or bylaws. No payment shall be made in violation of chapter 13 of this title.
3. 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 such payment, benefit, or distribution shall be deemed to be a dividend or distribution of income or profit.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.40. Derivative suits.

1. A proceeding may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor by:
   1. any member or members having five percent or more of the voting power or by 50 members, whichever is less; or
   2. any director.
2. In any such proceeding, each complainant shall be a member or director at the time of bringing the proceeding.
3. A complaint in a proceeding brought in the right of a corporation must be verified and allege with particularity the demand made, if any, to obtain action by the directors and either why the complainants could not obtain the action or why they did not make the demand. If a demand for action was made and the corporation's investigation of the demand is in progress when the proceeding is filed, the court may stay the suit until the investigation is completed.
4. On termination of the proceeding the court may require the complainants to pay any defendant's reasonable expenses (including counsel fees) incurred in defending the suit if it finds that the proceeding was commenced frivolously or in bad faith.
5. If the proceeding on behalf of the corporation results in the corporation taking some action requested by the complainants or otherwise was successful, in whole or in part, or if anything was received by the complainants as the result of a judgment, compromise, or settlement of an action or claim, the court may award the complainants reasonable expenses (including counsel fees).
6. The complainants shall notify the Attorney General within ten days after commencing any proceeding under this section if the proceeding involves a public benefit corporation or assets held in charitable trust by a mutual benefit corporation.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 6.50. Delegates.

1. A corporation may provide in its articles or bylaws for delegates having some or all of the authority of members.
2. The articles or bylaws may set forth provisions relating to:
   1. the characteristics, qualifications, rights, limitations, and obligations of delegates, including their selection and removal;
   2. calling, noticing, holding, and conducting meetings of delegates; and
   3. carrying on corporate activities during and between meetings of delegates.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.01. Annual meeting and regular meetings.

1. A corporation with members shall hold an annual membership meeting at a time stated in or fixed in accordance with the bylaws, unless a different time is specifically set forth in the notice of meeting with the change in time being duly noted.
2. A corporation with members may hold regular membership meetings at the times stated in or fixed in accordance with the bylaws, unless a different time is specifically set forth in the notice of meeting with the change in time being duly noted.
3. Annual and regular membership meetings shall be held in this State unless permitted in the bylaws of the corporation to be held outside this State. Annual meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, or otherwise stated in the notice of meeting, annual meetings shall be held at the corporation's principal office.
4. At the annual meeting:
   1. the president and chief financial officer shall report on the activities and financial condition of the corporation; and
   2. the members shall consider and act upon such other matters as may be raised consistent with the notice requirements of section 7.05 and subsection 7.23(b) of this chapter.
5. At regular meetings, the members shall consider and act upon such matters as may be raised consistent with the notice requirements of section 7.05 and subsection 7.23(b) of this title.
6. An annual or regular meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conferencing telecommunication.
7. The failure to hold an annual meeting at a time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporation action.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 33, eff. April 15, 2010.

§ 7.02. Special meeting.

1. A corporation with members shall hold a special meeting of members:
   1. on call of its board or the person or persons authorized to do so by the articles or bylaws; or
   2. if the holders of at least five percent of the voting power sign, date, and deliver to any corporate officer one or more written demands for the meeting describing the purpose or purposes for which it is to be held.
2. The close of business on the 30th day before delivery of the demand or demands for a special meeting to any corporate officer is the record date for the purpose of determining whether the five percent requirement of subsection (a) of this section has been met.
3. If a notice for a special meeting demanded under subsection (a)(2) of this section is not given pursuant to section 7.05 of this title within 30 days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection (d) of this section, a person signing the demand or demands may set the time and place of the meeting and give notice pursuant to section 7.05 of this title.
4. Special meetings of members shall be held in this State, unless permitted in the bylaws of the corporation to be held outside this State. Special meetings shall be held at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings shall be held at the corporation's principal office.
5. Only those matters that are within the purpose or purposes described in the meeting notice required by section 7.05 of this title may be conducted at a special meeting of members.
6. A special meeting may be conducted by means of any electronic or telecommunications mechanism, including video-conferencing telecommunication.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 34, eff. April 15, 2010.

§ 7.03. Court-ordered meeting.

1. The Superior Court of the county where a corporation's principal office (or, if none in this State, its registered office) is located may summarily order a meeting to be held:
   1. on application of any member or other person entitled to participate in the annual meeting, and in the case of a public benefit corporation, the Attorney General, if an annual meeting was not held within the earlier of six months after the end of the corporation's fiscal year or 15 months after its last annual meeting; or
   2. on application of a member who signed a demand for a special meeting valid under section 7.02 of this title, a person or persons entitled to call a special meeting, and in the case of a public benefit corporation, the Attorney General, if:
      1. notice of the special meeting was not given within 30 days after the date the demand was delivered to a corporate officer; or
      2. the special meeting was not held in accordance with the notice.
2. The court may fix the time and place of the meeting, specify a record date for determining members entitled to notice of and to vote at the meeting, prescribe the form and content of the meeting notice, fix the quorum required for specific matters to be considered at the meeting (or direct that the votes represented at the meeting constitute a quorum for action on those matters), and enter other orders necessary to accomplish the purpose or purposes of the meeting.
3. If the court orders a meeting, it may also order the corporation to pay the member's costs (including reasonable counsel fees) incurred to obtain the order.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.04. Action by written consent.

1. Unless the articles of incorporation preclude the taking of action required or permitted by this title without a members' meeting, action required or permitted by this title to be taken at a members' meeting may be taken without a meeting if the action is taken by all the members entitled to vote on the action. Each action must be evidenced by one or more written consents describing the action taken, signed by all the members entitled to vote on the action, and delivered to the corporation for inclusion in the minutes or filed with the corporate records.
2. If the articles of incorporation contain specific authority to do so, action required or permitted by this title to be taken at a members' meeting may be taken without a meeting if the action is taken by the holders of at least a majority of all of the members entitled to vote on the action, and if each member is given prior notice of the action proposed to be taken. Each action must be evidenced by one or more written consents describing the action taken, signed by at least a majority of all the members entitled to vote and delivered to the corporation for inclusion in the minutes or filed with the corporate records. Prompt notice of any action taken by less than unanimous written consent in lieu of a meeting shall be given to all shareholders entitled to vote on such action under this title.
3. If not otherwise fixed under section 7.03 or 7.07 of this title, the record date for determining shareholders entitled to take action without a meeting is the date the first member signs the consent under subsection (a) of this section.
4. A consent signed under this section has the effect of a meeting vote and may be described as such in any document.
5. For purposes of this section, written consent may be evidenced by an electronic communication or an electronic record.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 35.

§ 7.05. Notice of meeting.

1. A corporation shall give notice consistent with its bylaws of meetings of members in a fair and reasonable manner.
2. Any notice which conforms to the requirements of subsection (c) of this section is fair and reasonable, but other means of giving notice may also be fair and reasonable when all the circumstances are considered.
3. Notice is fair and reasonable if:
   1. the corporation notifies its members of the place, date, and time of each annual and special meeting of members no fewer than 10 (or if notice is mailed by other than first class or registered mail, 30) nor more than 60 days before the meeting date;
   2. notice of an annual meeting includes a description of any matter or matters which must be approved by the members under sections 8.31, 8.56, 10.03, 10.21, 11.04, 12.02, and 14.02 of this title; and
   3. notice of a special meeting includes a description of the matter or matters for which the meeting is called.
4. Unless the bylaws require otherwise, if an annual or special meeting of members is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place, if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under section 7.07 of this title, however, notice of the adjourned meeting must be given under this section to the members of record as of the new record date.
5. When giving notice of an annual or special meeting of members, a corporation shall give notice of a matter a member intends to raise at the meeting if:
   1. requested in writing to do so by a person entitled to call a special meeting; and
   2. the request is received by the secretary or president of the corporation at least ten days before the corporation gives notice of the meeting.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.06. Waiver of notice.

1. A member may waive any notice required by this title, the articles, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the member entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
2. A member's attendance at a meeting:
   1. waives objection to lack of notice or defective notice of the meeting, unless the member makes timely objection to holding the meeting or transacting business at the meeting;
   2. waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the member makes timely objection to considering the matter when it is presented, or when the member thereafter becomes aware that the matter has been presented.
3. The provisions in subsections (a) and (b) of this section shall also be applicable to delegates.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.07. Record date; determining members entitled to notice and vote.

1. The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to notice of a members' meeting. If the bylaws do not fix or provide for fixing such a record date, the board may fix a future date as such a record date. If no such record date is fixed, members at the close of business on the business day preceding the day on which notice is given, or if notice is waived, at the close of business on the business day preceding the day on which the meeting is held are entitled to notice of the meeting.
2. The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to vote at a members' meeting. If the bylaws do not fix or provide for fixing such a record date, the board may fix a future date as such a record date. If no such record date is fixed, members on the date of the meeting who are otherwise eligible to vote are entitled to vote at the meeting.
3. The bylaws may fix or provide the manner for determining a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. If the bylaws do not fix or provide for fixing such a record date, the board may fix in advance such a record date. If no such record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later, are entitled to exercise such rights.
4. A record date fixed under this section may not be more than 70 days before the meeting or action requiring a determination of members occurs.
5. A determination of members entitled to notice of or to vote at a membership meeting is effective for any adjournment of the meeting unless the board fixes a new date for determining the right to notice or the right to vote, which it must do if the meeting is adjourned to a date more than 70 days after the record date for determining members entitled to notice of the original meeting.
6. If a court orders a meeting adjourned to a date more than 120 days after the date fixed for the original meeting, it may provide that the original record date for notice or voting continues in effect or it may fix a new record date for notice or voting.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.08. Action by written ballot.

1. Unless prohibited or limited by the articles or bylaws, any action which may be taken at any annual or special meeting of members may be taken without a meeting if the corporation delivers a written ballot to every member entitled to vote on the matter; provided, however, that action taken by ballot may not be a substitute for the holding of an annual or special meeting.
2. A written ballot shall:
   1. set forth each proposed action; and
   2. provide an opportunity to vote for or against each proposed action.
3. Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.
4. All solicitations for votes by written ballot shall:
   1. indicate the number of responses needed to meet the quorum requirements;
   2. state the percentage of approvals necessary to approve each matter other than election of directors; and
   3. specify the time by which a ballot must be received by the corporation in order to be counted.
5. Except as otherwise provided in the articles or bylaws, a written ballot may not be revoked.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.20. Members' list for meeting.

1. After fixing a record date for a notice of a meeting, a corporation shall prepare an alphabetical list of the names of all its members who are entitled to notice of the meeting. The list must show the address and number of votes each member is entitled to vote at the meeting. The corporation shall prepare on a current basis through the time of the membership meeting a list of members, if any, who are entitled to vote at the meeting, but not entitled to notice of the meeting. This list shall be prepared on the same basis and be part of the list of members.
2. The list of members must be available for inspection by any member for the purpose of communication with other members concerning the meeting, beginning two business days after notice is given of the meeting for which the list was prepared and continuing through the meeting, at the corporation's principal office or at a reasonable place identified in the meeting notice in the city where the meeting will be held. A member, a member's agent, or attorney is entitled on written demand to inspect and, subject to the limitations of subsection 16.02(c) and section 16.05 of this title, to copy the list, at a reasonable time and at the member's expense, during the period it is available for inspection.
3. The corporation shall make the list of members available at the meeting, and any member, a member's agent, or attorney is entitled to inspect the list at any time during the meeting or any adjournment.
4. If the corporation refuses to allow a member, a member's agent, or attorney to inspect the list of members before or at the meeting (or copy the list as permitted by subsection (b) of this section), the Superior Court of the county where a corporation's principal office (or if none in this State, its registered office) is located, on application of the member, may summarily order the inspection or copying at the corporation's expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete and may order the corporation to pay the member's costs (including reasonable counsel fees) incurred to obtain the order.
5. Refusal or failure to prepare or make available the members' list does not affect the validity of action taken at the meeting, unless a member, or his or her agent or attorney objects on the record or in writing to such refusal or failure prior to such action having been taken. In the event of such refusal or failure, and such objection, the action taken at the meeting shall be negated unless:
   1. the meeting is recessed for a period of not less than five days after the list is made available to the objecting party; or
   2. the corporation petitions and the Superior Court declares that the corporation's refusal or failure is in accordance with the law.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.21. Voting entitlement generally.

