Source: official Alabama Legislature ALISON GraphQL service (alison.legislature.state.al.us/graphql), CodeOfAlabamaPrintContent, retrieved 2026-07-07. Sections: 211
(a) This chapter and the provisions of Chapter 1, to the extent applicable to business corporations, shall be known and may be cited as the Alabama Business Corporation Law.
(b) This chapter and the provisions of Chapter 1, to the extent applicable to business corporations, apply to a corporation incorporated and existing under this chapter or any predecessor law regarding business corporations, and to a foreign corporation that is transacting business in this state, regardless of whether the foreign corporation is registered to transact business in this state. Without in any way limiting the generality of any provision of this chapter or of any provision of Chapter 1, this chapter and the provisions of Chapter 1, to the extent applicable to corporations, shall apply to banks, trust companies, savings and loan associations, insurance companies, public utilities, and railroad companies, except to the extent, if any, that any provision of this chapter or of Chapter 1 is inconsistent with other statutes of this state specifically applicable to those entities.
(Act 2019-94, §1.)
(a) Whenever any filing instrument is to be filed with the Secretary of State or in accordance with this chapter, such instrument shall be executed as follows:
(1) Except as provided in subsection (a)(3), the certificate of incorporation, and any other instrument to be filed before the election of the initial board of directors if the initial directors were not named in the certificate of incorporation, shall be signed by the incorporator or incorporators or the successors and assigns of the incorporator or incorporators. If any incorporator is not available then any other instrument may be signed, with the same effect as if the incorporator had signed it, by any person for whom or on whose behalf the incorporator, in executing the certificate of incorporation, was acting directly or indirectly as employee or agent, provided that the other instrument shall state that the incorporator is not available and the reason therefor, that the incorporator in executing the certificate of incorporation was acting directly or indirectly as employee or agent for or on behalf of the person, and that the person’s signature on the instrument is otherwise authorized and not wrongful.
(2) Except as provided in subsection (a)(3), all other filing instruments shall be signed:
(i) by any authorized officer of the corporation; or
(ii) if it shall appear from the filing instrument that there are no such officers, then by a majority of the directors or by such directors as may be designated by the board of directors; or
(iii) if it shall appear from the filing instrument that there are no such officers or directors, then by the holders of record, or such of them as may be designated by the holders of record, of a majority of all outstanding shares of stock; or
(iv) by the holders of record of all outstanding shares of stock.
(3) If the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
(b) The person executing the filing instrument shall sign it and state beneath or opposite the person’s signature the person’s name and the capacity in which the filing instrument is signed. The filing instrument may, but need not, contain a corporate seal, attestation, acknowledgment, or verification.
(c) Whenever a provision of this chapter permits any of the terms of a plan or a filing instrument to be dependent on facts objectively ascertainable outside the plan or filing instrument, the following provisions apply:
(1) The manner in which the facts will operate upon the terms of the plan or filing instrument must be set forth in the plan or filing instrument.
(2) The facts may include:
(i) any of the following that are available in a nationally recognized news or information medium either in print or electronically: statistical or market indices, market prices of any security or group of securities, interest rates, currency exchange rates, or similar economic or financial data;
(ii) a determination or action by any person or body, including the corporation or any other party to a plan or filing instrument; or
(iii) the terms of, or actions taken under, an agreement to which the corporation is a party, or any other agreement or document.
(3) As used in this subsection (c), “plan” means a plan of conversion, merger, or share exchange.
(4) The following provisions of a plan or filing instrument may not be made dependent on facts outside the plan or filed document:
(i) the name and address of any person required in a filing instrument;
(ii) the registered office of any entity required in a filing instrument;
(iii) the registered agent of any entity required in a filing instrument;
(iv) the number of authorized shares of stock and designation of each class or series of stock;
(v) the effective date and time of a filing instrument as determined under Article 4 of Chapter 1; and
(vi) any required statement in a filing instrument of the date on which the underlying transaction was approved or the manner in which that approval was given.
(5) If a provision of a filing instrument is made dependent on a fact ascertainable outside of the filing instrument, and that fact is neither ascertainable by reference to a source described in subsection (c)(2)(i) or a document that is a matter of public record, nor have the affected stockholders received notice of the fact from the corporation, then the corporation shall file with the Secretary of State a certificate of amendment to the filing instrument setting forth the fact promptly after the time when the fact referred to is first ascertainable or thereafter changes. A certificate of amendment under this subsection (c)(5) is deemed to be authorized by the authorization of the original filing instrument to which it relates and may be filed by the corporation without further action by the board of directors or the stockholders.
(Act 2019-94, §1.)
(a) The Secretary of State, upon request and payment of the requisite fee, shall furnish to any person a certificate of existence for a corporation if the writings filed in the office of the Secretary of State show that the corporation has been incorporated under the laws of this state. A certificate of existence shall reflect only the information on file with the Secretary of State. A certificate of existence must state:
(1) the corporation’s name;
(2) that the corporation was incorporated under the laws of this state, the date of incorporation, and the filing office in which the certificate of incorporation was filed;
(3) whether the corporation has delivered to the Secretary of State for filing a certificate of dissolution;
(4) whether the corporation has delivered to the Secretary of State for filing a certificate of reinstatement; and
(5) other facts of record in the office of the Secretary of State that are specified by the person requesting the certificate.
(b) The Secretary of State, upon request and payment of the requisite fee, shall furnish to any person a certificate of registration for a foreign corporation if the writings filed in the office of the Secretary of State show that the Secretary of State has filed an application for registration for authority to transact business in this state and the registration has not been revoked, withdrawn, or terminated. A certificate of registration must state:
(1) the foreign corporation’s name and any alternate name adopted for use in this state;
(2) that the foreign corporation is authorized to transact business in this state;
(3) that the Secretary of State has not revoked the foreign corporation’s registration;
(4) that the foreign corporation has not filed with the Secretary of State a certificate of withdrawal or otherwise terminated its registration; and
(5) other facts of record in the office of the Secretary of State that are specified by the person requesting the certificate.
(c) Subject to any qualification stated in the certificate, a certificate of existence or certificate of registration issued by the Secretary of State is conclusive evidence that the corporation is in existence or the foreign corporation is authorized to transact business in this state.
(Act 2019-94, §1.)
As used in this chapter, unless otherwise specified or unless the context otherwise requires, the following terms have the following meanings:
(1) AUTHORIZED STOCK means the stock of all classes and series a corporation or foreign corporation is authorized to issue.
(2) BENEFICIAL STOCKHOLDER means a person who owns the beneficial interest in stock, which is either a record stockholder or a person on whose behalf shares of stock are registered in the name of an intermediary or nominee.
(3) CERTIFICATE OF INCORPORATION means the certificate of incorporation described in Section 10A-2A-2.02, all amendments to the certificate of incorporation, and any other documents permitted or required to be delivered for filing by a corporation with the Secretary of State under this chapter or Chapter 1 that modify, amend, supplement, restate, or replace the certificate of incorporation. After the filing of a filing instrument under this chapter or Chapter 1 that restates or amends and restates the certificate of incorporation in its entirety, the certificate of incorporation shall not include any prior documents, but the original date of incorporation shall remain unchanged. When used with respect to a corporation incorporated and existing on December 31, 2019, under a predecessor law of this state, the term “certificate of incorporation” means articles of incorporation, charter, or similar incorporating document, and all amendments and restatements to the certificate of incorporation, charter, or similar incorporating document. When used with respect to a foreign corporation, a nonprofit corporation, or a foreign nonprofit corporation, the “certificate of incorporation” of such an entity means the document of such entity that is equivalent to the certificate of incorporation of a corporation. The term “certificate of incorporation” as used in this chapter is synonymous to the term “certificate of formation” used in Chapter 1.
(4) CORPORATION, except in the phrase foreign corporation, means an entity incorporated or existing under this chapter.
(5) DELIVER or DELIVERY means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and, if authorized in accordance with Section 10A-2A-1.41, by electronic transmission.
(6) DISTRIBUTION means a direct or indirect transfer of cash or other property (except a corporation’s own stock) or incurrence of indebtedness by a corporation to or for the benefit of its stockholders in respect of any of its stock. A distribution may be in the form of a payment of a dividend; a purchase, redemption, or other acquisition of stock; a distribution of indebtedness; a distribution in liquidation; or otherwise.
(7) DOCUMENT means a writing as defined in Chapter 1.
(8) EFFECTIVE DATE, when referring to a document accepted for filing by the Secretary of State, means the time and date determined in accordance with Article 4 of Chapter 1.
(9) ELECTRONIC MAIL means an electronic transmission directed to a unique electronic mail address.
(10) ELECTRONIC MAIL ADDRESS means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the “local part” of the address) and a reference to an internet domain (commonly referred to as the “domain part” of the address), whether or not displayed, to which electronic mail can be sent or delivered.
(11) ELIGIBLE ENTITY means an unincorporated entity, foreign unincorporated entity, nonprofit corporation, or foreign nonprofit corporation.
(12) ELIGIBLE INTERESTS means interests or memberships.
(13) EMPLOYEE includes an officer, but not a director. A director may accept duties that make the director also an employee.
(14) ENTITY includes corporation; foreign corporation; nonprofit corporation; foreign nonprofit corporation; estate; trust; unincorporated entity; foreign unincorporated entity; and state, United States, and foreign government.
(15) EXPENSES means reasonable expenses of any kind that are incurred in connection with a matter.
(16) FILING ENTITY means an unincorporated entity, other than a limited liability partnership, that is of a type that is created by filing a public organic record or is required to file a public organic record that evidences its creation.
(17) FOREIGN CORPORATION means a corporation incorporated under a law other than the law of this state which would be a corporation if incorporated under the law of this state.
(18) FOREIGN NONPROFIT CORPORATION means a corporation incorporated under a law other than the law of this state which would be a nonprofit corporation if incorporated under the law of this state.
(19) GOVERNING STATUTE means the statute governing the internal affairs of a corporation, foreign corporation, nonprofit corporation, foreign nonprofit corporation, unincorporated entity, or foreign unincorporated entity.
(20) GOVERNMENTAL SUBDIVISION includes authority, county, district, and municipality.
(21) INCLUDES and INCLUDING denote a partial definition or a nonexclusive list.
(22) INTEREST means either or both of the following rights under the governing statute governing an unincorporated entity:
(i) the right to receive distributions from the entity either in the ordinary course or upon liquidation; or
(ii) the right to receive notice or vote on issues involving its internal affairs, other than as an agent, assignee, proxy, or person responsible for managing its business and affairs.
(23) INTEREST HOLDER means a person who holds of record an interest.
(24) KNOWLEDGE is determined as follows:
(a) A person knows a fact when the person:
(1) has actual knowledge of it; or
(2) is deemed to know it under law other than this chapter.
(b) A person has notice of a fact when the person:
(1) knows of it;
(2) receives notification of it in accordance with Section 10A-2A-1.41;
(3) has reason to know the fact from all of the facts known to the person at the time in question; or
(4) is deemed to have notice of the fact under subsection (d).
(c) A person notifies another of a fact by taking steps reasonably required to inform the other person in ordinary course in accordance with Section 10A-2A-1.41, whether or not the other person knows the fact.
(d) A person is deemed to have notice of a corporation’s:
(1) matters included in the certificate of incorporation upon filing;
(2) dissolution, 90 days after a certificate of dissolution under Section 10A-2A-14.03 becomes effective;
(3) conversion, merger, or interest exchange under Article 9 or Article 11, 90 days after a statement of conversion, or statement of merger or interest exchange becomes effective;
(4) conversion or merger under Article 8 of Chapter 1, 90 days after a statement of conversion or statement of merger becomes effective; and
(5) revocation of dissolution and reinstatement, 90 days after certificate of revocation of dissolution and reinstatement under Section 10A-2A-14.04 becomes effective.
(e) A stockholder’s knowledge, notice, or receipt of a notification of a fact relating to the corporation is not knowledge, notice, or receipt of a notification of a fact by the corporation solely by reason of the stockholder’s capacity as a stockholder.
(f) The date and time of the effectiveness of a notice delivered in accordance with Section 10A-2A-1.41, is determined by Section 10A-2A-1.41.
(25) MEANS denotes an exhaustive definition.
(26) MEMBERSHIP means the rights of a member in a nonprofit corporation or foreign nonprofit corporation.
(27) ORGANIZATIONAL DOCUMENTS means the public organic record and private organizational documents of a corporation, foreign corporation, or eligible entity.
(28) PRINCIPAL OFFICE means the office (in or out of this state) where the principal executive offices of the corporation or foreign corporation are located.
(29) PRIVATE ORGANIZATIONAL DOCUMENTS means (i) the bylaws of a corporation, foreign corporation, nonprofit corporation, or foreign nonprofit corporation, or (ii) the rules, regardless of whether in writing, that govern the internal affairs of an unincorporated entity or foreign unincorporated entity, are binding on all its interest holders, and are not part of its public organic record, if any. Where private organizational documents have been amended or restated, the term means the private organizational documents as last amended or restated.
(30) PROCEEDING includes any civil suit and criminal, administrative, and investigatory action.
(31) PUBLIC ORGANIC RECORD means (i) the certificate of incorporation of a corporation, foreign corporation, nonprofit corporation, or foreign nonprofit corporation, or (ii) the document, if any, the filing of which is required to create an unincorporated entity or foreign unincorporated entity, or which creates the unincorporated entity or foreign unincorporated entity and is required to be filed. Where a public organic record has been amended or restated, the term means the public organic record as last amended or restated.
(32) RECORD DATE means the date fixed for determining the identity of the corporation’s stockholders and their stockholdings for purposes of this chapter. Unless another time is specified when the record date is fixed, the determination shall be made as of the close of business at the principal office of the corporation on the date so fixed.
(33) RECORD STOCKHOLDER means (i) the person in whose name shares of stock are registered in the records of the corporation, or (ii) the person identified as the beneficial owner of stock in a beneficial ownership certificate pursuant to Section 10A-2A-7.23 on file with the corporation to the extent of the rights granted by such certificate.
(34) SECRETARY means the corporate officer to whom the board of directors has delegated responsibility under Section 10A-2A-8.40(c) to maintain the minutes of the meetings of the board of directors and of the stockholders and for authenticating records of the corporation.
(35) STOCK EXCHANGE means a transaction pursuant to Section 10A-2A-11.03.
(36) STOCKHOLDER means a record stockholder.
(37) STOCK means the units into which the proprietary interests in a corporation or foreign corporation are divided.
(38) TYPE OF ENTITY means a generic form of entity: (i) recognized at common law; or (ii) formed under a governing statute, regardless of whether some entities formed under that law are subject to provisions of that law that create different categories of the form of entity.
(39) UNINCORPORATED ENTITY means an organization or artificial legal person that either has a separate legal existence or has the power to acquire an estate in real property in its own name and that is not any of the following: a corporation, foreign corporation, nonprofit corporation, foreign nonprofit corporation, a series of a limited liability company or of another type of entity, an estate, a trust, a state, United States, or foreign government. The term includes a general partnership, limited liability company, limited partnership, business trust, joint stock association, and unincorporated nonprofit association.
(40) UNITED STATES includes any district, authority, bureau, commission, department, and any other agency of the United States.
(41) UNRESTRICTED VOTING TRUST BENEFICIAL OWNER means, with respect to any stockholder rights, a voting trust beneficial owner whose entitlement to exercise the stockholder right in question is not inconsistent with the voting trust agreement.
(42) VOTING GROUP means all stock of one or more classes or series that under the certificate of incorporation or this chapter are entitled to vote and be counted together collectively on a matter at a meeting of stockholders. All stock entitled by the certificate of incorporation or this chapter to vote generally on the matter is for that purpose a single voting group.
(43) VOTING POWER means the current power to vote in the election of directors.
(44) VOTING TRUST BENEFICIAL OWNER means an owner of a beneficial interest in stock of the corporation held in a voting trust established pursuant to Section 10A-2A-7.30(a).
(Act 2019-94, §1; Act 2020-73, §7; Act 2021-299, §3; Act 2023-503, §3; Act 2024-413, §1; Act 2024-213, §1.)
(a) A notice under this chapter must be in writing unless oral notice is reasonable in the circumstances. Unless otherwise agreed between the sender and the recipient, words in a notice or other communication under this chapter must be in English.
(b) A notice or other communication may be given by any method of delivery, except that notice or other communication by electronic transmission must be in accordance with this section. If the methods of delivery are impracticable, a notice or other communication from the corporation may be given by means of a broad non-exclusionary distribution to the public (which may include a newspaper of general circulation in the area where published; radio, television, or other form of public broadcast communication; or other methods of distribution that the corporation has previously identified to its stockholders).
(c) A notice or other communication to a corporation or to a foreign corporation registered to transact business in this state may be delivered to the corporation’s registered agent at its registered office or to the secretary at the corporation’s principal office or, in the case of a foreign corporation, in its foreign registration under Chapter 1.
(d) A notice or other communications from the corporation to a stockholder may be delivered by electronic mail to the electronic mail address for that stockholder required to be included in the record of stockholders maintained pursuant to Section 10A-2A-16.01(d), unless that stockholder has previously notified the corporation in writing that the stockholder objects to receiving notices and other communications by electronic mail. Any notice or communication may be delivered by another form of electronic transmission if consented to by the stockholder or if authorized by subsection (j). Any notice or other communication from the corporation to any other person may be delivered by electronic transmission if consented to by the recipient or if authorized by subsection (j). Any consent given under this subsection or subsection (j) may be revoked with respect to future notices or communications by the person who consented by written notice to the person to whom the consent was delivered.
(e) A notice or other communication may no longer be delivered to an electronic mail address or other electronic transmission address pursuant to subsection (d) if (i) the corporation receives notice from the information processing system into which the notice or other communication was entered that two consecutive notices or other communications given by electronic transmissions have not been delivered to the electronic mail address or other electronic transmission address to which the notice or other communication was directed, and (ii) the notice of non-delivery becomes known to the secretary or an assistant secretary or to the transfer agent, or another person responsible for the giving of notices or other communications for the corporation; provided, however, the inadvertent failure to recognize the notice of non-delivery as a cessation of authority to provide a stockholder with notice by electronic mail or other electronic transmission shall not invalidate any meeting or other action.
(f) Unless otherwise agreed between the sender and the recipient, a notice or other communication by electronic transmission is received when:
(1) it enters an information processing system directed to (i) in the case of a stockholder, the electronic mail address for the stockholder required to be included in the record of stockholders maintained pursuant to Section 10A-2A-16.01(d) or other electronic transmission address at which the stockholder has consented to receive notice or other communications by electronic transmission, or (ii) in the case of any other recipient, the electronic transmission address at which the recipient has consented to receive notice or other communications by electronic transmission; and
(2) it is in a form capable of being processed by that system.
(g) Receipt of an electronic acknowledgement from an information processing system described in subsection (f)(1) establishes that an electronic transmission was received but, by itself, does not establish that the content sent corresponds to the content received.
(h) An electronic transmission is received under this section even if no person is aware of its receipt.
(i) A notice or other communication, if in a comprehensible form or manner, is effective at the earliest of the following:
(1) if in a physical form, the earliest of when it is actually received, or when it is left at:
(i) a stockholder’s address included in the record of stockholders maintained pursuant to Section 10A-2A-16.01(d);
(ii) a director’s residence or usual place of business; or
(iii) the corporation’s principal office;
(2) if mailed by United States mail postage prepaid and addressed to a stockholder at the stockholder’s address included in the record of stockholders maintained pursuant to Section 10A-2A-16.01(d), upon deposit in the mail;
(3) if mailed by United States mail postage prepaid and addressed to a recipient other than a stockholder at the address included in the corporation’s records, the earliest of when it is actually received, or:
(i) if sent by registered or certified mail, return receipt requested, the date shown on the return receipt signed by or on behalf of the addressee; or
(ii) five days after it is deposited in the United States mail;
(4) if sent by a nationally recognized commercial carrier that issues a receipt or other confirmation of delivery, the earliest of when it is actually received or the date shown on the receipt or other confirmation of delivery issued by the commercial carrier;
(5) if an electronic transmission, when it is received as provided in subsection (f); and
(6) if oral, when communicated.
(j) A notice or other communication may be in the form of an electronic transmission that cannot be directly reproduced in paper form by the recipient through an automated process used in conventional commercial practice only if (i) the electronic transmission is otherwise retrievable in perceivable form, and (ii) the sender and the recipient have consented in writing to the use of such form of electronic transmission.
(k) If this chapter prescribes requirements for notices or other communications in particular circumstances, those requirements govern. If the certificate of incorporation or bylaws prescribe requirements for notices or other communications, not inconsistent with this section or other provisions of this chapter, those requirements govern. The certificate of incorporation or bylaws may authorize or require delivery of notices of meetings of directors by electronic transmission.
(l) In the event that any provisions of this chapter are deemed to modify, limit, or supersede the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. §§ 7001 et seq., the provisions of this chapter shall control to the maximum extent permitted by 15 U.S.C. § 7002(a)(2).
(m) Whenever a notice or communication would otherwise be required to be given under this chapter to a stockholder, the notice or communication need not be given if the corporation is not permitted to deliver the notice or communication by electronic transmission pursuant to subsections (d) and (e) and:
(1) notices and communications to stockholders of two consecutive annual meetings, and all notices and communications of meetings during the period between those two consecutive annual meetings, have been sent to that stockholder at that stockholder’s address included in the record of stockholders maintained pursuant to Section 10A-2A-16.01(d) and have been returned undeliverable or could not be delivered; or
(2) all, but not less than two, distributions to stockholders during a 12-month period, or two consecutive distributions to stockholders during a period of more than 12 months, have been sent to that stockholder at that stockholder’s address included in the record of stockholders maintained pursuant to Section 10A-2A-16.01(d) and have been returned undeliverable or could not be delivered; or
(3) no address has been provided to the corporation by or on behalf of a stockholder and the corporation has not otherwise obtained an address for that stockholder it believes to be reliable.
In addition, if any stockholder to which this subsection (m) applies delivers to the corporation a written notice or communication setting forth that stockholder’s then-current address, the requirement that notice and communication be given to that stockholder shall be reinstated.
(n) Whenever a notice or communication is required to be given, under this chapter or the certificate of incorporation or bylaws of any corporation, to any person with whom notice to or communication with is unlawful, the giving of the notice or communication to that person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give the notice or communication to that person. Any action or meeting which shall be taken or held without notice or communication to the person with whom notice to or communication with is unlawful shall have the same force and effect as if the notice or communication had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate or other filing instrument under any other sections of this chapter, the certificate or other filing instrument shall state, if that is the fact and if notice or communication is required, that notice or communication was given to all persons entitled to receive notice or communication except those persons with whom notice to or communication with is unlawful.
(Act 2019-94, §1; Act 2020-73, §7; Act 2021-299, §3; Act 2024-213, §1.)
(a) For purposes of this chapter, the following identified as a stockholder in a corporation’s current record of stockholders constitutes one stockholder:
(1) three or fewer co-owners;
(2) a corporation, partnership, trust, estate, or other entity; and
(3) the trustees, guardians, custodians, or other fiduciaries of a single trust, estate, or account.
(b) For purposes of this chapter, stockholdings registered in substantially similar names constitute one stockholder if it is reasonable to believe that the names represent the same person.
(Act 2019-94, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A “qualified director” is a director who, at the time action is to be taken under:
(1) Section 10A-2A-2.02(b)(6), is not a director (i) to whom the limitation or elimination of the duty of an officer to offer potential business opportunities to the corporation would apply, or (ii) who has a material relationship with any other person to whom the limitation or elimination would apply;
(2) Section 10A-2A-8.53 or Section 10A-2A-8.55, (i) is not a party to the proceeding, (ii) is not a director as to whom a transaction is a director’s conflicting interest transaction or who sought a disclaimer of the corporation’s interest in a business opportunity under Section 10A-2A-8.60, which transaction or disclaimer is challenged, and (iii) does not have a material relationship with a director described in either clause (i) or clause (ii) of this subsection (a)(2); or
(3) Section 10A-2A-8.60, is not a director (i) as to whom the contract or transaction is a director’s conflicting interest transaction, (ii) who has a material relationship with another director as to whom the transaction is a director’s conflicting interest transaction, (iii) pursues or takes advantage of the business opportunity, directly, or indirectly through or on behalf of another person, or (iv) has a material relationship with a director or officer who pursues or takes advantage of the business opportunity, directly, or indirectly through or on behalf of another person.
(b) For purposes of this section:
(1) “material relationship” means a familial, financial, professional, employment, or other relationship that would reasonably be expected to impair the objectivity of the director’s judgment when participating in the action to be taken; and
(2) “material interest” means an actual or potential benefit or detriment (other than one which would devolve on the corporation or the stockholders generally) that would reasonably be expected to impair the objectivity of the director’s judgment when participating in the action to be taken.
(c) The presence of one or more of the following circumstances shall not automatically prevent a director from being a qualified director:
(1) nomination or election of the director to the current board of directors by any director who is not a qualified director with respect to the matter (or by any person that has a material relationship with that director), acting alone or participating with others; or
(2) service as a director of another corporation of which a director who is not a qualified director with respect to the matter (or any individual who has a material relationship with that director), is or was also a director.
(Act 2019-94, §1; Act 2023-503, §3.)
[Effective: 2026-08-01]
(a) As used in this chapter, unless otherwise specified or unless the context otherwise requires, a “qualified director” is a director who, at the time action is to be taken under:
(1) Section 10A-2A-2.02(b)(6), is not a director (i) to whom the limitation or elimination of the duty of an officer to offer potential corporate opportunities to the corporation would apply or (ii) who has a material relationship with any other person to whom the limitation or elimination would apply; or
(2) Section 10A-2A-8.53 or Section 10A-2A-8.55, (i) is not a party to the proceeding, (ii) is not a director as to whom a transaction is a conflicting interest transaction or who sought a disclaimer of the corporation’s interest in a corporate opportunity under Section 10A-2A-8.70, which transaction or disclaimer is challenged, and (iii) does not have a material relationship with a director described in either clause (i) or clause (ii) of this subsection (a)(2); or
(3) Section 10A-2A-8.60, is not a director (i) as to whom the act or transaction is a conflicting interest transaction, (ii) who has a material relationship with another director as to whom the act or transaction is a conflicting interest transaction, or (iii) who has a material relationship with a stockholder as to whom the act or transaction is a controlling stockholder transaction or a going private transaction; or
(4) Section 10A-2A-8.70, is not a director who (i) pursues or takes advantage of a corporate opportunity, directly or indirectly, through or on behalf of another person or (ii) has a material relationship with a director or officer who pursues or takes advantage of a corporate opportunity, directly or indirectly, through or on behalf of another person.
(b) As used in this chapter, unless otherwise specified or unless the context otherwise requires, a “material relationship” means a familial, financial, professional, employment, or other relationship that (i) in the case of a director, would reasonably be expected to impair the objectivity of the director’s judgment when participating in the negotiation, authorization, or approval of the act or transaction at issue and (ii) in the case of a stockholder, would be material to that stockholder.
(c) The presence of one or more of the following circumstances shall not automatically prevent a director from being a qualified director:
(1) designation, nomination, or vote in the election of the director to the current board of directors by any director who is not a qualified director with respect to the matter (or by any person that has a material financial interest in an act or transaction), acting alone or participating with others; or
(2) service as a director of another corporation of which a director who is not a qualified director with respect to the matter (or any individual who has a material relationship with that director), is or was also a director.
(Act 2019-94, §1; Act 2023-503, §3; Act 2026-495, §1.)
(a) A corporation has delivered written notice or any other report or statement under this chapter, the certificate of incorporation, or the bylaws to all stockholders who share a common address if:
(1) the corporation delivers one copy of the notice, report, or statement to the common address;
(2) the corporation addresses the notice, report, or statement to those stockholders either as a group or to each of those stockholders individually or to the stockholders in a form to which each of those stockholders has consented; and
(3) each of those stockholders consents to delivery of a single copy of such notice, report, or statement to the stockholders’ common address.
(b) Any such consent described in subsection (a)(2) or (a)(3) shall be revocable by any stockholders who deliver written notice of revocation to the corporation. If a written notice of revocation is delivered, the corporation shall begin providing individual notices, reports, or other statements to the revoking stockholder no later than 30 days after delivery of the written notice of revocation.
(c) Any stockholder who fails to object by written notice to the corporation, within 60 days of written notice by the corporation of its intention to deliver single copies of notices, reports, or statements to stockholders who share a common address as permitted by subsection (a), shall be deemed to have consented to receiving such single copy at the common address; provided that the notice of intention explains that consent may be revoked and the method for revoking.
(Act 2019-94, §1.)
In this article:
(1) “Corporate action” means any action taken by or on behalf of the corporation, including any action taken by the incorporator, the board of directors, a committee of the board of directors, an officer or agent of the corporation or the stockholders.
(2) “Date of the defective corporate action” means the date (or the approximate date, if the exact date is unknown) the defective corporate action was purported to have been taken.
(3) “Defective corporate action” means (i) any corporate action purportedly taken that is, and at the time such corporate action was purportedly taken would have been, within the power of the corporation, but is void or voidable due to a failure of authorization, and (ii) an overissue.
(4) “Failure of authorization” means the failure to authorize, approve, or otherwise effect a corporate action in compliance with the provisions of this chapter, the certificate of incorporation or bylaws, a corporate resolution, or any plan or agreement to which the corporation is a party, if and to the extent such failure would render such corporate action void or voidable.
(5) “Overissue” means the purported issuance of:
(i) stock of a class or series in excess of the number of shares of stock of a class or series the corporation has the power to issue under Section 10A-2A-6.01 at the time of such issuance; or
(ii) stock of any class or series that is not then authorized for issuance by the certificate of incorporation.
(6) “Putative stock” means the stock of any class or series (including stock issued upon exercise of rights, options, warrants, or other securities convertible into stock of the corporation, or interests with respect to such stock) that was created or issued as a result of a defective corporate action, that (i) but for any failure of authorization would constitute valid stock, or (ii) cannot be determined by the board of directors to be valid stock.
(7) “Valid stock” means the stock of any class or series that has been duly authorized and validly issued in accordance with this chapter, including as a result of ratification or validation under this article.
(8) “Validation effective time” with respect to any defective corporate action ratified under this article means the later of:
(i) the time at which the ratification of the defective corporate action is approved by the stockholders, or if approval of stockholders is not required, the time at which the notice required by Section 10A-2A-1.49 becomes effective in accordance with Section 10A-2A-1.41; and
(ii) the time at which any certificate of validation filed in accordance with Section 10A-2A-1.51 becomes effective.
The validation effective time shall not be affected by the filing or pendency of a judicial proceeding under Section 10A-2A-1.52 or otherwise, unless otherwise ordered by the court.
(Act 2019-94, §1.)
(a) A defective corporate action shall not be void or voidable if ratified in accordance with Section 10A-2A-1.47 or validated in accordance with Section 10A-2A-1.52.
(b) Ratification under Section 10A-2A-1.47 or validation under Section 10A-2A-1.52 shall not be deemed to be the exclusive means of ratifying or validating any defective corporate action, and the absence or failure of ratification in accordance with this article shall not, of itself, affect the validity or effectiveness of any corporate action properly ratified under common law or otherwise, nor shall it create a presumption that any such corporate action is or was a defective corporate action or void or voidable.
(c) In the case of an overissue, putative stock shall be valid stock effective as of the date originally issued or purportedly issued upon:
(1) the effectiveness under this article and under Article 10 of an amendment to the certificate of incorporation authorizing, designating, or creating such stock; or
(2) the effectiveness of any other corporate action under this article ratifying the authorization, designation, or creation of such stock.
(Act 2019-94, §1.)
(a) To ratify a defective corporate action under this section (other than the ratification of an election of the initial board of directors under subsection (b)), the board of directors shall take action ratifying the action in accordance with Section 10A-2A-1.48, stating:
(1) the defective corporate action to be ratified and, if the defective corporate action involved the issuance of putative stock, the number and type of shares of putative stock purportedly issued;
(2) the date of the defective corporate action;
(3) the nature of the failure of authorization with respect to the defective corporate action to be ratified; and
(4) that the board of directors approves the ratification of the defective corporate action.
(b) In the event that a defective corporate action to be ratified relates to the election of the initial board of directors of the corporation under Section 10A-2A-2.04(a)(2), a majority of the persons who, at the time of the ratification, are exercising the powers of directors may take an action stating:
(1) the name of the person or persons who first took action in the name of the corporation as the initial board of directors of the corporation;
(2) the earlier of the date on which such persons first took such action or were purported to have been elected as the initial board of directors; and
(3) that the ratification of the election of such person or persons as the initial board of directors is approved.
(c) If any provision of this chapter, the certificate of incorporation or bylaws, any corporate resolution, or any plan or agreement to which the corporation is a party in effect at the time action under subsection (a) is taken requires stockholder approval or would have required stockholder approval at the date of the occurrence of the defective corporate action, the ratification of the defective corporate action approved in the action taken by the directors under subsection (a) shall be submitted to the stockholders for approval in accordance with Section 10A-2A-1.48.
(d) Unless otherwise provided in the action taken by the board of directors under subsection (a), after the action by the board of directors has been taken and, if required, approved by the stockholders, the board of directors may abandon the ratification at any time before the validation effective time without further action of the stockholders.
(Act 2019-94, §1.)
(a) The quorum and voting requirements applicable to a ratifying action by the board of directors under Section 10A-2A-1.47(a) shall be the quorum and voting requirements applicable to the corporate action proposed to be ratified at the time the ratifying action is taken.
(b) If the ratification of the defective corporate action requires approval by the stockholders under Section 10A-2A-1.47(c), and if the approval is to be given at a meeting, the corporation shall notify each holder of valid and putative stock, regardless of whether entitled to vote of (i) the date of the action by the board of directors under Section 10A-2A-1.47(a), which shall be the record date, and (ii) the date of the occurrence of the defective corporate action, provided that notice shall not be required to be given to holders of valid or putative stock whose identities or addresses for notice cannot be determined from the records of the corporation. The notice must state that the purpose, or one of the purposes, of the meeting, is to consider ratification of a defective corporate action and must be accompanied by (i) either a copy of the action taken by the board of directors in accordance with Section 10A-2A-1.47(a) or the information required by Section 10A-2A-1.47(a)(1) through (a)(4), and (ii) a statement that any claim that the ratification of the defective corporate action and any putative stock issued as a result of the defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days from the applicable validation effective time.
(c) Except as provided in subsection (d) with respect to the voting requirements to ratify the election of a director, the quorum and voting requirements applicable to the approval by the stockholders required by Section 10A-2A-1.47(c) shall be the quorum and voting requirements applicable to the corporate action proposed to be ratified at the time of the stockholder approval.
(d) The approval by stockholders to ratify the election of a director requires that the votes cast within the voting group favoring the ratification exceed the votes cast opposing the ratification of the election at a meeting at which a quorum is present.
(e) Putative stock on the date of the action by the board of directors under Section 10A-2A-1.47(a) (and without giving effect to any ratification of putative stock that becomes effective as a result of the vote) shall neither be entitled to vote nor counted for quorum purposes in any vote to approve the ratification of any defective corporate action.
(f) If the approval under this section of putative stock would result in an overissue, in addition to the approval required by Section 10A-2A-1.47, approval of an amendment to the certificate of incorporation under Article 10 to increase the number of shares of stock of an authorized class or series or to authorize the creation of a class or series of stock so there would be no overissue shall also be required.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) Unless stockholder approval is required under Section 10A-2A-1.47(c), prompt notice of an action taken under Section 10A-2A-1.47 shall be given to each holder of valid and putative stock, regardless of whether entitled to vote, as of (i) the date of such action by the board of directors, and (ii) the date of the defective corporate action ratified, provided that notice shall not be required to be given to holders of valid and putative stock whose identities or addresses for notice cannot be determined from the records of the corporation.
(b) The notice must contain (i) either a copy of the action taken by the board of directors in accordance with Section 10A-2A-1.47(a) or (b) or the information required by Section 10A-2A-1.47(a)(1) through (a)(4) or Section 10A-2A-1.47(b)(1) through (b)(3), as applicable, and (ii) a statement that any claim that the ratification of the defective corporate action and any putative stock issued as a result of such defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days from the applicable validation effective time.
(c) No notice under this section is required with respect to any action required to be submitted to stockholders for approval under Section 10A-2A-1.47(c) if notice is given in accordance with Section 10A-2A-1.48(b).
(d) A notice required by this section may be given in any manner permitted by Section 10A-2A-1.41 and, for any corporation subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, may be given by means of a filing or furnishing of such notice with the United States Securities and Exchange Commission.
(Act 2019-94, §1.)
From and after the validation effective time, and without regard to the 120-day period during which a claim may be brought under Section 10A-2A-1.52:
(a) Each defective corporate action ratified in accordance with Section 10A-2A-1.47 shall not be void or voidable as a result of the failure of authorization identified in the action taken under Section 10A-2A-1.47(a) or (b) and shall be deemed a valid corporate action effective as of the date of the defective corporate action;
(b) The issuance of each share of putative stock or fraction of a share of putative stock purportedly issued pursuant to a defective corporate action identified in the action taken under Section 10A-2A-1.47 shall not be void or voidable, and each such share of putative stock or fraction of a share of putative stock shall be deemed to be an identical share of stock or fraction of a valid share of stock as of the time it was purportedly issued; and
(c) Any corporate action taken subsequent to the defective corporate action ratified in accordance with this Division D of Article 1 in reliance on such defective corporate action having been validly effected and any subsequent defective corporate action resulting directly or indirectly from such original defective corporate action shall be valid as of the time taken.
(Act 2019-94, §1.)
(a) If the defective corporate action ratified under this Division D of Article 1 would have required under any other section of this chapter a filing instrument to be delivered to a filing officer for filing and either (i) the filing instrument requires any change to give effect to the defective corporate action in accordance with this Division D of Article 1 (including any change to the date and time of the effectiveness of the filing instrument) or (ii) a filing instrument under any other section of this chapter was not previously delivered to a filing officer for filing in respect of the defective corporate action, then, in lieu of a filing instrument otherwise required by this chapter, the corporation shall deliver a certificate of validation to the appropriate filing officer for filing in accordance with this section, and that certificate of validation shall serve to amend or substitute for any other filing instrument with respect to the defective corporate action required by this chapter.
(b) The certificate of validation must set forth:
(1) the name of the corporation;
(2) the unique identifying number or other designation as assigned by the Secretary of State;
(3) a statement that the defective corporate action was ratified in accordance with Section 10A-2A-1.47, including the date on which the board of directors ratified that defective corporate action and the date, if any, on which the stockholders approved the ratification of that defective corporate action; and
(4) the information required by subsection (c).