1. Unless the articles or bylaws provide otherwise, each member is entitled to one vote on each matter voted on by the members.
2. Unless the articles or bylaws provide otherwise, if a membership stands of record in the names of two or more persons, their acts with respect to voting shall have the following effect:
   1. if only one votes, such act binds all; and
   2. if more than one votes, the vote shall be divided on a pro rata basis.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.22. Quorum requirements.

1. Unless this title, the articles, or bylaws provide for a higher or lower quorum, ten percent of the votes entitled to be cast on a matter must be represented at a meeting of members to constitute a quorum on that matter.
2. A bylaw amendment to decrease the quorum for any member action may be approved by the members, or, unless prohibited by the bylaws, by the board.
3. A bylaws amendment to increase the quorum required for any member action must be approved by the members.
4. Unless one-third or more of the voting power is present in person or by proxy, the only matters that may be voted upon at an annual meeting of members are those matters that are described in the meeting notice.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.23. Voting requirements.

1. Unless this title, the articles, or the bylaws require a greater vote or voting by class, if a quorum is present, action on a matter by members is approved, if the votes cast by the members favoring the action exceeds the votes cast opposing the action.
2. A bylaw amendment to increase or decrease the vote required for any member action must be approved by the members.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.24. Proxies.

1. Unless the articles or bylaws prohibit or limit proxy voting, a member may appoint a proxy to vote or otherwise act for the member by:
   1. signing an appointment form either personally or by an attorney-in-fact; or
   2. by transmitting to the corporation or the corporation's duly authorized agent an appointment of proxy by electronic transmission, including telephone or e-mail.
2. An appointment of a proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment is valid for 11 months unless a different period is expressly provided in the appointment form; provided, however, that no proxy shall be valid for more than three years from its date of execution.
3. An appointment of a proxy is revocable by the member.
4. The death or incapacity of the member 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 authority under the appointment.
5. Appointment of a proxy is revoked by the person appointing the proxy:
   1. attending any meeting and voting in person;
   2. prior to a vote being taken on an action, delivering to the secretary or other officer or agent authorized to tabulate proxy votes either a signed writing or an electronic transmission stating that the appointment of the proxy is revoked or a subsequent appointment form.
6. Subject to section 7.27 of this title and any express limitation on the proxy's authority appearing on the face of the appointment form, a corporation is entitled to accept the proxy's vote or other action as that of the member making the appointment.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2001, No. 26 , § 3.

§ 7.25. Cumulative voting for directors.

1. If the articles and bylaws provide for cumulative voting by members, members may so vote, by multiplying the number of votes the members are entitled to cast by the number of directors for whom they are entitled to vote, and cast the product for a single candidate or distribute the product among two or more candidates.
2. Cumulative voting is not authorized at a particular meeting unless:
   1. the meeting notice or statement accompanying the notice states that cumulative voting will take place; or
   2. a member who has the right to cumulate his or her votes gives notice to the corporation not less than 48 hours before the time set for the meeting of his or her intent to cumulate his or her votes during the meeting, and if one member gives this notice, all other members entitled to vote and participating in the election are entitled to cumulate their votes without giving further notice.
3. A director elected by cumulative voting may be removed by the members without cause if the requirements of section 8.08 of this title are met unless the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written ballot, all memberships entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected.
4. Members may not cumulatively vote if the directors and members are identical.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.26. Other methods of electing directors.

A corporation may provide in its articles or bylaws for election of directors by members or delegates:

1. on the basis of chapter or other organizational unit;
2. by region or other geographic unit;
3. by preferential voting; and
4. by any other reasonable method.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 7.27. Corporation's acceptance of votes.

1. If the name signed or delivered by electronic transmission on a vote, consent, waiver, or proxy appointment corresponds to the name of a member, the corporation if acting in good faith is entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the member.
2. If the name signed or delivered by electronic transmission on a vote, consent, waiver, or proxy appointment does not correspond to the record name of a member, the corporation if acting in good faith is nevertheless entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the member if:
   1. the member is an entity and the name signed or delivered by electronic transmission purports to be that of an officer or agent of the entity;
   2. the name signed or delivered by electronic transmission purports to be that of an attorney-in-fact of the member and if the corporation requests, evidence acceptable to the corporation of the authority of the attorney-in-fact to represent the member has been presented with respect to the vote, consent, waiver, or proxy appointment;
   3. two or more persons hold the membership as cotenants or fiduciaries and the name signed or delivered by electronic transmission purports to be the name of at least one of the coholders and the person signing or delivering by electronic transmission appears to be acting on behalf of all the coholders; and
   4. in the case of a mutual benefit corporation:
      1. the name signed or delivered by electronic transmission purports to be that of an administrator, executor, guardian, or conservator representing the member and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment;
      2. the name signed or delivered by electronic transmission purports to be that of a receiver or trustee in bankruptcy of the member, and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment.
3. The corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of:
   1. the signature on it;
   2. the signatory's authority to sign for the member; or
   3. the electronic transmission by which the proxy appointment was made.
4. The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section are not liable in damages to the member for the consequences of the acceptance or rejection.
5. Corporate action based on the acceptance or rejection of a vote, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2001, No. 26 , § 4.

§ 7.30. Voting agreements.

1. Two or more members may provide for the manner in which they will vote by signing an agreement for that purpose. Such agreements may be valid for a period of up to 10 years. For public benefit corporations, such agreements must have a reasonable purpose not inconsistent with the corporation's public or charitable purposes.
2. A voting agreement created under this section is specifically enforceable.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.01. Requirement for and duties of board.

1. Each corporation must have a board of directors.
2. Except as provided in this title or subsection (c) of this section, all corporate powers shall be exercised by or under the authority of, and the affairs of the corporation managed under the direction of, its board.
3. The articles of incorporation may authorize a person or persons to exercise some or all of the powers which would otherwise be exercised by a board. To the extent so authorized, any such person or persons shall have the duties and responsibilities of the directors, and the directors shall be relieved to that extent from such duties and responsibilities.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.02. Qualifications of directors.

All directors must be individuals. The articles of incorporation or bylaws may prescribe other qualifications for directors. A director need not be a resident of this State or a member of the corporation unless the articles of incorporation or bylaws so prescribe.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.03. Number of directors.

1. A board of directors must consist of three or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws.
2. The number of directors may be increased or decreased (but to no fewer than three) from time to time by amendment to or in the manner prescribed in the articles of incorporation or bylaws.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.04. Election, designation, and appointment of directors.

1. If the corporation has members, all the directors (except the initial directors) shall be elected at the first annual meeting of members, and at each annual meeting thereafter, unless the articles of incorporation or bylaws provide some other time or method of election, or provide that some of the directors are appointed by some other person or designated.
2. If the corporation does not have members, all the directors (except the initial directors) shall be elected, appointed, or designated as provided in the articles of incorporation or bylaws. If no method of designation or appointment is set forth in the articles of incorporation or bylaws, the directors (other than the initial directors) shall be elected by the board.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.05. Terms of directors generally.

1. The articles of incorporation or bylaws must specify the terms of directors. Except for designated or appointed directors, the term of directors may not exceed six years. In the absence of any term specified in the articles of incorporation or bylaws, the term of each director shall be one year. Directors may be elected for successive terms.
2. A decrease in the number of directors or term of office does not shorten an incumbent director's term.
3. Except as provided in the articles of incorporation or bylaws:
   1. the term of a director filling a vacancy in the office of a director elected by members expires at the next election of directors by members; and
   2. the term of a director filling any other vacancy expires at the end of the unexpired term which such director is filling.
4. Despite the expiration of a director's term, the director continues to serve until the director's successor is elected, designated, or appointed and qualifies, or until there is a decrease in the number of directors.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.06. Staggered terms for directors.

The articles of incorporation or bylaws may provide for staggering the terms of directors by dividing the total number of directors into two, three, four, five, or six groups, with each group containing one-half, one-third, one-quarter, one-fifth or one-sixth of the total, as near as may be. In that event, the terms of the directors in the first group expire at the first annual members' meeting after their election, the terms of the second group expire at the second members' meeting after their election, and the terms of the third group, fourth group, fifth group, and sixth group, if any, expire at the third, fourth, fifth, or sixth annual members' meeting after their election. At each annual members' meeting held thereafter, directors shall be chosen for a term not to exceed six years, as the case may be, to succeed those whose terms expire.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.07. Resignation of directors.

1. A director may resign at any time by delivering written notice to the board of directors, its chair, or to the president or other officer responsible for recording the minutes of the meetings of the directors of the corporation.
2. A resignation is effective when the notice is effective unless the notice specifies a later effective date. If a resignation is made effective at a later date, the board may fill the pending vacancy before the effective date if the board provides that the successor does not take office until the effective date.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.08. Removal of directors elected by members or directors.

1. The members may remove one or more directors elected by them without cause.
2. If a director is elected by a class, chapter, or other organizational unit, or by region or other geographic grouping, the director may be removed only by the members of that class, chapter, unit or grouping.
3. Except as provided in subsection (i) of this section, a director may be removed under subsection (a) or (b) of this section only if the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors.
4. If cumulative voting is authorized, a director may not be removed if the number of votes, or if the director was elected by a class, chapter, unit, or grouping of members, the number of votes of that class, chapter, unit, or grouping, sufficient to elect the director under cumulative voting is voted against the director's removal.
5. A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.
6. In computing whether a director is protected from removal under subsections (b) through (d) of this section, it should be assumed that the votes against removal are cast in an election for the number of directors of the class to which the director to be removed belonged on the date of that director's election.
7. An entire board of directors may be removed under subsections (a) through (e) of this section.
8. The board of directors of a corporation may remove a director without cause who has been elected by the board by the vote of two-thirds of the directors then in office or such greater number as is set forth in the articles of incorporation or bylaws.
9. If at the beginning of a director's term on the board, the articles of incorporation or bylaws provide that the director may be removed for missing a specified number of board meetings, the board may remove the director for failing to attend the specified number of meetings. The director may be removed only if a majority of the directors then in office votes for the removal.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.09. Removal of designated or appointed directors.

1. A designated director may be removed by an amendment to the articles of incorporation or bylaws deleting or changing the designation.
2. Appointed directors:
   1. Except as otherwise provided in the articles of incorporation or bylaws, an appointed director may be removed without cause by the person appointing the director.
   2. The person removing the director shall do so by giving written notice of the removal to the director and either the presiding officer of the board or the corporation's president or secretary.
   3. A removal is effective when the notice is effective unless the notice specifies a future effective date.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.10. Removal of directors by judicial proceeding.

1. 1. The Superior Court may remove any director of the corporation from office in a proceeding commenced either by the corporation, its members holding at least 10 percent of the voting power of any class, or the Attorney General in the case of a public benefit corporation if the court finds that: (a) (1)  The Superior Court may remove any director of the corporation from office in a proceeding commenced either by the corporation, its members holding at least 10 percent of the voting power of any class, or the Attorney General in the case of a public benefit corporation if the court finds that:
      1. the director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation, that the provisions of section 8.13 of this title have been violated, or a final judgment has been entered finding that the director has violated a duty set forth in sections 8.30 through 8.33 of this title; and
      2. removal is in the best interest of the corporation.
   2. The petition for removal shall be filed:
      1. in the county where the corporation's principal office is located;
      2. in the county where the corporation's registered office is located if the corporation has no principal office in this State; or
      3. in the Superior Court of Washington County where the corporation has no principal office or registered office in this State.
2. The court that removes a director may bar the director from serving on the board for a period prescribed by the court.
3. If members or the Attorney General commence a proceeding under subsection (a) of this section, the corporation shall be made a party defendant.
4. If a public benefit corporation or its members commence a proceeding under subsection (a) of this section, they shall give the Attorney General written notice of the proceeding.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.11. Vacancy on board.

1. Unless the articles of incorporation or bylaws provide otherwise, and except as provided in subsections (b) and (c) of this section, if a vacancy occurs on the board of directors, including a vacancy resulting from an increase in the number of directors:
   1. the board of directors may fill the vacancy; or
   2. if the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
2. Unless the articles of incorporation or bylaws provide otherwise, if a vacant office was held by an appointed director, only the person who appointed the director may fill the vacancy.
3. If a vacant office was held by a designated director, the vacancy shall be filled as provided in the articles of incorporation or bylaws. In the absence of an applicable article or bylaw provision the vacancy may not be filled by the board.
4. A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date under subsection 8.07(b) of this title or otherwise) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.12. Compensation of directors.

Unless the articles of incorporation or bylaws provide otherwise, a board of directors may fix the compensation of directors.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.13. Financially disinterested majority - Public benefit corporations.

1. No more than 49 percent of the individuals serving on the board of any public benefit corporation may be financially interested persons.
2. For the purposes of this section, "financially interested persons" means:
   1. individuals who have received or are entitled to receive compensation, directly or indirectly, from the corporation for services rendered to it within the previous 12 months, whether as full- or part-time employees, independent contractors, consultants, or otherwise, excluding any reasonable payments made to directors for serving as directors; or
   2. any spouse, brother, sister, parent, or child of any such individual.
3. The failure to comply with the provisions of this section shall not affect the validity or enforceability of any transaction entered into by a corporation.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.20. Regular and special meetings.

1. If the time and place of a directors' meeting is fixed by the bylaws or the board, the meeting is a regular meeting. All other meetings are special meetings.
2. A board of directors may hold regular or special meetings in or outside this State.
3. Unless the articles of incorporation or bylaws provide otherwise, a board may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication, including an electronic, telecommunications, and video- or audio-conferencing conference telephone call, by which all directors participating may simultaneously or sequentially communicate with each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 36, eff. April 15, 2010; 2011, No. 52 , § 19, eff. May 27, 2011.

§ 8.21. Action without meeting.

1. Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by this title to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. Each action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes filed with the corporate records reflecting the action taken.
2. Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.
3. A consent signed under this section has the effect of a meeting vote and may be described as such in any document.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.22. Call and notice of meetings.

1. Unless the articles of incorporation, bylaws, or subsection (c) of this section provide otherwise, regular meetings of the board may be held without notice of the date, time, place, or purpose of the meeting.
2. Unless the articles of incorporation, bylaws, or subsection (c) of this section provide otherwise, special meetings of the board must be preceded by at least two business days' notice to each director of the date, time, and place of the meeting. The notice need not describe the purpose of the special meeting unless required by the articles of incorporation or bylaws.
3. In corporations without members, any board action to remove a director or to approve a matter which would require approval by the members if the corporation had members, shall not be valid unless each director is given at least seven days' written notice that the matter will be voted upon at a directors' meeting or unless notice is waived pursuant to section 8.23 of this title.
4. Unless the articles of incorporation or bylaws otherwise provide, the presiding officer of the board, the president, or 20 percent of the directors then in office may call and give notice of a meeting of the board.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.23. Waiver of notice.

1. A director may waive any notice required by this title, the articles of incorporation, or bylaws before or after the date and time stated in the notice. Except as provided in subsection (b) of this section, the waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or the corporate records.
2. A director's attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director, upon arriving at the meeting or prior to the vote on a matter not noticed in conformity with this title, the articles of incorporation, or bylaws, objects to lack of notice and does not thereafter vote for or assent to the objected to action.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.24. Quorum and voting.

1. Unless the articles of incorporation or bylaws require a greater number, a quorum of a board of directors consists of:
   1. a majority of the fixed number of directors if the corporation has a fixed board size; or
   2. a majority of the number of directors prescribed, or if no number is prescribed the number in office immediately before the meeting begins, if the corporation has a variable-range size board.
2. If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless this title, the articles of incorporation, or bylaws require the vote of a greater number of directors.
3. A director who is present at a meeting of the board of directors or a committee of the board of directors when corporate action is taken is deemed to have assented to the action taken unless:
   1. the director objects at the beginning of the meeting (or promptly upon the director's arrival) to holding it or transacting business at the meeting;
   2. the director's dissent or abstention from the action taken is entered in the minutes of the meeting; or
   3. the director delivers written notice of the director's dissent or abstention to the presiding officer of the meeting before its adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.25. Committees of the board.

1. Unless prohibited or limited by the articles of incorporation or bylaws, a board of directors may create one or more committees and appoint members of the board to serve on them. Each committee shall have two or more members, who serve at the pleasure of the board of directors.
2. The creation of a committee and appointment of members to it must be approved by the greater of:
   1. a majority of all the directors in office when the action is taken; or
   2. the number of directors required by the articles of incorporation or bylaws to take action under section 8.24 of this title.
3. Sections 8.20 through 8.24 of this title, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the board of directors, apply to committees and their members as well.
4. To the extent specified by the board of directors or in the articles of incorporation or bylaws, each committee may exercise the authority of the board of directors under section 8.01 of this title.
5. A committee of the board may not, however:
   1. authorize distributions;
   2. approve or recommend to members dissolution, merger, or the sale, pledge, or transfer of all or substantially all of the corporation's assets;
   3. elect, appoint, or remove directors or fill vacancies on the board or on any of its committees; or
   4. adopt, amend, or repeal the articles of incorporation or bylaws.
6. The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in section 8.30 of this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.30. General standards for directors.

1. A director shall discharge his or her duties as a director, including the director's duties as a member of a committee:
   1. in good faith;
   2. with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
   3. in a manner the director reasonably believes to be in the best interests of the corporation.
2. 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 the director is not a member, as to matters within its jurisdiction, if the director reasonably believes the committee merits confidence.
3. A director is not acting in good faith if the director has knowledge or a substantial reason to believe concerning the matter in question that makes reliance otherwise permitted by subsection (b) of this section unwarranted.
4. A director is not liable for the performance of the duties of his or her office if the director acted in compliance with this section.
5. A director shall not be deemed to be a trustee with respect to the corporation or with respect to any property held or administered by the corporation, including without limit, property that may be subject to restrictions imposed by the donor or transferor of such property.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.31. Director conflict of interest.

1. A conflict of interest transaction is a transaction with the corporation in which a director of the corporation has a direct or indirect interest. A conflict of interest transaction is not voidable or the basis for imposing liability on the director if the transaction was fair at the time it was entered into or is approved as provided in subsection (b) or (c) of this section.
2. A transaction in which a director of a public benefit corporation has a conflict of interest may be approved:
   1. in advance by the vote of the board of directors or a committee of the board if:
      1. the material facts of the transaction and the director's interest are disclosed or known to the board or committee of the board; and
      2. the directors approving the transaction in good faith reasonably believe that the transaction is fair to the corporation; or
   2. before or after it is consummated by obtaining approval of the:
      1. Attorney General; or
      2. Superior Court in an action in which the Attorney General is joined as party.
3. A transaction in which a director of a mutual benefit corporation has a conflict of interest may be approved if:
   1. the material facts of the transaction and the director's interest were disclosed or known to the board of directors or a committee of the board and the board or committee of the board authorized, approved, or ratified the transaction; or
   2. the material facts of the transaction and the director's interest were disclosed or known to the members and they authorized, approved, or ratified the transaction.
4. For the purposes of this section, a director of the corporation has an indirect interest in a transaction if:
   1. another entity in which the director has a material interest or in which the director is a general partner is a party to the transaction; or
   2. another entity of which the director is a director, officer, or trustee is a party to the transaction.
5. For purposes of subsections (b) and (c) of this section, a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board or on the committee who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors on the board who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subdivision (b)(1) or (c)(1) of this section if the transaction is otherwise approved as provided in subsection (b) or (c) of this section.
6. For purposes of subdivision (c)(2) of this section, a conflict of interest transaction is authorized, approved, or ratified by the members if it receives a majority of the votes entitled to be counted under this subsection. Votes cast by or voted under the control of a director who has a direct or indirect interest in the transaction, and votes cast by or voted under the control of an entity described in subdivision (d)(1) of this section, may not be counted in a vote of members to determine whether to authorize, approve, or ratify a conflict of interest transaction under subdivision (c)(2) of this section. The vote of these members, however, is counted in determining whether the transaction is approved under other sections of this title. A majority of the voting power, whether or not present, that is entitled to be counted in a vote on the transaction under this subsection constitutes a quorum for the purpose of taking action under this section.
7. The articles of incorporation, bylaws, or a resolution of the board may impose additional requirements on conflict of interest transactions.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.32. Loans to or guarantees for directors and officers.

1. A corporation may not lend money to or guarantee the obligation of a director or officer of the corporation.
2. The fact that a loan or guarantee is made in violation of this section does not affect the borrower's liability on the loan.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.33. Liability for unlawful distributions; statute of limitations.

1. A director who votes for or assents to a distribution made in violation of this title is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating this title if it is established that the director did not perform his or her duties in compliance with section 8.30 of this title.
2. A director held liable for an unlawful distribution under subsection (a) of this section is entitled to contribution:
   1. from every other director who voted for or assented to the distribution without complying with the applicable standards of conduct described in section 8.30 of this title; and
   2. from each person who received an unlawful distribution for the amount of the distribution whether or not the person receiving the distribution knew it was made in violation of this title.
3. A proceeding under this section is barred unless it is commenced within six years after the date on which the effect of the distribution was measured under this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.40. Required officers.

1. Unless otherwise provided in the articles or bylaws, a corporation shall have a president, a secretary, a treasurer, and such other officers as are appointed by the board.
2. The bylaws or the board shall delegate to one of the officers responsibility for preparing minutes of the directors' and members' meetings and for authenticating records of the corporation.
3. The same individual may simultaneously hold more than one office in a corporation, except that a person may not simultaneously hold the office of president and secretary.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.41. Duties and authority of officers.

Each officer has the authority and shall perform the duties set forth in the bylaws. In addition, each officer, to the extent consistent with the bylaws, has the authority and shall perform the duties prescribed in a resolution of the board. The board may authorize an officer, pursuant to a resolution of the board and to the extent consistent with the bylaws, to prescribe the duties and authority of other officers.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.42. Standards of conduct for officers.

1. An officer with discretionary authority shall discharge his or her duties under that authority:
   1. in good faith;
   2. with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
   3. in a manner the officer reasonably believes to be in the best interests of the corporation and its members, if any.
2. In discharging his or her duties, an officer 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 officer reasonably believes to be reliable and competent in the matters presented; or
   2. legal counsel, public accountants, or other persons as to matters the officer reasonably believes are within the person's professional or expert competence.
3. An officer is not acting in good faith if the officer has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) of this section unwarranted, or has a substantial reason to believe reliance is unwarranted.
4. An officer is not liable to the corporation, any member, or other person for any action taken or not taken as an officer if the officer acted in compliance with this section.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.43. Resignation and removal of officers.

1. An officer may resign at any time by delivering notice to the corporation. A resignation is effective when the notice is effective unless the notice specifies a future effective date. If a resignation is made effective at a future date and the corporation accepts the future effective date, its board of directors may fill the pending vacancy before the effective date if the board provides that the successor does not take office until the effective date.
2. A board may remove any officer at any time with or without cause.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.44. Contract rights of officers.

1. The appointment of an officer does not itself create contract rights.
2. An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the corporation's contract rights, if any, with the officer.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.45. Officers' authority to execute documents.

Any contract or other instrument in writing executed or entered into between a corporation and any other person is not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the contract or other instrument if it is signed by either the presiding officer of the board of directors and the president or, if the corporation has no president, or if they are the same person, then by the executive director of the corporation and any other officer.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.50. Subchapter definitions.

As used in this subchapter:

1. "Corporation" includes any domestic or foreign predecessor entity of a corporation in a merger or other transaction in which the predecessor's existence ceased upon the consummation of the transaction.
2. "Director" means an individual who is or was a director of a corporation or an individual who, while a director of a corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic business or nonprofit corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. A director is considered to be serving an employee benefit plan at the corporation's request if the director's duties to the corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director.
3. "Expenses" mean the reasonable costs incurred in connection with a proceeding, including reasonable attorney's fees.
4. "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses actually incurred with respect to a proceeding.
5. "Official capacity" means:
   1. when used with respect to a director, the office of director in a corporation; and
   2. when used with respect to an individual other than a director, as contemplated in section 8.56 of this title, the office in a corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation. "Official capacity" does not include service for any other foreign or domestic business or nonprofit corporation or any partnership, joint venture, trust, employee benefit plan, or other enterprise.
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 and whether formal or informal.
8. "Special legal counsel" means counsel that has never been an employee of the corporation and who has not, and whose firm has not, performed legal services for the corporation pertaining to the matter for which indemnification is sought for a period of at least two years before retention as special counsel.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.51. Authority to indemnify.