(c) The certificate of validation must also contain the following information:
(1) if a filing instrument was previously delivered to a filing officer for filing in respect of the defective corporate action and that filing instrument requires any change to give effect to the ratification of that defective corporate action in accordance with Section 10A-2A-1.47, the certificate of validation must set forth (i) the name, title, and filing date of the filing instrument previously delivered to a filing officer for filing and any certificate of correction to that filing instrument, (ii) a statement that a filing instrument containing all of the information required to be included under the applicable section or sections of this chapter to give effect to that defective corporate action is attached as an exhibit to the certificate of validation, and (iii) the date and time that filing instrument is deemed to have become effective; or
(2) if a filing instrument was not previously delivered to a filing officer for filing in respect of the defective corporate action and the defective corporate action ratified under Section 10A-2A-1.47 would have required a filing instrument under any other section of this chapter, the certificate of validation must set forth (i) a statement that a filing instrument containing all of the information required to be included under the applicable section or sections of this chapter to give effect to that defective corporate action is attached as an exhibit to the certificate of validation, and (ii) the date and time that filing instrument is deemed to have become effective.
(Act 2019-94, §1; Act 2023-503, §3; Act 2024-413, §1.)
(a) Upon application by the corporation, any successor entity to the corporation, a director of the corporation, any stockholder, beneficial stockholder or unrestricted voting trust beneficial owner of the corporation, including any stockholder, beneficial stockholder or unrestricted voting trust beneficial owner as of the date of the defective corporate action ratified under Section 10A-2A-1.47, or any other person claiming to be substantially and adversely affected by a ratification under Section 10A-2A-1.47, the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office, is located, may:
(1) determine the validity and effectiveness of any corporate action or defective corporate action;
(2) determine the validity and effectiveness of any ratification under Section 10A-2A-1.47;
(3) determine the validity of any putative stock; and
(4) modify or waive any of the procedures specified in Section 10A-2A-1.47 or Section 10A-2A-1.48 to ratify a defective corporate action.
(b) In connection with an action under this section, the court may make such findings or orders, and take into account any factors or considerations, regarding such matters as it deems proper under the circumstances.
(c) Service of process of the application under subsection (a) on the corporation may be made in any manner provided by statute of this state or by rule of the applicable court for service on the corporation, and no other party need be joined in order for the court to adjudicate the matter. In an action filed by the corporation, the court may require notice of the action be provided to other persons specified by the court and permit such other persons to intervene in the action.
(d) Notwithstanding any other provision of this section or otherwise under applicable law, any action asserting that the ratification of any defective corporate action and any putative stock issued as a result of a defective corporate action should not be effective, or should be effective only on certain conditions, shall be brought within 120 days of the validation effective time.
(Act 2019-94, §1; Act 2020-73, §7.)
Section 10A-1-3.04 shall not apply to this chapter. In order to incorporate a corporation, one or more incorporators must execute a certificate of incorporation and deliver it for filing to the Secretary of State.
(Act 2019-94, §1; Act 2021-299, §3.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
Section 10A-1-3.05 shall not apply to this chapter. Instead:
(a) The certificate of incorporation must set forth:
(1) a corporate name for the corporation that satisfies the requirements of Article 5 of Chapter 1;
(2) the number of shares of stock the corporation is authorized to issue;
(3) the street and mailing addresses of the corporation’s initial registered office, the county within this state in which the street and mailing address is located, and the name of the corporation’s initial registered agent at that office as required by Article 5 of Chapter 1; and
(4) the name and address of each incorporator.
(b) The certificate of incorporation may set forth:
(1) the names and addresses of the individuals who are to serve as the initial directors;
(2) provisions not inconsistent with law regarding:
(i) the purpose or purposes for which the corporation is organized;
(ii) managing the business and regulating the affairs of the corporation;
(iii) defining, limiting, and regulating the powers of the corporation, its board of directors, and stockholders;
(iv) a par value for authorized stock or classes of stock; or
(v) subject to subsection (f), a provision imposing personal liability for the debts of the corporation on its stockholders to a specified extent and upon specified conditions; otherwise, the stockholders of a corporation shall not be personally liable for the payment of the corporation’s debts, except as they may be liable by reason of their own conduct or acts;
(3) any provision that under this chapter is permitted to be set forth in the certificate of incorporation or required or permitted to be set forth in the bylaws;
(4) a provision eliminating or limiting the liability of a director or officer to the corporation or its stockholders for money damages for any action taken, or any failure to take any action, as a director or officer, except liability for (i) the amount of a financial benefit received by a director or officer to which the director or officer is not entitled; (ii) an intentional infliction of harm on the corporation or the stockholders; (iii) in the case of a director, a violation of Section 10A-2A-8.32; (iv) an intentional violation of criminal law; or (v) in the case of an officer, any claim by or in the right of the corporation;
(5) a provision permitting or making obligatory indemnification of a director for liability as defined in Section 10A-2A-8.50 to any person for any action taken, or any failure to take any action, as a director, except liability for (i) receipt of a financial benefit to which the director is not entitled, (ii) an intentional infliction of harm on the corporation or its stockholders, (iii) a violation of Section 10A-2A-8.32, or (iv) an intentional violation of criminal law; and
(6) a provision limiting or eliminating any duty of a director or any other person to offer the corporation the right to have or participate in any, or one or more classes or categories of, business opportunities, before the pursuit or taking of the opportunity by the director or other person; provided that any application of that provision to an officer or a related person of that officer (i) also requires approval of that application by the board of directors, subsequent to the effective date of the provision, by action of qualified directors taken in compliance with the same procedures as are set forth in Section 10A-2A-8.60; and (ii) may be limited by the authorizing action of the board of directors.
(c) The certificate of incorporation need not set forth any of the corporate powers enumerated in Sections 10A-1-2.11, 10A-1-2.12, and 10A-1-2.13.
(d) Provisions of the certificate of incorporation may be made dependent upon facts objectively ascertainable outside the certificate of incorporation in accordance with Section 10A-2A-1.20(c).
(e) As used in this section, “related person” means:
(i) the individual’s spouse;
(ii) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsibling, half sibling, aunt, uncle, niece, or nephew (or spouse of any such person) of the individual or of the individual’s spouse;
(iii) a natural person living in the same home as the individual;
(iv) an entity (other than the corporation or an entity controlled by the corporation) controlled by the individual or any person specified above in this definition;
(v) a domestic or foreign:
(A) business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the individual is a director,
(B) unincorporated entity of which the individual is a general partner or a member of the governing authority, or
(C) individual, trust or estate for whom or of which the individual is a trustee, guardian, personal representative, or like fiduciary, or
(vi) a person that is, or an entity that is, controlled by an employer of the individual.
(f) The certificate of incorporation may not contain any provision that would impose liability on a stockholder for the attorney’s fees or expenses of the corporation or any other party in connection with an internal corporate claim, as defined in Section 10A-2A-2.07(d).
(g) The certificate of incorporation is part of a binding contract between the corporation and the stockholders, subject to the provisions of this chapter.
(h) For purposes of subsection (b)(4) only, unless the certificate of incorporation otherwise provides, “officer” means an individual appointed or elected in accordance with Section 10A-2A-8.40 as (i) president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, secretary, controller, treasurer, or chief accounting officer of the corporation; and (ii) any officer of the corporation designated by resolution of the board of directors as an “officer” for purposes of subsection (b)(4). The board of directors may, from time to time, by resolution determine that one or more of the officers designated in accordance with subsection (h)(ii) shall no longer be an officer for purposes of subsection (b)(4), but no such resolution shall be effective as to any such officer, or any act or omission of any such officer, prior to the adoption of the resolution.
(i) No provision in the certificate of incorporation pursuant to subsection (b)(4) shall eliminate or limit the liability of a director or officer for any act or omission occurring prior to the date when the provision in the certificate of incorporation becomes effective. Any amendment, repeal, or elimination of a provision in the certificate of incorporation pursuant to subsection (b)(4) shall not affect its application with respect to an act or omission by a director or officer occurring before the amendment, repeal, or elimination unless the provision in the certificate of incorporation provides otherwise at the time of the act or omission.
(Act 2019-94, §1; Act 2020-73, §7; Act 2021-299, §3; Act 2023-503, §3; Act 2024-413, §1.)
[Effective: 2026-08-01]
Section 10A-1-3.05 shall not apply to this chapter. Instead:
(a) The certificate of incorporation must set forth:
(1) a corporate name for the corporation that satisfies the requirements of Article 5 of Chapter 1;
(2) the number of shares of stock the corporation is authorized to issue;
(3) the street and mailing addresses of the corporation’s initial registered office, the county within this state in which the street and mailing address is located, and the name of the corporation’s initial registered agent at that office as required by Article 5 of Chapter 1; and
(4) the name and address of each incorporator.
(b) The certificate of incorporation may set forth:
(1) the names and addresses of the individuals who are to serve as the initial directors;
(2) provisions not inconsistent with law regarding:
(i) the purpose or purposes for which the corporation is organized;
(ii) managing the business and regulating the affairs of the corporation;
(iii) defining, limiting, and regulating the powers of the corporation, its board of directors, and stockholders;
(iv) a par value for authorized stock or classes of stock; or
(v) subject to subsection (f), a provision imposing personal liability for the debts of the corporation on its stockholders to a specified extent and upon specified conditions; otherwise, the stockholders of a corporation shall not be personally liable for the payment of the corporation’s debts, except as they may be liable by reason of their own conduct or acts;
(3) any provision that under this chapter is permitted to be set forth in the certificate of incorporation or required or permitted to be set forth in the bylaws;
(4) a provision eliminating or limiting the liability of a director or officer to the corporation or its stockholders for money damages for any action taken, or any failure to take any action, as a director or officer, except liability for (i) the amount of a financial benefit received by a director or officer to which the director or officer is not entitled; (ii) an intentional infliction of harm on the corporation or the stockholders; (iii) in the case of a director, a violation of Section 10A-2A-8.32; (iv) an intentional violation of criminal law; or (v) in the case of an officer, any claim by or in the right of the corporation;
(5) a provision permitting or making obligatory indemnification of a director for liability as defined in Section 10A-2A-8.50 to any person for any action taken, or any failure to take any action, as a director, except liability for (i) receipt of a financial benefit to which the director is not entitled, (ii) an intentional infliction of harm on the corporation or its stockholders, (iii) a violation of Section 10A-2A-8.32, or (iv) an intentional violation of criminal law; and
(6) a provision limiting or eliminating any duty of a director or any other person to offer the corporation the right to have or participate in any, or one or more classes or categories of, corporate opportunities, before the pursuit or taking of the corporate opportunity by the director or other person; provided that any application of that provision to an officer or a related person of that officer (i) also requires approval of that application by the board of directors, subsequent to the effective date of the provision, by action of qualified directors taken in compliance with the same procedures as are set forth in Section 10A-2A-8.60; and (ii) may be limited by the authorizing action of the board of directors.
(c) The certificate of incorporation need not set forth any of the corporate powers enumerated in Sections 10A-1-2.11, 10A-1-2.12, and 10A-1-2.13.
(d) Provisions of the certificate of incorporation may be made dependent upon facts objectively ascertainable outside the certificate of incorporation in accordance with Section 10A-2A-1.20(c).
(e) As used in this section, the term “control” or “controlled” has the meaning specified in Section 10A-2A-8.60 and the term “related person” means:
(i) the individual’s spouse;
(ii) a child, stepchild, grandchild, parent, stepparent, grandparent, sibling, stepsibling, half sibling, aunt, uncle, niece, or nephew (or spouse of any such person) of the individual or of the individual’s spouse;
(iii) a natural person living in the same home as the individual;
(iv) an entity (other than the corporation or an entity controlled by the corporation) controlled by the individual or any person specified above in this definition;
(v) a domestic or foreign:
(A) business or nonprofit corporation (other than the corporation or an entity controlled by the corporation) of which the individual is a director,
(B) unincorporated entity of which the individual is a general partner or a member of the governing authority, or
(C) individual, trust, or estate for whom or of which the individual is a trustee, guardian, personal representative, or like fiduciary, or
(vi) a person that is, or an entity that is, controlled by an employer of the individual.
(f) The certificate of incorporation may not contain any provision that would impose liability on a stockholder for the attorney’s fees or expenses of the corporation or any other party in connection with an internal corporate claim, as defined in Section 10A-2A-2.07(c), or in connection with a claim that a stockholder, acting in its capacity as a stockholder or in the right of the corporation, has brought in an action, suit, or proceeding described in Section 10A-2A-2.07(b).
(g) The certificate of incorporation is part of a binding contract between the corporation and the stockholders, subject to the provisions of this chapter.
(h) For purposes of subsection (b)(4) only, unless the certificate of incorporation otherwise provides, “officer” means an individual appointed or elected in accordance with Section 10A-2A-8.40 as (i) president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, secretary, controller, treasurer, or chief accounting officer of the corporation; and (ii) any officer of the corporation designated by resolution of the board of directors as an “officer” for purposes of subsection (b)(4). The board of directors may, from time to time, by resolution determine that one or more of the officers designated in accordance with subsection (h)(ii) shall no longer be an officer for purposes of subsection (b)(4), but no such resolution shall be effective as to any such officer, or any act or omission of any such officer, prior to the adoption of the resolution.
(i) No provision in the certificate of incorporation pursuant to subsection (b)(4) shall eliminate or limit the liability of a director or officer for any act or omission occurring prior to the date when the provision in the certificate of incorporation becomes effective. Any amendment, repeal, or elimination of a provision in the certificate of incorporation pursuant to subsection (b)(4) shall not affect its application with respect to an act or omission by a director or officer occurring before the amendment, repeal, or elimination unless the provision in the certificate of incorporation provides otherwise at the time of the act or omission.
(Act 2019-94, §1; Act 2020-73, §7; Act 2021-299, §3; Act 2023-503, §3; Act 2024-413, §1; Act 2026-495, §1.)
All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this chapter, are jointly and severally liable for all liabilities created while so acting.
(Act 2019-94, §1.)
(a) After incorporation:
(1) if initial directors are named in the certificate 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; or
(2) if initial directors are not named in the certificate of incorporation, the incorporator or incorporators shall hold an organizational meeting at the call of a majority of the incorporators:
(i) to elect initial directors and complete the organization of the corporation; or
(ii) to elect a board of directors who shall complete the organization of the corporation.
(b) Action required or permitted by this chapter 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.
(c) An organizational meeting may be held in or out of this state.
(Act 2019-94, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) The incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.
(b) The bylaws of a corporation may contain any provision that is not inconsistent with law or the certificate of incorporation.
(c) The bylaws may contain one or both of the following provisions:
(1) a requirement that if the corporation solicits proxies or consents with respect to an election of directors, the corporation include in its proxy statement and any form of its proxy or consent, to the extent and subject to any procedures or conditions as are provided in the bylaws, one or more individuals nominated by a stockholder in addition to individuals nominated by the board of directors; and
(2) a requirement that the corporation reimburse the expenses incurred by a stockholder in soliciting proxies or consents in connection with an election of directors, to the extent and subject to any procedures and conditions as are provided in the bylaws, provided that no provision so adopted shall apply to elections for which any record date precedes its adoption.
(d) Notwithstanding Section 10A-2A-10.20(b)(2), the stockholders in amending, repealing, or adopting a provision described in subsection (c) may not limit the authority of the board of directors to amend or repeal any condition or procedure set forth in or to add any procedure or condition to a provision to provide for a reasonable, practical, and orderly process.
(e) The bylaws are part of a binding contract between the corporation and the stockholders, subject to the provisions of this chapter.
(Act 2019-94, §1; Act 2020-73, §7.)
[Effective: 2026-08-01]
(a) The incorporators or board of directors of a corporation shall adopt initial bylaws for the corporation.
(b) The bylaws of a corporation may contain any provision that is not inconsistent with law or the certificate of incorporation.
(c) The bylaws may contain one or more of the provisions set forth in subsections (c)(1) and (c)(2) below, provided that no provision so adopted shall apply to elections for which any record date precedes its adoption.
(1) The bylaws may provide that if the corporation solicits proxies with respect to an election of directors, the corporation may be required, to the extent and subject to such procedures or conditions as may be provided in the bylaws, to include in its proxy solicitation materials (including any form of proxy it distributes), in addition to individuals nominated by the board of directors, one or more individuals nominated by a stockholder. Such procedures or conditions may include any of the following:
(i) a provision requiring a minimum record or beneficial ownership, or duration of ownership, of shares of the corporation’s capital stock, by the nominating stockholder, and defining beneficial ownership to take into account options or other rights in respect of or related to such stock;
(ii) a provision requiring the nominating stockholder to submit specified information concerning the stockholder and the stockholder’s nominees, including information concerning ownership by such persons of shares of the corporation’s capital stock, or options or other rights in respect of or related to such stock;
(iii) a provision conditioning eligibility to require inclusion in the corporation’s proxy solicitation materials upon the number or proportion of directors nominated by stockholders or whether the stockholder previously sought to require such inclusion;
(iv) a provision precluding nominations by any person if such person, any nominee of such person, or any affiliate or associate of such person or nominee, has acquired or publicly proposed to acquire shares constituting a specified percentage of the voting power of the corporation’s outstanding voting stock within a specified period before the election of directors;
(v) a provision requiring that the nominating stockholder undertake to indemnify the corporation in respect of any loss arising as a result of any false or misleading information or statement submitted by the nominating stockholder in connection with a nomination; and
(vi) any other lawful condition.
(2) The bylaws may provide for the reimbursement by the corporation of expenses incurred by a stockholder in soliciting proxies in connection with an election of directors, subject to such procedures or conditions as the bylaws may prescribe, including:
(i) conditioning eligibility for reimbursement upon the number or proportion of persons nominated by the stockholder seeking reimbursement or whether such stockholder previously sought reimbursement for similar expenses;
(ii) limitations on the amount of reimbursement based upon the proportion of votes cast in favor of one or more of the persons nominated by the stockholder seeking reimbursement, or upon the amount spent by the corporation in soliciting proxies in connection with the election;
(iii) limitations concerning elections of directors by cumulative voting pursuant to Section 10A-2A-7.28; or
(iv) any other lawful condition.
(d) Notwithstanding Section 10A-2A-10.20(b)(2), the stockholders in amending, repealing, or adopting a provision described in subsection (c) may not limit the authority of the board of directors to amend or repeal any condition or procedure set forth in or to add any procedure or condition to a provision to provide for a reasonable, practical, and orderly process.
(e) The bylaws are part of a binding contract between the corporation and the stockholders, subject to the provisions of this chapter.
(Act 2019-94, §1; Act 2020-73, §7; Act 2026-495, §1.)
(a) Unless the certificate of incorporation provides otherwise, bylaws may be adopted to be effective only in an emergency defined in subsection (d). The emergency bylaws, which are subject to amendment or repeal by the stockholders, may make all provisions necessary for managing the corporation during the emergency, including:
(1) procedures for calling a meeting of the board of directors;
(2) quorum requirements for the meeting; and
(3) designation of additional or substitute directors.
(b) All provisions of the regular bylaws not inconsistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.
(c) Corporate action taken in good faith in accordance with the emergency bylaws:
(1) binds the corporation; and
(2) may not be used to impose liability on a director, officer, employee, or agent of the corporation.
(d) An emergency exists for purposes of this section if a quorum of the board of directors cannot readily be assembled because of some catastrophic event.
(Act 2019-94, §1; Act 2023-503, §3.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) The certificate of incorporation or the bylaws may require that any or all internal corporate claims shall be brought exclusively in any specified court or courts of this state and, if so specified, in any additional courts in this state or in any other jurisdictions with which the corporation has a reasonable relationship.
(b) A provision of the certificate of incorporation or bylaws adopted under subsection (a) shall not have the effect of conferring jurisdiction on any court or over any person or claim, and shall not apply if none of the courts specified by that provision has the requisite personal and subject matter jurisdiction. If the court or courts of this state specified in a provision adopted under subsection (a) do not have the requisite personal and subject matter jurisdiction and another court of this state does have jurisdiction, then the internal corporate claim may be brought in the other court of this state, notwithstanding that the other court of this state is not specified in that provision, and in any other court specified in that provision that has the requisite jurisdiction.
(c) No provision of the certificate of incorporation or the bylaws may prohibit bringing an internal corporate claim in the courts of this state or require those claims to be determined by arbitration.
(d) “Internal corporate claim” means, for the purposes of this section, (i) any claim that is based upon a violation of a duty under the laws of this state by a current or former director, officer, or stockholder in their capacities as such, (ii) any derivative action or proceeding brought on behalf of the corporation, (iii) any action asserting a claim arising pursuant to any provision of this chapter or the certificate of incorporation or bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine that is not included in (i) through (iii) above.
(Act 2019-94, §1.)
[Effective: 2026-08-01]
(a) The certificate of incorporation or the bylaws may require, consistent with applicable jurisdictional requirements, that any or all internal corporate claims shall be brought exclusively in any specified court or courts of this state and, if so specified, in any additional courts in this state or in any other jurisdictions with which the corporation has a reasonable relationship and no provision of the certificate of incorporation or the bylaws may prohibit bringing those claims in the courts of this state or require those claims to be determined by arbitration.
(b) With respect to claims that are not internal corporate claims, the certificate of incorporation or bylaws may require stockholders, when acting in their capacity as stockholders or in the right of the corporation, to bring any or all such claims only in any specified court or courts of this state and, if so specified, in any additional courts in this state or in any other jurisdictions with which the corporation has a reasonable relationship, if those claims relate to the business of the corporation, the conduct of its affairs, or the rights or powers of the corporation or its stockholders, directors, or officers; provided that such requirement is consistent with applicable jurisdictional requirements and allows a stockholder to bring such claims in at least one court in this state that has jurisdiction over those claims.
(c) “Internal corporate claim” means, for the purposes of this section, any claim, action, suit, or proceeding (i) that is based upon a violation of a duty under the laws of this state by a current or former director, officer, or stockholder in their capacities as such, (ii) that is a derivative action or proceeding brought on behalf of the corporation, (iii) that arises from, is pursuant to, or seeks to interpret, apply, enforce, or determine the validity of, any provision of this chapter, the certificate of incorporation, the bylaws, or any agreement entered into pursuant to Sections 10A-2A-7.30, 10A-2A-7.31, or 10A-2A-7.32 to which the corporation is a party or a stated beneficiary thereof, or (iv) that is governed by the internal affairs doctrine that is not included in (i) through (iii) above.
(d) This section does not prohibit any corporation from consenting, or require any corporation to consent, to any alternative forum in any instance.
(Act 2019-94, §1; Act 2026-495, §1.)
(a) Every corporation incorporated under this chapter has the purpose of engaging in any lawful business unless a more limited purpose is set forth in the certificate of incorporation.
(b) A corporation engaging in a business that is subject to regulation under another statute of this state may incorporate under this chapter only if permitted by, and subject to all limitations of, the other statute.
(Act 2019-94, §1.)
Unless its certificate of incorporation provides 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 business and affairs, including all entity powers provided in Section 10A-1-2.11, Section 10A-1-2.12, and Section 10A-1-2.13.
(Act 2019-94, §1.)
(a) In anticipation of or during an emergency defined in subsection (d), the board of directors of a corporation may:
(1) modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and
(2) relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so.
(b) During an emergency defined in subsection (d), unless emergency bylaws provide otherwise:
(1) notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practicable manner; and
(2) one or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.
(c) Corporate action taken in good faith during an emergency under this section to further the ordinary business affairs of the corporation:
(1) binds the corporation; and
(2) may not be used to impose liability on a director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the board of directors cannot readily be assembled because of some catastrophic event.
(Act 2019-94, §1.)
(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
(b) A corporation’s power to act may be challenged:
(1) in a proceeding by a stockholder against the corporation to enjoin the act;
(2) in a proceeding by the corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or
(3) in a proceeding by the Attorney General under Section 10A-2A-14.10.
(c) In a stockholder’s proceeding under subsection (b)(1) to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the corporation or another party because of enjoining the unauthorized act.
(d) Proceedings under subsection (b) shall be brought in the designated court, and if none, in the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the corporation’s most recent registered office is located.
(Act 2019-94, §1; Act 2020-73, §7.)
Action validly taken pursuant to one provision of this chapter shall not be deemed invalid solely because it is identical or similar in substance to an action that could have been taken pursuant to some other provision of this chapter but fails to satisfy one or more requirements prescribed by such other provision.
(Act 2025-281, §8.)
(a) The certificate of incorporation must set forth any classes of stock and series of stock within a class, and the number of shares of stock of each class and series, that the corporation is authorized to issue. If more than one class or series of stock is authorized, the certificate of incorporation must prescribe a distinguishing designation for each class or series and, before the issuance of stock of a class or series, describe the terms, including the preferences, rights, and limitations, of that class or series. Except to the extent varied as permitted by this section, all shares of stock of a class or series must have terms, including preferences, rights, and limitations, that are identical with those of other shares of stock of the same class or series.
(b) The certificate of incorporation must authorize:
(1) one or more classes or series of stock that together have full voting rights, and
(2) one or more classes or series of stock (which may be the same class, classes, or series as those with voting rights) that together are entitled to receive the net assets of the corporation upon dissolution.
(c) The certificate of incorporation may authorize one or more classes or series of stock that:
(1) have special, conditional, or limited voting rights, or no right to vote, except to the extent otherwise provided by this chapter;
(2) are redeemable or convertible as specified in the certificate of incorporation:
(i) at the option of the corporation, the stockholder, or another person or upon the occurrence of a specified event;
(ii) for cash, indebtedness, securities, or other property; and
(iii) at prices and in amounts specified or determined in accordance with a formula;
(3) entitle the holders to distributions calculated in any manner, including dividends that may be cumulative, noncumulative, or partially cumulative; or
(4) have preference over any other class or series of stock with respect to distributions, including distributions upon the dissolution of the corporation.
(d) Terms of stock may be made dependent upon facts objectively ascertainable outside the certificate of incorporation in accordance with Section 10A-2A-1.20(c).
(e) Any of the terms of stock may vary among holders of the same class or series so long as those variations are expressly set forth in the certificate of incorporation.
(f) The description of the preferences, rights, and limitations of classes or series of stock in subsection (c) is not exhaustive.
(g) The certificate of incorporation may authorize the board of directors, without stockholder approval, to adopt resolutions, prepare and deliver certificates and certificates of designation to the Secretary of State, and take any other actions described in Section 10A-2A-6.02.
(Act 2019-94, §1.)
(a) When any corporation desires to issue any shares of stock of any class or of any series of any class of which the powers, designations, preferences, and relative, participating, optional, or other rights, if any, or the qualifications, limitations, or restrictions thereof, if any, shall not have been set forth in the certificate of incorporation or in any amendment thereto but shall be provided for in a resolution or resolutions adopted by the board of directors pursuant to authority expressly vested in it by the certificate of incorporation or any amendment thereto, a certificate of designations setting forth a copy of the board resolution or resolutions and the number of shares of stock of the class or series as to which the resolution or resolutions apply shall be executed and delivered to the Secretary of State for filing and shall become effective in accordance with Article 4 of Chapter 1. If the certificate of incorporation vests authority in the board of directors to determine the powers, designations, preferences, and relative, participating, optional, or other rights, if any, or the qualifications, limitations, or restrictions thereof, if any, of any class or series of stock, the board of directors is authorized to do so to the same extent permitted under Section 10A-2A-6.01.
(b) Unless otherwise provided in any resolution or resolutions described in subsection (a), the number of shares of stock of any class or series to which the resolution or resolutions apply may be increased (but not above the total number of authorized shares of the class) or decreased (but not below the number of shares thereof then outstanding) by a certificate likewise executed and delivered to the Secretary of State for filing setting forth a statement that a specified increase or decrease therein had been authorized and directed by a resolution or resolutions likewise adopted by the board of directors. In case the number of the authorized shares shall be decreased the number of shares so specified in the certificate shall resume the status which they had prior to the adoption of the first resolution or resolutions.
(c) When no shares of any authorized class or series are outstanding, either because none were issued or because no issued shares of any authorized class or series remain outstanding, a certificate setting forth a resolution or resolutions adopted by the board of directors that none of the authorized shares of that class or series are outstanding, and that none will be issued subject to the certificate of designations previously filed with respect to that class or series, may be executed and delivered to the Secretary of State for filing and shall become effective in accordance with Article 4 of Chapter 1, and when the certificate becomes effective, it shall have the effect of eliminating from the certificate of incorporation all matters set forth in the certificate of designations with respect to that class or series of stock.
(d) Unless otherwise provided in the certificate of incorporation, if no shares of stock have been issued of a class or series of stock established by a resolution of the board of directors, the voting powers, designations, preferences, and relative, participating, optional, or other rights, if any, or the qualifications, limitations, or restrictions thereof, may be amended by a resolution or resolutions adopted by the board of directors. A certificate which: (1) states that no shares of the class or series have been issued; (2) sets forth a copy of the resolution or resolutions; and (3) if the designation of the class or series is being changed, indicates the original designation and the new designation, shall be executed and delivered to the Secretary of State for filing and shall become effective in accordance with Article 4 of Chapter 1.
(e) When any certificate filed under this section becomes effective, it shall have the effect of amending the certificate of incorporation; except that neither the filing of that certificate nor the filing of a restated certificate of incorporation pursuant to Section 10A-2A-10.07 shall prohibit the board of directors from subsequently adopting resolutions as authorized by this section.
(Act 2019-94, §1.)
(a) A corporation may issue the number of shares of stock of each class or series authorized by the certificate of incorporation. Stock that is issued is outstanding stock until it is reacquired, redeemed, converted, or cancelled.
(b) The reacquisition, redemption, or conversion of outstanding stock is subject to the limitations of subsection (c) and to Section 10A-2A-6.40.
(c) At all times that stock of the corporation is outstanding, one or more shares of stock that together have full voting rights and one or more shares of stock that together are entitled to receive the net assets of the corporation upon dissolution must be outstanding.
(Act 2019-94, §1.)
(a) A corporation may issue fractions of a share of stock or in lieu of doing so may:
(1) pay in cash the value of fractions of a share of stock;
(2) issue scrip in certificated or uncertificated form entitling the holder to receive a full share of stock upon surrendering enough scrip to equal a full share of stock; or
(3) arrange for disposition of fractional stock by the holders of that stock.
(b) Each certificate representing scrip must be conspicuously labeled “scrip” and must contain the information required by Section 10A-1-3.42(c). A corporation shall not issue a certificate representing scrip in bearer form. Within a reasonable time after the issuance or transfer of scrip without certificate, the corporation shall comply with the notice requirements of Section 10A-1-3.45.
(c) The holder of a fractional share of stock is entitled to exercise the rights of a stockholder, including the rights to vote, to receive dividends, and to receive distributions upon dissolution. The holder of scrip is not entitled to any of these rights unless the scrip provides for them.
(d) The board of directors may authorize the issuance of scrip subject to any condition, including that:
(1) the scrip will become void if not exchanged for full stock before a specified date; and
(2) the stock for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.
(Act 2019-94, §1; Act 2022-124, §1.)
(a) A subscription for stock entered into before incorporation is irrevocable for six months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation.
(b) The board of directors may determine the payment terms of subscriptions for stock that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors must be uniform so far as practicable as to all stock of the same class or series, unless the subscription agreement specifies otherwise.
(c) Stock issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration specified in the subscription agreement.
(d) If a subscriber defaults in payment of cash or property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as any other debt. Alternatively, unless the subscription agreement provides otherwise, the corporation may rescind the agreement and may sell the stock if the debt remains unpaid for more than 20 days after the corporation delivers a written demand for payment to the subscriber.
(Act 2019-94, §1.)
(a) The powers granted in this section to the board of directors may be reserved to the stockholders by the certificate of incorporation.
(b) The board of directors may authorize stock to be issued for consideration consisting of a contribution. Stock may be issued in one or more transactions, in the numbers, at the time and for the consideration as set forth in a resolution of the board of directors.
(c) A resolution of the board of directors may delegate to a person or body, in addition to the board of directors, the authority to enter into one or more transactions to issue stock, and with respect to that transaction, shares of stock may be issued in the numbers, at the time and for the consideration as the person or body may determine; provided the resolution fixes (i) a maximum number of shares of stock that may be issued pursuant to the resolution, (ii) a time period during which the stock may be issued, and (iii) a minimum amount of consideration for which the stock may be issued. No resolution shall permit a person or body to issue stock to that person or body.
(d) Before the corporation issues stock pursuant to subsection (b) or subsection (c), the board of directors or the person or body authorized pursuant to subsection (c) shall determine that the consideration received or to be received for stock to be issued is adequate. That determination by the board of directors or the person or body authorized pursuant to subsection (c) is conclusive insofar as the adequacy of consideration for the issuance of stock relates to whether the stock is validly issued, fully paid, and nonassessable.
(e) Any provision of a resolution contemplated by subsection (b) or subsection (c) may be made dependent on facts ascertainable outside the resolution, which facts shall be determined in accordance with Section 10A-2A-1.20(c).
(f) When the corporation receives the consideration for which the board of directors authorized the issuance of stock, the stock issued therefor is fully paid and nonassessable.
(g) The corporation may place in escrow stock issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the stock, and may credit distributions in respect of the stock against its purchase price, until the services are performed, the benefits are received, or the note is paid. If the services are not performed, the benefits are not received, or the note is not paid, the stock escrowed or restricted and the distributions credited may be cancelled in whole or part.
(Act 2019-94, §1; Act 2024-413, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A purchaser from a corporation of the corporation’s own stock is not liable to the corporation or its creditors with respect to the stock except to pay the consideration for which the stock was authorized to be issued or specified in the subscription agreement.
(b) A stockholder is not personally liable for any liabilities of the corporation (including liabilities arising from acts of the corporation) except to the extent provided in a provision of the certificate of incorporation permitted by Section 10A-2A-2.02.
(Act 2019-94, §1.)
[Effective: 2026-08-01]
(a) A purchaser from a corporation of the corporation’s own stock is not liable to the corporation or its creditors with respect to the stock except to pay the consideration for which the stock was authorized to be issued or specified in the subscription agreement.
(b) A stockholder is not personally liable for any liabilities of the corporation (including liabilities arising from acts of the corporation) except to the extent provided in a provision of the certificate of incorporation permitted by Section 10A-2A-2.02.
(c) Except for controlling stockholders and control groups in a controlling stockholder transaction (as defined in Section 10A-2A-8.60), a stockholder, regardless of the stockholder’s relative beneficial ownership of shares or relative voting power, may, and shall be entitled to, exercise or withhold the voting power of such shares in the stockholder’s personal interest and without regard to any other person or interest.
(d) Except as set forth in subsection (e), a stockholder, in that person’s capacity as a stockholder and regardless of the stockholder’s relative beneficial ownership of shares or relative voting power, shall not have any duty to the corporation or any other stockholder.
(e) A controlling stockholder or a stockholder that is a member of a control group of a corporation, in such person’s capacity as a stockholder, has the duty to refrain from exerting undue influence over any director or officer of the corporation with the purpose and proximate effect of inducing a breach of fiduciary duty by a director or officer (i) for which breach the director or officer is liable pursuant to Section 10A-2A-8.31 and (ii) which breach directly relates to the negotiation, authorization, or approval by the board of directors, or a committee thereof, of a controlling stockholder transaction. The exercise or withholding of voting power by a controlling stockholder or a control group, or the indication or implication by a controlling stockholder or control group as to whether or to what extent voting power may be exercised or withheld, does not, by itself, constitute or indicate a breach of the duty imposed on the controlling stockholder or control group by this subsection.
(f) A controlling stockholder and a control group are presumed to have not breached the duty imposed by subsection (e) with respect to a controlling stockholder transaction if the controlling stockholder transaction has been authorized or approved in accordance with Section 10A-2A-8.60.
(g) A stockholder of a corporation is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in such person’s capacity as a stockholder under subsection (e) unless (i) the stockholder is a controlling stockholder or a member of a control group, (ii) the presumption established by subsection (f) has been rebutted, and (iii) it is proven that the stockholder’s act or failure to act constituted a breach of the stockholder’s duty imposed by subsection (e).
(Act 2019-94, §1; Act 2026-495, §1.)
(a) Unless the certificate of incorporation provides otherwise, stock may be issued pro rata and without consideration to the corporation’s stockholders or to the stockholders of one or more classes or series of stock. An issuance of stock under this subsection is a stock dividend.
(b) Stock of one class or series may not be issued as a stock dividend in respect of stock of another class or series unless (i) the certificate of incorporation so authorizes, (ii) a majority of the votes entitled to be cast by the class or series to be issued approve the issuance, or (iii) there is no outstanding stock of the class or series to be issued.
(c) The board of directors may fix the record date for determining stockholders entitled to a stock dividend, which date may not be retroactive. If the board of directors does not fix the record date for determining stockholders entitled to a stock dividend, the record date is the date the board of directors authorizes the stock dividend.
(Act 2019-94, §1.)
(a) A corporation may issue rights, options, or warrants for the purchase of stock or other securities of the corporation. The board of directors shall determine (i) the terms and conditions upon which the rights, options, or warrants are issued; and (ii) the terms, including the consideration for which the stock or other securities acquired from the corporation upon the exercise of any rights, options, or warrants are to be issued. The authorization by the board of directors for the corporation to issue rights, options, or warrants constitutes authorization of the issuance of the stock or other securities for which the rights, options, or warrants are exercisable.
(b) The board of directors may adopt a resolution to delegate to a person or body, in addition to the board of directors, the authority to enter into one or more transactions to issue rights, options, or warrants, and with respect to those transactions, the rights, options, or warrants may be issued in the numbers, at the time and for the consideration as the person or body may determine; provided that the resolution fixes (i) the maximum number of rights, options, or warrants, and the maximum number of shares of stock issuable upon exercise thereof, that may be issued pursuant to the resolution, (ii) a time period during which the rights, options, or warrants, and during which the stock issuable upon exercise thereof, may be issued, and (iii) a minimum amount of consideration (if any) for which the rights, options, or warrants may be issued and a minimum amount of consideration for the stock issuable upon exercise thereof. No resolution shall permit a person or body to issue rights, options, or warrants to that person or body.
(c) Any provision in a resolution contemplated by subsection (a) or subsection (b) may be made dependent on facts ascertainable outside the resolution, which facts shall be determined in accordance with Section 10A-2A-1.20(c).
(d) The terms and conditions of rights, options, or warrants may include restrictions or conditions that:
(1) preclude or limit the exercise, transfer, or receipt of rights, options, or warrants by any person or persons owning or offering to acquire a specified number or percentage of the outstanding stock or other securities of the corporation or by any transferee or transferees of that person or persons, or
(2) invalidate or void rights, options, or warrants held by that person or persons or any of that person’s transferee or transferees.