1. Except as provided in subsection (d) of this section, a corporation may indemnify an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if the individual:
   1. conducted himself or herself in good faith; and
   2. reasonably believed:
      1. in the case of conduct in his or her official capacity with the corporation, that the director's conduct was in its best interests; and
      2. in all other cases, that his or her conduct was not in opposition to the corporation's best interests; and
   3. in the case of any proceeding brought by a governmental entity, the director had no reasonable cause to believe his or her conduct was unlawful, and the director is not finally found to have engaged in a reckless or intentional criminal act.
2. A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirements of subdivision (a)(2)(B) of this section.
3. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this section.
4. A corporation may not indemnify a director under this section:
   1. in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or
   2. in connection with any other proceeding charging improper personal benefit to the director, whether or not involving action in his or her official capacity, in which the director was adjudged liable on the basis that personal benefit was improperly received by the director.
5. Indemnification permitted under this section in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with the proceeding.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.52. Mandatory indemnification.

Unless limited by its articles of incorporation, a corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the director was a party because he or she is or was a director of the corporation against reasonable expenses, reasonably incurred by the director in connection with the proceeding.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.53. Advance for expenses.

1. A corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:
   1. the director furnishes the corporation a written affirmation of his or her good faith belief that he or she has met the standard of conduct described in section 8.51 of this title;
   2. the director furnishes the corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that the director did not meet the standard of conduct; and
   3. a determination is made that the facts then known to those making the determination would not preclude indemnification under this subchapter.
2. The undertaking required by subdivision (a)(2) of this section 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.
3. Determinations and authorizations of payments under this section shall be made in the manner specified in section 8.55 of this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.54. Court-ordered indemnification.

Unless limited by a corporation's articles of incorporation, a director of the corporation who is a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification in the amount it considers proper if it determines:

1. the director is entitled to mandatory indemnification under section 8.52 of this title, in which case the court shall also order the corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification; or
2. the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in subsection 8.51(a) of this title or was adjudged liable as described in subsection 8.51(d) of this title, but if the director was adjudged so liable, indemnification is limited to reasonable expenses incurred.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.55. Determination and authorization of indemnification.

1. Except as provided in section 8.53 of this title, a corporation may not indemnify a director under section 8.51 of this title prior to the final resolution of a proceeding, whether by judgment, order, settlement, conviction, plea, or otherwise, and 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 as set forth in section 8.51 of this title.
2. The determination shall be made:
   1. by the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceeding;
   2. if a quorum cannot be obtained under subdivision (1) of this subsection, by majority vote of a committee duly designated by the board of directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the proceeding;
   3. by special legal counsel:
      1. selected by the board of directors or its committee in the manner prescribed in subdivision (1) or (2) of this subsection; or
      2. if a quorum of the board cannot be obtained under subdivision (1) of this subsection and a committee cannot be designated under subdivision (2) of this subsection, selected by majority vote of the full board in which selections directors who are parties may participate; or
   4. by the members of a mutual benefit corporation, but directors who are at the time parties to the proceeding may not vote on the determination.
3. Authorization of indemnification and evaluation as to reasonableness of expenses shall be made in the same manner as the determination that indemnification is permissible, except that if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subdivision (b)(3) of this section to select counsel.
4. A director of a public benefit corporation may not be indemnified until 20 days after the effective date of written notice to the Attorney General of the proposed indemnification.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.56. Indemnification of officers, employees, and agents.

Unless limited by a corporation's articles of incorporation:

1. an officer of the corporation who is not a director is entitled to mandatory indemnification under section 8.52 of this title, and is entitled to apply for court-ordered indemnification under section 8.54 of this title, in each case to the same extent as a director;
2. the corporation may indemnify and advance expenses under this subchapter to an officer, employee, or agent of the corporation who is not a director to the same extent as a director; and
3. a corporation may also indemnify and advance expenses to an officer, employee, or agent who is not a director to the extent, consistent with public policy, that may be provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.57. Insurance.

A corporation may purchase and maintain insurance on behalf of an 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 business or nonprofit corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against liability asserted against or incurred by him or her in that capacity or arising from his or her status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnify the person against the same liability under section 8.51 or 8.52 of this title.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 8.58. Application of subchapter.

1. A provision treating a corporation's indemnification of or advance for expenses to directors that is contained in its articles of incorporation, bylaws, a resolution of its members or board of directors, or in a contract or otherwise, is valid only if and to the extent the provision is consistent with this subchapter. If articles of incorporation limit indemnification or advance for expenses, indemnification and advance for expenses are valid only to the extent consistent with the articles.
2. This subchapter does not limit a corporation's power to pay or reimburse expenses incurred by a director in connection with appearing as a witness in a proceeding at a time when the director has not been made a named defendant or respondent to the proceeding.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.01. Authority to amend.

A corporation may amend its articles of incorporation at any time to add or change a provision that is required or permitted in the articles or to delete a provision not required in the articles. Whether a provision is required or permitted in the articles is determined as of the effective date of the amendment.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.02. Amendment by directors.

1. Unless the articles provide otherwise, a corporation's board of directors may adopt one or more amendments to the corporation's articles without member approval:
   1. to extend the duration of the corporation if it was incorporated at a time when limited duration was required by law;
   2. to delete the names and addresses of the initial directors;
   3. to delete the names and addresses of the initial registered agent or registered office, if a statement of change is on file with the Secretary of State; or
   4. to change the corporate name by substituting the word "corporation," "incorporated," "company," "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," for a similar word or abbreviation in the name, or by adding, deleting, or changing a geographical attribution to the name.
2. If a corporation has no members, its incorporators, until directors have been chosen, and thereafter its board of directors may adopt one or more amendments to the corporation's articles subject to any approval required pursuant to section 10.30 of this title. The corporation shall provide notice of any meeting at which an amendment is to be voted upon. The notice shall be in accordance with section 8.22(c) of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider a proposed amendment to the articles and contain or be accompanied by a copy or summary of the amendment or state the general nature of the amendment. The amendment must be approved by a majority of the directors in office at the time the amendment is adopted.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.03. Amendment by directors and members.

1. Unless this act, the articles, bylaws, the members (acting pursuant to subsection (b) of this section), or the board of directors (acting pursuant to subsection (c) of this section) require a greater vote or voting by class, an amendment to a corporation's articles to be adopted must be approved:
   1. by the board if the corporation is a public benefit corporation and the amendment does not relate to the number of directors, the composition of the board, the term of office of directors, or the method or way in which directors are elected or selected;
   2. except as provided in subsection 10.02(a) of this title, by the members by two-thirds of the votes cast or a majority of the voting power, whichever is less; and
   3. in writing by any person or persons whose approval is required by a provision of the articles authorized by section 10.30 of this title.
2. The members may condition the amendment's adoption on receipt of a higher percentage of affirmative votes or on any basis.
3. If the board initiates an amendment to the articles or board approval is required by subsection (a) of this section to adopt an amendment to the articles, the board may condition the amendment's adoption on receipt of a higher percentage of affirmative votes or any other basis.
4. If the board or the members seek to have the amendment approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in writing in accordance with section 7.05 of this title. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the proposed amendment and contain or be accompanied by a copy or summary of the amendment.
5. If the board or the members seek to have the amendment approved by the members by written consent or written ballot, the material soliciting the approval shall contain or be accompanied by a copy or summary of the amendment.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.04. Class voting by members on amendments.

1. The members of a class in a public benefit corporation are entitled to vote as a class on a proposed amendment to the articles if the amendment would change the rights of that class as to voting in a manner different than such amendment affects another class or members of another class.
2. The members of a class in a mutual benefit corporation are entitled to vote as a class on a proposed amendment to the articles if the amendment would:
   1. affect the rights, privileges, preferences, restrictions, or conditions of that class as to voting, dissolution, redemption, or transfer of memberships in a manner different than such amendment would affect another class;
   2. change the rights, privileges, preferences, restrictions, or conditions of that class as to voting, dissolution, redemption, or transfer by changing the rights, privileges, preferences, restrictions, or conditions of another class;
   3. increase or decrease the number of memberships authorized for that class;
   4. increase the number of memberships authorized for another class;
   5. effect an exchange, reclassification, or termination of the memberships of that class; or
   6. authorize a new class of memberships.
3. If a class is to be divided into two or more classes as a result of an amendment to the articles, the amendment must be approved by the members of each class that would be created by the amendment.
4. If a class vote is required to approve an amendment to the articles, the amendment must be approved by the members of the class by two-thirds of the votes cast by the class or a majority of the voting power of the class, whichever is less.
5. A class of members is entitled to the voting rights granted by this section although the articles and bylaws provide that the class may not vote on the proposed amendment.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.05. Articles of amendment.

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

1. the name of the corporation;
2. the text of each amendment adopted;
3. the date of each amendment's adoption;
4. if approval of members was not required, a statement to that effect and a statement that the amendment was approved by a sufficient vote of the board of directors or incorporators;
5. if approval by members was required:
   1. the designation, number of memberships outstanding, number of votes entitled to be cast by each class entitled to vote separately on the amendment, and number of votes of each class indisputably voting on the amendment; and
   2. either the total number of votes cast for and against the amendment by each class entitled to vote separately on the amendment or the total number of undisputed votes cast for the amendment by each class and a statement that the number cast for the amendment by each class was sufficient for approval by that class;
6. if approval of the amendment by some person or persons other than the members, the board, or the incorporators is required, pursuant to section 10.30 of this title, a statement that the approval was obtained.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.06. Restated articles of incorporation.

1. A corporation's board of directors may restate its articles of incorporation at any time with or without approval by members or any other person.
2. The restatement may include one or more amendments to the articles. If the restatement includes an amendment requiring approval by the members or any other person, it must be adopted as provided in section 10.03 of this title.
3. If the restatement includes an amendment requiring approval by members, the board must submit the restatement to the members for their approval.
4. If the board seeks to have the restatement approved by the members at a membership meeting, the corporation shall notify each of its members of the proposed membership meeting in writing in accordance with section 7.05 of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the proposed restatement and contain or be accompanied by a copy or summary of the restatement that identifies any amendments or other change it would make in the articles.
5. If the board seeks to have the restatement's approval by the members by written ballot or written consent, the material soliciting the approval shall contain or be accompanied by a copy or summary of the restatement that identifies any amendment or other change it would make in the articles.
6. A restatement requiring approval by the members must be approval by the same vote as an amendment to articles under section 10.03 of this title.
7. If the restatement includes an amendment requiring approval pursuant to section 10.30 of this title, the board must submit the restatement for such approval.
8. A corporation restating its articles shall deliver to the Secretary of State articles of restatement setting forth the name of the corporation and the text of the restated articles of incorporation together with a certificate setting forth:
   1. whether the restatement contains an amendment to the articles requiring approval by the member or any other person other than the board of directors and, if it does not, that the board of directors adopted the restatement; or
   2. if the restatement contains an amendment to the articles requiring approval by the members, the information required by section 10.05 of this title; and
   3. if the restatement contains an amendment to the articles requiring approval by a person whose approval is required pursuant to section 10.30 of this title, a statement that such approval was obtained.
9. Duly adopted articles of incorporation supersede the original articles of incorporation and all amendments to them.
10. The Secretary of State may certify restated articles of incorporation as the articles of incorporation currently in effect, without including in the certificate information required by subsection (h) of this section.

    Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.07. Amendment pursuant to judicial reorganization.

1. A corporation's articles may be amended without board approval or approval by the members or approval required pursuant to section 10.30 of this title to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under federal statute if the articles after amendment contain only provisions required or permitted by section 2.02 of this title.
2. The individual or individuals designated by the court shall deliver to the Secretary of State articles of amendment setting forth:
   1. the name of the corporation;
   2. the text of each amendment approved by the court;
   3. the date of the court's order or decree approving the articles of amendment;
   4. the title of the reorganization proceeding in which the order or decree was entered; and
   5. a statement that the court had jurisdiction of the proceeding under federal statute.
3. This section does not apply after entry of a final decree in the reorganization proceeding even though the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the reorganization plan.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.08. Effect of amendment and restatement.

An amendment to articles of incorporation does not affect a cause of action existing against or in favor of the corporation, a proceeding to which the corporation is a party, any requirement or limitation imposed upon the corporation or any property held by it by virtue of any trust upon which such property is held by the corporation, or the existing rights of persons other than members of the corporation. An amendment changing a corporation's name does not abate a proceeding brought by or against the corporation in its former name.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.20. Amendment by directors.

If a corporation has no members, its incorporators, until directors have been chosen, and thereafter its board of directors, may adopt one or more amendments to the corporation's bylaws subject to any approval required pursuant to section 10.30 of this title. The corporation shall provide notice of any meeting of directors at which an amendment is to be approved. The notice shall be in accordance with subsection 8.22(c) of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider a proposed amendment to the bylaws and contain or be accompanied by a copy or summary of the amendment or state the general nature of the amendment. The amendment must be approved by a majority of the directors in office at the time the amendment is adopted.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.21. Amendment by directors and members.

1. Unless this act, the articles, bylaws, the members (acting pursuant to subsection (b) of this section), or the board of directors (acting pursuant to subsection (c) of this section) require a greater vote or voting by class, an amendment to a corporation's bylaws to be adopted must be approved:
   1. by the board if the corporation is a public benefit corporation and the amendment does not relate to the number of directors, the composition of the board, the term of office of directors, or the method or way in which directors are elected or selected;
   2. by the members by two-thirds of the votes cast or a majority of the voting power, whichever is less; and
   3. in writing by any person or persons whose approval is required by a provision of the articles authorized by section 10.30 of this title.
2. The members may condition the amendment's adoption on its receipt of a higher percentage of affirmative votes or on any other basis.
3. If the board initiates an amendment to the bylaws or board approval is required by subsection (a) of this section to adopt an amendment to the bylaws, the board may condition the amendment's adoption on receipt of a higher percentage of affirmative votes or on any other basis.
4. If the board or the members seek to have the amendment approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in writing in accordance with section 7.05 of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the proposed amendment and contain or be accompanied by a copy and any summary of the amendment.
5. If the board or the members seek to have the amendment approved by the members by written consent or written ballot, the material soliciting the approval shall contain or be accompanied by a copy or summary of the amendment.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.22. Class voting by members on amendments.

1. The members of a class in a public benefit corporation are entitled to vote as a class on a proposed amendment to the bylaws if the amendment would change the rights of that class as to voting in a manner different than such amendment affects another class or members of another class.
2. The members of a class in a mutual benefit corporation are entitled to vote as a class on a proposed amendment to the bylaws if the amendment would:
   1. affect the rights, privileges, preferences, restrictions, or conditions of that class as to voting, dissolution, redemption, or transfer of memberships in a manner different than such amendment would affect another class;
   2. change the rights, privileges, preferences, restrictions, or conditions of that class as to voting, dissolution, redemption, or transfer by changing the rights, privileges, preferences, restrictions, or conditions of another class;
   3. increase or decrease the number of memberships authorized for that class;
   4. increase the number of memberships authorized for another class;
   5. effect an exchange, reclassification, or termination of all or part of the memberships of that class; or
   6. authorize a new class of memberships.
3. The members of a class of a religious corporation are entitled to vote as a class on a proposed amendment to the bylaws only if a class vote is provided for in the articles or bylaws.
4. If a class is to be divided into two or more classes as a result of an amendment to the bylaws, the amendment must be approved by the members of each class that would be created by the amendment.
5. If a class vote is required to approve an amendment to the bylaws, the amendment must be approved by the members of the class by two-thirds of the votes cast by the class or a majority of the voting power of the class, whichever is less.
6. A class of members is entitled to the voting rights granted by this section although the articles and bylaws provide that the class may not vote on the proposed amendment.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.30. Approval by third persons.

The articles may require an amendment to the articles or bylaws to be approved in writing by a specified person or persons other than the board. Such an article provision may only be amended with the approval in writing of such person or persons.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 10.31. Amendment terminating members or redeeming or cancelling memberships.

1. Any amendment to the articles or bylaws which would terminate all members or any class of members or redeem or cancel all memberships or any class of memberships must meet the requirements of the act and this section.
2. Before adopting a resolution proposing such an amendment, the board of a mutual benefit corporation shall give notice of the general nature of the amendment to the members and shall provide a copy of the proposed amendment to each member.
3. After adopting a resolution proposing such an amendment, the notice to members proposing such amendment shall include one statement of up to 500 words opposing the proposed amendment if such statement is submitted by any five members or members having three percent or more of the voting power, whichever is less, not later than 20 days after the board has voted to submit such amendment to the members for their approval. In public benefit corporations, the production and mailing costs shall be paid by the requesting members. In mutual benefit corporations, the production and mailing costs shall be paid by the corporation.
4. Any such amendment shall be approved by the members by two-thirds of the votes cast by each class.
5. The provisions of section 6.21 of this title shall not apply to any amendment meeting the requirements of the act and this section.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 11.01. Approval of plan of merger.

1. Subject to the limitations set forth in section 11.02 of this title, one or more nonprofit corporations may merge into an existing business or nonprofit corporation, which may be one of the merging corporations as long as the plan of merger is approved as provided in section 11.03 of this title.
2. The plan of merger must set forth:
   1. the name of each corporation planning to merge and the name of the surviving corporation into which each plans to merge;
   2. the terms and conditions of the planned merger; and
   3. the manner and basis, if any, of converting the memberships of each public benefit corporation into memberships of the surviving corporation; and
   4. if the merger involves a mutual benefit corporation, the manner and basis, if any, of converting memberships of each merging corporation into memberships, obligations, or securities of the surviving or any other corporation or into cash or other property in whole or part.
3. The plan of merger shall set forth any amendments to the articles of incorporation or bylaws of the surviving corporation to be effected by the planned merger and may set forth other provisions relating to the planned merger.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 11.02. Limitations on mergers by public benefit corporations.

1. Without the prior approval of the Superior Court of Washington County in a proceeding of which the Attorney General has been given written notice, a public benefit corporation may merge only with:
   1. another public benefit corporation;
   2. a foreign corporation which would qualify under this title as a public benefit corporation;
   3. a wholly owned foreign or domestic business corporation, provided the public benefit corporation is the surviving corporation and continues to be a public benefit corporation after the merger; or
   4. a business corporation, provided that:
      1. on or prior to the effective date of the merger, assets with a value equal to the greater of the fair market value of the net tangible and intangible assets (including goodwill) of the public benefit corporation or the fair market value of the public benefit corporation if it were to be operated as a business concern are transferred or conveyed to one or more persons who would have received its assets under subdivisions 14.05(a)(5) and (6) of this title had it dissolved;
      2. it shall return, transfer, or convey any assets held by it upon condition requiring return, transfer, or conveyance, which condition occurs by reason of the merger, in accordance with such condition; and
      3. the merger is approved by a majority of directors of the public benefit corporation who are not and will not become shareholders in or officers, employees, agents, or consultants of the business corporation.
2. At least 20 days before consummation of any merger of a public benefit corporation, notice, including a copy of the proposed plan of merger, must be delivered to the Attorney General.
3. Without the prior written consent of the Attorney General or of the Superior Court of Washington County in a proceeding in which the Attorney General has been given notice, when a public benefit corporation merges each member of a public benefit corporation may only receive or keep a membership or memberships in the surviving public benefit corporation, if any.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 11.03. Action on plan by board, members and third persons.

1. Unless this title, the articles, bylaws, or the board of directors or members (acting pursuant to subsection (c) of this section) require a greater vote or voting by class, a plan of merger to be adopted must be approved:
   1. by the board;
   2. by the members, if any, by two-thirds of the votes cast or a majority of the voting power, whichever is less; and
   3. in writing by any person or persons whose approval is required by a provision of the articles authorized by section 10.30 of this title for an amendment to the articles or bylaws.
2. If the corporation does not have members, the merger must be approved by a majority of the directors in office at the time the merger is approved. In addition, the corporation shall provide notice of any directors' meeting at which such approval is to be obtained in accordance with subsection 8.22(c) of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the proposed merger.
3. The board may condition its submission of the proposed merger, and the members may condition their approval of the merger, on receipt of a higher percentage of affirmative votes or on any other basis.
4. If the board seeks to have the plan approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in accordance with section 7.05 of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger and contain or be accompanied by a copy of the plan and any summary of the plan. The copy and any summary of the plan for members of the surviving corporation shall include any provision that, if contained in a proposed amendment to the articles of incorporation or bylaws, would entitle members to vote on the provision. The copy and any summary of the plan for members of the disappearing corporation shall include a copy of the articles and bylaws which will be in effect immediately after the merger takes effect.
5. If the board seeks to have the plan approved by the members by written consent or written ballot, the material soliciting the approval shall contain or be accompanied by a copy and any summary of the plan. The copy and any summary of the plan for members of the surviving corporation shall include any provision, that, if contained in a proposed amendment to the articles of incorporation or bylaws, would entitle members to vote on the provision. The copy and any summary of the plan for members of the disappearing corporation shall include a copy of the articles and bylaws which will be in effect immediately after the merger takes effect.
6. Voting by a class of members is required on a plan of merger if the plan contains a provision that, if contained in a proposed amendment to articles of incorporation or bylaws, would entitle the class of members to vote as a class on the proposed amendment under section 10.04 or 10.22 of this title. The plan is approved by a class of members by two-thirds of the votes cast by the class or a majority of the voting power of the class, whichever is less.
7. After a merger is adopted, and at any time before articles of merger are filed, the planned merger may be abandoned (subject to any contractual rights) without further action by members or other persons who approved the plan in accordance with the procedure set forth in the plan of merger or, if none is set forth, in the manner determined by the board of directors.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 11.04. Articles of merger.

After a plan of merger is approved by the board of directors, and if required by section 11.03 of this title, by the members and any other persons, the surviving or acquiring corporation shall deliver to the Secretary of State articles of merger setting forth:

1. the plan of merger;
2. if approval of members was not required, a statement to that effect and a statement that the plan was approved by a sufficient vote of the board of directors;
3. if approval by members was required:
   1. the designation, number of memberships outstanding, number of votes entitled to be cast by each class entitled to vote separately on the plan, and number of votes of each class indisputably voting on the plan; and
   2. either the total number of votes cast for and against the plan by each class entitled to vote separately on the plan or the total number of undisputed votes cast for the plan by each class and a statement that the number cast for the plan by each class was sufficient for approval by that class;
4. if approval of the plan by some person or persons other than the members or the board is required pursuant to subdivision 11.03(a)(3) of this title, a statement that the approval was obtained.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 11.05. Effect of merger.

When a merger takes effect:

1. every other corporation party to the merger merges into the surviving corporation and the separate existence of every corporation except the surviving corporation ceases;
2. the title to all real estate and other property owned by each corporation party to the merger is vested in the surviving corporation without reversion or impairment, and such vesting shall occur without further act or deed;
3. the surviving corporation has all liabilities and obligations of each corporation party to the merger; provided that trust obligations upon property of a disappearing corporation shall be limited to the property affected thereby immediately prior to the time the merger is effective;
4. a proceeding pending against any corporation party to the merger may be continued as if the merger did not occur or the surviving corporation may be substituted in the proceeding for the corporation whose existence ceased;
5. the articles of incorporation and bylaws of the surviving corporation are amended to the extent provided in the plan of merger.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 11.06. Merger with foreign corporation.

1. Except as provided in section 11.02 of this title, one or more foreign business or nonprofit corporations may merge with one or more domestic nonprofit corporations if:
   1. the merger is permitted by the law of the state or country under whose law each foreign corporation is incorporated and each foreign corporation complies with that law in effecting the merger;
   2. the foreign corporation complies with section 11.04 of this title if it is the surviving corporation of the merger; and
   3. each domestic nonprofit corporation complies with the applicable provisions of sections 11.01 through 11.03 of this title and, if it is the surviving corporation of the merger, with section 11.04 of this title.
2. Upon the merger taking effect, the surviving foreign business or foreign nonprofit corporation for which a certificate of authority has not been issued is deemed to have irrevocably appointed the Secretary of State as its agent for service of process in any proceeding brought against it.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 11.07. Bequests, devises, and gifts.

Any bequest, devise, gift, grant, or promise contained in a will or other instrument of donation, subscription, or conveyance, which is made to a constituent corporation and which takes effect or remains payable after the merger, inures to the surviving corporation unless the will or other instrument otherwise specifically provides.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 12.01. Sale of the assets in regular course of activities and mortgage of assets.

1. A corporation may on the terms and conditions and for the consideration determined by the board of directors:
   1. sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property in the usual and regular course of its activities; or
   2. mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of its property whether or not in the usual and regular course of its activities.
2. Unless the articles require it, approval of the members or any other person of a transaction described in subsection (a) of this section is not required.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 12.02. Sale of assets other than in regular course of activities.