(e) The board of directors or the person or body authorized pursuant to subsection (b) may authorize one or more officers to (i) designate the recipients of rights, options, warrants, or other equity compensation awards that involve the issuance of stock and (ii) determine, within an amount and subject to any other limitations established by the board of directors, the person or body authorized pursuant to subsection (b) and, if applicable, the stockholders, the number of the rights, options, warrants, or other equity compensation awards and the terms of the rights, options, warrants, or awards to be received by the recipients, provided that an officer may not use that authority to designate himself or herself or any other persons as the board of directors may specify as a recipient of rights, options, warrants, or other equity compensation awards.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) Stock may, but need not, be represented by certificates. Unless this chapter or another statute expressly provides otherwise, the rights and obligations of stockholders are identical regardless of whether their stock is represented by certificates.
(b) Each stock certificate must be signed by two officers designated in the certificate of incorporation or bylaws.
(c) Each certificate representing stock shall comply with Sections 10A-1-3.42, 10A-1-3.43(b), and 10A-1-3.44.
(d) No certificate representing stock shall be issued in bearer form.
(Act 2019-94, §1.)
(a) Unless the certificate of incorporation or bylaws provide otherwise, the board of directors of a corporation may authorize the issuance of some or all of the shares of stock of any or all of its classes or series without certificates. The authorization does not affect shares of stock already represented by certificates until they are surrendered to the corporation.
(b) Within a reasonable time after the issuance or transfer of shares of stock without certificates, the corporation shall comply with the notice requirements of Section 10A-1-3.45.
(Act 2019-94, §1.)
(a) The certificate of incorporation, the bylaws, an agreement among stockholders, or an agreement between stockholders and the corporation may impose restrictions on the transfer or registration of transfer of stock of the corporation. A restriction does not affect stock issued before the restriction was adopted unless the holders of the stock are parties to the restriction agreement or voted in favor of the restriction.
(b) A restriction on the transfer or registration of transfer of stock is valid and enforceable against the corporation, the holder, or a transferee of the holder if the restriction is authorized by this section and as provided in Section 10A-1-3.42, and its existence is noted conspicuously on the front or back of the certificate or is contained in the information required by Section 10A-1-3.45. Unless so noted or contained, a restriction is not enforceable against a person without knowledge of the restriction.
(c) A restriction on the transfer or registration of transfer of stock is authorized:
(1) to maintain the corporation’s status when it is dependent on the number or identity of its stockholders;
(2) to preserve exemptions under federal or state securities law; or
(3) for any other reasonable purpose.
(d) A restriction on the transfer or registration of transfer of stock may include a restriction that:
(1) obligates the stockholder first to offer the corporation or other persons (separately, consecutively, or simultaneously) an opportunity to acquire the restricted stock;
(2) obligates the corporation or other persons (separately, consecutively, or simultaneously) to acquire the restricted stock;
(3) requires the corporation, the holders of any class or series of its stock, or other persons to approve the transfer of the restricted stock, if the requirement is not manifestly unreasonable;
(4) prohibits the transfer or registration of the restricted stock to designated persons or classes of persons, if the prohibition is not manifestly unreasonable; or
(5) requires the corporation to refuse to transfer the stock.
(e) For purposes of this section, “stock” includes a security convertible into or carrying a right to subscribe for or acquire stock.
(Act 2019-94, §1.)
A corporation may pay the expenses of selling or underwriting its shares, and of organizing or reorganizing the corporation, from the consideration received for shares.
(Act 2019-94, §1.)
(a) The stockholders of a corporation do not have a preemptive right to acquire the corporation’s unissued stock except to the extent the certificate of incorporation so provides.
(b) A statement included in the certificate of incorporation that “the corporation elects to have preemptive rights” (or words of similar effect) means that the following principles apply except to the extent the certificate of incorporation expressly provides otherwise:
(1) The stockholders of the corporation have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation’s unissued stock upon the decision of the board of directors to issue them.
(2) A preemptive right may be waived by a stockholder. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
(3) There is no preemptive right with respect to:
(i) stock issued as compensation to directors, officers, employees, or agents of the corporation, its subsidiaries, or affiliates;
(ii) stock issued to satisfy conversion or option rights created to provide compensation to directors, officers, employees, or agents of the corporation, its subsidiaries, or affiliates;
(iii) stock authorized in the certificate of incorporation that is issued within six months from the effective date of incorporation; or
(iv) stock sold otherwise than for cash.
(4) Holders of stock of any class or series without voting power but with preferential rights to distributions have no preemptive rights with respect to stock of any class or series.
(5) Holders of stock of any class or series with voting power but without preferential rights to distributions have no preemptive rights with respect to stock of any class or series with preferential rights to distributions unless the stock with preferential rights is convertible into or carry a right to subscribe for or acquire the stock without preferential rights.
(6) Stock subject to preemptive rights that is not acquired by stockholders may be issued to any person for a period of one year after being offered to stockholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the stockholders’ preemptive rights.
(c) For purposes of this section, “stock” includes a security convertible into or carrying a right to subscribe for or acquire stock.
(Act 2019-94, §1.)
(a) A corporation may acquire its own stock, and, the stock so acquired shall constitute authorized but unissued stock, provided, however, that:
(1) the certificate of incorporation may provide that the acquired stock shall constitute authorized, issued, but not outstanding stock;
(2) the certificate of incorporation may prohibit the reissue of the acquired stock, in which case the number of authorized shares of stock is reduced by the number of shares of stock acquired; or
(3) if the certificate of incorporation does not (i) provide that the acquired stock shall constitute authorized but unissued stock, (ii) prohibit the reissuance of the acquired stock, or (iii) provide that the acquired stock shall constitute authorized, issued, but not outstanding stock, then the board of directors may determine, at or prior to the time of the acquisition, that the acquired stock will constitute authorized, issued, but not outstanding stock.
(b) If the board of directors has determined that any acquired stock was to be authorized, issued, but not outstanding in accordance with subsection (a)(3), then the board of directors may thereafter determine that the acquired stock shall be converted to stock that is authorized but not issued.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) The board of directors may authorize and the corporation may make distributions to its stockholders subject to restriction by the certificate of incorporation and the limitation in subsection (c).
(b) The board of directors may fix the record date for determining stockholders entitled to a distribution, which date may not be retroactive. If the board of directors does not fix a record date for determining stockholders entitled to a distribution (other than one involving a purchase, redemption, or other acquisition of the corporation’s stock), the record date is the date the board of directors authorizes the distribution.
(c) No distribution may be made if, after giving it effect:
(1) the corporation would not be able to pay its debts as they become due in the usual course of business; or
(2) the corporation’s total assets would be less than the sum of its total liabilities plus (unless the certificate of incorporation permits otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution.
(d) The board of directors may base a determination that a distribution is not prohibited under subsection (c) either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
(e) Except as provided in subsection (g), the effect of a distribution under subsection (c) is measured:
(1) in the case of distribution by purchase, redemption, or other acquisition of the corporation’s stock, as of the earlier of (i) the date cash or other property is transferred or debt to a stockholder is incurred by the corporation or (ii) the date the stockholder ceases to be a stockholder with respect to the acquired stock;
(2) in the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and
(3) in all other cases, as of (i) the date the distribution is authorized if the payment occurs within 120 days after the date of authorization or (ii) the date the payment is made if it occurs more than 120 days after the date of authorization.
(f) A corporation’s indebtedness to a stockholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation’s indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.
(g) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (c) if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to stockholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.
(h) This section shall not apply to distributions in liquidation under Article 14.
(Act 2019-94, §1.)
(a) Unless directors are elected by written consent in lieu of an annual meeting as permitted by Section 10A-2A-7.04, a corporation shall hold a meeting of stockholders annually at a time stated in or fixed in accordance with the certificate of incorporation or bylaws at which directors shall be elected.
(b) Unless the board of directors determines to hold the meeting solely by means of remote communication in accordance with Section 10A-2A-7.09(c), annual meetings may be held (i) in or out of this state at the place stated in or fixed in accordance with the certificate of incorporation or bylaws or (ii) if no place is stated in or fixed in accordance with the certificate of incorporation or bylaws, at the corporation’s principal office.
(c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation’s certificate of incorporation or bylaws does not affect the validity of any corporate action.
(Act 2019-94, §1.)
(a) Special meetings of the stockholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws.
(b) In the event that the certificate of incorporation or bylaws allow stockholders to demand a special meeting of the stockholders, then if not otherwise fixed under Section 10A-2A-7.03 or Section 10A-2A-7.07, the record date for determining stockholders entitled to demand a special meeting shall be the first date on which a signed stockholder demand is delivered to the corporation. No written demand for a special meeting shall be effective unless, within 60 days of the earliest date on which the demand delivered to the corporation as allowed by the certificate of incorporation or bylaws was signed, written demands signed by stockholders holding at least the percentage of votes specified in or fixed in accordance with the certificate of incorporation or bylaws have been delivered to the corporation.
(c) Unless the board of directors determines to hold the meeting solely by means of remote participation in accordance with Section 10A-2A-7.09(c), special meetings of stockholders may be held (i) in or out of this state at the place stated in or fixed in accordance with the certificate of incorporation or bylaws or (ii) if no place is stated in or fixed in accordance with the certificate of incorporation or bylaws, at the corporation’s principal office.
(d) Only business within the purpose or purposes described in the meeting notice required by Section 10A-2A-7.05(c) may be conducted at a special meeting of stockholders.
(Act 2019-94, §1.)
(a) The designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and, if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located may summarily order a meeting to be held:
(1) on application of any stockholder of the corporation entitled to participate in an annual meeting if an annual meeting was not held or action by written consent in lieu of an annual meeting did not become effective within the earlier of 12 months after the end of the corporation’s fiscal year or 15 months after its last annual meeting; or
(2) on application of one or more stockholders who signed a demand for a special meeting valid under Section 10A-2A-7.02, if:
(i) notice of the special meeting was not given within 30 days after the first day on which the requisite number of demands have been delivered to the corporation; or
(ii) the special meeting was not held in accordance with the notice.
(b) The court may fix the time and place of the meeting, determine the stock entitled to participate in the meeting, specify a record date or dates for determining stockholders 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 stock 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.
(c) For purposes of subsection (a)(1), “stockholder” means a record stockholder, a beneficial stockholder, and an unrestricted voting trust beneficial owner.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) Unless otherwise provided in the certificate of incorporation, any action required or permitted by this chapter to be taken at any meeting of the stockholders may be taken without a meeting, and without prior notice, if one or more consents in writing setting forth the action so taken are signed by the holders of outstanding stock having not less than the minimum number of votes that would be required to authorize or take the action at a meeting at which all shares of stock entitled to vote on the action were present and voted; provided, however, that if a corporation’s certificate of incorporation authorizes stockholders to cumulate their votes when electing directors pursuant to Section 10A-2A-7.28, directors may not be elected by less than unanimous written consent. The action must be evidenced by one or more written consents describing the action taken, signed by the stockholders approving the action and delivered to the corporation for filing by the corporation with the minutes or corporate records.
(b) If not otherwise fixed under Section 10A-2A-7.07 and if prior action by the board of directors is not required respecting the action to be taken without a meeting, the record date for determining the stockholders entitled to take action without a meeting shall be the first date on which a written consent signed by a stockholder is delivered to the corporation. If not otherwise fixed under Section 10A-2A-7.07 and if prior action by the board of directors is required respecting the action to be taken without a meeting, the record date shall be the close of business on the day the resolution of the board of directors taking the prior action is adopted. No written consent of the stockholders shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest date on which a consent is delivered to the corporation as required by this section, written consents signed by sufficient stockholders to take the action have been delivered to the corporation. Any person signing a consent may provide, whether through instruction to an agent or otherwise, that the consent will be effective at a future time, including a time determined upon the happening of an event, occurring not later than 60 days after the instruction is given or such provision is made, if evidence of the instruction or provision is provided to the corporation. If a person signs a consent when that person is not a stockholder, then that person’s consent shall not be valid unless that person is a stockholder as of the record date for determining stockholders entitled to consent to the action. Unless a person’s written consent states that it is irrevocable, that written consent may be revoked by that person by a writing to that effect delivered to the corporation before unrevoked written consents sufficient in number to take the corporate action have been delivered to the corporation.
(c) A consent signed pursuant to this section has the effect of a vote taken at a meeting and may be described as such in any document. Unless the certificate of incorporation, bylaws or a resolution of the board of directors provides for a reasonable delay to permit tabulation of written consents, the action taken by written consent shall be effective when written consents signed by sufficient stockholders to take the action have been delivered to the corporation.
(d) If this chapter requires that notice of a proposed action be given to nonvoting stockholders and the action is to be taken by written consent of the voting stockholders, the corporation shall give its nonvoting stockholders written notice of the action not more than 10 days after (i) written consents sufficient to take the action have been delivered to the corporation, or (ii) any later date that tabulation of consents is completed pursuant to an authorization under subsection (c). The notice must reasonably describe the action taken and contain or be accompanied by the same material that, under any provision of this chapter, would have been required to be sent to nonvoting stockholders in a notice of a meeting at which the proposed action would have been submitted to the stockholders for action.
(e) If action is taken by less than unanimous written consent of the voting stockholders, the corporation shall give its nonconsenting voting stockholders written notice of the action not more than 10 days after (i) written consents sufficient to take the action have been delivered to the corporation, or (ii) any later date that tabulation of consents is completed pursuant to an authorization under subsection (c). The notice must reasonably describe the action taken and contain or be accompanied by the same material that, under any provision of this chapter, would have been required to be sent to voting stockholders in a notice of a meeting at which the action would have been submitted to the stockholders for action.
(f) The notice requirements in subsections (d) and (e) shall not delay the effectiveness of actions taken by written consent, and a failure to comply with those notice requirements shall not invalidate actions taken by written consent, provided that this subsection shall not be deemed to limit judicial power to fashion any appropriate remedy in favor of a stockholder adversely affected by a failure to give the notice within the required time period.
(Act 2019-94, §1; Act 2023-503, §3; Act 2024-413, §1.)
(a) A corporation shall notify stockholders of the place, if any, date, and time of each annual and special stockholders’ meeting no fewer than 10 nor more than 60 days before the meeting date. If the board of directors has authorized participation by means of remote communication pursuant to Section 10A-2A-7.09 for holders of any class or series of stock, the notice to the holders of that class or series of stock must describe the means of remote communication to be used. The notice must include the record date for determining the stockholders entitled to vote at the meeting, if that date is different from the record date for determining stockholders entitled to notice of the meeting. Unless this chapter or the certificate of incorporation requires otherwise, the corporation is required to give notice only to stockholders entitled to vote at the meeting as of the record date for determining the stockholders entitled to notice of the meeting.
(b) Unless this chapter or the certificate of incorporation requires otherwise, the notice of an annual meeting of stockholders need not include a description of the purpose or purposes for which the meeting is called.
(c) Notice of a special meeting of stockholders must include a description of the purpose or purposes for which the meeting is called.
(d) If not otherwise fixed under Section 10A-2A-7.03 or Section 10A-2A-7.07, the record date for determining stockholders entitled to notice of and to vote at an annual or special stockholders’ meeting is the earlier of (i) the date of the action by the board of directors calling the meeting of the stockholders or (ii) the day before the first notice is delivered to stockholders.
(e) Unless the certificate of incorporation or bylaws require otherwise, if an annual or special stockholders’ meeting is adjourned to a different place, if any, date, or time (including an adjournment taken to address a technical failure to convene or continue a meeting using remote communication pursuant to Section 10A-2A-7.09), notice need not be given of the new place, if any, date, or time if the new place, if any, date, or time is (i) announced at the meeting before adjournment or (ii) displayed, during the time scheduled for the meeting, on the same electronic network used to enable stockholders and proxy holders to participate in the meeting by means of remote communication. If a new record date for the adjourned meeting is or must be fixed under Section 10A-2A-7.07, however, notice of the adjourned meeting shall be given under this section to stockholders entitled to vote at the adjourned meeting as of the record date fixed for notice of the adjourned meeting.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) A stockholder may waive any notice required by this chapter or the certificate of incorporation or bylaws, before or after the date and time stated in the notice. The waiver must be in writing, be signed by the stockholder entitled to the notice, and be delivered to the corporation for filing by the corporation with the minutes or corporate records.
(b) A stockholder’s attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the meeting, unless the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and
(2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter when it is presented.
(Act 2019-94, §1.)
(a) The certificate of incorporation or bylaws may fix or provide the manner of fixing the record date or dates for one or more voting groups to determine the stockholders entitled to notice of a stockholders’ meeting, to demand a special meeting, to vote, or to take any other action. If the certificate of incorporation or bylaws do not fix or provide for fixing a record date, the board of directors may fix the record date.
(b) A record date fixed under this section may not be more than 70 days before the meeting or action requiring a determination of stockholders and may not be retroactive.
(c) A determination of stockholders entitled to notice of or to vote at a stockholders’ meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date or dates, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting.
(d) 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 or dates continues in effect or it may fix a new record date or dates.
(e) The record dates for a stockholders’ meeting fixed by or in the manner provided in the certificate of incorporation or bylaws or by the board of directors shall be the record date for determining stockholders entitled both to notice of and to vote at the stockholders’ meeting, unless in the case of a record date fixed by the board of directors and to the extent not prohibited by the certificate of incorporation or bylaws, the board of directors, at the time it fixes the record date for stockholders entitled to notice of the meeting, fixes a later record date on or before the date of the meeting to determine the stockholders entitled to vote at the meeting.
(Act 2019-94, §1.)
Unless the certificate of incorporation or bylaws provide otherwise, a meeting of the stockholders shall be conducted as follows:
(a) At each meeting of stockholders, a chair shall preside. The chair shall be appointed by the board of directors.
(b) The board of directors shall determine the order of business and shall have the authority to establish rules for the conduct of the meeting.
(c) The chair of the meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls shall be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes nor any revocations or changes to ballots, proxies or votes may be accepted.
(Act 2019-94, §1.)
(a) Stockholders of any class or series of stock may participate in any meeting of stockholders by means of remote communication to the extent the board of directors authorizes participation for that class or series. Participation as a stockholder by means of remote communication shall be subject to guidelines and procedures as the board of directors adopts, and shall be in conformity with subsection (b).
(b) Stockholders participating in a stockholders’ meeting by means of remote communication shall be deemed present and may vote at that meeting if the corporation has implemented reasonable measures:
(1) to verify that each person participating remotely as a stockholder is a stockholder; and
(2) to provide stockholders participating remotely a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to communicate, and to read or hear the proceedings of the meeting, substantially concurrently with the proceedings.
(c) Unless the certificate of incorporation or bylaws require the meeting of stockholders to be held at a place, the board of directors may determine that any meeting of stockholders shall not be held at any place and shall instead be held solely by means of remote communication, but only if the corporation implements the measures specified in subsection (b).
(Act 2019-94, §1.)
(a) After fixing a record date for a meeting, a corporation shall prepare an alphabetical list of the names of all its stockholders who are entitled to notice of the stockholders’ meeting. If the board of directors fixes a different record date under Section 10A-2A-7.07(e) to determine the stockholders entitled to vote at the meeting, a corporation also shall prepare an alphabetical list of the names of all its stockholders who are entitled to vote at the meeting. Each list must be arranged by voting group (and within each voting group by class or series of stock) and contain the address of, and number and class or series of shares of stock held by, each stockholder, and if the notice or other communications regarding the meeting have been or will be sent by the corporation to a stockholder by electronic mail or other electronic transmission, the electronic mail or other electronic transmission address of that stockholder.
(b) The list of stockholders entitled to notice and to vote shall be available for inspection by any stockholder no later than the tenth day before each meeting of stockholders; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date. The list shall be available (i) at the corporation’s principal office or at a place identified in the meeting notice in the city where the meeting will be held or (ii) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting. In the event that the corporation determines to make a list of stockholders available on an electronic network, the corporation may take reasonable steps to ensure that such information is available only to stockholders of the corporation. A stockholder, or the stockholder’s agent or attorney, is entitled on written demand to inspect and, subject to the requirements of Section 10A-2A-16.02(c), to copy a list of stockholders, during regular business hours and at the stockholder’s expense, during the period it is available for inspection. A corporation may satisfy the stockholder’s right to copy a list of stockholders by furnishing a copy in the manner described in Section 10A-2A-16.03(b). A stockholder and the stockholder’s agent or attorney who inspects or is furnished a copy of a list of stockholders under this subsection (b) or who copies the list under this subsection (b) may use the information on that list only for purposes related to the meeting and its subject matter and must keep the information on that list confidential.
(c) If the corporation refuses to allow a stockholder, or the stockholder’s agent or attorney, to inspect a list of stockholders before the meeting or any adjournment (or copy a list as permitted by subsection (b)), the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located, on application of the stockholder, 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.
(d) Refusal or failure to prepare or make available a list of stockholders does not affect the validity of action taken at the meeting.
(e) The stock transfer records of the corporation shall be prima facie evidence as to who are the stockholders entitled to examine the stockholders’ list or transfer records or to vote at any meeting of stockholders.
(Act 2019-94, §1; Act 2020-73, §7; Act 2021-299, §3; Act 2023-503, §3.)
(a) Except as provided in subsections (b) and (d) or unless the certificate of incorporation provides otherwise, each outstanding share of stock, regardless of class or series, is entitled to one vote on each matter voted on at a stockholders’ meeting. Only stock is entitled to vote.
(b) Stock of a corporation is not entitled to vote if it is owned by or otherwise belongs to the corporation directly, or indirectly through an entity of which a majority of the voting power is held directly or indirectly by the corporation or which is otherwise controlled by the corporation.
(c) Stock held by the corporation in a fiduciary capacity for the benefit of any person is entitled to vote unless it is held for the benefit of, or otherwise belongs to, the corporation directly, or indirectly through an entity of which a majority of the voting power is held directly or indirectly by the corporation or which is otherwise controlled by the corporation.
(d) Redeemable stock is not entitled to vote after delivery of written notice of redemption is effective and a sum sufficient to redeem the stock has been deposited with a bank, trust company, or other financial institution under an irrevocable obligation to pay the holders the redemption price on surrender of the stock.
(e) For purposes of this section, “voting power” means the current power to vote in the election of directors of a corporation or to elect, select, or appoint governing persons of another entity.
(Act 2019-94, §1.)
(a) A stockholder may vote the stockholder’s stock in person or by proxy.
(b) A stockholder, or the stockholder’s agent or attorney-in-fact, may appoint a proxy to vote or otherwise act for the stockholder by signing an appointment form, or by an electronic transmission. An electronic transmission must contain or be accompanied by information from which the recipient can determine the date of the transmission and that the transmission was authorized by the sender or the sender’s agent or attorney-in-fact.
(c) An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the corporation authorized to count votes. An appointment is valid for the term provided in the appointment form, and, if no term is provided, is valid for 11 months unless the appointment is irrevocable under subsection (d).
(d) An appointment of a proxy is revocable unless the appointment form or electronic transmission states that it is irrevocable and the appointment is coupled with an interest. Appointments coupled with an interest include the appointment of:
(1) a pledgee;
(2) a person who purchased or agreed to purchase the stock;
(3) a creditor of the corporation who extended it credit under terms requiring the appointment;
(4) an employee of the corporation whose employment contract requires the appointment; or
(5) a party to a voting agreement created under Section 10A-2A-7.31.
(e) The death or incapacity of the stockholder 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.
(f) An appointment made irrevocable under subsection (d) is revoked when the interest with which it is coupled is extinguished.
(g) Unless it otherwise provides, an appointment made irrevocable under subsection (d) continues in effect after a transfer of the stock and a transferee takes subject to the appointment, except that a transferee for value of stock subject to an irrevocable appointment may revoke the appointment if the transferee did not know of its existence when acquiring the stock and the existence of the irrevocable appointment was not noted conspicuously on the certificate representing the stock or on the information statement for stock without certificates.
(h) Subject to Section 10A-2A-7.24 and to any express limitation on the proxy’s authority stated in the appointment form or electronic transmission, a corporation is entitled to accept the proxy’s vote or other action as that of the stockholder making the appointment.
(i) Nothing in this section shall be construed as limiting, or extending, authority granted under a durable power of attorney under Section 26-1-2 or Chapter 1A of Title 26, and any successor statute or statutes thereto.
(Act 2019-94, §1.)
(a) A corporation’s board of directors may establish a procedure under which a person on whose behalf stock is registered in the name of an intermediary or nominee may elect to be treated by the corporation as the record stockholder by filing with the corporation a beneficial ownership certificate. The terms, conditions, and limitations of this treatment shall be specified in the procedure. To the extent that person is treated under those procedures as having rights or privileges that the record stockholder otherwise would have, the record stockholder shall not have those rights or privileges.
(b) The procedure must specify:
(1) the types of intermediaries or nominees to which it applies;
(2) the rights or privileges that the corporation recognizes in a person with respect to whom a beneficial ownership certificate is filed;
(3) the manner in which the procedure is selected which must include that the beneficial ownership certificate be signed or assented to by or on behalf of the record stockholder and the person on whose behalf the stock is held;
(4) the information that must be provided when the procedure is selected;
(5) the period for which selection of the procedure is effective;
(6) requirements for notice to the corporation with respect to the arrangement; and
(7) the form and contents of the beneficial ownership certificate.
(c) The procedure may specify any other aspects of the rights and duties created by the filing of a beneficial ownership certificate.
(Act 2019-94, §1.)
(a) If the name signed on a vote, ballot, consent, waiver, stockholder demand, or proxy appointment corresponds to the name of a stockholder, the corporation, if acting in good faith, is entitled to accept the vote, ballot, consent, waiver, stockholder demand, or proxy appointment and give it effect as the act of the stockholder.
(b) If the name signed on a vote, ballot, consent, waiver, stockholder demand, or proxy appointment does not correspond to the name of its stockholder, the corporation, if acting in good faith, is nevertheless entitled to accept the vote, ballot, consent, waiver, stockholder demand, or proxy appointment and give it effect as the act of the stockholder if:
(1) the stockholder is an entity and the name signed purports to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an administrator, executor, guardian, or conservator representing the stockholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, ballot, consent, waiver, stockholder demand, or proxy appointment;
(3) the name signed purports to be that of a receiver or trustee in bankruptcy of the stockholder and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, ballot, consent, waiver, stockholder demand, or proxy appointment;
(4) the name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the stockholder and, if the corporation requests, evidence acceptable to the corporation of the signatory’s authority to sign for the stockholder has been presented with respect to the vote, ballot, consent, waiver, stockholder demand, or proxy appointment; or
(5) two or more persons are the stockholder as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all the co-owners.
(c) The corporation is entitled to reject a vote, ballot, consent, waiver, stockholder demand, or proxy appointment if the person authorized to accept or reject that instrument, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory’s authority to sign for the stockholder.
(d) Neither the corporation or any person authorized by it, nor an inspector of election appointed under Section 10A-2A-7.29, that accepts or rejects a vote, ballot, consent, waiver, stockholder demand, or proxy appointment in good faith and in accordance with the standards of this Section 10A-2A-7.24 or Section 10A-2A-7.22(b) is liable in damages to the stockholder for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote, ballot, consent, waiver, stockholder demand, or proxy appointment under this section is valid unless the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located, determines otherwise.
(f) If an inspector of election has been appointed under Section 10A-2A-7.29, the inspector of election also has the authority to request information and make determinations under subsections (a), (b), and (c). Any determination made by the inspector of election under those subsections is controlling.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) Stock entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares of stock exists with respect to that matter. Unless the certificate of incorporation provides otherwise, stock representing a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. Whenever this chapter requires a particular quorum for a specified action, the certificate of incorporation may not provide for a lower quorum.
(b) Once a share of stock is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be fixed for that adjourned meeting.
(c) If a quorum exists, action on a matter (other than the election of directors) by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the certificate of incorporation requires a greater number of affirmative votes.
(d) An amendment of the certificate of incorporation adding, changing, or deleting a quorum or voting requirement for a voting group greater than specified in subsection (a) or subsection (c) is governed by Section 10A-2A-7.27.
(e) The election of directors is governed by Section 10A-2A-7.28.
(f) Whenever a provision of this chapter provides for voting of classes or series as separate voting groups, the rules provided in Section 10A-2A-10.04(c) for amendments of the certificate of incorporation apply to that provision.
(Act 2019-94, §1.)
(a) If the certificate of incorporation or this chapter provides for voting by a single voting group on a matter, action on that matter is taken when voted upon by that voting group as provided in Section 10A-2A-7.25.
(b) If the certificate of incorporation or this chapter provides for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately as provided in Section 10A-2A-7.25. Action may be taken by different voting groups on a matter at different times.
(Act 2019-94, §1.)
An amendment to the certificate of incorporation that adds, changes, or deletes a quorum or voting requirement shall meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever is greater.
(Act 2019-94, §1.)
(a) Unless otherwise provided in the certificate of incorporation, directors are elected by a plurality of the votes cast by the stock entitled to vote in the election at a meeting at which a quorum is present.
(b) Stockholders do not have a right to cumulate their votes for directors unless the certificate of incorporation so provides.
(c) A statement included in the certificate of incorporation that ”[all] [a designated voting group of] stockholders are entitled to cumulate their votes for directors” (or words of similar import) means that the stockholders designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two or more candidates.
(d) Stock otherwise entitled to vote cumulatively may not be voted cumulatively at a particular meeting unless:
(1) the meeting notice or proxy statement accompanying the notice states conspicuously that cumulative voting is authorized; or
(2) a stockholder who has the right to cumulate the stockholder’s votes gives notice to the corporation not less than 48 hours before the time set for the meeting of the stockholder’s intent to cumulate votes during the meeting, and if one stockholder gives this notice all other stockholders in the same voting group participating in the election are entitled to cumulate their votes without giving further notice.
(Act 2019-94, §1.)
(a) The corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector’s ability.
(b) The inspectors shall:
(1) Ascertain the number of shares of stock outstanding and the voting power of each;
(2) Determine the shares of stock represented at a meeting and the validity of proxies and ballots;
(3) Count all votes and ballots;
(4) Determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and
(5) Certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.
(c) The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxies, or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the corporation’s most recent registered office is located, upon application by a stockholder shall determine otherwise.
(d) In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in accordance with Section 10A-2A-7.22, or any information provided pursuant to Section 10A-2A-7.09(b), ballots and the regular books and records of the corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees, or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification pursuant to subsection (b)(5) of this section shall specify the precise information considered by them including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained, and the basis for the inspectors’ belief that the information is accurate and reliable.
(e) Unless otherwise provided in the certificate of incorporation or bylaws, this section shall not apply to a corporation that does not have a class of voting stock that is:
(1) Listed on a national securities exchange;
(2) Authorized for quotation on an interdealer quotation system of a registered national securities association; or
(3) Held of record by more than 2,000 stockholders.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) One or more stockholders may create a voting trust, conferring on a trustee the right to vote or otherwise act for them, by signing an agreement setting out the provisions of the trust (which may include anything consistent with its purpose) and transferring their stock to the trustee. When a voting trust agreement is signed, the trustee shall prepare a list of the names and addresses of all voting trust beneficial owners, together with the number and class of stock each transferred to the trust, and deliver copies of the list and agreement to the corporation at its principal office.
(b) A voting trust becomes effective on the date the first shares of stock subject to the trust are registered in the trustee’s name.
(c) Limits, if any, on the duration of a voting trust shall be as set forth in the voting trust. A voting trust that became effective when this chapter provided a 10-year limit on its duration remains governed by the provisions of this section concerning duration then in effect, unless the voting trust is amended to provide otherwise by unanimous agreement of the parties to the voting trust.
(Act 2019-94, §1.)
(a) Two or more stockholders may provide for the manner in which they will vote their stock by signing an agreement for that purpose. A voting agreement created under this section is not subject to the provisions of Section 10A-2A-7.30.
(b) A voting agreement created under this section is specifically enforceable.
(Act 2019-94, §1.)
(a) An agreement among the stockholders of a corporation that complies with this section is effective among the stockholders and the corporation even though it is inconsistent with one or more other provisions of this chapter in that it:
(1) eliminates the board of directors or restricts the discretion or powers of the board of directors;
(2) governs the authorization or making of distributions, regardless of whether they are in proportion to ownership of stock, subject to the limitations in Section 10A-2A-6.40;
(3) establishes who shall be directors or officers of the corporation, or their terms of office or manner of selection or removal;
(4) governs, in general or in regard to specific matters, the exercise or division of voting power by or between the stockholders and directors or by or among any of them, including use of weighted voting rights;
(5) establishes the terms and conditions of any agreement for the transfer or use of property or the provision of services between the corporation and any stockholder, director, officer, or employee of the corporation or among any of them;
(6) transfers to one or more stockholders or other persons all or part of the authority to exercise the corporate powers or to manage the business and affairs of the corporation, including the resolution of any issue about which there exists a deadlock among directors or stockholders;
(7) requires dissolution of the corporation at the request of one or more of the stockholders or upon the occurrence of a specified event or contingency; or
(8) otherwise governs the exercise of the corporate powers or the management of the business and affairs of the corporation or the relationship among the stockholders, the directors and the corporation, or among any of them, and is not contrary to public policy.
(b) An agreement authorized by this section shall be:
(1) as set forth (i) in the certificate of incorporation or bylaws and approved by all persons who are stockholders at the time of the agreement, or (ii) in a written agreement that is signed by all persons who are stockholders at the time of the agreement and is made known to the corporation; and
(2) subject to amendment only by all persons who are stockholders at the time of the amendment, unless the agreement provides otherwise.
(c) The existence of an agreement authorized by this section shall be noted conspicuously on the front or back of each certificate for outstanding stock or in the information required by Section 10A-1-3.45. If at the time of the agreement the corporation has stock outstanding represented by certificates, the corporation shall recall the outstanding certificates and issue substitute certificates that comply with this subsection. The failure to note the existence of the agreement as required by this subsection shall not affect the validity of the agreement or any action taken pursuant to it. Any purchaser of stock who, at the time of purchase, did not have knowledge of the existence of the agreement shall be entitled to rescission of the purchase. A purchaser shall be deemed to have knowledge of the existence of the agreement if its existence is noted on the certificate or if the stock is not represented by a certificate, the information required by Section 10A-1-3.45 is delivered to the purchaser at or before the time of purchase of the stock. An action to enforce the right of rescission authorized by this subsection shall be commenced within the earlier of 90 days after discovery of the existence of the agreement or two years after the time of purchase of the stock.
(d) If the agreement ceases to be effective for any reason, the board of directors may, if the agreement is contained or referred to in the corporation’s certificate of incorporation or bylaws, adopt an amendment to the certificate of incorporation or bylaws, without stockholder action, to delete the agreement and any references to it.
(e) An agreement authorized by this section that limits the discretion or powers of the board of directors shall relieve the directors of, and impose upon the person or persons in whom the discretion or powers are vested, liability for acts or omissions imposed by law on directors to the extent that the discretion or powers of the directors are limited by the agreement. An agreement authorized by this section that eliminates the board of directors shall impose on the person or persons in whom the discretion or powers of the directors are vested the liability for acts or omissions as are imposed by law on directors.
(f) The existence or performance of an agreement authorized by this section shall not be a ground for imposing personal liability on any stockholder for the acts or debts of the corporation even if the agreement or its performance treats the corporation as if it were a partnership or results in failure to observe the corporate formalities otherwise applicable to the matters governed by the agreement.
(g) Incorporators or subscribers for stock may act as stockholders with respect to an agreement authorized by this section if no stock has been issued when the agreement is made.
(h) Limits, if any, on the duration of an agreement authorized by this section must be set forth in the agreement.
(Act 2019-94, §1; Act 2023-503, §3.)
In this division:
(1) COURT means the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located.
(2) DERIVATIVE ACTION means a civil suit in the right of a corporation or, to the extent provided in Section 10A-2A-7.48, in the right of a foreign corporation.
(3) STOCKHOLDER means a record stockholder, a beneficial stockholder, and an unrestricted voting trust beneficial owner.
(Act 2019-94, §1; Act 2020-73, §7; Act 2025-281, §2.)
A stockholder may commence or maintain a derivative action in the right of a corporation to enforce a right of the corporation by complying with this division.
(Act 2019-94, §1.)
A stockholder may commence or maintain a derivative action in the right of the corporation only if the stockholder:
(1) fairly and adequately represents the interests of the corporation in enforcing the right of the corporation; and
(2) either:
(A) was a stockholder of the corporation at the time of the act or omission of which the stockholder complains; or
(B) whose status as a stockholder devolved upon the person by operation of law from a person who was a stockholder at the time of the act or omission of which the stockholder complains.
(Act 2019-94, §1.)
A stockholder may commence a derivative action in the right of the corporation, if:
(a) the stockholder first makes a written demand upon the corporation requesting that it bring an action to enforce the right and the corporation does not bring the action within a reasonable time; or
(b) a demand under subsection (a) would be futile.
(Act 2019-94, §1.)
In a derivative action, the complaint must state with particularity:
(a) the date and content of plaintiff’s demand and the corporation’s response by the corporation to the demand; or
(b) why the demand should be excused as futile.
(Act 2019-94, §1.)
For the purpose of allowing the corporation time to undertake an inquiry into the allegations made in the demand or complaint commenced pursuant to this division, the court may stay any derivative action for the period the court deems appropriate.
(Act 2019-94, §1.)
A derivative action may not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to stockholders of the corporation in such manner as the court directs.
(Act 2019-94, §1.)
(a) Except as otherwise provided in subsection (b):
(1) any proceeds or other benefits of a derivative action, whether by judgment, compromise, or settlement, belong to the corporation and not to the derivative plaintiff; and
(2) if the derivative plaintiff receives any proceeds, the derivative plaintiff shall immediately remit them to the corporation.
(b) If a derivative action is successful in whole or in part, the court may award the plaintiff reasonable expenses, including reasonable attorney’s fees, from the recovery of the corporation.
(Act 2019-94, §1.)
In any derivative action in the right of a foreign corporation, the right of a person to commence or maintain a derivative action in the right of a foreign corporation, and any matters raised in the action covered by Sections 10A-2A-7.42 through 10A-2A-7.47, shall be governed by the law of the jurisdiction under which the foreign corporation was formed; except that any matters raised in the action covered by Sections 10A-2A-7.45, 10A-2A-7.46, and 10A-2A-7.47 shall be governed by the law of this state.
(Act 2019-94, §1.)
(a) Except as may be provided in an agreement authorized under Section 10A-2A-7.32, each corporation shall have a board of directors.
(b) Except as may be provided in an agreement authorized under Section 10A-2A-7.32, and subject to any limitation in the certificate of incorporation permitted by Section 10A-2A-2.02(b), all corporate powers shall be exercised by or under the authority of the board of directors, and the business and affairs of the corporation shall be managed by or under the direction, and subject to the oversight, of the board of directors.
(Act 2019-94, §1.)
(a) The certificate of incorporation or bylaws may prescribe qualifications for directors or for nominees for directors. Qualifications must be reasonable as applied to the corporation and be lawful.