1. A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property (with or without the good will), other than in the usual and regular course of its activities on the terms and conditions and for the consideration determined by the corporation's board, if the proposed transaction is authorized by subsection (b) of this section.
2. Unless this title, the articles, bylaws, or the board of directors or members (acting pursuant to subsection (d) of this section) require a greater vote or voting by class, the proposed transaction to be authorized must be approved:
   1. by the board;
   2. by the members by two-thirds of the votes cast or a majority of the voting power, whichever is less; and
   3. in writing by any person or persons whose approval is required by a provision of the articles authorized by section 10.30 of this title for an amendment to the articles or bylaws.
3. If the corporation does not have members, the transaction must be approved by a vote of a majority of the directors in office at the time the transaction is approved. In addition the corporation shall provide notice of any directors' meeting at which such approval is to be obtained in accordance with subsection 8.22(c) of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property or assets of the corporation and contain or be accompanied by a copy or summary of a description of the transaction.
4. The board may condition its submission of the proposed transaction, and the members may condition their approval of the transaction, on receipt of a higher percentage of affirmative votes or on any other basis.
5. If the corporation seeks to have the transaction approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in accordance with section 7.05 of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property or assets of the corporation and contain or be accompanied by a copy or summary of a description of the transaction.
6. If the board needs to have the transaction approved by the members by written consent or written ballot, the material soliciting the approval shall contain or be accompanied by a copy or summary of a description of the transaction.
7. A public benefit corporation must give written notice to the Attorney General 20 days before it sells, leases, exchanges, or otherwise disposes of all, or substantially all, of its property if the transaction is not in the usual and regular course of its activities unless the Attorney General has given the corporation a written waiver of this subsection.
8. After a sale, lease, exchange, or other disposition of property is authorized, the transaction may be abandoned (subject to any contractual rights) without further action by the members or any other person who approved the transaction in accordance with the procedures set forth in the resolution proposing the transaction or, if none is set forth, in the manner determined by the board of directors.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 13.01. Prohibited distributions.

Except as authorized by section 13.02 of this title, a corporation shall not make any distributions.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 13.02. Authorized distributions.

1. A mutual benefit corporation may purchase its memberships if after the purchase is completed:
   1. the corporation would be able to pay its debts as they become due in the usual course of its activities; and
   2. the corporation's total assets would at least equal the sum of its total liabilities.
2. A public benefit corporation and a mutual benefit corporation may make distributions upon dissolution in conformity with chapter 14 of this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.01. Dissolution by incorporators or directors.

1. A majority of the incorporators or directors of a corporation that has no members may, subject to any approval required by the articles or bylaws, dissolve the corporation by delivering to the Secretary of State articles of dissolution.
2. The corporation shall give notice of any meeting at which dissolution will be approved. The notice shall be in accordance with subsection 8.22(c) of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolution of the corporation.
3. The incorporators or directors in approving dissolution shall adopt a plan of dissolution indicating to whom the assets owned or held by the corporation will be distributed after all creditors have been paid.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.02. Dissolution by directors, members.

1. Unless this title, the articles, bylaws, or the board of directors or members (acting pursuant to subsection (c) of this section) require a greater vote or voting by class dissolution is authorized if it is approved:
   1. by the board;
   2. by the members, if any, by two-thirds of the votes cast or a majority of the voting power, whichever is less; or
   3. in writing by any person or persons whose approval is required by a provision of the articles authorized by section 10.30 of this title for an amendment to the articles or bylaws.
2. If the corporation does not have members, dissolution must be approved by a vote of a majority of the directors in office at the time the transaction is approved. In addition, the corporation shall provide notice of any directors' meeting at which such approval is to be obtained in accordance with subsection 8.22(c) of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolution of the corporation and contain or be accompanied by a copy or summary of the plan of dissolution.
3. The board may condition its submission of the proposed dissolution, and the members may condition their approval of the dissolution on receipt of a higher percentage of affirmative votes or on any other basis.
4. If the board seeks to have dissolution approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in accordance with section 7.05 of this title. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation and contain or be accompanied by a copy or summary of the plan of dissolution.
5. If the board seeks to have dissolution approved by the members by written consent or written ballot, the material soliciting the approval shall contain or be accompanied by a copy or summary of the plan of dissolution.
6. The plan of dissolution shall indicate to whom the assets owned or held by the corporation will be distributed after all creditors have been paid.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.03. Articles of dissolution.

1. At any time after dissolution is authorized, the corporation may dissolve by delivering to the Secretary of State articles of dissolution setting forth:
   1. the name of the corporation;
   2. the date dissolution was authorized;
   3. a statement that dissolution was approved by a sufficient vote of the board;
   4. if approval of members was not required, a statement to that effect and a statement that dissolution was approved by a sufficient vote of the board of directors or incorporators;
   5. if approval by members was required:
      1. the designation, number of memberships outstanding, number of votes entitled to be cast by each class entitled to vote separately on dissolution, and number of votes of each class indisputably voting on dissolution; and
      2. either the total number of votes cast for and against dissolution by each class entitled to vote separately on dissolution or the total number of undisputed votes cast for dissolution by each class and a statement that the number cast for dissolution by each class was sufficient for approval by that class;
   6. if approval of dissolution by some person or persons other than the members, the board or the incorporators is required pursuant to subdivision 14.02(a)(3) of this title, a statement that the approval was obtained.
2. A corporation is dissolved upon the effective date of its articles of dissolution.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.04. Revocation of dissolution.

1. A corporation may revoke its dissolution within 120 days of its effective date.
2. Revocation of dissolution must be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation by action of the board of directors alone, in which event the board of directors may revoke the dissolution without action by the members or any other person.
3. After the revocation of dissolution is authorized, the corporation may revoke the dissolution by delivering to the Secretary of State for filing articles of revocation of dissolution, together with a copy of its articles of dissolution, that set forth:
   1. the name of the corporation;
   2. the effective date of the dissolution that was revoked;
   3. the date that the revocation of dissolution was authorized;
   4. if the corporation's board of directors (or incorporators) revoked the dissolution, a statement to that effect;
   5. if the corporation's board of directors revoked a dissolution authorized by the members alone or in conjunction with another person or persons, a statement that revocation was permitted by action by the board of directors alone pursuant to that authorization; and
   6. if member or third person action was required to revoke the dissolution, the information required by subdivision 14.03(a)(5) or (6) of this title.
4. Revocation of dissolution is effective upon the effective date of the articles of revocation of dissolution.
5. 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 activities as if dissolution had never occurred.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.05. Effect of dissolution.

1. A dissolved corporation continues its corporate existence but may not carry on any activities except those appropriate to wind up and liquidate its affairs, including:
   1. preserving and protecting its assets and minimizing its liabilities;
   2. discharging or making provision for discharging its liabilities and obligations;
   3. disposing of its properties that will not be distributed in kind;
   4. returning, transferring, or conveying assets held by the corporation upon a condition requiring return, transfer, or conveyance, which condition occurs by reason of the dissolution, in accordance with such condition;
   5. transferring, subject to any contractual or legal requirements, its assets as provided in or authorized by its articles of incorporation or bylaws;
   6. if the corporation is a public benefit corporation, and no provision has been made in its articles or bylaws for distribution of assets on dissolution, transferring, subject to any contractual or legal requirement, its assets:
      1. to one or more persons recognized as exempt under section 501(c)(3) of the Internal Revenue Code; or
      2. if the dissolved corporation is not recognized as exempt under section 501(c)(3) of the Internal Revenue Code, to one or more public benefit corporations;
   7. if the corporation is a mutual benefit corporation and no provision has been made in its articles or bylaws for distribution of assets on dissolution, transferring its assets to its members or, if it has no members those persons whom the corporation holds itself out as benefiting or serving; and
   8. doing every other act necessary to wind up and liquidate its assets and affairs.
2. Dissolution of a corporation does not:
   1. transfer title to the corporation's property;
   2. subject its directors or officers to standards of conduct different from those prescribed in chapter 8 of this title;
   3. change quorum or voting requirements for its board or members; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;
   4. prevent commencement of a proceeding by or against the corporation in its corporate name;
   5. abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
   6. terminate the authority of the registered agent.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.06. Known claims against dissolved corporation.

1. A dissolved corporation may dispose of the known claims against it by following the procedure described in this section.
2. The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date. The written notice must:
   1. describe information that must be included in a claim;
   2. provide a mailing address where a claim may be sent;
   3. state the deadline, which may not be fewer than 120 days from the effective date of the written notice, by which the dissolved corporation must receive the claim; and
   4. state that the claim will be barred if not received by the deadline.
3. A claim against the dissolved corporation is barred:
   1. if a claimant who was given written notice under subsection (b) of this section does not deliver the claim to the dissolved corporation by the deadline;
   2. if a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within 90 days from the effective date of the rejection notice.
4. For purposes of this section, "claim" does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.07. Unknown claims against dissolved corporation.

1. A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice.
2. The notice must:
   1. be published one time in a newspaper of general circulation in the county where the dissolved corporation's principal office (or, if none in this State, its registered office) is or was last located;
   2. describe the information that must be included in a claim and provide a mailing address where the claim may be sent; and
   3. state that a claim against the corporation will be barred unless a proceeding to enforce the claim is commenced within five years after publication of the notice.
3. If the dissolved corporation publishes a newspaper notice in accordance with subsection (b) of this section, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within five years after the publication date of the newspaper notice:
   1. a claimant who did not receive written notice under section 14.06 of this title;
   2. a claimant whose claim was timely sent to the dissolved corporation but not acted on; and
   3. a claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.
4. A claim may be enforced under this section:
   1. against the dissolved corporation, to the extent of its undistributed assets; or
   2. if the assets have been distributed in liquidation, against any person, other than a creditor of the corporation, to whom the corporation distributed its property to the extent of the distributee's pro rata share of the claim or the corporate assets distributed to such person in liquidation, whichever is less, but the distributee's total liability for all claims under this section may not exceed the total amount of assets distributed to the distributee.
5. The provisions of this section shall not apply to claimants whose claim is commenced in a timely manner pursuant to 12 V.S.A. § 512 , 518, 521, 522, 551, or 560.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.20. Involuntary termination.

The Secretary of State may commence a proceeding under section 14.21 of this title to administratively dissolve a corporation if:

1. the corporation does not pay within 60 days after they are due fees imposed by this title;
2. the corporation does not deliver its biennial report to the Secretary of State within 60 days after it is due;
3. the corporation is without a registered agent or registered office in this State for 60 days or more; or
4. the corporation does not notify the Secretary of State within 120 days that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.21. Procedure for and effect of involuntary termination.

1. Upon determining that one or more grounds exist under section 14.20 of this title for dissolving a corporation, the Secretary of State shall serve the corporation with written notice of that determination under section 5.04 of this title.
2. If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the Secretary of State that each ground determined by the Secretary of State does not exist within at least 60 days after service of the notice is perfected under section 5.04 of this title, the Secretary of State may administratively dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. The Secretary of State shall file the original of the certificate and serve a copy on the corporation under section 5.04 of this title, and in the case of a public benefit corporation shall notify the Attorney General in writing.
3. A corporation involuntarily dissolved continues its corporate existence but may not carry on any activities except those necessary to wind up and liquidate its affairs under section 14.05 of this title and notify its claimants under sections 14.06 and 14.07 of this title.
4. The involuntarily dissolution of a corporation does not terminate the authority of its registered agent.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.22. Reinstatement following involuntary dissolution.

1. A corporation involuntarily dissolved that has not distributed its assets under section 14.21 of this title may apply to the Secretary of State for reinstatement upon payment of $25.00 for each year the corporation is delinquent. The application must:
   1. recite the name of the corporation and the effective date of its involuntary dissolution;
   2. state that the ground or grounds for dissolution either did not exist or have been eliminated;
   3. state that the corporation's name satisfies the requirements of section 4.01 of this title.
2. If the Secretary of State determines that the application contains the information required by subsection (a) of this section and that the information is correct, the Secretary of State shall cancel the certificate of dissolution and prepare a certificate of reinstatement reciting that determination and the effective date of reinstatement, file the original of the certificate, and serve a copy on the corporation under section 5.04 of this title.
3. When reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the corporation shall resume carrying on its activities as if the administrative dissolution had never occurred.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.23. Appeal from denial of reinstatement.

1. The Secretary of State, upon denying a corporation's application for reinstatement following involuntary dissolution, shall serve the corporation under section 5.04 of this title with a written notice that explains the reason or reasons for denial.
2. The corporation may appeal the denial of reinstatement to the Superior Court of Washington County within 90 days after service of the notice of denial is perfected. The corporation appeals by petitioning the court to set aside the dissolution and attaching to the petition copies of the Secretary of State's certificate of dissolution, the corporation's application for reinstatement, and the Secretary of State's notice of denial.
3. The court may summarily order the Secretary of State to reinstate the dissolved corporation or may take other action the court considers appropriate.
4. The court's final decision may be appealed as in other civil proceedings.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.30. Grounds for judicial dissolution.