(b) A requirement that is based on a past, prospective, or current action, or expression of opinion, by a nominee for director or a director that could limit the ability of a nominee for director or a director to discharge his or her duties as a director is not a permissible qualification under this section. Notwithstanding the foregoing, qualifications may include not being or having been subject to specified criminal, civil, or regulatory sanctions or not having been removed as a director by judicial action or for cause.
(c) A director shall be a natural person of the age of at least 19 years but need not be a resident of this state or a stockholder unless the certificate of incorporation or bylaws so prescribe.
(d) A qualification for nomination for director prescribed before a person’s nomination shall apply to that person at the time of nomination. A qualification for nomination for director prescribed after a person’s nomination shall not apply to that person with respect to that person’s nomination.
(e) A qualification for director prescribed before a director has been elected or appointed may apply only at the time an individual becomes a director or may apply during a director’s term. A qualification prescribed after a director has been elected or appointed shall not apply to that director before the end of that director’s term.
(Act 2019-94, §1.)
(a) A board of directors shall consist of one or more individuals, with the number specified in or fixed in accordance with the certificate of incorporation or bylaws.
(b) The number of directors may be increased or decreased from time to time by amendment to, or in the manner provided in, the certificate of incorporation or bylaws.
(c) Except as set forth in Section 10A-2A-2.04, directors are elected at the first annual stockholders’ meeting and at each annual stockholders’ meeting thereafter unless elected by written consent in lieu of an annual meeting as permitted by Section 10A-2A-7.04 or unless their terms are staggered under Section 10A-2A-8.06.
(Act 2019-94, §1.)
If the certificate of incorporation or action by the board of directors pursuant to Section 10A-2A-6.02 authorizes dividing the stock into classes or series, the certificate of incorporation may also authorize the election of all or a specified number of directors by the holders of one or more authorized classes or series of stock. A class or series (or multiple classes or series) of stock entitled to elect one or more directors is a separate voting group for purposes of the election of directors.
(Act 2019-94, §1.)
(a) The terms of the initial directors of a corporation expire at the first stockholders’ meeting at which directors are elected.
(b) The terms of all other directors expire at the next, or if their terms are staggered in accordance with Section 10A-2A-8.06, at the applicable second or third, annual stockholders’ meeting following their election, except to the extent (i) provided in Section 10A-2A-10.22 if a bylaw electing to be governed by that section is in effect, or (ii) a shorter term is specified in the certificate of incorporation in the event of a director nominee failing to receive a specified vote for election.
(c) A decrease in the number of directors does not shorten an incumbent director’s term.
(d) Except as set forth in the next sentence of this subsection, the term of a director elected to fill a vacancy expires at the next stockholders’ meeting at which directors are elected. The term of a director elected to fill a vacancy in a corporation, the directors of which have been divided into groups under Section 10A-2A-8.06, shall hold office until the next election of the group for which that group of directors has been chosen, and until their successors shall be elected and qualified.
(e) Except to the extent otherwise provided in the certificate of incorporation or under Section 10A-2A-10.22 if a bylaw electing to be governed by that section is in effect, despite the expiration of a director’s term, the director continues to serve until the director’s successor is elected and qualifies or there is a decrease in the number of directors.
(Act 2019-94, §1.)
The certificate of incorporation may provide for staggering the terms of directors by dividing the total number of directors into two or three groups, with each group containing half or one-third of the total, as near as may be practicable. In that event, the terms of directors in the first group expire at the first annual stockholders’ meeting after their election, the terms of the second group expire at the second annual stockholders’ meeting after their election, and the terms of the third group, if any, expire at the third annual stockholders’ meeting after their election. At each annual stockholders’ meeting held thereafter, directors shall be elected for a term of two years or three years, as the case may be, to succeed those whose terms expire.
(Act 2019-94, §1.)
(a) A director may resign at any time by delivering a written notice of resignation to the board of directors or its chair, to the secretary, or to the corporation.
(b) A resignation is effective as provided in Section 10A-2A-1.41(i) unless the resignation provides for a delayed effectiveness, including effectiveness determined upon a future event or events. A resignation that is conditioned upon failing to receive a specified vote for election as a director may provide that it is irrevocable.
(Act 2019-94, §1.)
(a) The stockholders may remove one or more directors with or without cause unless the certificate of incorporation provides that directors may be removed only for cause.
(b) If a director is elected by a voting group of stockholders, only the stockholders of that voting group may participate in the vote to remove that director.
(c) A director may be removed if the number of votes cast to remove exceeds the number of votes cast not to remove the director, except to the extent the certificate of incorporation or bylaws require a greater number; provided that if cumulative voting is authorized, a director may not be removed if, in the case of a meeting, the number of votes sufficient to elect the director under cumulative voting is voted against removal and, if in the case of an action by written consent, the action is taken by less than unanimous consent.
(d) A director may be removed by the stockholders only at a meeting called for the purpose of removing the director and the meeting notice must state that removal of the director is a purpose of the meeting.
(Act 2019-94, §1.)
(a) The designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located may remove a director from office or may order other relief, including barring the director from reelection for a period prescribed by the court, in a proceeding commenced by or in the right of the corporation if the court finds that (i) the director engaged in fraudulent conduct with respect to the corporation or its stockholders, grossly abused the position of director, or intentionally inflicted harm on the corporation; and (ii) considering the director’s course of conduct and the inadequacy of other available remedies, removal or such other relief would be in the best interest of the corporation.
(b) A stockholder proceeding on behalf of the corporation under subsection (a) shall comply with all of the requirements of Division D of Article 7, except clause (2) of Section 10A-2A-7.42.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) Except as otherwise provided in Section 10A-2A-8.10(b) or the certificate of incorporation, if a vacancy occurs on the board of directors, including a vacancy resulting from an increase in the number of directors:
(1) the stockholders may fill the vacancy;
(2) the board of directors may fill the vacancy; or
(3) if the directors remaining in office are less than a quorum, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
(b) Unless the certificate of incorporation provides otherwise, if the vacant office was held by a director elected by a voting group of stockholders, only the holders of stock of that voting group are entitled to vote to fill the vacancy if it is filled by the stockholders, and only the remaining directors elected by that voting group, even if less than a quorum, are entitled to fill the vacancy if it is filled by the directors.
(c) A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date under Section 10A-2A-8.07(b) or otherwise) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.
(Act 2019-94, §1; Act 2023-503, §3.)
Unless the certificate of incorporation or bylaws provide otherwise, the board of directors may fix the compensation of directors.
(Act 2019-94, §1.)
(a) The board of directors may hold regular or special meetings in or out of this state.
(b) Unless restricted by the certificate of incorporation or bylaws, any or all directors may participate in any meeting of the board of directors through the use of any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
(Act 2019-94, §1.)
(a) Except to the extent that the certificate of incorporation or bylaws require that action by the board of directors be taken at a meeting, action required or permitted by this chapter to be taken by the board of directors may be taken without a meeting if each director signs a consent describing the action to be taken and delivers it to the corporation.
(b) Action taken under this section is the act of the board of directors when one or more consents signed by all the directors are delivered to the corporation. Any director executing a consent may provide, whether through instruction to an agent or otherwise, that such consent will be effective at a future time, including a time determined upon the happening of an event, occurring not later than 60 days after such instruction is given or such provision is made, if evidence of the instruction or provision is provided to the corporation. A director’s consent may be withdrawn by a revocation signed by the director and delivered to the corporation before delivery to the corporation of unrevoked written consents signed by all the directors.
(c) A consent signed under this section has the effect of action taken at a meeting of the board of directors and may be described as such in any document.
(Act 2019-94, §1; Act 2023-503, §3.)
(a) Unless the certificate of incorporation or bylaws provide otherwise, regular meetings of the board of directors may be held without notice of the place, if any, date, time, or purpose of the meeting.
(b) Unless the certificate of incorporation or bylaws provide for a longer or shorter period, special meetings of the board of directors shall be preceded by at least two days’ notice of the place, if any, date, time of the meeting. The notice need not describe the purpose of the special meeting unless required by the certificate of incorporation or bylaws.
(Act 2019-94, §1; Act 2023-503, §3.)
(a) A director may waive any notice required by this chapter, the certificate of incorporation or the bylaws before or after the date and time stated in the notice. Except as provided by subsection (b), the waiver must be in writing, signed by the director entitled to the notice and delivered to the corporation for filing by the corporation with the minutes or corporate records.
(b) A director’s attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting (or promptly upon arrival) objects to holding the meeting or transacting business at the meeting and does not after objecting vote for or assent to action taken at the meeting.
(Act 2019-94, §1.)
(a) Unless the certificate of incorporation or bylaws provide for a greater or lesser number or unless otherwise expressly provided in this chapter, a quorum of a board of directors consists of a majority of the number of directors specified in or fixed in accordance with the certificate of incorporation or bylaws.
(b) The quorum of the board of directors specified in or fixed in accordance with the certificate of incorporation or bylaws may not consist of less than one-third of the specified or fixed number of directors.
(c) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the certificate of incorporation or bylaws require the vote of a greater number of directors or unless otherwise expressly provided in this chapter.
(d) A director who is present at a meeting of the board of directors or a committee when corporate action is taken is deemed to have assented to the action taken unless: (i) the director objects at the beginning of the meeting (or promptly upon arrival) to holding it or transacting business at the meeting; (ii) the dissent or abstention from the action taken is entered in the minutes of the meeting; or (iii) the director delivers written notice of the director’s dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a director who votes in favor of the action taken.
(Act 2019-94, §1; Act 2023-503, §1.)
(a) Unless this chapter, the certificate of incorporation, or the bylaws provide otherwise, a board of directors may establish one or more board committees composed exclusively of one or more directors to perform functions of the board of directors.
(b) The establishment of a board committee and appointment of members to it shall be approved by the greater of (i) a majority of all the directors in office when the action is taken or (ii) the number of directors required by the certificate of incorporation or bylaws to take action under Section 10A-2A-8.24, unless, in either case, this chapter or the certificate of incorporation provides otherwise.
(c) Section 10A-2A-8.20 through Section 10A-2A-8.24 apply to board committees and their members.
(d) A board committee may exercise the powers of the board of directors under Section 10A-2A-8.01, to the extent specified by the board of directors or in the certificate of incorporation or bylaws, except that a board committee may not:
(1) authorize or approve distributions, except according to a formula or method, or within limits, prescribed by the board of directors;
(2) approve or propose to stockholders action that this chapter requires be approved by stockholders;
(3) fill vacancies on the board of directors or, subject to subsection (e), on any board committees; or
(4) adopt, amend, or repeal bylaws or amend or restate the certificate of incorporation.
(e) The board of directors may appoint one or more directors as alternate members of any board committee to replace any absent or disqualified member during the member’s absence or disqualification. If the certificate of incorporation, the bylaws, or the resolution creating the board committee so provide, the member or members present at any board committee meeting and not disqualified from voting may, by unanimous action, appoint another director to act in place of an absent or disqualified member during that member’s absence or disqualification.
(Act 2019-94, §1.)
A corporation may agree to submit a matter to a vote of its stockholders even if, after approving the matter, the board of directors determines it no longer recommends the matter.
(Act 2019-94, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) Whenever this chapter expressly requires the board of directors to approve or take other action with respect to any agreement, instrument, plan, or document, such agreement, instrument, plan, or document may be approved by the board of directors in final form or in substantially final form. Substantially final form means that all of the material terms are set forth in the agreement, instrument, plan, or document, or are determinable through other information or materials presented to or known by the board of directors, or are determinable by a combination thereof.
(b) If the board of directors shall have acted to approve or take other action with respect to an agreement, instrument, plan, or document that is expressly required by this chapter to be approved by the board of directors, the board of directors may, but is not required to, at any time after providing the approval or taking such other action adopt a resolution ratifying the agreement, instrument, plan, or document, and the ratification shall be deemed to be effective as of the time of the original approval or other action by the board of directors and to satisfy any requirement under this chapter that the board of directors approve or take other action with respect to the agreement, instrument, plan, or document in a specific manner or sequence.
(Act 2025-281, §8.)
[Effective: 2026-08-01]
(a) Whenever this chapter expressly requires the board of directors to approve or take other action with respect to any agreement, instrument, plan, or document, such agreement, instrument, plan, or document may be approved by the board of directors in final form or in substantially final form. Substantially final form means that all of the material terms are set forth in the agreement, instrument, plan, or document, or are determinable through other information or materials presented to or known by the board of directors, or are determinable by a combination thereof, except as otherwise described in subsection (c).
(b) If the board of directors shall have acted to approve or take other action with respect to an agreement, instrument, plan, or document that is expressly required by this chapter to be approved by the board of directors, the board of directors may, but is not required to, at any time after providing the approval or taking such other action adopt a resolution ratifying the agreement, instrument, plan, or document, and the ratification shall be deemed to be effective as of the time of the original approval or other action by the board of directors and to satisfy any requirement under this chapter that the board of directors approve or take other action with respect to the agreement, instrument, plan, or document in a specific manner or sequence.
(c) At the time of the approval of any agreement, instrument, plan, or document by the board of directors, the agreement, instrument, plan, or document is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the agreement, instrument, plan, or document that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the agreement, instrument, plan, or document.
(Act 2025-281, §8; Act 2026-495, §1.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) Each member of the board of directors, when discharging the duties of a director, shall act: (i) in good faith, and (ii) in a manner the director reasonably believes to be in the best interests of the corporation.
(b) The members of the board of directors or a board committee, when becoming informed in connection with their decision-making function or devoting attention to their oversight function, shall discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.
(c) In discharging board of directors or board committee duties, a director shall disclose, or cause to be disclosed, to the other board of directors or board committee members information not already known by them but known by the director to be material to the discharge of their decision-making or oversight functions, except that disclosure is not required to the extent that the director reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule.
(d) In discharging board of directors or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on the performance by any of the persons specified in subsection (f)(1) or subsection (f)(3) to whom the board of directors may have delegated, formally or informally by course of conduct, the authority or duty to perform one or more of the board of directors’ functions that are delegable under applicable law.
(e) In discharging board of directors or board committee duties, a director who does not have knowledge that makes reliance unwarranted is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by any of the persons specified in subsection (f).
(f) A director is entitled to rely, in accordance with subsection (d) or (e), on:
(1) one or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the functions performed or the information, opinions, reports or statements provided;
(2) legal counsel, public accountants, or other persons retained by the corporation as to matters involving skills or expertise the director reasonably believes are matters (i) within the particular person’s professional or expert competence, or (ii) as to which the particular person merits confidence; or
(3) a board committee of which the director is not a member if the director reasonably believes the committee merits confidence.
(Act 2019-94, §1; Act 2021-299, §3.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) A director shall not be liable to the corporation or its stockholders for any decision to take or not to take action, or any failure to take any action, as a director, unless the party asserting liability in a proceeding establishes that:
(1) no defense interposed by the director based on (i) any provision in the certificate of incorporation authorized by Section 10A-2A-2.02(b)(4) or by Section 10A-2A-2.02(b)(6), or (ii) the protection afforded by Section 10A-2A-8.60, precludes liability; and
(2) the challenged conduct consisted or was the result of:
(i) action not in good faith; or
(ii) a decision
(A) which the director did not reasonably believe to be in the best interests of the corporation, or
(B) as to which the director was not informed to an extent the director reasonably believed appropriate in the circumstances; or
(iii) a lack of objectivity due to the director’s familial, financial or business relationship with, or a lack of independence due to the director’s domination or control by, another person having a material interest in the challenged conduct,
(A) which relationship or which domination or control could reasonably be expected to have affected the director’s judgment respecting the challenged conduct in a manner adverse to the corporation, and
(B) after a reasonable expectation to that effect has been established, the director shall not have established that the challenged conduct was reasonably believed by the director to be in the best interests of the corporation; or
(iv) a sustained failure of the director to devote attention to ongoing oversight of the business and affairs of the corporation, or a failure to devote timely attention, by making (or causing to be made) appropriate inquiry, when particular facts and circumstances of significant concern materialize that would alert a reasonably attentive director to the need for that inquiry; or
(v) receipt of a financial benefit to which the director was not entitled or any other breach of the director’s duties to deal fairly with the corporation and its stockholders that is actionable under applicable law.
(b) The party seeking to hold the director liable:
(1) for money damages, shall also have the burden of establishing that:
(i) harm to the corporation or its stockholders has been suffered, and
(ii) the harm suffered was proximately caused by the director’s challenged conduct; or
(2) for other money payment under a legal remedy, such as compensation for the unauthorized use of corporate assets, shall also have whatever persuasion burden may be called for to establish that the payment sought is appropriate in the circumstances; or
(3) for other money payment under an equitable remedy, such as profit recovery by or disgorgement to the corporation, shall also have whatever persuasion burden may be called for to establish that the equitable remedy sought is appropriate in the circumstances.
(c) Nothing contained in this section shall (i) in any instance where fairness is at issue alter the burden of proving the fact or lack of fairness otherwise applicable, (ii) alter the fact or lack of liability of a director under another section of this chapter, such as the provisions governing the consequences of an unlawful distribution under Section 10A-2A-8.32 or a transactional interest under Section 10A-2A-8.60, or (iii) affect any rights to which the corporation or a stockholder may be entitled under another statute of this state or the United States.
(Act 2019-94, §1; Act 2021-299, §3.)
(a) A director who votes for or assents to a distribution in excess of what may be authorized and made pursuant to Section 10A-2A-6.40(a) or Section 10A-2A-14.08(a) is personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating Section 10A-2A-6.40(a) or Section 10A-2A-14.08(a) if the party asserting liability establishes that when taking the action the director did not comply with Section 10A-2A-8.30.
(b) A director held liable under subsection (a) for an unlawful distribution is entitled to:
(1) contribution from every other director who could be held liable under subsection (a) for the unlawful distribution; and
(2) recoupment from each stockholder of the pro-rata portion of the amount of the unlawful distribution the stockholder accepted, knowing the distribution was made in violation of Section 10A-2A-6.40(a) or Section 10A-2A-14.08(a).
(c) A proceeding to enforce:
(1) the liability of a director under subsection (a) is barred unless it is commenced within two years after the date (i) on which the effect of the distribution was measured under Section 10A-2A-6.40(e) or (g), (ii) as of which the violation of Section 10A-2A-6.40(a) occurred as the consequence of disregard of a restriction in the certificate of incorporation, or (iii) on which the distribution of assets to stockholders under Section 10A-2A-14.08(a) was made; or
(2) contribution or recoupment under subsection (b) is barred unless it is commenced within one year after the liability of the claimant has been finally adjudicated under subsection (a).
(Act 2019-94, §1.)
(a) A corporation has the officers described in its certificate of incorporation or bylaws or appointed by the board of directors in accordance with the certificate of incorporation or bylaws.
(b) The board of directors may elect individuals to fill one or more offices of the corporation. An officer may appoint one or more officers if authorized by the certificate of incorporation or bylaws or the board of directors.
(c) The certificate of incorporation, bylaws, or the board of directors shall assign to an officer responsibility for maintaining and authenticating the records of the corporation required to be kept under Section 10A-2A-16.01(a).
(d) Unless the certificate of incorporation or bylaws provide otherwise, the same individual may simultaneously hold more than one office in a corporation.
(Act 2019-94, §1.)
Each officer has the authority and shall perform the functions set forth in the certificate of incorporation or bylaws or, to the extent consistent with the certificate of incorporation or bylaws, the functions prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the functions of other officers.
(Act 2019-94, §1.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) An officer, when performing in his or her capacity as such, has the duty to act:
(1) in good faith;
(2) with the care that a person in a like position would reasonably exercise under similar circumstances; and
(3) in a manner the officer reasonably believes to be in the best interests of the corporation.
(b) The duty of an officer includes the obligation:
(1) to inform the superior officer to whom, or the board of directors or the board committee to which, the officer reports of information about the affairs of the corporation known to the officer, within the scope of the officer’s functions, and known to the officer to be material to that superior officer, board of directors or board committee; and
(2) to inform his or her superior officer, or another appropriate person within the corporation, or the board of directors, or a board committee, of any actual or probable material violation of law involving the corporation or material breach of duty to the corporation by an officer, employee, or agent of the corporation, that the officer believes has occurred or is likely to occur.
(c) In discharging an officer’s duties, an officer who does not have knowledge that makes reliance unwarranted is entitled to rely on:
(1) the performance of properly delegated responsibilities by one or more employees of the corporation whom the officer reasonably believes to be reliable and competent in performing the responsibilities delegated; or
(2) information, opinions, reports or statements, including financial statements and other financial data, prepared or presented by one or more employees of the corporation whom the officer reasonably believes to be reliable and competent in the matters presented or by legal counsel, public accountants, or other persons retained by the corporation as to matters involving skills or expertise the officer reasonably believes are matters (i) within the particular person’s professional or expert competence or (ii) as to which the particular person merits confidence.
(d) An officer shall not be liable to the corporation or its stockholders for any decision to take or not to take action, or any failure to take any action, as an officer, if the duties of the office are performed in compliance with this section. Whether an officer who does not comply with this section shall have liability will depend in each instance on applicable law, including those principles of Section 10A-2A-8.31 that have relevance.
(Act 2019-94, §1; Act 2021-299, §3.)
Division C of Article 3 of Chapter 1 shall not apply to this chapter. Instead:
(a) An officer may resign at any time by delivering a written notice to the board of directors, its chair, the appointing officer, the secretary, or the corporation. A resignation is effective as provided in Section 10A-2A-1.41(i) unless the notice provides for a delayed effectiveness, including effectiveness determined upon a future event or events. If effectiveness of a resignation is stated to be delayed and the board of directors or the appointing officer accepts the delay, the board of directors or the appointing officer may fill the pending vacancy before the delayed effectiveness but the new officer may not take office until the vacancy occurs.
(b) An officer may be removed at any time with or without cause by (i) the board of directors; (ii) the appointing officer, unless the certificate of incorporation, bylaws, or the board of directors provide otherwise; or (iii) any other officer if authorized by the certificate of incorporation, bylaws, or the board of directors.
(c) In this section, “appointing officer” means the officer (including any successor to that officer) who appointed the officer resigning or being removed.
(Act 2019-94, §1; Act 2021-299, §3.)
(a) The election or appointment of an officer does not itself create contract rights.
(b) 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.
(Act 2019-94, §1.)
In this division:
(1) “Corporation” includes any domestic or foreign predecessor entity of a corporation.
(2) “Director” or “officer” means an individual who is or was a director or officer, respectively, of a corporation or who, while a director or officer of the corporation, is or was serving at the corporation’s request as a director, officer, manager, partner, trustee, employee, or agent of another entity or employee benefit plan. A director or officer is considered to be serving an employee benefit plan at the corporation’s request if the individual’s duties to the corporation also impose duties on, or otherwise involve services by, the individual to the plan or to participants in or beneficiaries of the plan. “Director” or “officer” includes, unless the context requires otherwise, the estate or personal representative of a director or officer.
(3) “Liability” means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or expenses incurred with respect to a proceeding.
(4) “Official capacity” means: (i) when used with respect to a director, the office of director in a corporation; and (ii) when used with respect to an officer, as contemplated in Section 10A-2A-8.56, the office in a corporation held by the officer. “Official capacity” does not include service for any other corporation or foreign corporation or any joint venture, trust, employee benefit plan, or other entity.
(5) “Party” means an individual who was, is, or is threatened to be made, a defendant or respondent in a proceeding.
(6) “Proceeding” means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative and whether formal or informal.
(Act 2019-94, §1.)
(a) Except as otherwise provided in this section, a corporation may indemnify an individual who is a party to a proceeding because the individual is a director against liability incurred in the proceeding if:
(1) (i) the director conducted himself or herself in good faith; and
(ii) the director reasonably believed:
(A) in the case of conduct in an official capacity, that his or her conduct was in the best interests of the corporation; and
(B) in all other cases, that his or her conduct was at least not opposed to the best interests of the corporation; and
(iii) in the case of any criminal proceeding, the director had no reasonable cause to believe his or her conduct was unlawful; or
(2) the director engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the certificate of incorporation (as authorized by Section 10A-2A-2.02(b)(5)).
(b) 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 the beneficiaries of, the plan is conduct that satisfies the requirement of subsection (a)(1)(ii)(B).
(c) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the relevant standard of conduct described in this section.
(d) Unless ordered by a court under Section 10A-2A-8.54(a)(3), a corporation may not indemnify a director:
(1) in connection with a proceeding by or in the right of the corporation, except for expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection (a); or
(2) in connection with any proceeding with respect to conduct for which the director was adjudged liable on the basis of receiving a financial benefit to which he or she was not entitled, regardless of whether it involved action in the director’s official capacity.
(Act 2019-94, §1.)
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 was a director of the corporation against expenses incurred by the director in connection with the proceeding.
(Act 2019-94, §1.)
(a) A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse expenses incurred in connection with the proceeding by an individual who is a party to the proceeding because that individual is a director if the director delivers to the corporation a signed written undertaking of the director to repay any funds advanced if (i) the director is not entitled to mandatory indemnification under Section 10A-2A-8.52 and (ii) it is ultimately determined under Section 10A-2A-8.54 or Section 10A-2A-8.55 that the director is not entitled to indemnification.
(b) The undertaking required by subsection (a) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to the financial ability of the director to make repayment.
(c) Authorizations under this section shall be made:
(1) by the board of directors:
(i) if there are two or more qualified directors, by a majority vote of all the qualified directors (a majority of whom shall for that purpose constitute a quorum) or by a majority of the members of a committee consisting solely of two or more qualified directors appointed by a majority vote of qualified directors; or
(ii) if there are fewer than two qualified directors, by the vote necessary for action by the board of directors in accordance with Section 10A-2A-8.24(c), in which authorization directors who are not qualified directors may participate; or
(2) by the stockholders, but stock owned by or voted under the control of a director who at the time is not a qualified director may not be voted on the authorization.
(Act 2019-94, §1.)
(a) A director who is a party to a proceeding because he or she is a director may apply for indemnification or an advance for expenses to the court conducting the proceeding or to another court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the court shall:
(1) order indemnification if the court determines that the director is entitled to mandatory indemnification under Section 10A-2A-8.52;
(2) order indemnification or advance for expenses if the court determines that the director is entitled to indemnification or advance for expenses pursuant to a provision authorized by Section 10A-2A-8.58(a); or
(3) order indemnification or advance for expenses if the court determines, in view of all the relevant circumstances, that it is fair and reasonable (i) to indemnify the director, or (ii) to advance expenses to the director, even if, in the case of (i) or (ii), he or she has not met the relevant standard of conduct set forth in Section 10A-2A-8.51(a), failed to comply with Section 10A-2A-8.53 or was adjudged liable in a proceeding referred to in Section 10A-2A-8.51(d)(1) or Section 10A-2A-8.51(d)(2), but if the director was adjudged so liable indemnification shall be limited to expenses incurred in connection with the proceeding.
(b) If the court determines that the director is entitled to indemnification under subsection (a)(1) or to indemnification or advance for expenses under subsection (a)(2), it shall also order the corporation to pay the director’s expenses incurred in connection with obtaining court-ordered indemnification or advance for expenses. If the court determines that the director is entitled to indemnification or advance for expenses under subsection (a)(3), it may also order the corporation to pay the director’s expenses to obtain court-ordered indemnification or advance for expenses.
(Act 2019-94, §1.)
(a) A corporation may not indemnify a director under Section 10A-2A-8.51 unless authorized for a specific proceeding after a determination has been made that indemnification is permissible because the director has met the relevant standard of conduct set forth in Section 10A-2A-8.51.
(b) The determination shall be made:
(1) if there are two or more qualified directors, by the board of directors by a majority vote of all the qualified directors (a majority of whom shall for that purpose constitute a quorum), or by a majority of the members of a committee of two or more qualified directors appointed by a majority vote of qualified directors;
(2) by special legal counsel:
(i) selected in the manner prescribed in subsection (b)(1); or
(ii) if there are fewer than two qualified directors, selected by the board of directors (in which selection directors who are not qualified directors may participate); or
(3) by the stockholders, but stock owned by or voted under the control of a director who at the time is not a qualified director may not be voted on the determination.
(c) Authorization of indemnification shall be made in the same manner as the determination that indemnification is permissible except that if there are fewer than two qualified directors, or if the determination is made by special legal counsel, authorization of indemnification shall be made by those entitled to select special legal counsel under subsection (b)(2)(ii).
(Act 2019-94, §1.)
(a) A corporation may indemnify and advance expenses under this Division E of this Article 8 to an officer who is a party to a proceeding because he or she is an officer
(1) to the same extent as a director; and
(2) if he or she is an officer but not a director, to such further extent as may be provided by the certificate of incorporation or the bylaws, or by a resolution adopted or a contract approved by the board of directors or stockholders, except for
(i) liability in connection with a proceeding by or in the right of the corporation other than for expenses incurred in connection with the proceeding, or
(ii) liability arising out of conduct that constitutes
(A) receipt by the officer of a financial benefit to which he or she is not entitled,
(B) an intentional infliction of harm on the corporation or the stockholders, or
(C) an intentional violation of criminal law.
(b) Subsection (a)(2) shall apply to an officer who is also a director if he or she is made a party to the proceeding based on an act or omission solely as an officer.
(c) An officer who is not a director is entitled to mandatory indemnification under Section 10A-2A-8.52, and may apply to a court under Section 10A-2A-8.54 for indemnification or an advance for expenses, in each case to the same extent to which a director may be entitled to indemnification or advance for expenses under those sections.
(Act 2019-94, §1.)
A corporation may purchase and maintain insurance on behalf of an individual who is a director or officer of the corporation, or who, while a director or officer of the corporation, serves at the corporation’s request as a director, officer, partner, trustee, employee, or agent of another corporation or foreign corporation or a joint venture, trust, employee benefit plan, or other entity, against liability asserted against or incurred by the individual in that capacity or arising from the individual’s status as a director or officer, regardless of whether the corporation would have power to indemnify or advance expenses to the individual against the same liability under this Division E of this Article 8.
(Act 2019-94, §1.)
(a) A corporation may, by a provision in its certificate of incorporation, bylaws, or in a resolution adopted or a contract approved by the board of directors or stockholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in accordance with Section 10A-2A-8.51 or advance funds to pay for or reimburse expenses in accordance with Section 10A-2A-8.53. Any obligatory provision shall be deemed to satisfy the requirements for authorization referred to in Section 10A-2A-8.53(c) and in Section 10A-2A-8.55(c). Any provision that obligates the corporation to provide indemnification to the fullest extent permitted by law shall be deemed to obligate the corporation to advance funds to pay for or reimburse expenses in accordance with Section 10A-2A-8.53 to the fullest extent permitted by law, unless the provision expressly provides otherwise.
(b) A right of indemnification or to advances for expenses created by this Division E of this Article 8 or under subsection (a) and in effect at the time of an act or omission shall not be eliminated or impaired with respect to the act or omission by an amendment of the certificate of incorporation, bylaws, or a resolution of the board of directors or stockholders, adopted after the occurrence of the act or omission, unless, in the case of a right created under subsection (a), the provision creating the right and in effect at the time of the act or omission explicitly authorizes elimination or impairment after the act or omission has occurred.
(c) Any provision pursuant to subsection (a) shall not obligate the corporation to indemnify or advance expenses to a director of a predecessor of the corporation, pertaining to conduct with respect to the predecessor, unless otherwise expressly provided. Any provision for indemnification or advance for expenses in the certificate of incorporation, bylaws, or a resolution of the board of directors or stockholders of a predecessor of the corporation in a merger or in a contract to which the predecessor is a party, existing at the time the merger takes effect, shall be governed by Section 10A-2A-11.07(a)(4).
(d) Subject to subsection (b), a corporation may, by a provision in its certificate of incorporation, limit any of the rights to indemnification or advance for expenses created by or pursuant to this Division E of this Article 8.
(e) This Division E of this Article 8 does not limit a corporation’s power to pay or reimburse expenses incurred by a director or an officer in connection with appearing as a witness in a proceeding at a time when he or she is not a party.
(f) This Division E of this Article 8 does not limit a corporation’s power to indemnify, advance expenses to or provide or maintain insurance on behalf of an employee or agent.
(Act 2019-94, §1.)
A corporation may provide indemnification or advance expenses to a director or an officer only as permitted by this Division E.
(Act 2019-94, §1; Act 2021-299, §3; Act 2023-503, §3.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) No contract or transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association, or other entity in which one or more of its directors or officers, are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board of directors or committee which authorizes the contract or transaction, or solely because the director’s or officer’s votes are counted for that purpose, if:
(1) The material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the qualified directors, even though the qualified directors be less than a quorum; or
(2) The material facts as to the director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee, or the stockholders.
(b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction.
(Act 2019-94, §1.)
[Effective: 2026-08-01]
(a) As used in this chapter, unless otherwise specified or unless the context otherwise requires, the following terms shall mean:
(1) CONFLICTING INTEREST TRANSACTION means an act or transaction effected or proposed to be effected by the corporation (or by an entity controlled by the corporation):
(i) to which, at the relevant time, a director or officer is a party;
(ii) respecting which, at the relevant time, the director or officer had knowledge and a material financial interest known to the director or officer; or
(iii) respecting which, at the relevant time, the director or officer knew that a related person was a party or had a material financial interest.
(2) CONTROL or CONTROLLED BY means (i) having the power, directly or indirectly, to elect or remove a majority of the members of the board of directors or other governing authority of an entity, whether through the ownership of voting shares or interests, by contract, or otherwise or (ii) being subject to a majority of the risk of loss from the entity’s activities or entitled to receive a majority of the entity’s residual returns.
(3) CONTROL GROUP means two or more persons that are not controlling stockholders that, by virtue of an agreement, arrangement, or understanding between or among those persons, constitute a controlling stockholder.
(4) CONTROLLING STOCKHOLDER means any person that, together with (i) any related person and (ii) any person that controls, is controlled by, or is under common control with that person:
(A) owns or controls a majority in voting power of the outstanding stock of the corporation entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors;
(B) has the right, by contract or otherwise, to cause the election of nominees who are selected at the discretion of that person and who constitute either a majority of the members of the board of directors or directors entitled to cast a majority in voting power of the votes of all directors on the board of directors;
(C) has the power functionally equivalent to that of a stockholder that owns or controls a majority in voting power of the outstanding stock of the corporation entitled to vote generally in the election of directors by virtue of ownership or control of at least one-third in voting power of the outstanding stock of the corporation entitled to vote generally in the election of directors or in the election of directors who have a majority in voting power of the votes of all directors on the board of directors and the power to exercise managerial authority over the business and affairs of the corporation; or
(D) owns or controls a majority in voting power of the outstanding stock of the corporation entitled to vote generally when the board of directors has been eliminated under Section 10A-2A-7.32.
(5) CONTROLLING STOCKHOLDER TRANSACTION means an act or transaction between the corporation or one or more of its subsidiaries, on the one hand, and a controlling stockholder or a control group, on the other hand, or an act or transaction from which a controlling stockholder or a control group receives a material financial or other benefit not shared with the corporation’s stockholders generally; provided that a merger under Section 10A-2A-11.05 is not a controlling stockholder transaction.
(6) DISINTERESTED STOCKHOLDER means any stockholder that does not have a material financial interest in the act or transaction at issue or, if applicable, a material relationship with the controlling stockholder or other member of the control group, or any other person that has a material financial interest in the act or transaction.
(7) FAIR TO THE CORPORATION means the act or transaction at issue, as a whole, is beneficial to the corporation or its stockholders in their capacity as stockholders, given the consideration paid to or received by the corporation or its stockholders or other benefit conferred on the corporation or its stockholders and taking into appropriate account whether the act or transaction meets both of the following: (i) it is fair in terms of the director’s, officer’s, controlling stockholder’s, or control group’s dealings with the corporation, as the case may be; and (ii) it is comparable to what might have been obtainable in an arm’s length transaction available to the corporation.
(8) GOING PRIVATE TRANSACTION means, other than a merger under Section 10A-2A-11.05:
(i) for a corporation with a class of equity securities subject to Section 12(g) or Section 15(d) of the Securities Exchange Act of 1934 [15 U.S.C. § 78l(g) or § 78o(d)] or listed on a national securities exchange, a “Rule 13e-3 transaction” (as defined in 17 CFR § 240.13e-3(a)(3) or any successor provision); and
(ii) for any other corporation to which subsection (a)(8)(i) does not apply, a transaction that (A) is a controlling stockholder transaction, including a merger, recapitalization, stock purchase, amendment to the certificate of incorporation, tender or exchange offer, stock exchange, or conversion and (B) pursuant to which all or substantially all of the shares of the corporation’s capital stock held by the disinterested stockholders (but not those of the controlling stockholder or control group) are cancelled, converted, purchased, or otherwise acquired or cease to be outstanding in exchange for cash or property other than the stock or an eligible interest in the surviving organization.
(9) MATERIAL FINANCIAL INTEREST means a nonspeculative financial interest in an act or transaction, other than one that would devolve on the corporation or the stockholders generally, that (i) in the case of a director or officer, would reasonably be expected to impair the objectivity of the director’s or officer’s judgment when participating in the negotiation, authorization, or approval of the act or transaction at issue or (ii) in the case of a stockholder or any other person (other than a director or officer), would be material to such stockholder or such other person.
(10) MATERIAL RELATIONSHIP has the meaning set forth in Section 10A-2A-1.43.
(11) QUALIFIED DIRECTOR has the meaning set forth in Section 10A-2A-1.43.
(12) RELATED PERSON has the meaning set forth in Section 10A-2A-2.02.
(13) RELEVANT TIME means (i) the time at which a directors’ action respecting the act or transaction is taken in compliance with subsection (c) or (ii) if the act or transaction is not brought before the board of directors (or a committee thereof) for action under subsection (c), at the time the corporation (or an entity controlled by the corporation) becomes legally obligated to consummate the act or transaction.
(14) REQUIRED DISCLOSURE means disclosure of (i) the existence and nature of the director’s or officer’s conflicting interest and (ii) all facts known to the director or officer respecting the subject matter of the act or transaction that a qualified director would reasonably believe to be material in deciding whether to proceed with the act or transaction.
(b)(1) An act or transaction effected or proposed to be effected by a corporation (or by an entity controlled by the corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the corporation, on the grounds that the director or officer has an interest respecting the act or transaction, if the act or transaction is not a conflicting interest transaction.
(2) Except for a controlling stockholder transaction under subsection (e), a conflicting interest transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a director or officer of the corporation, in a proceeding by a stockholder or by or in the right of the corporation, on the grounds that the director or officer has an interest respecting the conflicting interest transaction, if:
(i) the directors’ action respecting the act or transaction was taken in compliance with subsection (c) at any time; or
(ii) the stockholders’ action respecting the act or transaction was taken in compliance with subsection (d) at any time; or
(iii) the act or transaction is at the relevant time fair to the corporation.
(c)(1) Directors’ action respecting a conflicting interest transaction is effective for purposes of subsection (b)(2)(i) if the conflicting interest transaction has been authorized, after required disclosure by the conflicted director or officer of information not already known by the qualified directors, or after modified disclosure in compliance with subsection (c)(2), by (A) the affirmative vote of a majority (but no fewer than two) of the qualified directors who voted on the conflicting interest transaction or (B) the affirmative vote of a majority of the members of a board committee that is composed of only qualified directors (but no fewer than two). Directors’ action respecting a conflicting interest transaction is effective even though the conflicted director or officer is present at or participates in the meeting of the board or committee which authorizes the act or transaction or was involved in the initiation, negotiation, or approval of the act or transaction.
(2) Notwithstanding subsection (c)(1), when a transaction is a conflicting interest transaction only because a related person described in clause (v) or (vi) of the definition of “related person” in Section 10A-2A-2.02 is a party to or has a material financial interest in the conflicting interest transaction, the conflicted director or officer is not obligated to make required disclosure to the extent that the director or officer reasonably believes that doing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule, provided that the conflicted director or officer discloses to the qualified directors voting on the conflicting interest transaction:
(i) all information required to be disclosed that is not so violative;
(ii) the existence and nature of the director’s or officer’s conflicting interest; and
(iii) the nature of the conflicted director’s or officer’s duty not to disclose the confidential information.
(3) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the board committee, constitutes a quorum for purposes of action that complies with this section.
(4) Where directors’ action under this subsection (c) does not satisfy a quorum or voting requirement applicable to the authorization of the conflicting interest transaction by reason of the certificate of incorporation, the bylaws, or another provision of this chapter, independent action to satisfy those authorization requirements shall be taken by the board of directors or a board committee, in which action directors who are not qualified directors may participate.
(5) Where directors’ action under this subsection (c) is taken without a meeting in accordance with Section 10A-2A-8.21, the action is effective even though a conflicted director signs a consent to that action.
(d)(1) Stockholders’ action respecting a conflicting interest transaction is effective for purposes of subsection (b)(2)(ii) if a majority of the votes cast by the holders of all qualified shares are in favor of the conflicting interest transaction after (i) notice to stockholders describing the action to be taken respecting the conflicting interest transaction, (ii) provision to the corporation of the information referred to in subsection (d)(2), and (iii) communication to the stockholders entitled to vote on the conflicting interest transaction of the information that is the subject of required disclosure, to the extent the information is not already known by them. In the case of stockholders’ action at a meeting, the stockholders entitled to vote shall be determined as of the record date for notice of the meeting.
(2) A director or officer who has a conflicting interest respecting the conflicting interest transaction shall, before the stockholders’ vote, inform the secretary or other officer or agent of the corporation authorized to tabulate votes, in writing, of the number of shares that the director or officer knows are not qualified shares under subsection (c), and the identity of the holders of those shares.
(3) For purposes of this section: (i) “holder” means and “held by” refers to shares held by a record stockholder, a beneficial stockholder, and an unrestricted voting trust beneficial owner and (ii) “qualified shares” means all shares entitled to be voted with respect to the conflicting interest transaction except for shares that the secretary or other officer or agent of the corporation authorized to tabulate votes either knows, or under subsection (b) is notified, are held by (A) a director or officer who has a conflicting interest respecting the conflicting interest transaction or (B) a related person of the director or officer (excluding a person described in clause (vi) of the definition of a related person in Section 10A-2A-2.02).
(4) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of compliance with this section. Subject to the provisions of subsection (e), stockholders’ action that otherwise complies with this section is not affected by the presence of holders, or by the voting, of shares that are not qualified shares.
(5) If a stockholders’ vote does not comply with subsection (d)(1) solely because of a director’s or officer’s failure to comply with subsection (d)(2), and if the director or officer establishes that the failure was not intended to influence and did not in fact determine the outcome of the vote, then the action by the stockholders respecting the conflicting interest transaction shall be given effect.
(6) Where stockholders’ action under this section does not satisfy a quorum or voting requirement applicable to the authorization of the conflicting interest transaction by reason of the certificate of incorporation, the bylaws, or another provision of this chapter, independent action to satisfy those authorization requirements shall be taken by the stockholders, in which action shares that are not qualified shares may participate.
(7) Where stockholders’ action under this subsection (d) is taken without a meeting in accordance with Section 10A-2A-7.04, the action is effective even though stockholders holding shares that are not qualified shares sign a consent to that action.
(e)(1) An act or transaction effected or proposed to be effected by the corporation (or by an entity controlled by the corporation) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against a stockholder of the corporation, on the grounds that the stockholder has an interest respecting the act or transaction, if the act or transaction is not a controlling stockholder transaction.
(2) A controlling stockholder transaction (other than a going private transaction) may not be the subject of equitable relief, or give rise to an award of damages or other sanctions, against a director or officer of the corporation or any controlling stockholder or member of a control group, by reason of a claim based on a breach of fiduciary duty by a director or officer, or a duty (as described in Section 10A-2A-6.22) of a controlling stockholder or member of a control group, if:
(i) the material facts as to the controlling stockholder transaction (including the controlling stockholder’s or control group’s interest therein) are disclosed or are known to all members of the board of directors or a committee of the board of directors to which the board of directors has expressly delegated the authority to negotiate (or oversee the negotiation of) and to reject the controlling stockholder transaction, and the controlling stockholder transaction is approved (or recommended for approval) by the affirmative vote of a majority (but no fewer than two) of the qualified directors who voted on the controlling stockholder transaction; or
(ii) the controlling stockholder transaction is conditioned, by its terms, as in effect at the time it is submitted to stockholders for their approval or ratification, on the approval of or ratification by disinterested stockholders, and the controlling stockholder transaction is approved or ratified by an informed, uncoerced, affirmative vote of a majority of the votes cast by the disinterested stockholders; or
(iii) the controlling stockholder transaction is at the relevant time fair to the corporation.
(3) A controlling stockholder transaction constituting a going private transaction may not be the subject of equitable relief, or give rise to an award of damages or other sanctions, against a director or officer of the corporation or any controlling stockholder or member of a control group by reason of a claim based on breach of fiduciary duty by a director or officer or a duty (described in Section 10A-2A-6.22) of a controlling stockholder or member of a control group, if:
(i) the controlling stockholder transaction is approved (or recommended for approval) in accordance with subsection (e)(2)(i) and approved in accordance with subsection (e)(2)(ii); or
(ii) the controlling stockholder transaction is at the relevant time fair to the corporation.
(4) No person shall be deemed a controlling stockholder unless that person satisfies the criteria in subsection (a)(4). No two or more persons that are not controlling stockholders shall be a control group unless they satisfy the criteria in subsection (a)(3).
(f) For purposes of this section, if a corporation has eliminated its board of directors under Section 10A-2A-7.32, each stockholder of that corporation shall be deemed to be a director, in addition to their capacity as a stockholder.
(Act 2019-94, §1; Act 2026-495, §1.)
[Effective: 2026-08-01]
(a) If a director or officer pursues or takes advantage of a corporate opportunity directly, or indirectly through or on behalf of another person, that action may not be the subject of equitable relief, or give rise to an award of damages or other sanctions against the director, officer, or other person, in a proceeding by or in the right of the corporation on the ground that the corporate opportunity should have first been offered to the corporation, if (1) before the director, officer, or other person becomes legally obligated respecting the corporate opportunity the director or officer brings it to the attention of the corporation and either: (i) action by qualified directors disclaiming the corporation’s interest in the corporate opportunity is taken in compliance with the same procedures as are set forth in Section 10A-2A-8.60(c) or (ii) stockholders’ action disclaiming the corporation’s interest in the corporate opportunity is taken in compliance with the procedures set forth in Section 10A-2A-8.60(d), in either case as if the decision being made concerned a conflicting interest transaction, except that, rather than making “required disclosure” as defined in Section 10A-2A-8.60(a), the director or officer shall have made prior disclosure to those acting on behalf of the corporation of all material facts concerning the corporate opportunity known to the director or officer; or (2) the duty to offer the corporation the corporate opportunity has been limited or eliminated pursuant to a provision of the certificate of incorporation adopted (and where required, made effective by action of qualified directors) in accordance with Section 10A-2A-2.02(b)(6).
(b) In any proceeding seeking equitable relief or other remedies based upon an alleged improper pursuit or taking advantage of a corporate opportunity by a director or officer directly, or indirectly through or on behalf of another person, the fact that the director or officer did not employ the procedure described in subsection (a)(1)(i) or (ii) before pursuing or taking advantage of the corporate opportunity shall not create an implication that the corporate opportunity should have been first presented to the corporation or alter the burden of proof otherwise applicable to establish that the director or officer breached a duty to the corporation in the circumstances.
(Act 2026-495, §2.)
As used in this Article 9:
As used in this article, unless the context otherwise requires, the following terms have the following meanings:
(1) CONVERTED ORGANIZATION means the organization into which a converting organization converts pursuant to this article.
(2) CONVERTING CORPORATION means a converting organization that is a corporation.
(3) CONVERTING ORGANIZATION means an organization that converts into another organization pursuant to this article.
(4) GOVERNING STATUTE of an organization means the statute that governs the organization’s internal affairs.
(5) ORGANIZATION means a general partnership, including a limited liability partnership; limited partnership, including a limited liability limited partnership; limited liability company; business trust; corporation; nonprofit corporation; professional corporation; or any other person having a governing statute. The term includes domestic and foreign organizations whether or not organized for profit.
(6) ORGANIZATIONAL DOCUMENTS means:
(A) for a general partnership or foreign general partnership, its partnership agreement and if applicable, its registration as a limited liability partnership or a foreign limited liability partnership;
(B) for a limited partnership or foreign limited partnership, its certificate of formation and partnership agreement, or comparable writings as provided in its governing statute;
(C) for a limited liability company or foreign limited liability company, its certificate of formation and limited liability company agreement, or comparable writings as provided in its governing statute;
(D) for a business or statutory trust or foreign business or statutory trust, its agreement of trust and declaration of trust, or comparable writings as provided in its governing statute;
(E) for a corporation for profit or foreign corporation for profit, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(F) for a nonprofit corporation or foreign nonprofit corporation, its certificate of incorporation, bylaws, and other agreements that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(G) for a professional corporation or foreign professional corporation, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute, or comparable writings as provided in its governing statute; and
(H) for any other organization, the basic writings that create the organization and determine its internal governance and the relations among the persons that own it, have an interest in it, or are members of it.
(Act 2019-94, §1; Act 2021-299, §3.)
(a) An organization other than a corporation may convert to a corporation, and a corporation may convert to an organization other than a corporation pursuant to this article, and a plan of conversion, if:
(1) the governing statute of the organization that is not a corporation authorizes the conversion;
(2) the law of the jurisdiction governing the converting organization and the converted organization does not prohibit the conversion; and
(3) the converting organization and the converted organization each comply with the governing statute and organizational documents applicable to that organization in effecting the conversion.
(b) A plan of conversion must be in writing and must include:
(1) the name, type of organization, and mailing address of the principal office of the converting organization and its unique identifying number or other designation as assigned by the Secretary of State, if any, before conversion;
(2) the name, type of organization, and mailing address of the principal office of the converted organization after conversion;
(3) the terms and conditions of the conversion, including the manner and basis for converting interests in the converting organization into any combination of money, interests in the converted organization, and other consideration allowed in Section 10A-9A-10.02(c); and
(4) the organizational documents of the converted organization.
(c) In connection with a conversion, rights or securities of or interests in the converting organization may be exchanged for or converted into cash, property, or rights or securities of or interests in the converted organization, or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, or rights or securities of or interests in another organization or may be cancelled.
(d) In addition to the requirements of subsection (a), a plan of conversion may contain any other provision not prohibited by law.
(e) The terms of a plan of conversion may be made dependent upon facts objectively ascertainable outside the plan in accordance with Section 10A-2A-1.20(c).
(f) At the time of the approval of the plan of conversion in accordance with this chapter, the plan of conversion is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the plan of conversion that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the plan of conversion.
(Act 2019-94, §1; Act 2025-281, §2.)
In the case of a conversion of a corporation the plan of conversion shall be adopted in the following manner:
(a) The plan of conversion shall first be adopted by the board of directors.
(b) The plan of conversion shall then be approved by the stockholders. In submitting the plan of conversion to the stockholders for their approval, the board of directors must recommend that the stockholders approve the plan, unless (i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, or (ii) Section 10A-2A-8.26 applies. If either (i) or (ii) applies, the board of directors shall inform the stockholders of the basis for its so proceeding.
(c) The board of directors may set conditions for approval of the plan of conversion by the stockholders or the effectiveness of the plan of conversion.
(d) If the approval of the stockholders is to be given at a meeting, the corporation shall notify each stockholder, regardless of whether entitled to vote, of the meeting of stockholders at which the plan of conversion is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan of conversion and must contain or be accompanied by a copy or summary of the plan. The notice must include or be accompanied by a copy of the organizational documents of the converted organization which are to be in writing as they will be in effect immediately after the conversion.
(e) Unless the certificate of incorporation, or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater quorum, approval of the plan of conversion requires (i) the approval of the stockholders at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the plan, and (ii) the approval of each class or series of stock voting as a separate voting group at a meeting at which a quorum of the voting group exists consisting of a majority of the votes entitled to be cast on the plan by that voting group.
(f) If as a result of the conversion one or more stockholders of the converting corporation would become subject to personal liability, approval of the plan of conversion shall require the signing in connection with the transaction, by each stockholder who would become subject to personal liability, of a separate written consent to become subject to personal liability.
(Act 2019-94, §1.)
(a) After a plan of conversion is approved:
(1) if the converting organization is an organization formed under, or its internal affairs are governed by, the laws of this state, the converting organization shall file a statement of conversion in accordance with subsection (c), which statement of conversion must be signed in accordance with Section 10A-1-4.01 and which must include:
(A) the name, type of organization, and mailing address of the principal office of the converting organization, and its unique identifying number or other designation as assigned by the Secretary of State, if any;
(B) the date of the filing of the certificate of formation of the converting organization, if any, and all prior amendments and the filing office or offices, if any, where the certificate of formation and amendments are filed;
(C) a statement that the converting organization has been converted into the converted organization;
(D) the name and type of organization of the converted organization and the jurisdiction of its governing statute;
(E) the street and mailing address of the principal office of the converted organization;
(F) the date the conversion is effective under the governing statute of the converted organization;
(G) a statement that the conversion was approved as required by this chapter;
(H) a statement that the conversion was approved as required by the governing statute of the converted organization;
(I) a statement that a copy of the plan of conversion will be furnished by the converted organization, on request and without cost, to any owner of the converting organization; and
(J) if the converted organization is a foreign organization not authorized to conduct activities and affairs in this state, the street and mailing address of an office for the purposes of Section 10A-2A-9.15(b); and
(2) if the converted organization is a corporation, the converting organization shall deliver for filing a certificate of incorporation in accordance with subsection (d), which certificate of incorporation must include, in addition to the information required by Section 10A-2A-2.02:
(A) a statement that the corporation was converted from the converting organization;
(B) the name and type of organization of the converting organization, the jurisdiction of the converting organization’s governing statute, and the converting organization’s unique identifying number or other designation as assigned by the Secretary of State, if any; and
(C) a statement that the conversion was approved in a manner that complied with the converting organization’s governing statute.
(b) A conversion becomes effective:
(1) if the converted organization is a corporation, when the certificate of incorporation takes effect; and
(2) if the converted organization is not a corporation, as provided by the governing statute of the converted organization.
(c) If the converting organization is an organization formed under, or its internal affairs are governed by, the laws of this state, then the converting organization shall deliver for filing the statement of conversion required under subsection (a)(1) to the Secretary of State.
(d) If the converted organization is a corporation, then, the converting organization shall deliver for filing the certificate of incorporation required under subsection (a)(2) to the Secretary of State.
(e) If the converting organization is required to deliver for filing a statement of conversion and a certificate of formation to the Secretary of State, then the converting organization shall deliver for filing the statement of conversion and the certificate of formation to the Secretary of State simultaneously.
(f) After a conversion becomes effective, if the converted organization is a corporation, then, except for certified copies of the statement of conversion permitted to be delivered to the judge of probate for filing pursuant to subsection (h), all filing instruments required to be filed under this title regarding that converted organization shall be delivered for filing to the Secretary of State.
(g) If:
(1) the converting organization is a filing entity or a foreign filing entity registered to conduct activities and affairs in this state;
(2) the converted organization will be a filing entity or a foreign filing entity registered to conduct activities and affairs in this state;
(3) the name of the converting organization and the converted organization are to be the same, other than words, phrases, or abbreviations indicating the type of entity; and
(4) the name of the converted organization complies with Division A of Article 5 of Chapter 1 or Section 10A-1-7.07, as the case may be; then notwithstanding Division B of Article 5 of Chapter 1, no name reservation shall be required and the converted organization shall for all purposes of this title be entitled to utilize the name of the converting organization without any further action by the converting organization or the converted organization.
(h) A certified copy of any document required to be filed under this section may be filed in the real estate records in the office of the judge of probate in any county in which the converting organization owned real property, without payment and without collection by the judge of probate of any deed or other transfer tax or fee. The judge of probate shall, however, be entitled to collect a filing fee of five dollars ($5). Any such filing with the judge of probate shall evidence chain of title, but lack of filing shall not affect the converted organization’s title to such real property.
(i) A statement of conversion is a filing instrument under Chapter 1.
(j) The filing fees for a statement of conversion shall be as set forth in Chapter 1.
(Act 2019-94, §1.)
(a) A plan of conversion of a converting organization that is a corporation may be amended:
(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or
(2) in the manner provided in the plan, except that if the plan has been approved by the stockholders that were entitled to vote on, consent to, or approve of the plan, then those stockholders are entitled to vote on, consent to, or approve of any amendment of the plan that will change:
(i) the amount or kind of eligible interests or other securities, obligations, rights to acquire eligible interests or other securities, cash, other property, or any combination of the foregoing, to be received by any of the stockholders of the converting corporation under the plan;
(ii) the organizational documents of the converted organization that will be in effect immediately after the conversion becomes effective, except for changes that do not require approval of the eligible interest holders of the converted organization under its governing statute or organizational documents; or
(iii) any other terms or conditions of the plan, if the change would adversely affect the stockholders in any material respect.
(b) After a plan of conversion has been approved by a converting organization that is a corporation in the manner required by this Division B of this Article 9 and before the statement of conversion becomes effective, the plan may be abandoned by the corporation without action by its stockholders in accordance with any procedures set forth in the plan or, if no procedures are set forth in the plan, in the manner determined by the board of directors.
(c) If a conversion is abandoned after the statement of conversion has been delivered to the Secretary of State for filing and before the statement of conversion becomes effective, a statement of abandonment, signed by the converting organization, must be delivered to the Secretary of State for filing before the statement of conversion becomes effective. The statement of abandonment takes effect on filing, and the conversion is abandoned and does not become effective. The statement of abandonment must contain:
(1) the name of the converting organization;
(2) the date on which the statement of conversion was filed by the Secretary of State; and
(3) a statement that the conversion has been abandoned in accordance with this section.
(Act 2019-94, §1.)
(a) When a conversion takes effect:
(1) all property and contract rights owned by the converting organization remain vested in the converted organization without transfer, reversion, or impairment, and the title to any property vested by deed or otherwise in the converting organization shall not revert or be in any way impaired by reason of the conversion;
(2) all debts, obligations, or other liabilities of the converting organization continue as debts, obligations, or other liabilities of the converted organization and neither the rights of creditors, nor the liens upon the property of the converting organization shall be impaired by the conversion;
(3) an action or proceeding pending by or against the converting organization continues as if the conversion had not occurred and the name of the converted organization may, but need not, be substituted for the name of the converting organization in any pending action or proceeding;
(4) except as prohibited by law other than this chapter, all of the rights, privileges, immunities, powers, and purposes of the converting organization remain vested in the converted organization;
(5) except as otherwise provided in the plan of conversion, the terms and conditions of the plan of conversion take effect;
(6) except as otherwise agreed, for all purposes of the laws of this state, the converting organization shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of the converting organization;
(7) for all purposes of the laws of this state, the rights, privileges, powers, interests in property, debts, liabilities, and duties of the converting organization, shall be the rights, privileges, powers, interests in property, debts, liabilities, and duties of the converted organization, and shall not be deemed as a consequence of the conversion, to have been transferred to the converted organization;
(8) if the converted organization is a corporation, for all purposes of the laws of this state, the corporation shall be deemed to be the same organization as the converting organization, and the conversion shall constitute a continuation of the existence of the converting organization in the form of a corporation;
(9) if the converted organization is a corporation, the existence of the corporation shall be deemed to have commenced on the date the converting organization commenced its existence in the jurisdiction in which the converting organization was first created, formed, organized, incorporated, or otherwise came into being;
(10) the conversion shall not affect the choice of law applicable to matters arising prior to conversion;
(11) if the Secretary of State has assigned a unique identifying number or other designation to the converting organization and (i) the converted organization is formed pursuant to, or its internal affairs are governed by, the laws of this state, or (ii) the converted organization is, within 30 days after the effective date of the conversion, registered to transact business in this state, then that unique identifying number or other designation shall continue to be assigned to the converted organization; and
(12) the stock or eligible interests of the converting organization are reclassified into stock, eligible interests or other securities, obligations, rights to acquire stock, eligible interests or other securities, cash, or other property in accordance with the terms of the conversion, and the stockholders or interest holders of the converting organization are entitled only to the rights provided to them by those terms and to any appraisal rights they may have under the governing statute of the converting organization.
(b) A converted organization that is a foreign entity consents to the jurisdiction of the courts of this state to enforce any debt, obligation, or other liability for which the converting corporation, is liable if, before the conversion, the converting corporation was subject to suit in this state on the debt, obligation, or other liability or was subject to pay amounts to its stockholders under Article 13. If a converted organization is a foreign entity and fails to designate or maintain a registered agent, or the designated registered agent cannot with reasonable diligence be served, then service of process on that converted organization for the purposes of enforcing a debt, obligation, or other liability under this subsection may be made in the same manner and has the same consequences as provided in Section 10A-1-5.35.
(c) When the converting organization is a corporation and the conversion becomes effective, the converted organization is deemed to agree that it will promptly pay the amount, if any, to which the stockholders of the converting corporation are entitled under Article 13.
(Act 2019-94, §1.)
This article is not exclusive. This article does not preclude a corporation from converting under law other than this chapter.
(Act 2019-94, §1.)
(Act 2023-503, §4.)
(a) A corporation may amend its certificate of incorporation at any time to add or change a provision that is required or permitted in the certificate of incorporation as of the effective date of the amendment or to delete a provision that is not required to be contained in the certificate of incorporation. Whether a provision is required or permitted in the certificate of incorporation is determined as of the effective date of the amendment.
(b) A stockholder of the corporation does not have a vested property right resulting from any provision in the certificate of incorporation, including provisions relating to management, control, capital structure, dividend entitlement, or purpose or duration of the corporation.
(Act 2019-94, §1.)
If a corporation has not yet issued stock, its board of directors, or its incorporators if it has no board of directors, may adopt one or more amendments to the corporation’s certificate of incorporation.
(Act 2019-94, §1.)
If a corporation has issued stock, an amendment to the certificate of incorporation shall be adopted in the following manner:
(a) The proposed amendment shall first be adopted by the board of directors.
(b) Except as provided in Sections 10A-2A-10.05, 10A-2A-10.07, and 10A-2A-10.08, the amendment shall then be approved by the stockholders. In submitting the proposed amendment to the stockholders for approval, the board of directors shall recommend that the stockholders approve the amendment, unless (i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, or (ii) Section 10A-2A-8.26 applies. If either (i) or (ii) applies, the board of directors must inform the stockholders of the basis for its so proceeding.
(c) The board of directors may set conditions for the approval of the amendment by the stockholders or the effectiveness of the amendment.
(d) If the amendment is required to be approved by the stockholders, and the approval is to be given at a meeting, the corporation shall notify each stockholder, regardless of whether entitled to vote, of the meeting of stockholders at which the amendment is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the amendment. The notice must contain or be accompanied by a copy of the amendment.
(e) Unless the certificate of incorporation, or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater quorum, approval of the amendment requires the approval of the stockholders at a meeting at which a quorum consisting of a majority of the votes entitled to be cast on the amendment exists, and, if any class or series of stock is entitled to vote as a separate group on the amendment, except as provided in Section 10A-2A-10.04(c), the approval of each separate voting group at a meeting at which a quorum of the voting group exists consisting of a majority of the votes entitled to be cast on the amendment by that voting group.
(f) If as a result of an amendment of the certificate of incorporation one or more stockholders of a corporation would become subject to new personal liability, approval of the amendment requires the signing in connection with the amendment, by each stockholder who will become subject to new personal liability, of a separate written consent to become subject to new personal liability, unless in the case of a stockholder that already has personal liability the terms and conditions of the new personal liability (i) are substantially identical to those of the existing personal liability, or (ii) are substantially identical to those of the existing personal liability (other than changes that eliminate or reduce existing personal liability).
(g) For purposes of subsection (f) and Section 10A-2A-10.09, “new personal liability” means personal liability of a person resulting from an amendment of the certificate of incorporation if (i) the person did not have personal liability before the amendment becomes effective, or (ii) the person had personal liability before the amendment becomes effective, the terms and conditions of which are changed when the amendment becomes effective.
(Act 2019-94, §1.)
(a) The holders of the outstanding stock of a class are entitled to vote as a separate voting group (if stockholder voting is otherwise required by this chapter) on a proposed amendment to the certificate of incorporation if the amendment would:
(1) effect an exchange or reclassification of all or part of the stock of the class into stock of another class;
(2) effect an exchange or reclassification, or create the right of exchange, of all or part of the stock of another class into stock of the class;
(3) change the rights, preferences, or limitations of all or part of the stock of the class;
(4) change the stock of all or part of the class into a different number of shares of stock of the same class;
(5) create a new class of stock having rights or preferences with respect to distributions that are prior or superior to the stock of the class;
(6) increase the rights, preferences, or number of authorized shares of stock of any class that, after giving effect to the amendment, have rights or preferences with respect to distributions that are prior or superior to the stock of the class;
(7) limit or deny an existing preemptive right of all or part of the stock of the class; or
(8) cancel or otherwise affect rights to distributions that have accumulated but not yet been authorized on all or part of the stock of the class.
(b) If a proposed amendment would affect a series of a class of stock in one or more of the ways described in subsection (a), the holders of stock of that series are entitled to vote as a separate voting group on the proposed amendment.
(c) If a proposed amendment that entitles the holders of two or more classes or series of stock to vote as separate voting groups under this section would affect those two or more classes or series in the same or a substantially similar way, the holders of stock of all the classes or series so affected shall vote together as a single voting group on the proposed amendment, unless otherwise provided in the certificate of incorporation or added as a condition by the board of directors pursuant to Section 10A-2A-10.03(c).
(d) A class or series of stock is entitled to the voting rights granted by this section even if the certificate of incorporation provides that the stock is nonvoting stock.
(Act 2019-94, §1.)
Unless the certificate of incorporation provides otherwise, a corporation’s board of directors may adopt amendments to the corporation’s certificate of incorporation without stockholder approval:
(a) to extend the duration of the corporation if it was incorporated at a time when limited duration was required by law;
(b) to delete the names and addresses of the incorporators or initial directors;
(c) to delete the name and address of the initial registered agent or registered office, if a statement of change is on file with the Secretary of State;
(d) if the corporation has only one class of stock outstanding:
(1) to change each issued and unissued authorized share of stock of the class into a greater number of whole shares of stock of that class; or
(2) to increase the number of authorized shares of stock of the class to the extent necessary to permit the issuance of stock as a stock dividend;
(e) to change the corporate name, provided that the name complies with Article 5 of Chapter 1;
(f) to reflect a reduction in authorized stock, as a result of the operation of Section 10A-2A-6.31(a)(2), when the corporation has acquired its own stock and the certificate of incorporation prohibits the reissue of the acquired stock;
(g) to delete a class of stock from the certificate of incorporation, as a result of the operation of Section 10A-2A-6.31(a)(2), when there is no remaining stock of the class because the corporation has acquired all stock of the class and the certificate of incorporation prohibits the reissue of the acquired stock; or
(h) to take actions expressly permitted by Section 10A-2A-6.02 to be made without stockholder approval.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) After an amendment to the certificate of incorporation has been adopted and approved in the manner required by this chapter and by the certificate of incorporation, the corporation shall deliver to the Secretary of State for filing a certificate of amendment, which must set forth:
(1) the name of the corporation;
(2) the text of each amendment adopted, or the information required by Section 10A-2A-1.20(c)(5);
(3) if an amendment provides for an exchange, reclassification, or cancellation of issued stock, provisions for implementing the amendment if not contained in the amendment itself, (which may be made dependent upon facts objectively ascertainable outside the certificate of amendment in accordance with Section 10A-2A-1.20(c)(5));
(4) the date of each amendment’s adoption;
(5) if an amendment:
(i) was adopted by the incorporators or board of directors without stockholder approval, a statement that the amendment was duly adopted by the incorporators or by the board of directors, as the case may be, and that stockholder approval was not required;
(ii) required approval by the stockholders, a statement that the amendment was duly approved by the stockholders in the manner required by this chapter and by the certificate of incorporation; or
(iii) is being filed pursuant to Section 10A-2A-1.20(c)(5), a statement to that effect; and
(6) the unique identifying number or other designation as assigned by the Secretary of State.
(b) A certificate of amendment shall take effect at the effective date determined in accordance with Article 4 of Chapter 1.
(Act 2019-94, §1; Act 2021-299, §3; Act 2023-503, §3.)
(a) A corporation’s board of directors may restate its certificate of incorporation at any time, without stockholder approval, to consolidate all amendments into a single document. The restated certificate of incorporation may amend the certificate of incorporation with those amendments that the board of directors is permitted to adopt without stockholder approval in accordance with Sections 10A-2A-10.02 and 10A-2A-10.05. The restated certificate of incorporation may also amend the certificate of incorporation with those amendments that the stockholders must approve in accordance with Section 10A-2A-10.03.
(b) If the restated certificate of incorporation includes one or more new amendments that require stockholder approval, the amendments shall be adopted and approved as provided in Section 10A-2A-10.03.
(c) A corporation that restates its certificate of incorporation shall deliver to the Secretary of State for filing a certificate of restatement setting forth:
(1) the name of the corporation;
(2) the text of the restated certificate of incorporation;
(3) a statement that the restated certificate of incorporation consolidates all amendments into a single document;
(4) if a new amendment is included in the restated certificate of incorporation, the statements required under Section 10A-2A-10.06 with respect to the new amendment; and
(5) the unique identifying number or other designation as assigned by the Secretary of State.
(d) The duly adopted restated certificate of incorporation supersedes the original certificate of incorporation and all amendments to the certificate of incorporation.
(e) A restated certificate of incorporation may omit the information that may be deleted pursuant to Section 10A-2A-10.05.
(Act 2019-94, §1; Act 2021-299, §3; Act 2023-503, §3; Act 2024-413, §1.)
(a) A corporation’s certificate of incorporation may be amended without action by the board of directors or stockholders to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under the authority of a law of the United States if the certificate of incorporation after the amendment only contains provisions required or permitted by Section 10A-2A-2.02.
(b) The individual or individuals designated by the court shall deliver to the Secretary of State for filing a certificate 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 certificate of amendment;
(4) the title of the reorganization proceeding in which the order or decree was entered;
(5) a statement that the court had jurisdiction of the proceeding under federal statute; and
(6) the unique identifying number or other designation as assigned by the Secretary of State.
(c) Stockholders of a corporation undergoing reorganization do not have appraisal rights except as and to the extent provided in the reorganization plan.
(d) 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.
(Act 2019-94, §1; Act 2021-299, §3; Act 2023-503, §3; Act 2024-413, §1.)
(a) An amendment to the certificate of incorporation does not affect a cause of action existing against or in favor of the corporation, a proceeding to which the corporation is a party, or the existing rights of persons other than the stockholders. An amendment changing a corporation’s name does not affect a proceeding brought by or against the corporation in its former name.
(b) A stockholder who becomes subject to new personal liability in respect of the corporation as a result of an amendment to the certificate of incorporation shall have that new personal liability only in respect of interest holder liabilities that arise after the amendment becomes effective.
(c) Except as otherwise provided in the certificate of incorporation of the corporation, the personal liability of a stockholder who had personal liability in respect of the corporation before the amendment becomes effective and has new personal liability after the amendment becomes effective shall be as follows:
(1) The amendment does not discharge that prior personal liability with respect to any interest holder liabilities that arose before the amendment becomes effective.
(2) The provisions of the certificate of incorporation relating to personal liability as in effect immediately prior to the amendment shall continue to apply to the collection or discharge of any interest holder liabilities preserved by subsection (c)(1), as if the amendment had not occurred.
(3) The stockholder shall have the rights of contribution from other persons as are provided by the certificate of incorporation relating to personal liability as in effect immediately prior to the amendment with respect to any interest holder liabilities preserved by subsection (c)(1), as if the amendment had not occurred.
(4) The stockholder shall not, by reason of any prior personal liability, have personal liability with respect to any interest holder liabilities that arise after the amendment becomes effective.
(Act 2019-94, §1.)
(a) A restated certificate of incorporation takes effect when the filing of the restated certificate of incorporation takes effect as provided by Article 4 of Chapter 1.
(b) On the date and time the restated certificate of incorporation takes effect, the original certificate of incorporation and each prior amendment or restatement of the certificate of incorporation is superseded and the restated certificate of incorporation is the effective certificate of incorporation.
(c) Section 10A-2A-10.09 applies to an amendment effected by a restated certificate of incorporation.
(Act 2023-503, §4.)
(a) A corporation’s stockholders may amend or repeal the corporation’s bylaws.
(b) A corporation’s board of directors may amend or repeal the corporation’s bylaws, unless:
(1) the certificate of incorporation, Section 10A-2A-10.21 or, if applicable, Section 10A-2A-10.22, reserves that power exclusively to the stockholders in whole or part; or
(2) except as provided in Section 10A-2A-2.05(d), the stockholders in amending, repealing, or adopting a bylaw expressly provide that the board of directors may not amend, repeal, or adopt that bylaw.
(c) A stockholder of the corporation does not have a vested property right resulting from any provision in the bylaws.
(Act 2019-94, §1.)
(a) A bylaw that increases a quorum or voting requirement for the board of directors or that requires a meeting of stockholders to be held at a place may be amended or repealed:
(1) if originally adopted by the stockholders, only by the stockholders, unless the bylaw otherwise provides; or
(2) if adopted by the board of directors, either by the stockholders or by the board of directors.
(b) A bylaw adopted or amended by the stockholders that increases a quorum or voting requirement for the board of directors may provide that it can be amended or repealed only by a specified vote of either the stockholders or the board of directors.
(c) Action by the board of directors under subsection (a) to amend or repeal a bylaw that changes a quorum or voting requirement for the board of directors shall meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.
(Act 2019-94, §1.)
(a) Unless the certificate of incorporation (i) specifically prohibits the adoption of a bylaw pursuant to this section, (ii) alters the vote specified in Section 10A-2A-7.28(a), or (iii) provides for cumulative voting, a corporation may elect in its bylaws to be governed in the election of directors as follows:
(1) each vote entitled to be cast may be voted for or against up to that number of candidates that is equal to the number of directors to be elected, or a stockholder may indicate an abstention, but without cumulating the votes;
(2) to be elected, a nominee shall have received a plurality of the votes cast by holders of stock entitled to vote in the election at a meeting at which a quorum is present, provided that a nominee who is elected but receives more votes against than for election shall serve as a director for a term that shall terminate on the date that is the earlier of (i) 90 days from the date on which the voting results are determined pursuant to Section 10A-2A-7.29(b)(5) or (ii) the date on which an individual is selected by the board of directors to fill the office held by that director, which selection shall be deemed to constitute the filling of a vacancy by the board of directors to which Section 10A-2A-8.10 applies. Subject to subsection (a)(3), a nominee who is elected but receives more votes against than for election shall not serve as a director beyond the 90-day period referenced above; and
(3) the board of directors may select any qualified individual to fill the office held by a director who received more votes against than for election.
(b) Subsection (a) does not apply to an election of directors by a voting group if (i) at the expiration of the time fixed under a provision requiring advance notification of director candidates, or (ii) absent that provision, at a time fixed by the board of directors which is not more than 14 days before notice is given of the meeting at which the election is to occur, there are more candidates for election by the voting group than the number of directors to be elected, one or more of whom are properly proposed by stockholders. An individual shall not be considered a candidate for purposes of this subsection if the board of directors determines before the notice of meeting is given that the individual’s candidacy does not create a bona fide election contest.
(c) A bylaw electing to be governed by this section may be repealed:
(1) if originally adopted by the stockholders, only by the stockholders, unless the bylaw otherwise provides;
(2) if adopted by the board of directors, by the board of directors or the stockholders.
(Act 2019-94, §1.)
As used in this article, unless the context otherwise requires, the following terms mean:
(1) ACQUIRED ENTITY means the corporation or foreign corporation that will have all of one or more classes or series of its stock acquired in a stock exchange.
(2) ACQUIRING ENTITY means the corporation or foreign corporation that will acquire all of one or more classes or series of stock of the acquired entity in a stock exchange.
(3) CONSTITUENT CORPORATION means a constituent organization that is a corporation.
(4) CONSTITUENT ORGANIZATION means an organization that is party to a merger under this article.
(5) GOVERNING STATUTE of an organization means the statute that governs the organization’s internal affairs.
(6) ORGANIZATION means a general partnership, including a limited liability partnership; limited partnership, including a limited liability limited partnership; limited liability company; business trust; corporation; nonprofit corporation; professional corporation; or any other person having a governing statute. The term includes domestic and foreign organizations whether or not organized for profit.
(7) ORGANIZATIONAL DOCUMENTS means:
(A) for a general partnership or foreign general partnership, its partnership agreement and if applicable, its registration as a limited liability partnership or a foreign limited liability partnership;
(B) for a limited partnership or foreign limited partnership, its certificate of formation and partnership agreement, or comparable writings as provided in its governing statute;
(C) for a limited liability company or foreign limited liability company, its certificate of formation and limited liability company agreement, or comparable writings as provided in its governing statute;
(D) for a business or statutory trust or foreign business or statutory trust its agreement of trust and declaration of trust, or comparable writings as provided in its governing statute;
(E) for a corporation or foreign corporation, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(F) for a nonprofit corporation or foreign nonprofit corporation, its certificate of incorporation, bylaws, and other agreements that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(G) for a professional corporation or foreign professional corporation, its certificate of incorporation, bylaws, and other agreements among its stockholders that are authorized by its governing statute, or comparable writings as provided in its governing statute; and
(H) for any other organization, the basic writings that create the organization and determine its internal governance and the relations among the persons that own it, have an interest in it, or are members of it.