1. The Superior Court may dissolve a corporation:
   1. in a proceeding by the Attorney General if it is established that:
      1. the corporation obtained 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 is a public benefit corporation and the corporate assets are being misapplied or wasted; or
      4. the corporation is a public benefit corporation and is no longer able to carry out its purposes;
   2. in a proceeding by 50 members or members holding five percent of the voting power, whichever is less, or by a director or any person specified in the articles, if it is established that:
      1. the directors are deadlocked in the management of the corporate affairs, and the members, if any, are unable to breach the deadlock;
      2. the directors or those in control of the corporation have acted, are acting or will act in a manner that is illegal, oppressive, or fraudulent;
      3. the members are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have, or would otherwise have, expired;
      4. the corporate assets are being misapplied or wasted; or
      5. the corporation is a public benefit corporation and is no longer able to carry out its purposes;
   3. in a proceeding by a creditor if it is established that:
      1. the creditor's claim has been reduced to judgment, the execution on the judgment returned unsatisfied and the corporation is insolvent; or
      2. the corporation has admitted in writing that the creditor's claim is due and owing and the corporation is insolvent; or
   4. in a proceeding by the corporation to have its voluntary dissolution continued under court supervision.
2. Prior to dissolving a corporation, the court shall consider whether:
   1. there are reasonable alternatives to dissolution;
   2. dissolution is in the public interest, if the corporation is a public benefit corporation;
   3. dissolution is the best way of protecting the interests of members, if the corporation is a mutual benefit corporation.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.31. Procedure for judicial dissolution.

1. Venue for a proceeding by the Attorney General to dissolve a corporation lies in the Superior Court of Washington County. Venue for a proceeding brought by any other party named in section 14.30 of this title lies in the county where a corporation's principal office (or, if none in this State, its registered office) is or was last located.
2. It is not necessary to make directors or members parties to a proceeding to dissolve a corporation unless relief is sought against them individually.
3. A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the activities of the corporation until a full hearing can be held.
4. A person other than the Attorney General who brings an involuntary dissolution proceeding for a public benefit corporation shall forthwith give written notice of the proceeding to the Attorney General who may intervene.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.32. Receivership or custodianship.

1. A court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property wherever located.
2. The court may appoint an individual, or a domestic or foreign business or nonprofit corporation (authorized to transact business in this state) as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.
3. The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:
   1. the receiver:
      1. may dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court; provided, however, that the receiver's power to dispose of the assets of the corporation is subject to any trust and other restrictions that would be applicable to the corporation; and
      2. may sue and defend in the receiver's or custodian's name as receiver or custodian of the corporation in all courts of this State;
   2. the custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its members and creditors.
4. The court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation, its members, and creditors.
5. The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and the receiver's or custodian's counsel from the assets of the corporation or proceeds from the sale of the assets.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.33. Decree of dissolution.

1. If after a hearing the court determines that one or more grounds for judicial dissolution described in section 14.30 of this title exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the Secretary of State, who shall file it.
2. After entering the decree of dissolution, the court shall direct the winding up and liquidation of the corporation's affairs in accordance with section 14.05 of this title and the notification of its claimants in accordance with sections 14.06 and 14.07 of this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 14.40. Deposit with State Treasurer.

Assets of a dissolved corporation that should be transferred to a creditor, claimant, or member of the corporation who cannot be found or who is not competent to receive them shall be reduced to cash subject to known trust restrictions and deposited with the State Treasurer for safekeeping; provided, however, that in the State Treasurer's discretion property may be received and held in kind. When the creditor, claimant, or member furnishes satisfactory proof of entitlement to the amount deposited or property held in kind, the State Treasurer shall deliver to the creditor, member, or other person or his or her representative that amount or property.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.01. Authority to transact business required.

1. A foreign corporation may not transact business in this State until it obtains a certificate of authority from the Secretary of State.
2. The following activities, among others, do not constitute transacting business within the meaning of subsection (a) of this section:
   1. maintaining, defending, or settling any proceeding;
   2. holding meetings of the board of directors or members or carrying on other activities concerning internal corporate affairs;
   3. maintaining bank accounts;
   4. maintaining offices or agencies for the transfer, exchange, and registration of memberships or securities or maintaining trustees or depositaries with respect to those securities;
   5. selling through independent contractors;
   6. soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this State before they become contracts;
   7. creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
   8. securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
   9. owning, without more, real or personal property;
   10. conducting an isolated transaction that is completed within 30 days and that is not one in the course of repeated transactions of a like nature;
   11. transacting business in interstate commerce.

       Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.02. Consequences of transacting business without authority.

1. A foreign corporation transacting business in this State without a certificate of authority may not maintain a proceeding or raise a counterclaim, crossclaim, or affirmative defense in any court in this State until it obtains a certificate of authority.
2. The successor to a foreign corporation that transacted business in this State without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding or raise a counterclaim, crossclaim, or affirmative defense based on that cause of action in any court in this State until the foreign corporation or its successor or assignee obtains a certificate of authority.
3. A court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.
4. A foreign corporation that transacts business in this State without a certificate of authority is liable to the State for:
   1. a civil penalty of $50.00 for each day, not to exceed a total of $10,000.00 for each year, it transacts business in this State without a certificate of authority;
   2. an amount equal to the fees due under this title during the period it transacted business in this State without a certificate of authority; and
   3. other penalties imposed by law.
5. The Attorney General may file an action in the Civil Division of Superior Court to collect the penalties due under this subsection and to restrain a foreign corporation not in compliance with this chapter from doing business within this State.
6. Notwithstanding subsections (a) and (b) of this section, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this State.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2015, No. 128 (Adj. Sess.), § C.11.

§ 15.03. Application for certificate of authority.

1. A foreign corporation may apply for a certificate of authority to transact business in this State by delivering an application to the Secretary of State. The application must set forth:
   1. the name of the foreign corporation or, if its name is unavailable for use in this State, a corporate name that satisfies the requirements of section 15.06 of this title;
   2. the name of the state or country under whose law it is incorporated;
   3. the date of incorporation and period of duration;
   4. the street address of its principal office;
   5. the address of its registered office in this State and the name of its registered agent at that office;
   6. the names and usual business or home addresses of its current directors and officers;
   7. whether the foreign corporation has members; and
   8. whether the corporation, if it had been incorporated in this State, would be a public benefit or mutual benefit corporation.
2. The foreign corporation shall deliver with the completed application a certificate of existence (or a document of similar import) duly authenticated by the Secretary of State or other official having custody of corporate records in the state or country under whose law it is incorporated.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.04. Amended certificate of authority.

1. A foreign corporation authorized to transact business in this State must obtain an amended certificate of authority from the Secretary of State if it changes:
   1. its corporate name;
   2. the period of its duration; or
   3. the state or country of its incorporation.
2. The requirements of section 15.03 of this title for obtaining an original certificate of authority apply to obtaining an amended certificate under this section.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.05. Effect of certificate of authority.

1. A certificate of authority authorizes the foreign corporation to which it is issued to transact business in this State subject, however, to the right of the State to revoke the certificate as provided in this title.
2. A foreign corporation with a valid certificate of authority has the same rights and enjoys the same privileges as, and except as otherwise provided by this title is subject to the same duties, restrictions, penalties, and liabilities now or later imposed on, a domestic corporation of like character.
3. Except as provided in subsection 11.07(a) of this title, this title does not authorize this State to regulate the organization or internal affairs of a foreign corporation authorized to transact business in this State.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.06. Corporate name of foreign corporation.

1. If the corporate name of a foreign corporation does not satisfy the requirements of section 4.01 of this title, the foreign corporation to obtain or maintain a certificate of authority to transact business in this State:
   1. may add the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," to its corporate name for use in this State; or
   2. may use an available trade name to transact business in this State if its corporate name is unavailable and it delivers to the Secretary of State for filing a copy of the resolution of its board of directors, certified by its secretary, adopting the trade name.
2. Except as authorized by subsections (c) and (d) of this section, the corporate name (including a trade name) of a foreign corporation must be distinguishable upon the records of the Secretary of State from reserved or registered trade names or corporate names.
3. A foreign corporation may apply to the Secretary of State for authorization to use in this State the name of another corporation incorporated or authorized to transact business in this State that is not distinguishable upon the records from the name applied for by submitting to the Secretary of State a satisfactory written form indicating the other corporation's consent and change of name.
4. A foreign corporation may use in this State the name (including the trade name) of another domestic or foreign corporation that is used in this State if the other corporation is incorporated or authorized to transact business in this State and the foreign corporation:
   1. has merged with the other corporation;
   2. has been formed by reorganization of the other corporation; or
   3. has acquired all or substantially all of the assets, including the corporate name, of the other corporation.
5. If a foreign corporation authorized to transact business in this State changes its corporate name to one that does not satisfy the requirements of section 4.01 of this title, it may not transact business in this State under the changed name until it adopts a name satisfying the requirements of section 4.01 and obtains an amended certificate of authority under section 15.04 of this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.07. Registered office and registered agent of foreign corporation.

Each foreign corporation authorized to transact business in this State must continuously maintain in this State:

1. a registered office with the same address as that of its registered agent; and
2. a registered agent, who may be:
   1. an individual who resides in this State and whose office is identical with the registered office;
   2. a domestic business or nonprofit corporation whose office is identical with the registered office; or
   3. a foreign business or nonprofit corporation authorized to trans- act business in this State whose office is identical with the registered office.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.08. 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 registered agent by delivering to the Secretary of State for filing a statement of change that sets forth:
   1. its name;
   2. the street address of its current registered office;
   3. if the current registered office is to be changed, the street address of its new registered office;
   4. the name of its current registered agent;
   5. if the current registered agent is to be changed, the name of its new registered agent and the new agent's written consent (either on the statement or attached to it) to the appointment; and
   6. that after the change or changes are made, the street addresses of its registered office and the office of its registered agent will be identical.
2. If a registered agent changes the street address of its business office, the agent may change the address of the registered office of any foreign corporation for which the agent is the registered agent by notifying the corporation in writing of the change and signing (either manually or in facsimile) and delivering to the Secretary of State for filing a statement of change that complies with the requirements of subsection (a) of this section and recites that the corporation has been notified of the change.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.09. Resignation of registered agent of foreign corporation.

1. The registered agent of a foreign corporation may resign as agent by signing and delivering to the Secretary of State for filing the original and two exact or conformed copies of a statement of resignation. The statement of resignation may include a statement that the registered office is also discontinued.
2. After filing the statement, the Secretary of State shall attach the filing receipt to one copy and mail the copy and receipt to the registered office if not discontinued. The Secretary of State shall mail the other copy to the foreign corporation at its principal office address shown in its most recent biennial report.
3. The agency is terminated, and the registered office discontinued if so provided, on the 31st day after the date on which the statement was filed.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.10. Service on foreign corporation.

1. The registered agent of a foreign corporation authorized to transact business in this State is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the foreign corporation.
2. A foreign corporation may be served by registered or certified mail, return receipt requested, addressed to the secretary of the foreign corporation at its principal office shown in its application for a certificate of authority or in its most recent biennial report filed under section 16.22 of this title if the foreign corporation:
   1. has no registered agent or its registered agent cannot with reasonable diligence be served;
   2. has withdrawn from transacting business in this State under section 15.20 of this title; or
   3. has had its certificate of authority revoked under section 15.31 of this title.
3. Service is perfected under subsection (b) of this section at the earliest of:
   1. the date the foreign corporation receives the mail;
   2. the date shown on the return receipt, if signed on behalf of the foreign corporation; or
   3. five days after its deposit in the U.S. mail, as evidenced by the postmark if mailed postpaid and correctly addressed.
4. This section does not prescribe the only means, or necessarily the required means, of serving a foreign corporation.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.20. Withdrawal of foreign corporation.

1. A foreign corporation authorized to transact business in this State may not withdraw from this State until it obtains a certificate of withdrawal from the Secretary of State.
2. A foreign corporation authorized to transact business in this State may apply for a certificate of withdrawal by delivering an application to the Secretary of State for filing. The application must set forth:
   1. the name of the foreign corporation and the name of the state or country under whose law it is incorporated;
   2. that it is not transacting business in this State and that it surrenders its authority to transact business in this State;
   3. that it revokes the authority of its registered agent to accept service on its behalf and appoints the Secretary of State as its agent for service of process in any proceeding based on a cause of action arising during the time it was authorized to do business in this State;
   4. a mailing address to which the Secretary of State may mail a copy of any process served on him or her under subdivision (3) of this subsection; and
   5. a commitment to notify the Secretary of State in the future of any change in the mailing address.
3. After the withdrawal of the corporation is effective, service of process on the Secretary of State under this section is service on the foreign corporation. Upon receipt of process, the Secretary of State shall mail a copy of the process to the foreign corporation at the post office address set forth in its application for withdrawal, or otherwise perfect service under section 15.10 of this title.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 15.30. Involuntary termination.