(8) NEW PERSONAL LIABILITY means personal liability of a person, resulting from a merger or stock exchange, that is (i)(A) in respect of an entity which is different from the entity in which the person held stock or eligible interests immediately before the merger became effective, or (B) in respect of an entity which is different from the entity in which the person held stock immediately before the stock exchange became effective; or (ii) in respect of the same entity as the one in which the person held stock or eligible interests immediately before the merger became effective if (A) the person did not have personal liability immediately before the merger became effective, or (B) the person had personal liability immediately before the merger became effective, the terms and conditions of which were changed when the merger became effective; or (iii) in respect of the same entity as the one in which the person held stock immediately before the stock exchange became effective if (A) the person did not have personal liability immediately before the stock exchange became effective, or (B) the person had personal liability immediately before the stock exchange became effective, the terms and conditions of which were changed when the stock exchange became effective.
(9) PLAN OF MERGER. Except as set forth in Section 10A-2A-11.02(g), a plan of merger, whether referred to as a plan of merger, an agreement of merger, a merger agreement, a plan and agreement of merger, an agreement and plan of merger, or otherwise, means a writing described in Section 10A-2A-11.02 and includes any agreement, instrument, or other document referenced therein or associated therewith that sets forth the terms and conditions of the merger.
(10) SURVIVING ORGANIZATION means an organization into which one or more other organizations are merged under this article, whether the organization pre-existed the merger or was created pursuant to the merger.
(Act 2019-94, §1; Act 2021-299, §3; Act 2025-281, §2.)
(a) A corporation may merge with one or more other constituent organizations pursuant to this article, and a plan of merger, if:
(1) the governing statute of each of the other organizations authorizes the merger;
(2) the merger is not prohibited by the law of a jurisdiction that enacted any of those governing statutes; and
(3) each of the other organizations complies with its governing statute in effecting the merger.
(b) A plan of merger must be in writing and must include:
(1) the name, type of organization, and mailing address of the principal office of each constituent organization, the jurisdiction of the governing statute of each constituent organization, and the respective unique identifying number or other designation as assigned by the Secretary of State, if any, of each constituent organization;
(2) the name, type of organization, and mailing address of the principal office of the surviving organization, the unique identifying number or other designation as assigned by the Secretary of State, if any, of the surviving organization, the jurisdiction of the governing statute of the surviving organization, and, if the surviving organization is created pursuant to the merger, a statement to that effect;
(3) the terms and conditions of the merger, including the manner and basis for converting the stock or eligible interests in each constituent organization into any combination of money, stock, eligible interests in the surviving organization, and other consideration as allowed by subsection (c);
(4) if the surviving organization is to be created pursuant to the merger, the surviving organization’s organizational documents; and
(5) if the surviving organization is not to be created pursuant to the merger, any amendments to be made by the merger to the surviving organization’s organizational documents.
(c) In connection with a merger, rights, securities, stock, or eligible interests, if any, in a constituent organization may be exchanged for or converted into cash, property, rights, securities, stock, or eligible interests, if any, in the surviving organization, or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, rights, securities, stock, or eligible interests, if any, in another organization, or may be cancelled.
(d) In addition to the requirements of subsection (b), a plan of merger may:
(1) provide that (i) a constituent organization or any other party to the plan of merger that fails to perform its obligations under the plan of merger in accordance with the terms and conditions of the plan of merger, or that otherwise fails to comply with the terms and conditions of the plan of merger, in each case, required to be performed or complied with prior to the time the merger becomes effective, or that otherwise fails to consummate, or fails to cause the consummation of, the merger (whether prior to a specified date, upon satisfaction or, to the extent permitted by law, waiver of all conditions to consummation set forth in the plan of merger, or otherwise) shall be subject, in addition to any other remedies available at law or in equity, to the penalties or consequences as are set forth in the plan of merger (which penalties or consequences may include an obligation to pay to the other party or parties to the plan of merger an amount representing, or based on the loss of, any premium or other economic entitlement the stockholders or owners, as the case may be, of the other party would be entitled to receive pursuant to the terms of the plan of merger if the merger were consummated in accordance with the terms of the plan of merger) and (ii) if, pursuant to the terms of the plan of merger, a corporation is entitled to receive payment from another party to the plan of merger of any amount representing a penalty or consequence (as specified in clause (i) of this Section 10A-2A-11.02(d)(1)), the corporation shall be entitled to enforce the other party’s payment obligation and, upon receipt of any payment, shall be entitled to retain the amount of the payment so received;
(2) provide (i) for the appointment, at or after the time at which the plan of merger is adopted by the stockholders of a constituent corporation in accordance with the requirements of Section 10A-2A-11.04, of one or more persons (which may include the surviving or resulting entity or any officer, manager, representative or agent thereof) as representative of the stockholders of a constituent corporation of this state, including those whose shares of capital stock shall be cancelled, converted, or exchanged in the merger, and for the delegation to that person or persons of the sole and exclusive authority to take action on behalf of the stockholders pursuant to the plan of merger, including taking such actions as the representative determines to enforce (including by entering into settlements with respect to) the rights of the stockholders under the plan of merger, on the terms and subject to the conditions set forth in the plan of merger, (ii) that any appointment pursuant to clause (i) of this Section 10A-2A-11.02(d)(2) shall be irrevocable and binding on all stockholders from and after the adoption of the plan of merger by the requisite vote of the stockholders pursuant to Section 10A-2A-11.04, and (iii) that any provision adopted pursuant to this Section 10A-2A-11.02(d)(2) may not be amended after the merger has become effective or may be amended only with the consent or approval of persons specified in the plan of merger; and
(3) contain any other provision not prohibited by law.
(e) Terms of a plan of merger may be made dependent on facts objectively ascertainable outside the plan in accordance with Section 10A-2A-1.20(c).
(f) A plan of merger may be amended only with the consent of each constituent organization, except as provided in the plan. A domestic constituent organization may approve an amendment to a plan:
(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or
(2) in the manner provided in the plan, except that if the plan has been approved by the stockholders, members, or interest holders that were entitled to vote on, consent to, or approve of, the plan, then those stockholders, members, or interest holders are entitled to vote on, consent to, or approve of any amendment of the plan that will change:
(i) the amount or kind of stock or other securities, eligible interests, obligations, rights to acquire stock, other securities or eligible interests, cash, or other property to be received under the plan by the stockholders, members, or interest holders of a constituent organization;
(ii) the certificate of incorporation of any corporation, foreign corporation, nonprofit corporation, foreign nonprofit corporation or the organizational documents of any unincorporated entity or foreign unincorporated entity, that will be the surviving organization, except for changes permitted by Section 10A-2A-10.05 or by comparable provisions of the governing statute of the foreign corporation, nonprofit corporation, foreign nonprofit corporation, unincorporated entity, or foreign unincorporated entity; or
(iii) any of the other terms or conditions of the plan if the change would adversely affect the stockholders, members, or interest holders in any material respect.
(g) At the time of the approval of the plan of merger in accordance with this chapter, the plan of merger is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the plan of merger that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the plan of merger.
(Act 2019-94, §1; Act 2023-503, §3; Act 2025-281, §2.)
(a) By complying with this Article 11:
(1) a corporation may acquire all of the stock of one or more classes or series of stock, of another corporation or foreign corporation, in exchange for stock or other securities, obligations, rights to acquire stock or other securities, cash, other property, or any combination of the foregoing, pursuant to a plan of stock exchange; or
(2) all of the stock of one or more classes or series of stock of a corporation may be acquired by another corporation or foreign corporation, in exchange for stock or other securities, obligations, rights to acquire stock or other securities, cash, other property, or any combination of the foregoing, pursuant to a plan of stock exchange.
(b) A foreign corporation may be the acquired entity in a stock exchange only if the stock exchange is permitted by the governing statute of that foreign corporation.
(c) The plan of stock exchange must include:
(1) the name of each corporation or foreign corporation the stock of which will be acquired, the name of the corporation or foreign corporation that will acquire that stock, and the respective unique identifying numbers or other designations as assigned by the Secretary of State, if any, of the corporation or foreign corporation;
(2) the terms and conditions of the stock exchange;
(3) the manner and basis of exchanging stock of a corporation or foreign corporation, the stock of which will be acquired under the stock exchange for stock or other securities, obligations, rights to acquire stock, other securities, cash, other property, or any combination of the foregoing; and
(4) any other provisions required by the governing statute governing the acquired entity or its certificate of incorporation or organizational documents.
(d) Terms of a plan of stock exchange may be made dependent on facts objectively ascertainable outside the plan in accordance with Section 10A-2A-1.20(c).
(e) A plan of stock exchange may be amended only with the consent of each party to the stock exchange, except as provided in the plan. A corporation may approve an amendment to a plan:
(1) in the same manner as the plan was approved, if the plan does not provide for the manner in which it may be amended; or
(2) in the manner provided in the plan, except that if the plan has been approved by the stockholders that were entitled to vote on, consent to, or approve of the plan then those stockholders are entitled to vote on, consent to, or approve of any amendment of the plan that will change:
(i) the amount or kind of stock or other securities, obligations, rights to acquire stock, other securities, cash, or other property to be received under the plan by the stockholders of the acquired entity; or
(ii) any of the other terms or conditions of the plan if the change would adversely affect the stockholders in any material respect.
(f) At the time of the approval of the plan of stock exchange in accordance with this chapter, the plan of stock exchange is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the plan of stock exchange that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the plan of stock exchange.
(Act 2019-94, §1; Act 2025-281, §2.)
In the case of a corporation that is a constituent organization or the acquired entity in a stock exchange, the plan of merger or stock exchange shall be adopted in the following manner:
(a) The plan of merger or stock exchange shall first be adopted by the board of directors.
(b) Except as provided in subsections (h), (j), and (l) and in Section 10A-2A-11.05, the plan of merger or stock exchange shall then be approved by the stockholders. In submitting the plan of merger or stock exchange to the stockholders for approval, the board of directors shall recommend that the stockholders approve the plan or, in the case of an offer referred to in subsection (j)(2), that the stockholders tender their stock to the offeror in response to the offer, unless (i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation or (ii) Section 10A-2A-8.26 applies. If either (i) or (ii) applies, the board of directors shall inform the stockholders of the basis for its so proceeding.
(c) The board of directors may set conditions for the approval of the plan of merger or stock exchange by the stockholders or the effectiveness of the plan of merger or stock exchange.
(d) If the plan of merger or stock exchange is required to be approved by the stockholders, and if the approval is to be given at a meeting, the corporation shall notify each stockholder, regardless of whether entitled to vote, of the meeting of stockholders at which the plan is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the plan and must contain or be accompanied by a copy or summary of the plan. If the corporation is to be merged into an existing corporation, foreign corporation, or eligible entity, the notice must also include or be accompanied by a copy or summary of the certificate of incorporation and bylaws or the organizational documents of that corporation, foreign corporation, or eligible entity. If the corporation is to be merged with a corporation, foreign corporation, or eligible entity and a new corporation, foreign corporation, or eligible entity is to be created pursuant to the merger, the notice must include or be accompanied by a copy or a summary of the certificate of incorporation and bylaws or the organizational documents of the new corporation, foreign corporation, or eligible entity.
(e) Unless the certificate of incorporation, or the board of directors acting pursuant to subsection (c), requires a greater vote or a greater quorum, approval of the plan of merger or stock exchange requires the approval of the stockholders at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the plan, and, if any class or series of stock is entitled to vote as a separate group on the plan of merger or stock exchange, the approval of each separate voting group at a meeting at which a quorum of the voting group is present consisting of a majority of the votes entitled to be cast on the merger or stock exchange by that voting group.
(f) Subject to subsection (g), separate voting by voting groups is required:
(1) on a plan of merger, by each class or series of stock that:
(i) are to be converted under the plan of merger into stock, other securities, eligible interests, obligations, rights to acquire stock, other securities or eligible interests, cash, other property, or any combination of the foregoing; or
(ii) are entitled to vote as a separate group on a provision in the plan that constitutes a proposed amendment to the certificate of incorporation of a surviving corporation that requires action by separate voting groups under Section 10A-2A-10.04;
(2) on a plan of stock exchange, by each class or series of stock included in the exchange, with each class or series constituting a separate voting group; and
(3) on a plan of merger or stock exchange, if the voting group is entitled under the certificate of incorporation to vote as a voting group to approve a plan of merger or stock exchange, respectively.
(g) The certificate of incorporation may expressly limit or eliminate the separate voting rights provided in subsection (f)(1)(i) and subsection (f)(2) as to any class or series of stock, except when the plan of merger or stock exchange (i) includes what is or would be in effect an amendment subject to subsection (f)(1)(ii), and (ii) will not effect a substantive business combination.
(h) Unless the certificate of incorporation otherwise provides, approval by the corporation’s stockholders of a plan of merger is not required if:
(1) the corporation will survive the merger;
(2) except for amendments permitted by Section 10A-2A-10.05, its certificate of incorporation will not be changed; and
(3) each stockholder of the corporation whose stock was outstanding immediately before the effective date of the merger or stock exchange will hold the same number of shares of stock, with identical preferences, rights and limitations, immediately after the effective date of the merger.
(i) If as a result of a merger or stock exchange one or more stockholders of a corporation will have new personal liability with respect to the surviving organization or the acquiring entity, approval of the plan of merger or stock exchange will be ineffective without the consent to the plan of merger or stock exchange of the stockholder who will have new personal liability. A stockholder does not give consent required in this subsection (i) merely by consenting to a provision in the certification of incorporation, the bylaws, or an agreement of the stockholders, that allows for a plan of merger or stock exchange to impose new personal liability on that stockholder without that stockholder’s consent at the time of the plan of merger or stock exchange.
(j) Unless the certificate of incorporation otherwise provides, approval by the stockholders of a plan of merger or stock exchange is not required if:
(1) the plan of merger or stock exchange expressly (i) permits or requires the merger or stock exchange to be effected under this subsection and (ii) provides that, if the merger or stock exchange is to be effected under this subsection, the merger or stock exchange will be effected as soon as practicable following the satisfaction of the requirement set forth in subsection (j)(6);
(2) another party to the merger, the acquiring entity in the stock exchange, or a parent of another party to the merger or the acquiring entity in the stock exchange, makes an offer to purchase, on the terms provided in the plan of merger or stock exchange, any and all of the outstanding stock of the corporation that, absent this subsection, would be entitled to vote on the plan of merger or stock exchange, except that the offer may exclude stock of the corporation that is owned at the commencement of the offer by the corporation, the offeror, or any parent of the offeror, or by any wholly owned subsidiary of any of the foregoing;
(3) the offer discloses that the plan of merger or stock exchange provides that the merger or stock exchange will be effected as soon as practicable following the satisfaction of the requirement set forth in subsection (j)(6) and that the stock of the corporation that is not tendered in response to the offer will be treated as set forth in subsection (j)(8);
(4) the offer remains open for at least 10 days;
(5) the offeror purchases all stock properly tendered in response to the offer and not properly withdrawn;
(6) the stock listed below is collectively entitled to cast at least the minimum number of votes on the merger or stock exchange that, absent this subsection, would be required by this Article 11 and by the certificate of incorporation for the approval of the merger or stock exchange by the stockholders, and by any other voting group entitled to vote on the merger or stock exchange at a meeting at which all stock entitled to vote on the approval was present and voted, and with the consent of the stockholders required under Section 10A-2A-11.04(i):
(i) stock purchased by the offeror in accordance with the offer;
(ii) stock otherwise owned by the offeror or by any parent of the offeror or any wholly owned subsidiary of any of the foregoing; and
(iii) stock subject to an agreement that the stock is to be transferred, contributed, or delivered to the offeror, any parent of the offeror, or any wholly owned subsidiary of any of the foregoing in exchange for stock or eligible interests in the offeror, parent, or subsidiary;
(7) the offeror or a wholly owned subsidiary of the offeror merges with or into, or effects a stock exchange in which it acquires stock of, the corporation; and
(8) each outstanding share of stock of each class or series of stock of the corporation that the offeror is offering to purchase in accordance with the offer, and that is not purchased in accordance with the offer, is to be converted in the merger into, or into the right to receive, or is to be exchanged in the stock exchange for, or for the right to receive, the same amount and kind of securities, eligible interests, obligations, rights, cash, or other property to be paid or exchanged in accordance with the offer for each share of stock of that class or series of stock that is tendered in response to the offer, except that stock of the corporation that is owned by the corporation or that are described in clause (ii) or (iii) of subsection (j)(6) need not be converted into or exchanged for the consideration described in this subsection (j)(8).
(k) As used in subsection (j):
(1) “offer” means the offer referred to in subsection (j)(2);
(2) “offeror” means the person making the offer;
(3) “parent” of an entity means a person that owns, directly or indirectly (through one or more wholly owned subsidiaries), all of the outstanding stock of or eligible interests in that entity;
(4) stock tendered in response to the offer shall be deemed to have been “purchased” in accordance with the offer at the earliest time as of which (i) the offeror has irrevocably accepted that stock for payment, and (ii) either (A) in the case of stock represented by certificates, the offeror, or the offeror’s designated depository or other agent, has physically received the certificates representing that stock, or (B) in the case of stock without certificates, that stock has been transferred into the account of the offeror or its designated depository or other agent, or an agent’s message relating to that stock has been received by the offeror or its designated depository or other agent; and
(5) “wholly owned subsidiary” of a person means an entity of or in which that person owns, directly or indirectly (through one or more wholly owned subsidiaries), all of the outstanding stock or eligible interests.
(l) Unless the certificate of incorporation otherwise provides,
(1) approval of a plan of stock exchange by the stockholders of a corporation is not required if the corporation is the acquiring entity in the stock exchange; and
(2) stock not to be exchanged under the plan of stock exchange is not entitled to vote on the plan.
(Act 2019-94, §1.)
(a) A domestic or foreign parent entity that owns stock of a corporation which carries at least 90 percent of the voting power of each class and series of the outstanding stock of that subsidiary corporation that has voting power may (i) merge that subsidiary corporation into itself (if it is a corporation, foreign corporation, or eligible entity), (ii) merge that subsidiary corporation into another corporation, foreign corporation, or eligible entity in which the parent entity owns at least 90 percent of the voting power of each class and series of the outstanding stock or eligible interests which have voting power, or (iii) merge itself (if it is a corporation, foreign corporation, or eligible entity) into that subsidiary corporation, in any case without the approval of the board of directors or stockholders of that subsidiary corporation, unless the certificate of incorporation or organizational documents of the parent entity or the certificate of incorporation of that subsidiary corporation otherwise provide. The certificate of incorporation, organizational documents, and the governing statute of the parent entity and the other corporation, foreign corporation, or eligible entity into which the parent entity intends to merge the subsidiary corporation under clause (ii) of this subsection shall determine the necessary consent or approval required for the merger. Section 10A-2A-11.04(i) applies to a merger under this section. The statement of merger relating to a merger under this section does not need to be signed by the subsidiary corporation.
(b) A parent entity shall, within 10 days after the effective date of a merger approved under subsection (a), notify each of the subsidiary corporation’s stockholders that the merger has become effective.
(c) Except as provided in subsections (a) and (b), a merger between a parent entity and a subsidiary corporation shall, as to the subsidiary corporation and a parent entity that is a corporation, be governed by the provisions of Article 11 applicable to mergers generally, and as to a parent entity that is not a corporation, be governed by the organizational documents and governing statute of that parent entity.
(Act 2019-94, §1.)
(a) After a plan of merger has been adopted and approved as required by this article, then a statement of merger shall be signed by each party to the merger except as provided in Section 10A-2A-11.05(a). The statement of merger must set forth:
(1) the name, type of organization, and mailing address of the principal office of each constituent organization, the jurisdiction of the governing statute of each constituent organization, and the respective unique identifying number or other designation as assigned by the Secretary of State, if any, of each constituent organization;
(2) the name, type of organization, and mailing address of the principal office of the surviving organization, the unique identifying number or other designation as assigned by the Secretary of State, if any, of the surviving organization, the jurisdiction of the governing statute of the surviving organization, and, if the surviving organization is created pursuant to the merger, a statement to that effect;
(3) the date the merger is effective under the governing statute of the surviving organization;
(4) if the surviving organization is to be created pursuant to the merger:
(A) if it will be a corporation, the corporation’s certificate of incorporation; or
(B) if it will be an organization other than a corporation, any organizational document that creates the organization that is required to be in a public writing or in the case of a limited liability partnership, its statement of limited liability partnership;
(5) if the surviving organization exists before the merger, any amendments provided for in the plan of merger for the organizational document that created the organization that are in a public writing;
(6) a statement as to each constituent organization that the merger was approved as required by the organization’s governing statute;
(7) if the surviving organization is a foreign organization not authorized to conduct activities and affairs in this state, the street and mailing address of an office for the purposes of Section 10A-2A-11.07(c);
(8) any additional information required by the governing statute of any constituent organization;
(9) if the plan of merger required approval by the stockholders of a corporation that is a constituent organization, a statement that the plan was duly approved by the stockholders and, if voting by any separate voting group was required, by each separate voting group, in the manner required by this chapter and the certificate of incorporation;
(10) if the plan of merger did not require approval by the stockholders of a corporation that is a constituent organization, a statement to that effect; and
(11) a statement that the plan of merger will be furnished by the surviving organization, on request and without cost, to any owner of any constituent organization which is a party to the merger.
(b) After a plan of stock exchange in which the acquired entity is a corporation has been adopted and approved as required by this chapter, a statement of stock exchange shall be signed by the acquired entity and the acquiring entity. The statement of stock exchange shall set forth:
(1) the name and mailing address of the principal office of the acquired entity, and the jurisdiction of its governing statute, and its unique identifying number or other designation as assigned by the Secretary of State, if any;
(2) the name, jurisdiction of formation, and type of entity of the corporation or foreign corporation that is the acquiring entity;
(3) a statement that the plan of stock exchange was duly approved by the acquired entity by:
(i) the required vote or consent of each class or series of stock included in the exchange; and
(ii) the required vote or consent of each other class or series of stock entitled to vote on approval of the exchange by the certificate of incorporation of the acquired entity; and
(4) if the stock exchange did not require the approval by the stockholders of a corporation that is a party to the stock exchange, a statement to that effect.
(c) In addition to the requirements of subsection (a) or subsection (b), a statement of merger or stock exchange may contain any other provision not prohibited by law.
(d) The statement of merger or stock exchange shall be delivered to the Secretary of State for filing and, subject to subsection (e), the merger or stock exchange shall take effect at the effective date determined in accordance with Article 4 of Chapter 1.
(e) With respect to a merger in which one or more foreign organizations is a constituent organization or a foreign organization created by the merger is the surviving organization, the merger itself shall become effective at the later of:
(1) when all documents required to be filed in foreign jurisdictions to effect the merger have become effective, or
(2) when the statement of merger takes effect.
(f) A statement of merger filed under this section may be combined with any filing required under the governing statute governing any domestic organization involved in the transaction if the combined filing satisfies the requirements of this section, the other governing statute, and Article 4 of Chapter 1.
(g) A certified copy of the statement of merger required to be filed under this section may be filed in the real estate records in the office of the judge of probate in any county in which any constituent organization owned real property, without payment and without collection by the judge of probate of any deed or other transfer tax or fee. The judge of probate, however, shall be entitled to collect the filing fee of five dollars ($5). Any filing shall evidence chain of title, but lack of filing shall not affect the surviving organization’s title to real property.
(Act 2019-94, §1; Act 2023-503, §3.)
(a) When a merger becomes effective:
(1) the surviving organization continues or, in the case of a surviving organization created pursuant to the merger, comes into existence;
(2) each constituent organization that merges into the surviving organization ceases to exist as a separate entity;
(3) except as provided in the plan of merger, all property owned by, and every contract right possessed by, each constituent organization that ceases to exist vests in the surviving organization without transfer, reversion, or impairment and the title to any property and contract rights vested by deed or otherwise in the surviving organization shall not revert, be in any way impaired, or be deemed to be a transfer by reason of the merger;
(4) all debts, obligations, and other liabilities of each constituent organization, other than the surviving organization, are debts, obligations, and liabilities of the surviving organization, and neither the rights of creditors, nor any liens upon the property of any constituent organization, shall be impaired by the merger;
(5) an action or proceeding pending by or against any constituent organization continues as if the merger had not occurred and the name of the surviving organization may, but need not be, substituted in any pending proceeding for the name of any constituent organization whose separate existence ceased in the merger;
(6) except as prohibited by law other than this chapter or as provided in the plan of merger, all the rights, privileges, franchises, immunities, powers, and purposes of each constituent organization, other than the surviving organization, vest in the surviving organization;
(7) except as otherwise provided in the plan of merger, the terms and conditions of the plan of merger take effect;
(8) except as otherwise agreed, if a constituent organization that is a corporation ceases to exist, the merger does not dissolve the corporation;
(9) if the surviving organization is created pursuant to the merger:
(A) if it is a corporation, the certificate of incorporation and bylaws become effective; or
(B) if it is an organization other than a corporation, the organizational documents that create the organization becomes effective;
(10) if the surviving organization existed before the merger, any amendments provided for in the statement of merger for the organizational documents of that organization become effective;
(11) the stock of each corporation or foreign corporation that is a constituent organization to the merger, and the eligible interests in an eligible entity that is a constituent organization, that are to be converted in accordance with the terms of the merger into stock or other securities, eligible interests, obligations, rights to acquire stock, other securities, or eligible interests, cash, other property, or any combination of the foregoing, are converted, and the former holders of stock or eligible interests are entitled only to the rights provided to them by those terms or to any rights they may have under Article 13 or the governing statute governing the eligible entity or foreign corporation;
(12) if the surviving organization exists before the merger:
(i) except as provided in the plan of merger, all property and contract rights of the surviving organization remain its property and contract rights without transfer, reversion, or impairment;
(ii) the surviving organization remains subject to all its debts, obligations, and other liabilities; and
(iii) except as provided by law other than this chapter or the plan of merger, the surviving organization continues to hold all of its rights, privileges, franchises, immunities, powers and purposes.
(b) When a stock exchange becomes effective, the stock in the acquired entity that is to be exchanged for stock or other securities, obligations, rights to acquire stock, other securities, cash, other property, or any combination of the foregoing, are entitled only to the rights provided to them in the plan of stock exchange or to any rights they may have under Article 13 or under the governing statute governing the acquired entity.
(c) A surviving organization that is a foreign organization:
(1) consents to the jurisdiction of this state to enforce any debt, obligation, or other liability owed by a constituent organization, if before the merger the constituent organization was subject to suit in this state on the debt, obligation, or other liability;
(2) consents that if it fails to designate or maintain a registered agent, or the designated registered agent cannot with reasonable diligence be served, then the service of process on that surviving organization for the purposes of enforcing a debt, obligation, or other liability under this subsection and for enforcing the rights of stockholders of each corporation that is a constituent organization who exercise appraisal rights may be made in the same manner and has the same consequences as provided in Section 10A-1-5.35; and
(3) agrees that it will promptly pay the amount, if any, to which stockholders referred to in clause (2) of this subsection (c) are entitled under Article 13.
(Act 2019-94, §1.)
(a) After a plan of merger or stock exchange has been adopted and approved as required by this Article 11, and before the statement of merger or stock exchange has become effective, the plan may be abandoned by a corporation that is a party to the plan without action by its stockholders in accordance with any procedures set forth in the plan of merger or stock exchange or, if no procedures are set forth in the plan, in the manner determined by the board of directors.
(b) If a merger or stock exchange is abandoned under subsection (a) after the statement of merger or stock exchange has been delivered to the Secretary of State for filing but before the merger or stock exchange has become effective, a statement of abandonment signed by all the parties that signed the statement of merger or stock exchange shall be delivered to the Secretary of State for filing before the statement of merger or stock exchange becomes effective. The statement shall take effect on filing and the merger or stock exchange shall be deemed abandoned and shall not become effective. The statement of abandonment must contain:
(1) the name of each party to the merger or the names of the acquiring and acquired entities in a stock exchange;
(2) the date on which the statement of merger or stock exchange was filed by the Secretary of State; and
(3) a statement that the merger or stock exchange has been abandoned in accordance with this section.
(Act 2019-94, §1.)
This article is not exclusive. This article does not preclude a corporation from merging or exchanging its stock under law other than this chapter.
(Act 2019-94, §1.)
(a) No approval of the stockholders is required, unless the certificate of incorporation otherwise provides:
(1) to sell, lease, exchange, or otherwise dispose of any or all of the corporation’s assets in the usual and regular course of business;
(2) to mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of the corporation’s assets, regardless of whether in the usual and regular course of business;
(3) to transfer any or all of the corporation’s assets to one or more corporations, foreign corporations, or other entities all of the stock or interests of which are owned by the corporation; or
(4) to distribute assets pro rata to the holders of one or more classes or series of the corporation’s stock.
(b) Without limiting the rights of a secured party under applicable law, no approval by stockholders shall be required by Section 10A-2A-12.02 for a sale, lease, exchange, or other disposition of any of the corporation’s assets if those assets are mortgaged, pledged, dedicated to the repayment of indebtedness, or otherwise encumbered for the benefit of a secured party or other creditor and either:
(1) The secured party or other creditor exercises its rights under the law governing the mortgage, pledge, dedication, or encumbrance, or other applicable law, whether under the Uniform Commercial Code, a real property law, or other law, to effect the sale, lease, exchange, or other disposition of those assets without the consent of the corporation; or
(2) In lieu of the secured party or other creditor exercising such rights, the board of directors of the corporation authorizes an alternative sale, lease, exchange, or other disposition of those assets, whether with the secured party or other creditor, that results in the reduction or elimination of the total liabilities or obligations secured by those assets, provided that (i) the value of those assets is less than or equal to the total amount of the liabilities or obligations being eliminated or reduced and (ii) the sale, lease, exchange, or other disposition of those assets is not prohibited by the law governing the mortgage, pledge, dedication, or encumbrance. The provision of consideration to the corporation or to its stockholders shall not create a presumption that the value of the assets is greater than the total amount of the liabilities or obligations being eliminated or reduced.
(c) A failure to satisfy the condition in subsection (b)(2)(i) shall not result in the invalidation of a sale, lease, exchange, or other disposition of the corporation’s assets if the transferee of those assets (i) provided value therefor (which may include the reduction or elimination of the total liabilities or obligations secured by those assets) and (ii) acted in good faith (as defined in Section 7-1-201(b)). The preceding sentence shall not apply to a proceeding against the corporation and any other necessary parties to enjoin the sale, lease, exchange, or other disposition of the corporation’s assets before the consummation thereof and shall not eliminate any liability for monetary damages for any claim, including a claim in the right of the corporation, based upon a violation of a duty by a current or former director or officer, or other person.
(d) A provision of the certificate of incorporation that requires the authorization or consent of stockholders for a sale, lease, exchange, or other disposition of the corporation’s assets shall not apply to a transaction permitted by subsection (b) unless that provision expressly so requires.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) A sale, lease, exchange, or other disposition of assets, other than a disposition described in Section 10A-2A-12.01, requires approval of the corporation’s stockholders if the disposition would leave the corporation without a significant continuing business activity. A corporation will conclusively be deemed to have retained a significant continuing business activity if it retains a business activity that represented, for the corporation and its subsidiaries on a consolidated basis, at least (i) 25 percent of total assets at the end of the most recently completed fiscal year, and (ii) either 25 percent of either income from continuing operations before taxes or 25 percent of revenues from continuing operations, in each case for the most recently completed fiscal year.
(b) To obtain the approval of the stockholders under subsection (a) the board of directors shall first adopt a resolution authorizing the disposition. The disposition shall then be approved by the stockholders. In submitting the disposition to the stockholders for approval, the board of directors shall recommend that the stockholders approve the disposition, unless (i) the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make a recommendation, or (ii) Section 10A-2A-8.26 applies. If either (i) or (ii) applies, the board of directors shall inform the stockholders of the basis for its so proceeding.
(c) The board of directors may set conditions for the approval by the stockholders of a disposition or the effectiveness of the disposition.
(d) If a disposition is required to be approved by the stockholders under subsection (a), and if the approval is to be given at a meeting, the corporation shall notify each stockholder, regardless of whether entitled to vote, of the meeting of stockholders at which the disposition is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider the disposition and must contain a description of the disposition, including the terms and conditions of the disposition and the consideration to be received by the corporation.
(e) Unless the certificate of incorporation or the board of directors acting pursuant to subsection (c) requires a greater vote or a greater quorum, the approval of a disposition by the stockholders shall require the approval of the stockholders at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the disposition.
(f) After a disposition has been approved by the stockholders under this Article 12, and at any time before the disposition has been consummated, it may be abandoned by the corporation without action by the stockholders, subject to any contractual rights of other parties to the disposition.
(g) A disposition of assets in the course of dissolution under Article 14 is not governed by this section.
(h) For purposes of this section only, the property and assets of the corporation include the property and assets of any subsidiary of the corporation. As used in this subsection, “subsidiary” means any entity wholly owned and controlled, directly or indirectly, by the corporation and includes, without limitation, corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies, and/or statutory trusts.
(Act 2019-94, §1; Act 2023-503, §3.)
In this Article 13:
(1) AFFILIATE means a person that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with another person or is a senior executive of that person. For purposes of Section 10A-2A-13.02(b)(4), a person is deemed to be an affiliate of its senior executives.
(2) CORPORATION means the corporation that is the issuer of the stock held by a stockholder demanding appraisal and, for matters covered in Section 10A-2A-13.22 through Section 10A-2A-13.31, includes the surviving organization of a merger.
(3) FAIR VALUE means the value of the corporation’s stock determined:
(i) immediately before the effectiveness of the corporate action to which the stockholder objects;
(ii) using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction requiring appraisal; and
(iii) without discounting for lack of marketability or minority status.
(4) INTEREST means interest from the date the corporate action becomes effective until the date of payment, and shall be compounded quarterly and shall accrue at five percent over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the corporate action and the date of payment.
(5) INTERESTED TRANSACTION means a corporate action described in Section 10A-2A-13.02(a), other than a merger pursuant to Section 10A-2A-11.05, involving an interested person in which any of the stock or assets of the corporation are being acquired or converted. As used in this definition:
(i) “Interested person” means a person, or an affiliate of a person, who at any time during the one-year period immediately preceding approval by the board of directors of the corporate action:
(A) was the beneficial owner of 20 percent or more of the voting power of the corporation, other than as owner of excluded stock;
(B) had the power, contractually or otherwise, other than as owner of excluded stock, to cause the appointment or election of 25 percent or more of the directors to the board of directors of the corporation; or
(C) was a senior executive or director of the corporation or a senior executive of any affiliate of the corporation, and that senior executive or director will receive, as a result of the corporate action, a financial benefit not generally available to other stockholders as such, other than:
(I) employment, consulting, retirement, or similar benefits established separately and not as part of or in contemplation of the corporate action;
(II) employment, consulting, retirement, or similar benefits established in contemplation of, or as part of, the corporate action that are not more favorable than those existing before the corporate action or, if more favorable, that have been approved on behalf of the corporation in the same manner as is provided in Section 10A-2A-8.60; or
(III) in the case of a director of the corporation who will, in the corporate action, become a director or governing person of the acquiror or any of its affiliates, rights and benefits as a director or governing person that are provided on the same basis as those afforded by the acquiror generally to other directors or governing persons of the acquiror or its affiliate.
(ii) “Beneficial owner” means any person who, directly or indirectly, through any contract, arrangement, or understanding, other than a revocable proxy, has or shares the power to vote, or to direct the voting of, stock; except that a member of a national securities exchange is not deemed to be a beneficial owner of securities held directly or indirectly by it on behalf of another person if the member is precluded by the rules of the exchange from voting without instruction on contested matters or matters that may affect substantially the rights or privileges of the holders of the securities to be voted. When two or more persons agree to act together for the purpose of voting their stock of the corporation, each member of the group formed thereby is deemed to have acquired beneficial ownership, as of the date of the agreement, of all stock having voting power of the corporation beneficially owned by any member of the group.
(iii) “Excluded stock” means stock acquired pursuant to an offer for all stock having voting power if the offer was made within one year before the corporate action for consideration of the same kind and of a value equal to or less than that paid in connection with the corporate action.
(6) PREFERRED STOCK means a class or series of stock whose holders have preference over any other class or series of stock with respect to distributions.
(7) SENIOR EXECUTIVE means the chief executive officer, chief operating officer, chief financial officer, and any individual in charge of a principal business unit or function.
(8) STOCKHOLDER means a record stockholder, a beneficial stockholder, and a voting trust beneficial owner.
(Act 2019-94, §1; Act 2021-299, §3.)
(a) A stockholder is entitled to appraisal rights, and to obtain payment of the fair value of that stockholder’s stock, in the event of any of the following corporate actions:
(1) consummation of a merger to which the corporation is a party (i) if the corporation is a subsidiary and the merger is governed by Section 10A-2A-11.05 or (ii) if stockholder approval is required for the merger by Section 10A-2A-11.04, or would be required but for the provisions of Section 10A-2A-11.04(j), except that appraisal rights shall not be available to any stockholder of the corporation with respect to stock of any class or series that remain outstanding after consummation of the merger;
(2) consummation of a stock exchange to which the corporation is a party the stock of which will be acquired, except that appraisal rights shall not be available to any stockholder of the corporation with respect to any class or series of stock of the corporation that is not acquired in the stock exchange;
(3) consummation of a disposition of assets pursuant to Section 10A-2A-12.02 if the stockholder is entitled to vote on the disposition, except that appraisal rights shall not be available to any stockholder of the corporation with respect to stock of any class or series if (i)(A) under the terms of the corporate action approved by the stockholders there is to be distributed to stockholders in cash the corporation’s net assets, in excess of a reasonable amount reserved to meet claims of the type described in Section 10A-2A-14.06 and Section 10A-2A-14.07, (I) within one year after the stockholders’ approval of the action and (II) in accordance with their respective interests determined at the time of distribution, and (B) the disposition of assets is not an interested transaction, or (ii) the certificate of incorporation states that no stockholder shall be entitled to appraisal rights with respect to the consummation of a disposition of assets pursuant to Section 10A-2A-12.02;
(4) an amendment of the certificate of incorporation with respect to a class or series of stock that reduces the number of stock of a class or series owned by the stockholder to a fraction of a stock if the corporation has the obligation or right to repurchase the fractional stock so created;
(5) any other merger, stock exchange, disposition of assets or amendment to the certificate of incorporation, in each case to the extent provided by the certificate of incorporation, bylaws or a resolution of the board of directors;
(6) consummation of a conversion of a corporation to a foreign corporation pursuant to Article 9 of this chapter or Article 8 of Chapter 1 if the stockholder does not receive stock in the foreign corporation resulting from the conversion that has terms as favorable to the stockholder in all material respects, and represents at least the same percentage interest of the total voting rights of the outstanding stock of the foreign corporation, as the stock held by the stockholder before the conversion;
(7) consummation of a conversion of a corporation to a nonprofit corporation pursuant to Article 9 of this chapter or Article 8 of Chapter 1; or
(8) consummation of a conversion of the corporation to an unincorporated entity pursuant to Article 9 of this chapter or Article 8 of Chapter 1.
(b) Notwithstanding subsection (a), the availability of appraisal rights under subsections (a)(1), (2), (3), (4), (6), and (8) shall be limited in accordance with the following provisions:
(1) Appraisal rights shall not be available for the holders of stock of any class or series of stock which is:
(i) a covered security under Section 18(b)(1)(A) or (B) of the Securities Act of 1933;
(ii) has at least 2,000 record stockholders; or
(iii) issued by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and which may be redeemed at the option of the holder at net asset value.
(2) The applicability of subsection (b)(1) shall be determined as of:
(i) the record date fixed to determine the stockholders entitled to receive notice of the meeting of stockholders to act upon the corporate action requiring appraisal rights or, in the case of an offer made pursuant to Section 10A-2A-11.04(j), the date of the offer; or
(ii) if there is no meeting of stockholders and no offer made pursuant to Section 10A-2A-11.04(j), the day before the consummation of the corporate action or effective date of the amendment of the certificate of incorporation, as applicable.
(3) Subsection (b)(1) shall not be applicable and appraisal rights shall be available pursuant to subsection (a) for the holders of any class or series of stock (i) who are required by the terms of the corporate action requiring appraisal rights to accept for their stock anything other than cash or stock of any class or any series of stock of any corporation, or any other proprietary interest of any other entity, that satisfies the standards set forth in subsection (b)(1) at the time the corporate action becomes effective, (ii) in the case of the consummation of a disposition of assets pursuant to Section 10A-2A-12.02, unless the cash, stock, or proprietary interests received in the disposition are, under the terms of the corporate action approved by the stockholders, to be distributed to the stockholders, as part of a distribution to stockholders of the net assets of the corporation in excess of a reasonable amount to meet claims of the type described in Sections 10A-2A-14.06 and 10A-2A-14.07, (A) within one year after the stockholders’ approval of the action, and (B) in accordance with their respective interests determined at the time of the distribution, or (iii) in the case of the consummation of a disposition of assets pursuant to Section 10A-2A-12.02, unless the certificate of incorporation states that no stockholder shall be entitled to appraisal rights with respect to the consummation of a disposition of assets pursuant to Section 10A-2A-12.02.
(4) Subsection (b)(1) shall not be applicable and appraisal rights shall be available pursuant to subsection (a) for the holders of any class or series of stock where the corporate action is an interested transaction.
(c) Notwithstanding any other provision of this Section 10A-2A-13.02, the certificate of incorporation as originally filed or any amendment to the certificate of incorporation may limit or eliminate appraisal rights for any class or series of preferred stock, except that (i) no limitation or elimination shall be effective if the class or series does not have the right to vote separately as a voting group (alone or as part of a group) on the action or if the action is a conversion or merger in which the converted organization or the surviving organization is not a corporation or foreign corporation, and (ii) any limitation or elimination contained in an amendment to the certificate of incorporation that limits or eliminates appraisal rights for any stock that is outstanding immediately before the effective date of the amendment or that the corporation is or may be required to issue or sell thereafter pursuant to any conversion, exchange, or other right existing immediately before the effective date of the amendment shall not apply to any corporate action that becomes effective within one year after the effective date of the amendment if that action would otherwise afford appraisal rights.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) A record stockholder may assert appraisal rights as to fewer than all the shares of stock registered in the record stockholder’s name but owned by a beneficial stockholder or a voting trust beneficial owner only if the record stockholder objects with respect to all shares of stock of a class or series owned by the beneficial stockholder or the voting trust beneficial owner and notifies the corporation in writing of the name and address of each beneficial stockholder or voting trust beneficial owner on whose behalf appraisal rights are being asserted. The rights of a record stockholder who asserts appraisal rights for only part of the stock held of record in the record stockholder’s name under this subsection shall be determined as if the stock as to which the record stockholder objects and the record stockholder’s other shares of stock were registered in the names of different record stockholders.
(b) A beneficial stockholder and a voting trust beneficial owner may assert appraisal rights as to stock of any class or series held on behalf of the stockholder only if the stockholder:
(1) submits to the corporation the record stockholder’s written consent to the assertion of appraisal rights no later than the date referred to in Section 10A-2A-13.22(b)(2)(ii); and
(2) does so with respect to all stock of the class or series that is beneficially owned by the beneficial stockholder or the voting trust beneficial owner.
(Act 2019-94, §1.)
(a) Where any corporate action specified in Section 10A-2A-13.02(a) is to be submitted to a vote at a stockholders’ meeting, the meeting notice (or where no approval of the corporate action is required pursuant to Section 10A-2A-11.04(j), the offer made pursuant to Section 10A-2A-11.04(j)), must state that the corporation has concluded that appraisal rights are, are not, or may be available under this Article 13. If the corporation concludes that appraisal rights are or may be available, a copy of this Article 13 must accompany the meeting notice or offer sent to those record stockholders entitled to exercise appraisal rights.
(b) In a merger pursuant to Section 10A-2A-11.05, the parent entity shall notify in writing all record stockholders of the subsidiary who are entitled to assert appraisal rights that the corporate action became effective. The notice shall be sent within 10 days after the corporate action became effective and include the materials described in Section 10A-2A-13.22.
(c) Where any corporate action specified in Section 10A-2A-13.02(a) is to be approved by written consent of the stockholders pursuant to Section 10A-2A-7.04:
(1) written notice that appraisal rights are, are not, or may be available shall be sent to each record stockholder from whom a consent is solicited at the time consent of each stockholder is first solicited and, if the corporation has concluded that appraisal rights are or may be available, the notice must be accompanied by a copy of this Article 13; and
(2) written notice that appraisal rights are, are not, or may be available must be delivered together with the notice to nonconsenting and nonvoting stockholders required by Section 10A-2A-7.04(d) and (e), may include the materials described in Section 10A-2A-13.22 and, if the corporation has concluded that appraisal rights are or may be available, must be accompanied by a copy of this Article 13.
(d) Where corporate action described in Section 10A-2A-13.02(a) is proposed, or a merger pursuant to Section 10A-2A-11.05 is effected, the notice referred to in subsection (a) or (c), if the corporation concludes that appraisal rights are or may be available, and in subsection (b) must be accompanied by:
(1) financial statements of the corporation that issued the stock that may be subject to appraisal, consisting of a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of the notice, an income statement for that year, and a cash flow statement for that year; provided that, if the financial statements are not reasonably available, the corporation shall provide reasonably equivalent financial information; and
(2) the latest interim financial statements of the corporation, if any.
(e) The right to receive the information described in subsection (d) may be waived in writing by a stockholder before or after the corporate action.
(Act 2019-94, §1.)
(a) If a corporate action specified in Section 10A-2A-13.02(a) is submitted to a vote at a stockholders’ meeting, a stockholder who wishes to assert appraisal rights with respect to any class or series of stock:
(1) shall deliver to the corporation, before the vote is taken, written notice of the stockholder’s intent to demand payment if the proposed action is effectuated; and
(2) shall not vote, or cause or permit to be voted, any stock of the class or series in favor of the proposed action.
(b) If a corporate action specified in Section 10A-2A-13.02(a) is to be approved by written consent, a stockholder who wishes to assert appraisal rights with respect to any class or series of stock shall not sign a consent in favor of the proposed action with respect to that class or series of stock.
(c) If a corporate action specified in Section 10A-2A-13.02(a) does not require stockholder approval pursuant to Section 10A-2A-11.04(j), a stockholder who wishes to assert appraisal rights with respect to any class or series of stock (i) shall deliver to the corporation before the stock is purchased pursuant to the offer written notice of the stockholder’s intent to demand payment if the proposed action is effected; and (ii) shall not tender, or cause or permit to be tendered, any stock of the class or series in response to the offer.
(d) A stockholder who fails to satisfy the requirements of subsection (a), (b), or (c) is not entitled to payment under this Article 13.
(Act 2019-94, §1.)
(a) If a corporate action requiring appraisal rights under Section 10A-2A-13.02(a) becomes effective, the corporation shall deliver a written appraisal notice and form required by subsection (b) to all stockholders who satisfy the requirements of Section 10A-2A-13.21(a), (b), or (c). In the case of a merger under Section 10A-2A-11.05, the parent shall deliver an appraisal notice and form to all record stockholders who may be entitled to assert appraisal rights.
(b) The appraisal notice shall be delivered no earlier than the date the corporate action specified in Section 10A-2A-13.02(a) became effective, and no later than 10 days after that date, and must:
(1) supply a form that (i) specifies the first date of any announcement to stockholders made before the date the corporate action became effective of the principal terms of the proposed corporate action, (ii) if the announcement was made, requires the stockholder asserting appraisal rights to certify whether beneficial ownership of those shares of stock for which appraisal rights are asserted was acquired before that date, and (iii) requires the stockholder asserting appraisal rights to certify that the stockholder did not vote for or consent to the transaction as to the class or series of stock for which appraisal is sought;
(2) state:
(i) where the form shall be sent and where certificates for certificated stock shall be deposited and the date by which those certificates must be deposited, which date may not be earlier than the date by which the corporation must receive the required form under subsection (b)(2)(ii);
(ii) a date by which the corporation shall receive the form, which date may not be fewer than 40 nor more than 60 days after the date the subsection (a) appraisal notice is sent, and state that the stockholder shall have waived the right to demand appraisal with respect to the stock unless the form is received by the corporation by the specified date;
(iii) the corporation’s estimate of the fair value of the stock;
(iv) that, if requested in writing, the corporation will provide, to the stockholder so requesting, within 10 days after the date specified in subsection (b)(2)(ii) the number of stockholders who return the forms by the specified date and the total number of shares of stock owned by them; and
(v) the date by which the notice to withdraw under Section 10A-2A-13.23 shall be received, which date shall be within 20 days after the date specified in subsection (b)(2)(ii); and
(3) be accompanied by a copy of this Article 13.
(Act 2019-94, §1.)
(a) A stockholder who receives notice pursuant to Section 10A-2A-13.22 and who wishes to exercise appraisal rights shall sign and return the form sent by the corporation and, in the case of certificated stock, deposit the stockholder’s certificates in accordance with the terms of the notice by the date referred to in the notice pursuant to Section 10A-2A-13.22(b)(2)(ii). In addition, if applicable, the stockholder shall certify on the form whether the beneficial owner of the stock acquired beneficial ownership of the stock before the date required to be set forth in the notice pursuant to Section 10A-2A-13.22(b)(1)(i). If a stockholder fails to make this certification, the corporation may elect to treat the stockholder’s stock as after-acquired stock under Section 10A-2A-13.25. Once a stockholder deposits the certificates or, in the case of uncertificated stock, returns the signed forms, that stockholder loses all rights as a stockholder, unless the stockholder withdraws pursuant to subsection (b).
(b) A stockholder who has complied with subsection (a) may nevertheless decline to exercise appraisal rights and withdraw from the appraisal process by so notifying the corporation in writing by the date set forth in the appraisal notice pursuant to Section 10A-2A-13.22(b)(2)(v). A stockholder who fails to so withdraw from the appraisal process may not thereafter withdraw without the corporation’s written consent.
(c) A stockholder who does not sign and return the form and, in the case of certificated stock, deposit that stockholder’s stock certificates where required, each by the date set forth in the notice described in Section 10A-2A-13.22(b), shall not be entitled to payment under this Article 13.
(Act 2019-94, §1.)
(a) Except as provided in Section 10A-2A-13.25, within 30 days after the form required by Section 10A-2A-13.22(b)(2)(ii) is due, the corporation shall pay in cash to those stockholders who complied with Section 10A-2A-13.23(a) the amount the corporation estimates to be the fair value of their stock, plus interest.
(b) The payment to each stockholder pursuant to subsection (a) must be accompanied by:
(1)(i) financial statements of the corporation that issued the stock to be appraised, consisting of a balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, an income statement for that year, and a cash flow statement for that year; provided that, if the annual financial statements are not reasonably available, the corporation shall provide reasonably equivalent financial information, and (ii) the latest interim financial statements of the corporation, if any;
(2) a statement of the corporation’s estimate of the fair value of the stock, which estimate shall equal or exceed the corporation’s estimate given pursuant to Section 10A-2A-13.22(b)(2)(iii); and
(3) a statement that stockholders described in subsection (a) have the right to demand further payment under Section 10A-2A-13.26 and that if any stockholder does not do so within the time period specified in Section 10A-2A-13.26(b), the stockholder shall be deemed to have accepted the payment under subsection (a) in full satisfaction of the corporation’s obligations under this Article 13.
(Act 2019-94, §1.)
(a) A corporation may elect to withhold payment required by Section 10A-2A-13.24 from any stockholder who was required to, but did not certify that beneficial ownership of all of the stockholder’s stock for which appraisal rights are asserted was acquired before the date set forth in the appraisal notice sent pursuant to Section 10A-2A-13.22(b)(1).
(b) If the corporation elects to withhold payment under subsection (a), it shall, within 30 days after the form required by Section 10A-2A-13.22(b)(2)(ii) is due, notify all stockholders who are described in subsection (a):
(1) of the information required by Section 10A-2A-13.24(b)(1);
(2) of the corporation’s estimate of fair value pursuant to Section 10A-2A-13.24(b)(2);
(3) that they may accept the corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under Section 10A-2A-13.26;
(4) that those stockholders who wish to accept the offer shall so notify the corporation of their acceptance of the corporation’s offer within 30 days after receiving the offer; and
(5) that those stockholders who do not satisfy the requirements for demanding appraisal under Section 10A-2A-13.26 shall be deemed to have accepted the corporation’s offer.
(c) Within 10 days after receiving the stockholder’s acceptance pursuant to subsection (b)(4), the corporation shall pay in cash the amount it offered under subsection (b)(2) plus interest to each stockholder who agreed to accept the corporation’s offer in full satisfaction of the stockholder’s demand.
(d) Within 40 days after delivering the notice described in subsection (b), the corporation shall pay in cash the amount it offered to pay under subsection (b)(2) plus interest to each stockholder described in subsection (b)(5).
(Act 2019-94, §1.)
(a) A stockholder paid pursuant to Section 10A-2A-13.24 who is dissatisfied with the amount of the payment shall notify the corporation in writing of that stockholder’s estimate of the fair value of the stock and demand payment of that estimate (less any payment under Section 10A-2A-13.24) plus interest. A stockholder offered payment under Section 10A-2A-13.25 who is dissatisfied with that offer shall reject the offer and demand payment of the stockholder’s stated estimate of the fair value of the stock plus interest.
(b) A stockholder who fails to notify the corporation in writing of that stockholder’s demand to be paid the stockholder’s stated estimate of the fair value plus interest under subsection (a) within 30 days after receiving the corporation’s payment or offer of payment under Section 10A-2A-13.24 or Section 10A-2A-13.25, respectively, waives the right to demand payment under this section and shall be entitled only to the payment made or offered pursuant to those respective sections.
(Act 2019-94, §1.)
(a) If a stockholder makes demand for payment under Section 10A-2A-13.26 which remains unsettled, the corporation shall commence a proceeding within 60 days after receiving the payment demand and petition the court to determine the fair value of the stock and accrued interest. If the corporation does not commence the proceeding within the 60-day period, it shall pay in cash to each stockholder the amount the stockholder demanded pursuant to Section 10A-2A-13.26 plus interest.
(b) The corporation shall commence the proceeding in the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the corporation’s most recent registered office is located.
(c) The corporation shall make all stockholders (regardless of whether they are residents of this state) whose demands remain unsettled parties to the proceeding as in an action against their stock, and all parties shall be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the powers described in the order appointing them, or in any amendment to it. The stockholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There shall be no right to a jury trial.
(e) Each stockholder made a party to the proceeding is entitled to judgment (i) for the amount, if any, by which the court finds the fair value of the stockholder’s stock exceeds the amount paid by the corporation to the stockholder for the stock, plus interest, or (ii) for the fair value, plus interest, of the stockholder’s stock for which the corporation elected to withhold payment under Section 10A-2A-13.25.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) The court in an appraisal proceeding commenced under Section 10A-2A-13.30 shall determine all court costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the court costs against the corporation, except that the court may assess court costs against all or some of the stockholders demanding appraisal, in amounts which the court finds equitable, to the extent the court finds the stockholders acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this article.
(b) The court in an appraisal proceeding may also assess the expenses of the respective parties in amounts the court finds equitable:
(1) against the corporation and in favor of any or all stockholders demanding appraisal if the court finds the corporation did not substantially comply with the requirements of Section 10A-2A-13.20, Section 10A-2A-13.22, Section 10A-2A-13.24, or Section 10A-2A-13.25; or
(2) against either the corporation or a stockholder demanding appraisal, in favor of any other party, if the court finds the party against whom expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this Article 13.
(c) If the court in an appraisal proceeding finds that the expenses incurred by any stockholder were of substantial benefit to other stockholders similarly situated and that the expenses should not be assessed against the corporation, the court may direct that the expenses be paid out of the amounts awarded the stockholders who were benefited.
(d) To the extent the corporation fails to make a required payment pursuant to Section 10A-2A-13.24, Section 10A-2A-13.25, or Section 10A-2A-13.26, the stockholder may sue directly for the amount owed, and to the extent successful, shall be entitled to recover from the corporation all expenses of the suit.
(Act 2019-94, §1.)
(a) The legality of a proposed or completed corporate action described in Section 10A-2A-13.02(a) may not be contested, nor may the corporate action be enjoined, set aside or rescinded, in a legal or equitable proceeding by a stockholder after the stockholders have approved the corporate action.
(b) Subsection (a) does not apply to a corporate action that:
(1) was not authorized and approved in accordance with the applicable provisions of:
(i) Article 9, 10, 11, or 12 of this chapter or Article 8 of Chapter 1;
(ii) the certificate of incorporation or bylaws; or
(iii) the resolution of the board of directors authorizing the corporate action;
(2) was procured as a result of fraud, a material misrepresentation, or an omission of a material fact necessary to make statements made, in light of the circumstances in which they were made, not misleading;
(3) is an interested transaction, unless it has been recommended by the board of directors in the same manner as is provided in Section 10A-2A-8.60 and has been approved by the stockholders in the same manner as is provided in Section 10A-2A-8.60 as if the interested transaction were a director’s conflicting interest transaction; or
(4) is approved by less than unanimous consent of the voting stockholders pursuant to Section 10A-2A-7.04 if:
(i) the challenge to the corporate action is brought by a stockholder who did not consent and as to whom notice of the approval of the corporate action was not effective at least 10 days before the corporate action was effected; and
(ii) the proceeding challenging the corporate action is commenced within 10 days after notice of the approval of the corporate action is effective as to the stockholder bringing the proceeding.
(Act 2019-94, §1.)
A majority of the incorporators or initial directors of a corporation that has not issued stock or has not commenced business may dissolve the corporation by delivering to the Secretary of State for filing a certificate of dissolution that sets forth:
(a) the name of the corporation;
(b) the date of its incorporation;
(c) either (i) that none of the corporation’s stock has been issued, or (ii) that the corporation has not commenced business;
(d) that no debt of the corporation remains unpaid;
(e) that the net assets of the corporation remaining after winding up have been distributed to the stockholders, if stock was issued;
(f) that a majority of the incorporators or initial directors authorized the dissolution; and
(g) the unique identifying number or other designation as assigned by the Secretary of State.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) The board of directors may propose dissolution for submission to the stockholders by first adopting a resolution authorizing the dissolution.
(b) For a proposal to dissolve to be adopted, it shall then be approved by the stockholders. In submitting the proposal to dissolve to the stockholders for approval, the board of directors shall recommend that the stockholders approve the dissolution, unless (i) the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation or (ii) Section 10A-2A-8.26 applies. If either (i) or (ii) applies, the board of directors shall inform the stockholders of the basis for its so proceeding.
(c) The board of directors may set conditions for the approval of the proposal for dissolution by stockholders or the effectiveness of the dissolution.
(d) If the approval of the stockholders is to be given at a meeting, the corporation shall notify each stockholder, regardless of whether entitled to vote, of the meeting of stockholders at which the dissolution is to be submitted for approval. The notice must state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.
(e) Unless the certificate of incorporation or the board of directors acting pursuant to subsection (c) requires a greater vote, a greater quorum, or a vote by voting groups, adoption of the proposal to dissolve shall require the approval of the stockholders at a meeting at which a quorum exists consisting of a majority of the votes entitled to be cast on the proposal to dissolve.
(f) Dissolution of a corporation may also be authorized without action of the directors if all the stockholders entitled to vote thereon shall consent in writing and a certificate of dissolution shall be delivered to the Secretary of State for filing pursuant to Section 10A-2A-14.03.
(Act 2019-94, §1.)
(a) At any time after dissolution is authorized, the corporation may dissolve by delivering to the Secretary of State for filing a certificate of dissolution setting forth:
(1) the name of the corporation;
(2) the date that dissolution was authorized;
(3) if dissolution was approved by the stockholders, a statement that the proposal to dissolve was duly approved by the stockholders in the manner required by this chapter and by the certificate of incorporation; and
(4) the unique identifying number or other designation as assigned by the Secretary of State.
(b) The certificate of dissolution shall take effect at the effective date determined in accordance with Article 4 of Chapter 1. A corporation is dissolved upon the effective date of its certificate of dissolution.
(c) For purposes of this Division A of this Article 14, “dissolved corporation” means a corporation whose certificate of dissolution has become effective and includes a successor entity to which the remaining assets of the corporation are transferred subject to its liabilities for purposes of liquidation.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) A corporation may revoke its dissolution within 120 days after its effective date and be reinstated.
(b) Revocation of dissolution and reinstatement shall be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation and reinstatement by action of the board of directors alone, in which event the board of directors may revoke the dissolution and effect the reinstatement without stockholder action.
(c) After the revocation of dissolution and reinstatement is authorized, the corporation may revoke the dissolution and effect the reinstatement by delivering to the Secretary of State for filing a certificate of revocation of dissolution and reinstatement, together with a copy of its certificate of dissolution, that sets 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 and reinstatement was authorized;
(4) if the corporation’s board of directors (or incorporators) revoked the dissolution and effected the reinstatement, a statement to that effect;
(5) if the corporation’s board of directors revoked a dissolution and effected the reinstatement as authorized by the stockholders, a statement that revocation and reinstatement was permitted by action by the board of directors alone pursuant to that authorization;
(6) if stockholder action was required to revoke the dissolution and effect the reinstatement, a statement that the revocation and reinstatement was duly approved by the stockholders in the manner required by this chapter and by the certificate of incorporation; and
(7) the unique identifying number or other designation as assigned by the Secretary of State.
(d) The certificate of revocation of dissolution and reinstatement shall take effect at the effective date determined in accordance with Article 4 of Chapter 1. Revocation of dissolution and reinstatement is effective upon the effective date of the certificate of revocation of dissolution and reinstatement.
(e)(1) Subject to subsection (e)(2), upon revocation and reinstatement, the corporation shall be deemed for all purposes to have continued its business as if dissolution had never occurred; and each right inuring to, and each debt, obligation, and liability incurred by, the corporation after the dissolution shall be determined as if the dissolution had never occurred.
(2) The rights of persons acting in reliance on the dissolution before those persons had notice of the revocation and reinstatement shall not be adversely affected by the revocation and reinstatement.
(f) If the corporation is listed in the Secretary of State’s records as a corporation that has been dissolved, then the name of the corporation following revocation and reinstatement shall be that corporation name at the time of revocation and reinstatement if that corporation name complies with Article 5 of Chapter 1 at the time of revocation and reinstatement. If that corporation name does not comply with Article 5 of Chapter 1, the name of the corporation following revocation and reinstatement shall be that corporation name followed by the word “reinstated.”
(Act 2019-94, §1; Act 2020-73, §7.)
(a) A dissolved corporation continues its existence as a corporation but may not carry on any business except as is appropriate to wind up and liquidate its business and affairs, including:
(1) collecting its assets;
(2) disposing of its properties that will not be distributed in kind to stockholders;
(3) discharging or making provisions for discharging its liabilities;
(4) distributing its remaining property among its stockholders according to their interests; and
(5) doing every other act necessary to wind up and liquidate its business and affairs.
(b) In winding up its business and affairs, a corporation may:
(1) preserve the corporation’s business and affairs and property as a going concern for a reasonable time;
(2) prosecute, defend, or settle actions or proceedings whether civil, criminal, or administrative;
(3) transfer the corporation’s assets;
(4) resolve disputes by mediation or arbitration;
(5) merge or convert in accordance with Article 9 or 11 of this chapter or Article 8 of Chapter 1; and
(6) enter into a stock exchange in accordance with Article 11 of this chapter.
(c) Dissolution of a corporation does not:
(1) transfer title to the corporation’s property;
(2) prevent transfer of its stock or securities;
(3) subject its directors or officers to standards of conduct different from those prescribed in Article 8 of this chapter;
(4) change (i) quorum or voting requirements for its board of directors or stockholders;
(ii) provisions for selection, resignation, or removal of its directors or officers or both; or
(iii) provisions for amending its bylaws;
(5) prevent commencement of a proceeding by or against the corporation in its corporate name;
(6) abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or
(7) terminate the authority of the registered agent of the corporation.
(d) A distribution in liquidation under this section may only be made by a dissolved corporation. For purposes of determining the stockholders entitled to receive a distribution in liquidation, the board of directors may fix a record date for determining stockholders entitled to a distribution in liquidation, which date may not be retroactive. If the board of directors does not fix a record date for determining stockholders entitled to a distribution in liquidation, the record date is the date the board of directors authorizes the distribution in liquidation.
(Act 2019-94, §1; Act 2024-413, §1.)
(a) A dissolved corporation may dispose of any known claims against it by following the procedures described in subsection (b) at any time after the effective date of the dissolution of the corporation.
(b) A dissolved corporation may give written notice of the dissolution to the holder of any known claim. The notice must:
(1) identify the dissolved corporation;
(2) describe the information required to be included in a claim;
(3) provide a mailing address to which the claim is to be sent;
(4) state the deadline, which may not be fewer than 120 days from the effective date of the notice, by which the dissolved corporation must receive the claim; and
(5) state that if not sooner barred, the claim will be barred if not received by the deadline.
(c) Unless sooner barred by any other statute limiting actions, a claim against a dissolved corporation is barred:
(1) if a claimant who was given notice under subsection (b) does not deliver the claim to the dissolved corporation by the deadline; or
(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.
(d) For purposes of this section, “known claim” or “claim” includes unliquidated claims, but does not include a contingent liability that has not matured so that there is no immediate right to bring suit or a claim based on an event occurring after the effective date of dissolution.
(e) Nothing in this section shall be deemed to extend any otherwise applicable statute of limitations.
(Act 2019-94, §1.)
(a) A dissolved corporation may publish notice of its dissolution and request that persons with claims against the dissolved corporation present them in accordance with the notice.
(b) The notice authorized by subsection (a) must:
(1) be published at least one time in a newspaper of general circulation in the county in which the dissolved corporation’s principal office is located or, if it has none in this state, in the county in which the corporation’s most recent registered office is located;
(2) describe the information that must be included in a claim and provide a mailing address to which the claim is to be sent; and
(3) state that if not sooner barred, a claim against the dissolved corporation will be barred unless a proceeding to enforce the claim is commenced within two years after the publication of the notice.
(c) If a dissolved corporation publishes a newspaper notice in accordance with subsection (b), unless sooner barred by any other statute limiting actions, 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 two years after the publication date of the newspaper notice:
(1) a claimant who was not given notice under Section 10A-2A-14.06;
(2) a claimant whose claim was timely sent to the dissolved corporation but not acted on by the dissolved corporation; and
(3) a claimant whose claim is contingent at the effective date of the dissolution of the corporation, or is based on an event occurring after the effective date of the dissolution of the corporation.
(d) A claim that is not barred under this section, any other statute limiting actions, or Section 10A-2A-14.06 may be enforced:
(1) against a dissolved corporation, to the extent of its undistributed assets; and
(2) except as provided in subsection (h), if the assets of a dissolved corporation have been distributed after dissolution, against each stockholder to the extent of the stockholder’s proportionate share of the claim or of the assets distributed to that stockholder after dissolution, whichever is less, but a stockholder’s total liability for all claims under subsection (d) may not exceed the total amount of assets distributed to that stockholder after dissolution of the corporation.
(e) A dissolved corporation that published a notice under this section may file an application with the circuit court for the county in which the dissolved corporation’s principal office is located in this state and if the corporation does not have a principal office within this state, with the circuit court for the county in which the dissolved corporation’s most recent registered office is located, for a determination of the amount and form of security to be provided for payment of claims that are contingent or have not been made known to the dissolved corporation or that are based on an event occurring after the effective date of the dissolution of the corporation but that, based on the facts known to the dissolved corporation, are reasonably estimated to arise after the effective date of the dissolution of the corporation. Provision need not be made for any claim that is or is reasonably anticipated to be barred under subsection (c).
(f) Within 10 days after the filing of the application provided for in subsection (e), notice of the proceeding shall be given by the dissolved corporation to each potential claimant as described in subsection (e).
(g) The circuit court under subsection (e) may appoint a guardian ad litem to represent all claimants whose identities are unknown in any proceeding brought under this section. The reasonable fees and expenses of the guardian, including all reasonable expert witness fees, shall be paid by the dissolved corporation.
(h) Provision by the dissolved corporation for security in the amount and the form ordered by the circuit court under subsection (e) shall satisfy the dissolved corporation’s obligation with respect to claims that are contingent, have not been made known to the dissolved corporation, or are based on an event occurring after the effective date of the dissolution of the corporation, and those claims may not be enforced against a stockholder to whom assets have been distributed by the dissolved corporation after the effective date of the dissolution of the corporation.
(i) Nothing in this section shall be deemed to extend any otherwise applicable statute of limitations.
(j) If a claim has been satisfied, disposed of, or barred under Section 10A-2A-14.06, this section, or other law, the person or persons designated to wind up the affairs of a corporation, and the stockholders receiving assets from the dissolved corporation, shall not be liable for that claim.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) Directors shall cause the dissolved corporation to discharge or make reasonable provision for the payment of claims and make distributions in liquidation of assets to stockholders after payment or provision for claims.
(b) Directors of a dissolved corporation which has disposed of claims under Section 10A-2A-14.06 or Section 10A-2A-14.07 shall not be liable for breach of Section 10A-2A-14.08(a) with respect to claims against the dissolved corporation that are barred or satisfied under Section 10A-2A-14.06 or Section 10A-2A-14.07.
(Act 2019-94, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) The circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located may dissolve a corporation:
(1) in a proceeding by the Attorney General if it is established that:
(i) the corporation obtained its certificate of incorporation through fraud; or
(ii) the corporation has continued to exceed or abuse the authority conferred upon it by law;
(2) in a proceeding by a stockholder if it is established that:
(i) the directors are deadlocked in the management of the corporate affairs, the stockholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the stockholders generally, because of the deadlock;
(ii) 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;
(iii) the stockholders 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 expired; or
(iv) the corporate assets are being misapplied or wasted;
(3) in a proceeding by a creditor if it is established that:
(i) the creditor’s claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or
(ii) the corporation has admitted in writing that the creditor’s claim is due and owing and the corporation is insolvent;
(4) in a proceeding by the corporation to have its voluntary dissolution continued under court supervision; or
(5) in a proceeding by a stockholder if the corporation has abandoned its business and has failed within a reasonable time to liquidate and distribute its assets and dissolve.
(b) Subsection (a)(2) shall not apply in the case of a corporation that, on the date of the filing of the proceeding, has a class or series of stock which is:
(1) a covered security under Section 18(b)(1)(A) or (B) of the Securities Act of 1933; or
(2) not a covered security, but is held by at least 2,000 stockholders.
(c) In subsection (a), “stockholder” means a record stockholder, a beneficial stockholder, and an unrestricted voting trust beneficial owner, and in subsection (b), “stockholder” means a record stockholder, a beneficial stockholder, and a voting trust beneficial owner.
(Act 2019-94, §1; Act 2020-73, §7.)
[Effective: 2026-08-01]
(a) The circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located may dissolve a corporation:
(1) in a proceeding by the Attorney General if it is established that:
(i) the corporation obtained its certificate of incorporation through fraud; or
(ii) the corporation has continued to exceed or abuse the authority conferred upon it by law;
(2) in a proceeding by a stockholder if it is established that:
(i) the directors are deadlocked in the management of the corporate affairs, the stockholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the business and affairs of the corporation can no longer be conducted to the advantage of the stockholders generally, because of the deadlock;
(ii) the directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal or fraudulent;
(iii) the stockholders 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 expired; or
(iv) the corporate assets are being misapplied or wasted;
(3) in a proceeding by a creditor if it is established that:
(i) the creditor’s claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or
(ii) the corporation has admitted in writing that the creditor’s claim is due and owing and the corporation is insolvent;
(4) in a proceeding by the corporation to have its voluntary dissolution continued under court supervision; or
(5) in a proceeding by a stockholder if the corporation has abandoned its business and has failed within a reasonable time to liquidate and distribute its assets and dissolve.
(b) Subsection (a)(2) shall not apply in the case of a corporation that, on the date of the filing of the proceeding, has a class or series of stock which is:
(1) a covered security under Section 18(b)(1)(A) or (B) of the Securities Act of 1933; or
(2) not a covered security, but is held by at least 2,000 stockholders.
(c) In subsection (a), “stockholder” means a record stockholder, a beneficial stockholder, and an unrestricted voting trust beneficial owner, and in subsection (b), “stockholder” means a record stockholder, a beneficial stockholder, and a voting trust beneficial owner.
(Act 2019-94, §1; Act 2020-73, §7; Act 2026-495, §1.)
(a) Venue for a proceeding by the attorney general to dissolve a corporation lies in circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the corporation’s most recent registered office is located. Venue for a proceeding brought by any other party named in Section 10A-2A-14.10(a) lies in circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the corporation’s most recent registered office is located.
(b) It is not necessary to make stockholders parties to a proceeding to dissolve a corporation unless relief is sought against them individually.
(c) A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian during the proceeding with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.
(d) Within 10 days of the commencement of a proceeding to dissolve a corporation under Section 10A-2A-14.10(a)(2), the corporation shall deliver to all stockholders, other than the petitioner, a notice stating that the stockholders are entitled to avoid the dissolution of the corporation by electing to purchase the petitioner’s stock under Section 10A-2A-14.14 and accompanied by a copy of Section 10A-2A-14.14.
(Act 2019-94, §1; Act 2020-73, §7.)
(a) Unless an election to purchase has been filed under Section 10A-2A-14.14, a court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the business and affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has jurisdiction over the corporation and all of its property wherever located.
(b) The court may appoint an individual, corporation, foreign corporation, or eligible entity as a receiver or custodian, which, if a foreign corporation or foreign eligible entity, must be registered to do business in this state. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.
(c) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:
(1) the receiver (i) may dispose of all or any part of the assets of the corporation wherever located, at a public or private sale; and (ii) may sue and defend in the receiver’s own name as receiver 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, to the extent necessary to manage the affairs of the corporation in the best interests of its stockholders and creditors. The receiver or custodian shall have such other powers and duties as the court may provide in the appointing order, which may be amended from time to time.
(d) The court during a receivership may redesignate the receiver a custodian and during a custodianship may redesignate the custodian a receiver.
(e) The court from time to time during the receivership or custodianship may order compensation paid and expenses paid or reimbursed to the receiver or custodian from the assets of the corporation or proceeds from the sale of the assets.
(Act 2019-94, §1.)
(a) If after a hearing the court determines that one or more grounds for judicial dissolution described in Section 10A-2A-14.10 exist, the court may enter a decree dissolving the corporation and specifying the effective date of the dissolution. If the court enters a decree dissolving the corporation, then the clerk of the court shall deliver a certified copy of the decree to the Secretary of State for filing.
(b) After entering the decree of dissolution, the court shall direct the winding-up and liquidation of the corporation’s business and affairs in accordance with Section 10A-2A-14.05 and the notification of claimants in accordance with Sections 10A-2A-14.06 and 10A-2A-14.07.
(Act 2019-94, §1; Act 2023-503, §3.)
(a) In a proceeding under Section 10A-2A-14.10(a)(2) to dissolve a corporation, the corporation may elect or, if it fails to elect, one or more stockholders may elect to purchase all stock owned by the petitioning stockholder at the fair value of the stock. An election pursuant to this section shall be irrevocable unless the court determines that it is equitable to set aside or modify the election.
(b) An election to purchase pursuant to this section may be filed with the court at any time within 90 days after the filing of the petition under Section 10A-2A-14.10(a)(2) or at a later time as the court in its discretion may allow. If the election to purchase is filed by one or more stockholders, the corporation shall, within 10 days thereafter, give written notice to all stockholders, other than the petitioner. The notice must state the name and number of shares of stock owned by the petitioner and the name and number of shares of stock owned by each electing stockholder and must advise the recipients of their right to join in the election to purchase stock in accordance with this section. Stockholders who wish to participate shall file notice of their intention to join in the purchase no later than 30 days after the effectiveness of the notice to them. All stockholders who have filed an election or notice of their intention to participate in the election to purchase thereby become parties to the proceeding and shall participate in the purchase in proportion to their ownership of stock as of the date the first election was filed, unless they otherwise agree or the court otherwise directs. After an election has been filed by the corporation or one or more stockholders, the proceeding under Section 10A-2A-14.10(a)(2) may not be discontinued or settled, nor may the petitioning stockholder sell or otherwise dispose of his or her stock, unless the court determines that it would be equitable to the corporation and the stockholders, other than the petitioner, to permit the discontinuance, settlement, sale, or other disposition.
(c) If, within 60 days of the filing of the first election, the parties reach agreement as to the fair value and terms of purchase of the petitioner’s stock, the court shall enter an order directing the purchase of the petitioner’s stock upon the terms and conditions agreed to by the parties.
(d) If the parties are unable to reach an agreement as provided for in subsection (c), the court, upon application of any party, shall stay the proceedings under Section 10A-2A-14.10(a)(2) and determine the fair value of the petitioner’s stock as of the day before the date on which the petition under Section 10A-2A-14.10(a)(2) was filed or as of any other date as the court deems appropriate under the circumstances.
(e) Upon determining the fair value of the stock, the court shall enter an order directing the purchase upon terms and conditions as the court deems appropriate, which may include payment of the purchase price in installments, where necessary in the interests of equity, provision for security to assure payment of the purchase price and any additional expenses as may have been awarded, and, if the stock is to be purchased by stockholders, the allocation of stock among them. In allocating the petitioner’s stock among holders of different classes or series of stock, the court should attempt to preserve the existing distribution of voting rights among holders of different classes or series insofar as practicable and may direct that holders of a specific class or classes or series shall not participate in the purchase. Interest may be allowed at the rate and from the date determined by the court to be equitable, but if the court finds that the refusal of the petitioning stockholder to accept an offer of payment was arbitrary or otherwise not in good faith, no interest shall be allowed. If the court finds that the petitioning stockholder had probable grounds for relief under Section 10A-2A-14.10(a)(2)(ii) or (iv), it may award expenses to the petitioning stockholder.