1. The Secretary of State shall terminate the certificate of authority of a foreign corporation if:
   1. the foreign corporation fails to deliver its biennial report to the Secretary of State as required by section 16.22 of this title;
   2. the foreign corporation does not pay any penalties imposed by this title or other law;
   3. the foreign corporation is without a registered agent or registered office in this State;
   4. the foreign corporation fails to inform the Secretary of State under section 15.08 or 15.09 of this title that its registered agent or registered office has changed;
   5. a material misrepresentation is knowingly made in a signed document delivered to the Secretary of State for filing;
   6. the Secretary of State receives a duly authenticated certificate from the secretary of state or other official having custody of corporation records in the state or country under whose law the foreign corporation is incorporated stating that it has been dissolved or terminated or disappeared as the result of a merger; or
   7. the foreign corporation has failed to comply with subdivision 11.07(a) of this title requiring it to file articles of merger where it is the survivor of a merger with a domestic corporation.
2. The Secretary of State shall serve the foreign corporation with written notice of termination of its certificate of authority under section 15.10 of this title, setting out each deficiency.
3. The authority of a foreign corporation to transact business in this State ceases on the date shown on the notice terminating its certificate of authority. Termination of a foreign corporation's certificate of authority does not terminate the authority of the registered agent of the corporation.
4. The Secretary of State's termination of a foreign corporation's certificate of authority appoints the Secretary of State the foreign corporation's agent for service of process in any proceeding based on a cause of action that arose during the time the foreign corporation was authorized to transact or was transacting without authorization business in this State. Service of process on the Secretary of State under this subsection is service on the foreign corporation. Upon receipt of process, the Secretary of State shall mail a copy of the process to the secretary of the foreign corporation at its principal office shown in its most recent biennial report or in any subsequent communication received from the corporation stating the current mailing address of its principal office, or, if none is on file, in its application for a certificate of authority, or otherwise perfect service under section 15.10 of this title.
5. If the foreign corporation corrects each ground for termination and demonstrates to the reasonable satisfaction of the Secretary of State that each ground cited in the notice of termination does not exist, and pays to the Secretary of State a fee of $25.00 for each year it is delinquent, the Secretary may cancel the termination and prepare a certificate of reinstatement, file the original of the certificate, and serve a copy on the corporation under section 15.10 of this title.
6. When the reinstatement is effective, reinstatement shall relate back to and take effect as of the effective date of the foreign corporation's involuntary termination under this section as if the involuntary termination had never occurred.
7. A foreign corporation shall lose the right to retain its registered name, if its biennial report required under subsection (a) of this section is not filed on or before five years after the date that the report is due, and if another domestic or foreign corporation files a request for the name with the Secretary of State.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§§ 15.31. [Reserved.].

1. A foreign corporation may appeal the Secretary of State's revocation of its certificate of authority to the Superior Court within 30 days after service of the certificate of revocation is perfected under section 15.10 of this title. The foreign corporation appeals by petitioning the Court to set aside the revocation and attaching to the petition copies of its certificate of authority and the Secretary of State's certificate of revocation.
2. The court may summarily order the Secretary of State to reinstate the certificate of authority or may take any other action the court considers appropriate.
3. The court's final decision may be appealed as in other civil proceedings.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 16.01. Corporate records.

1. A corporation shall keep as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or directors without a meeting, and a record of all actions taken by committees of the board of directors as authorized by subsection 8.25(d) of this title.
2. A corporation shall maintain appropriate accounting records.
3. A corporation or its agent shall maintain a record of its members in a form that permits preparation of a list of the name and address of all members, in alphabetical order by class showing the number of votes each member is entitled to vote.
4. A corporation shall maintain its records in written form or in another form, including electronic form, capable of conversion into written form within a reasonable time.
5. A corporation shall keep a copy of the following records at its principal office (or, if none in this State, then the registered office):
   1. its articles or restated articles of incorporation and all amendments to them currently in effect;
   2. its bylaws or restated bylaws and all amendments to them currently in effect;
   3. resolutions adopted by its board of directors relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members;
   4. the minutes of all meetings of members and records of all actions approved by the members for the past three years;
   5. all written or electronic communications to members generally within the past three years, including the financial statements furnished for the past three years under section 16.20 of this title;
   6. a list of the names and business or home addresses of its current directors and officers; and
   7. its most recent biennial report delivered to the Secretary of State under section 16.22 of this title.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 2009, No. 78 (Adj. Sess.), § 37, eff. April 15, 2010.

§ 16.02. Inspection of records by members.

1. Subject to subsection 16.03(c) of this title, a member is entitled to inspect and copy, at a reasonable time and location specified by the corporation, any of the records of the corporation described in subsection 16.01(e) of this title if the member gives the corporation written notice at least five business days before the date on which the member wishes to inspect and copy.
2. A member is entitled to inspect and copy, at a reasonable time and reasonable location specified by the corporation, any of the following records of the corporation if the member meets the requirements of subsection (c) of this section and gives the corporation written notice at least five business days before the date on which the member wishes to inspect and copy:
   1. excerpts from any records required to be maintained under subsection 16.01(a) of this title, to the extent not subject to inspection under subsection 16.02(a) of this title;
   2. accounting records of the corporation; and
   3. subject to section 16.05 of this title, the membership list.
3. A member may inspect and copy the records identified in subsection (b) of this section only if:
   1. the member's demand is made in good faith and for a proper purpose;
   2. the member describes with reasonable particularity the purpose and the records the member desires to inspect; and
   3. the records are directly connected with this purpose.
4. This section does not affect:
   1. the right of a member to inspect records under section 7.20 of this title or, if the member is in litigation with the corporation, to the same extent as any other litigant; or
   2. the power of a court, independently of this title, to compel the production of corporate records for examination.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 16.03. Scope of inspection right.

1. A member's agent or attorney has the same inspection and copying rights as the member the agent or attorney represents.
2. The right to copy records under section 16.02 of this title includes, if reasonable, the right to receive copies on computer diskette, or made by photographic, xerographic, or other means.
3. The corporation may impose a reasonable charge for labor and materials necessary to provide copies of any document for a member. The charge may not exceed the estimated cost of such copies.
4. The corporation may comply with a member's demand to inspect the record of members under subdivision 16.02(b)(3) of this title by providing the member with a list of its members that was compiled no earlier than the date of the member's demand.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 16.04. Court-ordered inspection.

1. If a corporation does not allow a member who complies with subsection 16.02(a) of this title to inspect and copy any records required by that subsection to be available for inspection, the Superior Court in the county where the corporation's principal office (or, if none in this State, then the registered office) is located may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the member.
2. If a corporation does not within a reasonable time allow a member to inspect and copy any other record, the member who complies with subsections 16.02(b) and (c) of this title may apply to the Superior Court in the county where the corporation's principal office (or, if none in this State, the registered office) is located for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection on an expedited basis.
3. If the court orders inspection and copying of the records demanded, it shall also order the corporation to pay the member's costs (including reasonable counsel fees) incurred to obtain the order unless the corporation proves that it refused inspection in good faith because it had a reasonable basis for doubt about the right of the member to inspect the records demanded.
4. If the court orders inspection and copying of the records demanded, it may impose reasonable restrictions on the use or distribution of the records by the demanding member.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 16.05. Limitations on use of membership list.

1. Without consent of the board, a membership list or any part thereof may not be obtained or used by any person for any purpose unrelated to a member's interest as a member. Without limiting the generality of the foregoing, without the consent of the board a membership list or any part thereof may not be:
   1. used to solicit money or property unless such money or property will be used solely to solicit the votes of the members in an election to be held by the corporation;
   2. used for any commercial purpose; or
   3. sold to or purchased by any person.
2. A corporation may use its membership list for solicitation of money or property for its own purposes.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 16.20. Financial statements for members.

1. A corporation upon written demand from a member shall furnish that member its latest annual financial statements, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries or affiliates, as appropriate, that include a balance sheet as of the end of the fiscal year and statement of operations for the year. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis.
2. If annual financial statements are reported upon by a public accountant, the accountant's report must accompany them. If not, the statements must be accompanied by the statement of the president or the person responsible for the corporation's financial accounting records:
   1. stating the president's or other person's reasonable belief as to whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation; and
   2. describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.

      Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 16.21. Report of indemnification to members.

If a corporation indemnifies or advances expenses to a director under section 8.51, 8.52, 8.53, or 8.54 of this title in connection with a proceeding by or in the right of the corporation, the corporation shall report the indemnification or advance in writing to the members with or before the notice of the next meeting of members.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 16.22. Biennial report for Secretary of State.

1. Each domestic corporation, and each foreign corporation authorized to transact business in this State, shall deliver to the Secretary of State a biennial report on a form prescribed and furnished by the Secretary of State that sets forth:
   1. the name of the corporation and the state or country under whose law it is incorporated;
   2. the address of its registered office and the name of its registered agent at the office in this State;
   3. the address of its principal office;
   4. the names and business or residence addresses of its directors and principal officers; and
   5. a brief description of the nature of its activities.
2. The information in the biennial report must be current on the date the biennial report is executed on behalf of the corporation.
3. The first biennial report must be delivered to the Secretary of State between January 1 and April 1 of the year following the calendar year in which a domestic corporation was incorporated or a foreign corporation was authorized to transact business. Subsequent biennial reports must be delivered to the Secretary of State between January 1 and April 1 following each succeeding two calendar years.
4. If a biennial report does not contain the information required by this section, the Secretary of State shall promptly notify the reporting domestic or foreign corporation in writing and return the report to it for correction. If the report is corrected to contain the information required by this section and delivered to the Secretary of State within 30 days after the effective date of notice, it is deemed to be timely filed.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 17.01. Application to existing domestic corporations.

The provisions of this title shall apply to all existing corporations organized under any general or special act of this State providing for the organization of corporations for a purpose or purposes for which a corporation might be organized under this title.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997; amended 1997, No. 10 , § 1.

§ 17.02. Application to qualified foreign corporations.

A foreign corporation authorized to transact business in this State on the effective date of this chapter is subject to this chapter but is not required to obtain a new certificate of authority to transact business under this chapter.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 17.03. Savings provisions.

1. Except as provided in subsection (b) of this section, the repeal of a statute by this chapter does not affect:
   1. the operation of the statute or any action taken under it before its repeal;
   2. any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or incurred under the statute before its repeal;
   3. any violation of the statute or any penalty, forfeiture, or punishment incurred because of the violation before its repeal;
   4. any proceeding, reorganization, or dissolution commenced under the statute before its repeal, and the proceeding, reorganization, or dissolution may be completed in accordance with the statute as if it had not been repealed; or
   5. any meeting of members or directors or action by written consent noticed or any action taken before its repeal as a result of a meeting of members or directors or action by written consent.
2. If a penalty or punishment imposed for violation of a statute repealed by this chapter is reduced by this chapter, the penalty or punishment if not already imposed shall be imposed in accordance with this chapter.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 17.04. 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 provision 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.

Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.

§ 17.05. Public benefit and mutual benefit corporations.

Each domestic corporation existing on the effective date of this chapter that is or becomes subject to this chapter shall be classified as a public benefit or a mutual benefit corporation as follows:

1. any corporation classified by statute as a public benefit corporation or a mutual benefit corporation is the type of corporation so classified by statute;
2. any corporation which does not come within subdivision (1) of this section but which is recognized as exempt under section 501(c)(3) of the Internal Revenue Code, or any successor section, is a public benefit corporation;
3. any corporation which does not come within subdivision (1) or (2) of this section, but which is organized for a public or charitable purpose and which upon dissolution must distribute its assets to the United States, a state, or a person which is recognized as exempt under section 501(c)(3) of the Internal Revenue Code, or any successor section, is a public benefit corporation; and
4. any corporation which does not come within subdivision (1), (2), or (3) of this section is a mutual benefit corporation.

   Added 1995, No. 179 (Adj. Sess.), § 1, eff. Jan. 1, 1997.