(f) Upon entry of an order under subsection (c) or (e), the court shall dismiss the petition to dissolve the corporation under Section 10A-2A-14.10(a)(2), and the petitioning stockholder shall no longer have any rights or status as a stockholder of the corporation, except the right to receive the amounts awarded by the order of the court which shall be enforceable in the same manner as any other judgment.
(g) The purchase ordered pursuant to subsection (e) shall be made within 10 days after the date the order becomes final.
(h) Any payment by the corporation pursuant to an order under subsections (c) or (e), other than an award of expenses pursuant to subsection (e), is subject to the provisions of Section 10A-2A-6.40.
(Act 2019-94, §1.)
Assets of a dissolved corporation that should be transferred to a creditor, claimant, or stockholder of the corporation who cannot be found or who is not competent to receive them shall be reduced to cash and deposited with the State Treasurer or other appropriate state official for safekeeping. When the creditor, claimant, or stockholder furnishes satisfactory proof of entitlement to the amount deposited, the State Treasurer or other appropriate state official shall pay that person or his or her representative that amount.
(Act 2019-94, §1.)
(a) The law of the jurisdiction of formation of a foreign corporation governs:
(1) the incorporation and internal affairs of the foreign corporation;
(2) the liability of its stockholders as stockholders for the debts, obligations, or other liabilities of the foreign corporation; and
(3) the authority of the directors and officers of the foreign corporation.
(b) A foreign corporation is not precluded from registering to do business in this state because of any difference between the law of the foreign corporation’s jurisdiction of formation and the law of this state.
(Act 2019-94, §1.)
The term “foreign corporation,” as used in this division, shall mean:
(1) Any bank or other corporation now or hereafter organized or existing under the laws of any state of the United States other than this state; and
(2) Any national banking association or other corporation organized under the laws of the United States having its principal place of business in any state of the United States other than this state.
(Act 2019-94, §1.)
(a) Any foreign corporation may act in this state as trustee, personal representative, executor, administrator of any kind, guardian, conservator, or in any other like or similar fiduciary capacity, whether the appointment is by law, will, deed, inter vivos trust, mortgage, deed of trust, court order or otherwise, without the necessity of complying with any law of this state relating to the qualification of foreign corporations to do business in this state or the licensing of foreign corporations to do business in this state and notwithstanding any prohibition, limitation, or restriction contained in any law of this state subject to the following conditions:
(1) The foreign corporation is authorized to act in a fiduciary capacity, or capacities, in the state in which it is incorporated or, if the foreign corporation is a national banking association or other corporation organized under the laws of the United States, in the state in which it has its principal place of business.
(2) Any bank or other corporation organized under the laws of this state or a national banking association or other corporation organized under the laws of the United States having its principal place of business in this state which is authorized to act in a fiduciary capacity in this state is authorized to act in a like fiduciary capacity in the other state without the necessity of complying with any law of the other state relating to the qualification of a foreign corporation to do business in the other state.
(b) Nothing contained in this division shall be construed to prohibit or make unlawful any activity in this state by a bank or other corporation which is not incorporated under the laws of this state, or, if a national bank or other corporation organized under the laws of the United States, which does not have its principal place of business in this state which would be lawful in the absence of this division.
(Act 2019-94, §1.)
Prior to the time when any foreign corporation acts pursuant to the authority of this article in any fiduciary capacity or capacities in this state, the foreign corporation shall file with the Commissioner of Revenue of this state a verified statement which shall state:
(1) The correct corporate name of the foreign corporation;
(2) The name of the state under the laws of which it is incorporated or if the foreign corporation is a national banking association or other corporation organized under the laws of the United States shall state that fact;
(3) The address of its principal business office;
(4) In what fiduciary capacity, or capacities, it desires to act in the State of Alabama;
(5) That it is authorized to act in a similar fiduciary capacity or capacities in the state in which it is incorporated or, if it is a national banking association or other corporation organized under the laws of the United States, in which it has its principal place of business; and
(6) The statement shall irrevocably appoint the Commissioner of Revenue of Alabama as its true and lawful attorney to receive service of process in any action or proceeding against it relating to or growing out of any trust, estate, or matter in respect of which the foreign corporation may act in this state in any fiduciary capacity. The statement shall be verified by an officer of the foreign corporation, and there shall be filed with it the certificates of public officials and copies of documents certified by public officials as may be necessary to show that the foreign corporation is authorized to act in a fiduciary capacity or capacities similar to those in which it desires to act in this state, in the state in which it is incorporated, or, if it is a national banking association or other corporation organized under the laws of the United States, in which it has its principal place of business.
(Act 2019-94, §1.)
A foreign corporation, insofar as it acts in a fiduciary capacity in this state pursuant to the provisions of this division, shall not be deemed to be transacting business in this state, but no foreign corporation acting in a fiduciary capacity in this state pursuant to the provisions of this division without registering to transact business in this state pursuant to this title or other applicable provisions of law shall establish or maintain in this state a place of business, branch office, or agency for the conduct of business as a fiduciary. Nothing contained in this division shall diminish the authority of out-of-state banks and trust companies to establish or acquire and maintain trust offices or representative trust offices, or both, under the provisions of Chapter 11A of Title 5.
(Act 2019-94, §1.)
The provisions of this division shall not prohibit any foreign corporation authorized to act in a fiduciary capacity or capacities in the state in which it is incorporated or any national banking association or other corporation organized under the laws of the United States authorized to act in a fiduciary capacity or capacities in its principal place of business which, prior to April 14, 1956, or in the case of a corporation other than a national banking association, prior to January 1, 1995, was acting or appointed to act in this state in a particular fiduciary capacity or capacities, from continuing in the performance of the fiduciary activity or activities without complying with the provisions of this division.
(Act 2019-94, §1.)
Every foreign corporation acting in a fiduciary capacity in this state pursuant to the terms of this division shall be deemed to consent to service of all legal process in any action or proceeding against it and to service of any notice or demand permitted or required by law relating to or growing out of any trust, estate, or matter in respect of which the foreign corporation shall have acted in this state in any fiduciary capacity pursuant to any means of service of process provided in Section 10A-1-5.31, Section 10A-1-5.35, or Section 10A-1-5.36.
(Act 2019-94, §1.)
(a) A corporation shall maintain the following records:
(1) its certificate of incorporation as currently in effect;
(2) any notices to stockholders referred to in Section 10A-2A-1.20(c)(5) specifying facts on which a filed document is dependent if those facts are not included in the certificate of incorporation or otherwise available as specified in Section 10A-2A-1.20(c)(5);
(3) its bylaws as currently in effect;
(4) all written communications within the past three years to stockholders generally;
(5) minutes of all meetings of, and records of all actions taken without a meeting by, its stockholders, its board of directors, and board committees established under Section 10A-2A-8.25; and
(6) a list of the names and business addresses of its current directors and officers.
(b) A corporation shall maintain all annual financial statements prepared for the corporation for its last three fiscal years (or any shorter period of existence) and any audit or other reports with respect to those financial statements.
(c) A corporation shall maintain accounting records in a form that permits preparation of its financial statements.
(d) A corporation shall maintain a record of its current stockholders in alphabetical order by class or series of stock showing the address of each stockholder to which notices and other communications from the corporation are to be sent, and which shall include the number and class or series of stock held by each stockholder. In addition, if a stockholder has provided an electronic mail address to the corporation or has consented to receive notices or other communications by electronic mail or other electronic transmission, the record of stockholders shall include the electronic mail or other electronic transmission address of the stockholder if notices or other communications are being delivered by the corporation to the stockholder at that electronic mail or other electronic transmission address pursuant to Section 10A-2A-1.41(d). An electronic mail address of a stockholder shall be deemed to be provided by a stockholder if it is contained in a communication to the corporation by or on behalf of the stockholder, unless the communication expressly indicates that the electronic mail address may not be used to deliver notices or other communications.
(e) A corporation shall maintain the records specified in this section in a manner so that they may be made available for inspection within a reasonable time.
(Act 2019-94, §1; Act 2021-299, §3; Act 2024-213, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A stockholder of a corporation is entitled to inspect and copy, during regular business hours at the corporation’s principal office, any of the records of the corporation described in Section 10A-2A-16.01(a), excluding minutes of meetings of, and records of actions taken without a meeting by, the corporation’s board of directors and board committees established under Section 10A-2A-8.25, if the stockholder gives the corporation a signed written notice of the stockholder’s demand at least five business days before the date on which the stockholder wishes to inspect and copy.
(b) A stockholder of a corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if the stockholder meets the requirements of subsection (c) and gives the corporation a signed written notice of the stockholder’s demand at least five business days before the date on which the stockholder wishes to inspect and copy:
(1) the financial statements of the corporation maintained in accordance with Section 10A-2A-16.01(b);
(2) accounting records of the corporation;
(3) excerpts from minutes of any meeting of, or records of any actions taken without a meeting by, the corporation’s board of directors and board committees maintained in accordance with Section 10A-2A-16.01(a); and
(4) the record of stockholders maintained in accordance with Section 10A-2A-16.01(d).
(c) A stockholder may inspect and copy the records described in subsection (b) only if:
(1) the stockholder’s demand is made in good faith and for a proper purpose;
(2) the stockholder’s demand describes with reasonable particularity the stockholder’s purpose and the records the stockholder desires to inspect; and
(3) the records are directly connected with the stockholder’s purpose.
(d)(1) The corporation may impose reasonable restrictions and conditions on access to and use of the records to be inspected and copied under subsections (a) and (b), including designating information confidential and imposing nondisclosure and safeguarding, and may further keep confidential from its stockholders and other persons, for a period of time as the corporation deems reasonable any information that the corporation reasonably believes to be in the nature of a trade secret or other information the disclosure of which the corporation in good faith believes is not in the best interest of the corporation or could damage the corporation or its business or affairs, or that the corporation is required by law or by agreement with a third party to keep confidential. In any dispute concerning the reasonableness of a restriction under this subsection, the corporation has the burden of proving reasonableness.
(2) If a stockholder is entitled to inspect and copy the records described in subsection (a) or having met the requirements of subsection (c) is entitled to inspect and copy the records described in subsection (b), and an officer of the corporation with the authority to bind the corporation who, or a corporation which, without reasonable cause, refuses to allow that stockholder to inspect and copy those records shall be liable to that stockholder for a penalty of an amount not to exceed 10 percent of the value of the shares of stock owned by that stockholder, in addition to any other damages or remedy afforded that stockholder by law. It shall be a defense to an action brought to collect the penalty specified in this section that the stockholder suing therefor has previously sold or offered for sale any list of stockholders of the corporation, or any other corporation or knowingly has aided or abetted any person in procuring any list of stockholders, or improperly has used any information secured through any prior inspection of those records of the corporation, or was not acting in good faith or for a proper purpose in making this demand.
(e) For any meeting of stockholders for which the record date for determining stockholders entitled to vote at the meeting is different than the record date for notice of the meeting, any person who becomes a stockholder subsequent to the record date for notice of the meeting and is entitled to vote at the meeting is entitled to obtain from the corporation upon request the notice and any other information provided by the corporation to stockholders in connection with the meeting, unless the corporation has made that information generally available to stockholders by posting it on its website or by other generally recognized means. Failure of a corporation to provide that information does not affect the validity of action taken at the meeting.
(f) The right of inspection granted by this section may not be abolished or limited by a corporation’s certificate of incorporation or bylaws, but the right of inspection granted by this section may be limited to the extent permitted under Section 10A-2A-7.32.
(g) This section does not affect:
(1) the right of a stockholder to inspect records under Section 10A-2A-7.20 or, if the stockholder is in litigation with the corporation, to the same extent as any other litigant; or
(2) the power of a court, independently of this chapter, to compel the production of corporate records for examination and to impose reasonable restrictions as provided in Section 10A-2A-16.04(c), provided that, in the case of production of records described in subsection (b) of this section at the request of a stockholder, the stockholder has met the requirements of subsection (c).
(h) For purposes of this section, “stockholder” means a record stockholder, a beneficial stockholder, and an unrestricted voting trust beneficial owner.
(Act 2019-94, §1.)
[Effective: 2026-08-01]
Subject to subsections (i) and (j) of this section:
(a) A stockholder of a corporation is entitled to inspect and copy, during regular business hours at the corporation’s principal office, any of the records of the corporation described in Section 10A-2A-16.01(a), excluding minutes of meetings of, and records of actions taken without a meeting by, the corporation’s board of directors and board committees established under Section 10A-2A-8.25, if the stockholder gives the corporation a signed written notice of the stockholder’s demand at least five business days before the date on which the stockholder wishes to inspect and copy and the demand provides the information required in subsection (h) if the stockholder is not a record stockholder as defined in clause (i) of the definition of record stockholder in Section 10A-2A-1.40.
(b) A stockholder of a corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if the stockholder meets the requirements of subsection (c) and gives the corporation a signed written notice of the stockholder’s demand at least five business days before the date on which the stockholder wishes to inspect and copy:
(1) the financial statements of the corporation maintained in accordance with Section 10A-2A-16.01(b); provided, however, that the corporation may deliver or make available the financial statements to the requesting stockholder by posting them on the corporation’s website or by other generally recognized means. If financial statements have been prepared for the corporation on the basis of generally accepted accounting principles for that specified period, the corporation shall deliver or make available those financial statements to the requesting stockholder. If the annual financial statements to be delivered or made available to the requesting stockholder are audited or otherwise reported upon by a public accountant, the report shall also be delivered or made available to the requesting stockholder. The corporation may also fulfill its responsibilities under this section by delivering the specified financial statements, or otherwise making them available, in any manner permitted by the applicable rules and regulations of the United States Securities and Exchange Commission;
(2) the accounting records of the corporation maintained in accordance with Section 10A-2A-16.01(c) that permitted the preparation of the financial statements maintained in accordance with Section 10A-2A-16.01(b);
(3) excerpts from minutes of any meeting of, or records of any actions taken without a meeting by, the corporation’s board of directors and board committees maintained in accordance with Section 10A-2A-16.01(a); and
(4) the record of stockholders maintained in accordance with Section 10A-2A-16.01(d); provided however, the corporation may withhold the record of stockholders maintained in accordance with Section 10A-2A-16.01(d) if the demanding stockholder of the corporation has, without the consent of the corporation, within two years preceding the stockholder’s demand sold or offered for sale any list of the stockholders of the corporation or has aided or abetted any person in selling or offering to sell any list of the stockholders of the corporation.
(c)(1) A stockholder may inspect and copy the records described in subsection (b) only if:
(i) the stockholder has delivered to the corporation a signed written notice of the stockholder’s demand at least five business days before the date on which the stockholder wishes to inspect and copy;
(ii) the stockholder’s demand provides the information required in subsection (h) if the stockholder is not a record stockholder as defined in clause (i) of the definition of record stockholder in Section 10A-2A-1.40;
(iii) the stockholder’s demand is made in good faith and for a proper purpose;
(iv) the stockholder’s demand describes with reasonable particularity the stockholder’s purpose and the records the stockholder desires to inspect; and
(v) the records are directly related to the stockholder’s purpose.
(2) For purposes of this subsection (c), a proper purpose shall mean a purpose directly related to the stockholder’s interest as a stockholder; provided, however, that a demand shall not be for a proper purpose if the corporation reasonably determines that the demand is in connection with:
(i) an active or pending derivative proceeding in the right of the corporation under Division D of Article 7 of this chapter that is or is expected to be instituted or maintained by the stockholder or the stockholder’s affiliate; or
(ii) an active or pending civil lawsuit to which the corporation, or its affiliate, and the stockholder, or the stockholder’s affiliate, are, or are expected to be, adversarial named parties.
(d) The corporation may redact portions of the records to be inspected and copied under subsections (a) and (b) to the extent the portions so redacted are not directly related to the stockholder’s purpose. The corporation may also impose reasonable restrictions and conditions on access to and use of the records to be inspected and copied under subsections (a) and (b), including designating information confidential and imposing nondisclosure and safeguarding, and may further keep confidential from its stockholders and other persons, for a period of time as the corporation deems reasonable any information that the corporation reasonably believes to be in the nature of a trade secret or other information the disclosure of which the corporation in good faith believes is not in the best interest of the corporation or could damage the corporation or its business or affairs, or that the corporation is required by law or by agreement with a third party to keep confidential. In any dispute concerning the reasonableness of a restriction under this subsection, the corporation has the burden of proving reasonableness.
(e) For any meeting of stockholders for which the record date for determining stockholders entitled to vote at the meeting is different than the record date for notice of the meeting, any person who becomes a stockholder subsequent to the record date for notice of the meeting and is entitled to vote at the meeting is entitled to obtain from the corporation upon request the notice and any other information provided by the corporation to stockholders in connection with the meeting, unless the corporation has made that information generally available to stockholders by posting it on its website or by other generally recognized means. Failure of a corporation to provide that information does not affect the validity of action taken at the meeting.
(f) The right of inspection granted by this section may not be abolished or limited by a corporation’s certificate of incorporation or bylaws, but the right of inspection granted by this section may be limited to the extent permitted under Section 10A-2A-7.32.
(g) This section does not affect
the right of a stockholder to inspect records under Section 10A-2A-7.20 or, if the stockholder is in litigation with the corporation, to the same extent as any other litigant.
(h) For purposes of this section, “stockholder” means a record stockholder, a beneficial stockholder, and an unrestricted voting trust beneficial owner. If a stockholder is not a record stockholder as defined in clause (i) of the definition of record stockholder in Section 10A-2A-1.40, the demand described in subsections (a) and (b) shall state the person’s status as a beneficial stockholder or an unrestricted voting trust beneficial owner, be accompanied by documentary evidence thereof, and state that such documentary evidence is a true and correct copy of what it purports to be.
(i) The right of a stockholder to inspect and copy the records described in subsections (a) and (b) may be denied by the corporation if the corporation determines that the demanding stockholder has within two years preceding his, her, or its demand improperly used any information secured through any prior examination of the records of the corporation.
(j) The right to inspect and copy the records described in subsections (a) and (b) shall not be available for any stockholder of a corporation that has been subject to the filing requirements pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. §§ 78m or 78o(d) for at least the preceding 12 months and the corporation has filed with the Securities and Exchange Commission all reports required to be filed thereunder; provided, however, the corporation shall provide the requesting stockholder with the information regarding the stockholders of the corporation as may be required by the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(Act 2019-94, §1; Act 2026-495, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A stockholder may appoint an agent or attorney to exercise the stockholder’s inspection and copying rights under Section 10A-2A-16.02.
(b) The corporation may, if reasonable, satisfy the right of a stockholder to copy records under Section 10A-2A-16.02 by furnishing to the stockholder copies by photocopy or other means chosen by the corporation, including furnishing copies through an electronic transmission.
(c) The corporation may comply at its expense with a stockholder’s demand to inspect the record of stockholders under Section 10A-2A-16.02(b)(4) by providing the stockholder with a list of stockholders that was compiled no earlier than the date of the stockholder’s demand.
(d) The corporation may impose a reasonable charge to cover the costs of providing copies of documents to the stockholder, which may be based on an estimate of those costs.
(Act 2019-94, §1.)
[Effective: 2026-08-01]
If a stockholder is entitled to inspection and copying rights under Section 10A-2A-16.02:
(a) A stockholder may appoint an agent or attorney to exercise the stockholder’s inspection and copying rights under Section 10A-2A-16.02. In that case, the demand shall be accompanied by a power of attorney or other writing which authorizes the agent or attorney to so act on behalf of the stockholder.
(b) The corporation may, if reasonable, satisfy the right of a stockholder to copy records under Section 10A-2A-16.02 by furnishing to the stockholder copies by photocopy or other means chosen by the corporation, including furnishing copies through an electronic transmission.
(c) The corporation may comply at its expense with a stockholder’s demand to inspect the record of stockholders under Section 10A-2A-16.02(b)(4) by providing the stockholder with a list of stockholders that was compiled no earlier than the date of the stockholder’s demand.
(d) The corporation may impose a reasonable charge to cover the costs of providing copies of documents to the stockholder, which may be based on an estimate of those costs.
(Act 2019-94, §1; Act 2026-495, §1.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) If a corporation does not allow a stockholder who complies with Section 10A-2A-16.02(a) to inspect and copy any records required by that section to be available for inspection, the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located may summarily order inspection and copying of the records demanded at the corporation’s expense upon application of the stockholder.
(b) If a corporation does not within a reasonable time allow a stockholder who complies with Section 10A-2A-16.02(b) to inspect and copy the records required by that section, the stockholder who complies with Section 10A-2A-16.02(c) may apply to the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent 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.
(c) If the court orders inspection and copying of the records demanded under Section 10A-2A-16.02(b), it may impose reasonable restrictions on their confidentiality, use, or distribution by the demanding stockholder and it shall also order the corporation to pay the stockholder’s expenses incurred to obtain the order unless the corporation establishes that it refused inspection in good faith because the corporation had:
(1) a reasonable basis for doubt about the right of the stockholder to inspect the records demanded; or
(2) required reasonable restrictions on the confidentiality, use, or distribution of the records demanded to which the demanding stockholder had been unwilling to agree.
(Act 2019-94, §1; Act 2020-73, §7.)
[Effective: 2026-08-01]
If a stockholder is entitled to inspection and copying rights under Section 10A-2A-16.02:
(a) If a corporation does not allow a stockholder who complies with Section 10A-2A-16.02(a) to inspect and copy any records required by that section to be available for inspection, the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located may summarily order inspection and copying of the records demanded at the corporation’s expense upon application of the stockholder.
(b) If a corporation does not within a reasonable time allow a stockholder who complies with Section 10A-2A-16.02(b) to inspect and copy the records required by that section, the stockholder who complies with Section 10A-2A-16.02(c) may apply to the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent 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.
(c) If the court orders inspection and copying of the records demanded under Section 10A-2A-16.02(b), it may impose reasonable restrictions on their confidentiality, use, or distribution by the demanding stockholder and it shall also order the corporation to pay the stockholder’s expenses incurred to obtain the order unless the corporation establishes that it refused inspection in good faith because the corporation had:
(1) a reasonable basis for doubt about the right of the stockholder to inspect the records demanded; or
(2) required reasonable restrictions on the confidentiality, use, or distribution of the records demanded to which the demanding stockholder had been unwilling to agree. If the corporation has declined to deliver or make available the records because the stockholder had been unwilling to agree to restrictions proposed by the corporation on the confidentiality, use, or distribution of the records, the corporation shall have the burden of demonstrating that the restrictions proposed by the corporation were reasonable.
(Act 2019-94, §1; Act 2020-73, §7; Act 2026-495, §1.)
(a) A director of a corporation is entitled to inspect and copy the books, records, and documents of the corporation at any reasonable time to the extent reasonably related to the performance of the director’s duties as a director, including duties as a member of a board committee, but not for any other purpose or in any manner that would violate any duty to the corporation.
(b) The designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located may order inspection and copying of the books, records, and documents at the corporation’s expense, upon application of a director who has been refused inspection rights, unless the corporation establishes that the director is not entitled to inspection rights. The court shall dispose of an application under this subsection on an expedited basis.
(c) If an order is issued, the court may include provisions protecting the corporation from undue burden or expense, and prohibiting the director from using information obtained upon exercise of the inspection rights in a manner that would violate a duty to the corporation, and may also order the corporation to reimburse the director for the director’s expenses incurred in connection with the application.
(Act 2019-94, §1; Act 2020-73, §7.)
[Superseded: 2026-08-01]
THIS SECTION WAS REPEALED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026.
(a) Upon the written request of a stockholder, a corporation shall deliver or make available to the requesting stockholder by posting on its website or by other generally recognized means annual financial statements for the most recent fiscal year of the corporation for which annual financial statements have been prepared for the corporation. If financial statements have been prepared for the corporation on the basis of generally accepted accounting principles for that specified period, the corporation shall deliver or make available those financial statements to the requesting stockholder. If the annual financial statements to be delivered or made available to the requesting stockholder are audited or otherwise reported upon by a public accountant, the report shall also be delivered or made available to the requesting stockholder.
(b) A corporation shall deliver, or make available and provide written notice of availability of, the financial statements required under subsection (a) to the requesting stockholder within five business days of delivery of the written request to the corporation.
(c) A corporation may fulfill its responsibilities under this section by delivering the specified financial statements, or otherwise making them available, in any manner permitted by the applicable rules and regulations of the United States Securities and Exchange Commission.
(d) Notwithstanding the provisions of subsections (a), (b), and (c) of this section:
(1) as a condition to delivering or making available financial statements to a requesting stockholder, the corporation may require the requesting stockholder to agree to reasonable restrictions on the confidentiality, use, and distribution of the financial statements; and
(2) the corporation may, if it reasonably determines that the stockholder’s request is not made in good faith or for a proper purpose, decline to deliver or make available the financial statements to that stockholder.
(e) If a corporation does not respond to a stockholder’s request for annual financial statements pursuant to this section in accordance with subsection (b) within five business days of delivery of the request to the corporation:
(1) The requesting stockholder may apply to the designated court, and if none, the circuit court for the county in which the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located for an order requiring delivery of or access to the requested financial statements. The court shall dispose of an application under this subsection on an expedited basis.
(2) If the court orders delivery or access to the requested financial statements, it may impose reasonable restrictions on their confidentiality, use, or distribution.
(3) In the proceeding, if the corporation has declined to deliver or make available the financial statements because the stockholder had been unwilling to agree to restrictions proposed by the corporation on the confidentiality, use, and distribution of the financial statements, the corporation shall have the burden of demonstrating that the restrictions proposed by the corporation were reasonable.
(4) In the proceeding, if the corporation has declined to deliver or make available the financial statements pursuant to Section 10A-2A-16.10(d)(2), the corporation shall have the burden of demonstrating that it had reasonably determined that the stockholder’s request was not made in good faith or for a proper purpose.
(5) If the court orders delivery or access to the requested financial statements, it shall order the corporation to pay the stockholder’s expenses incurred to obtain the order unless the corporation establishes that it had refused delivery or access to the requested financial statements because the stockholder had refused to agree to reasonable restrictions on the confidentiality, use, or distribution of the financial statements or that the corporation had reasonably determined that the stockholder’s request was not made in good faith or for a proper purpose.
(Act 2019-94, §1; Act 2020-73, §7.)
[Effective: 2026-08-01]
THIS SECTION WAS REPEALED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026.
(Act 2019-94, §1; Act 2020-73, §7; Act 2026-495, §5.)
REPEALED BY ACT 2024-213, EFFECTIVE OCTOBER 1, 2024.
(Act 2019-94, §1.)
(a) A corporation electing to become a benefit corporation under this article in the manner prescribed in this article is subject in all respects to the provisions of this chapter, except to the extent this article imposes additional or different requirements, in which case those requirements apply. The inclusion of a provision in this article does not imply that a contrary or different rule of law applies to a corporation that is not a benefit corporation. This article does not affect a statute or rule of law that applies to a corporation that is not a benefit corporation.
(b) As used in this article:
(1) BENEFIT CORPORATION means a corporation that includes in its certificate of incorporation a statement that the corporation is subject to this article.
(2) PUBLIC BENEFIT means a positive effect, or reduction of negative effects, on one or more communities or categories of persons (other than stockholders solely in their capacity as stockholders) or on the environment, including effects of an artistic, charitable, economic, educational, cultural, literary, medical, religious, social, ecological, or scientific nature.
(3) PUBLIC BENEFIT PROVISION means a provision in the certificate of incorporation which states that the corporation shall pursue one or more identified public benefits.
(4) RESPONSIBLE AND SUSTAINABLE MANNER means a manner that:
(i) pursues through the business of the corporation the creation of a positive effect on society and the environment, taken as a whole, that is material taking into consideration the corporation’s size and the nature of its business; and
(ii) considers, in addition to the interests of stockholders generally, the separate interests of stakeholders known to be affected by the conduct of the business of the corporation.
(Act 2020-73, §8.)
(a) The name of a benefit corporation must comply with Section 10A-1-5.04(e).
(b) Any stock certificate issued by a benefit corporation, and any information statement delivered by a benefit corporation pursuant to Section 10A-2A-6.26(b), must note conspicuously that the corporation is a benefit corporation subject to this chapter.
(Act 2020-73, §8.)
(a) Unless the certificate of incorporation requires a greater vote, in addition to any other approval of stockholders required under this chapter, the approval of at least two-thirds of the votes entitled to be cast thereon, and, if any class or series of stock is entitled to vote as a separate group thereon, the approval of at least two-thirds of the votes entitled to be cast by that voting group, shall be required for a corporation that is not a benefit corporation to:
(1) amend its certificate of incorporation to include a statement that it is subject to this article; or
(2)(i) merge with or into another entity, or effect a conversion, if, as a result of the merger or conversion, the stock of any voting group would become, or be converted into or exchanged for the right to receive, stock of a benefit corporation or stock or interests in an entity subject to provisions of organic law analogous to those in this article; provided, however, that in the case of this subsection (a)(2)(i), if the stock of one or more, but not all, voting groups are so affected, then only the stock in the voting groups so affected shall be entitled to cast votes under this subsection (a).
(ii) enter into a stock exchange with another corporation or foreign corporation, if, as a result of the stock exchange, the stock of any voting group would become, or be converted into or exchanged for the right to receive, stock of a benefit corporation or a foreign benefit corporation subject to provisions of organic law analogous to those in this article; provided, however, that in the case of this subsection (a)(2)(ii), if the stock of one or more, but not all, voting groups are so affected, then only the stock in the voting groups so affected shall be entitled to cast votes under this subsection (a).
(b) Unless the certificate of incorporation requires a greater vote, in addition to any other approval of stockholders required under this chapter, the approval of at least two-thirds of the votes entitled to be cast thereon, and, if any class or series of stock entitled to vote as a separate group thereon, the approval of at least two-thirds of the votes entitled to be cast by that voting group, shall be required for a benefit corporation to:
(1) amend its certificate of incorporation to eliminate a statement that the corporation is subject to this article; or
(2)(i) merge with or into, another entity, or effect a conversion if, as a result of the merger or conversion, the stock of any voting group would become, or be converted into or exchanged for the right to receive, stock or interests in an entity that is neither a benefit corporation nor an entity subject to provisions of organic law analogous to those in this article; provided, however, that in the case of this subsection (b)(2)(i), if the stock of one or more, but not all, voting groups are so affected, then only the stock in the voting groups so affected shall be entitled to cast votes under this subsection (b).
(ii) enter into a stock exchange with another corporation or foreign corporation if, as a result of the stock exchange, the stock of any voting group would become, or be converted into or exchanged for the right to receive, stock or interests in a corporation or foreign corporation that is neither a benefit corporation nor a foreign benefit corporation subject to provisions of organic law analogous to those in this article; provided, however, that in the case of this subsection (b)(2)(ii), if the stock of one or more, but not all, voting groups are so affected, then only the stock in the voting groups so affected shall be entitled to cast votes under this subsection (b).
(Act 2020-73, §8.)
(a) Each member of the board of directors of a benefit corporation, when discharging the duties of a director, shall act: (i) in a responsible and sustainable manner, and (ii) in a manner that pursues the public benefit or benefits identified in any public benefit provision.
(b) In fulfilling the duties under subsection (a), a director shall consider, to the extent affected, in addition to the interests of stockholders generally, the separate interests of stakeholders known to be affected by the business of the corporation including:
(1) the employees and work forces of the corporation, its subsidiaries, and its suppliers;
(2) customers;
(3) communities or society, including those of each community in which offices or facilities of the corporation, its subsidiaries, or its suppliers are located; and
(4) the local and global environment.
(c) A director of a benefit corporation shall not, by virtue of the duties imposed by subsections (a) and (b), owe any duty to a person other than the benefit corporation due to any interest of the person in the status of the corporation as a benefit corporation or in any public benefit provision.
(d) Unless otherwise provided in the certificate of incorporation, the violation by a director of the duties imposed by subsections (a) and (b) shall not constitute an intentional infliction of harm on the corporation or the stockholders for purposes of Section 10A-2A-2.02(b)(4) and (5).
(Act 2020-73, §8.)
(a) No less than annually, a benefit corporation shall prepare a benefit report addressing the efforts of the corporation during the preceding year to operate in a responsible and sustainable manner, to pursue any public benefit or benefits identified in any public benefit provision, and to consider the interests described in Section 10A-2A-17.04(b). The annual benefit report must include:
(1) the objectives that the board of directors has established for the corporation to operate in a responsible and sustainable manner, to pursue the public benefit or benefits identified in any public benefit provision, and to consider the interests described in Section 10A-2A-17.04(b);
(2) the standards the board of directors has adopted to measure the corporation’s progress in operating in a responsible and sustainable manner, in pursuing the public benefit or benefits identified in any public benefit provision, and in considering the interests described in Section 10A-2A-17.04(b);
(3) if the certificate of incorporation or bylaws require that the corporation use an independent third-party standard in reporting on the corporation’s progress in operating in a responsible and sustainable manner, in pursuing the public benefit or benefits identified in any public benefit provision, or in considering the interests described in Section 10A-2A-17.04(b), or if the board of directors has chosen to use such a standard, the applicable standard so required or chosen; and
(4) an assessment of the corporation’s success in meeting the objectives and standards identified in subsections (a)(1) and (a)(2) and, if applicable, subsection (a)(3), and the basis for that assessment.
(b) The benefit corporation shall deliver to each stockholder, or make available and provide written notice to each stockholder of the availability of, the annual benefit report required by subsection (a) on or before the earlier of:
(1) 120 days following the end of the fiscal year of the benefit corporation; or
(2) the time that the benefit corporation delivers any other annual reports or annual financial statements to its stockholders.
(c) Any stockholder that has not received or been given access to an annual benefit report within the time required by subsection (b) may make a written request that the corporation deliver or make available the annual benefit report to the stockholder. If a benefit corporation does not deliver or make available an annual benefit report to the stockholder within five business days of receiving such request, the requesting stockholder may apply to the designated court, and if none, to the circuit court of the county where the corporation’s principal office is located in this state, and if none in this state, the circuit court for the county in which the corporation’s most recent registered office is located for an order requiring delivery of or access to the annual benefit report. The court shall dispose of an action under this subsection (c) on an expedited basis.
(d) A benefit corporation shall post all of its annual benefit reports on the public portion of its website, if any. If a benefit corporation does not have a website, the benefit corporation shall provide a copy of its most recent annual benefit report, without charge, to any person that requests a copy in writing.
(Act 2020-73, §8.)
(a) Except in a proceeding authorized under Section 10A-2A-17.05(c) or this section, no person other than the corporation, or a stockholder in the right of the corporation pursuant to subsection (b), may bring an action or assert a claim with respect to the violation of any duty applicable to a benefit corporation or any of its directors under this article.
(b) Except for a proceeding brought under Section 10A-2A-17.05(c), a proceeding by a stockholder of a benefit corporation claiming violation of any duty applicable to a benefit corporation or any of its directors under this article:
(1) must be brought in a derivative proceeding pursuant to Division D of Article 7 of this chapter; and
(2) may be brought only by a stockholder of the benefit corporation that at the time of the act or omission complained of either individually, or together with other stockholders bringing such action collectively, owned directly or indirectly at least five percent of a class of the corporation’s outstanding stock or, in the case of a corporation with stock traded on an organized market as described in Section 10A-2A-13.02(b)(1)(i), either that percentage of shares of stock or shares of stock with a market value of at least $5 million at the time the proceeding is commenced.
(c) A suit under subsection (b) may not be maintained if, during the pendency of the suit, the stockholder individually fails, or the stockholders collectively fail, to continue to own directly or indirectly the lesser of (i) the number of shares of stock at the time the proceeding is commenced, (ii) a number of shares of stock representing five percent of a class of the corporation’s stock, or (iii) a number of shares of stock with a market value of at least $5 million.
(Act 2020-73, §8.)
(a) Before January 1, 2021, this chapter governs only:
(1) a corporation incorporated on or after January 1, 2020; and
(2) a corporation incorporated before January 1, 2020, which elects, by amending or restating that corporation’s certificate of incorporation, to be governed by this chapter.
(b) On and after January 1, 2021, this chapter governs all existing corporations incorporated under:
(1) any general or special law of this state providing for the incorporation of corporations for a purpose or purposes for which a corporation might be incorporated under this chapter, where the power has been reserved to amend, repeal, or modify the law under which the corporation was incorporated; and
(2) any predecessor statute hereto.
(c) For purposes of applying this chapter to a corporation incorporated before January 1, 2020:
(1) the corporation’s incorporation document, whether a certificate of incorporation, certificate of formation, charter, or articles of incorporation is deemed to be the corporation’s certificate of incorporation;
(2) the corporation’s bylaws are deemed to be the corporation’s bylaws;
(3) any amendment or restatement of a corporation’s certificate of incorporation or bylaws on or after January 1, 2020, shall conform with this chapter; and
(4) all filing instruments to be delivered for filing by or on behalf of a corporation on or after January 1, 2020, shall conform with this chapter and shall be delivered for filing to the filing officer in accordance with Article 4, commencing with Section 10A-1-4.01, of Chapter 1.
(d) No corporation may be incorporated after December 31, 2019, pursuant to Sections 10A-2-1.01 to 10A-2-17.02, inclusive.
(Act 2019-94, §1; §10A-2A-17.01; amended and renumbered by Act 2020-73, §9.)
A foreign corporation registered or authorized to transact business in this state on January 1, 2020, is subject to this chapter and is deemed to be registered to transact business in this state, and is not required to renew its registration to transact business under Article 7, commencing with Section 10A-1-7.01, of Chapter 1, except as Article 7, commencing with Section 10A-1-7.01, of Chapter 1 requires.
(Act 2019-94, §1; §10A-2A-17.02; amended and renumbered by Act 2020-73, §9.)
(a) Except as provided in subsection (b), 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; or
(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.
(b) 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.
(Act 2019-94, §1; §10A-2A-17.03; renumbered by Act 2020-73, §9.)
If any provision of this chapter or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions or applications of this chapter that can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.
(Act 2019-94, §1; §10A-2A-17.04; renumbered by Act 2020-73, §9.)
This chapter modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., but does not modify, limit, or supersede Section 101(c) of that act, 15 U.S.C. Section 7001(c), or authorize electronic delivery of any of the notices described in Section 103(b) of that act, 15 U.S.C. Section 7003(b).
(Act 2019-94, §1; §10A-2A-17.05; renumbered by Act 2020-73, §9.)
A corporation formed and existing under this chapter may conduct its business and affairs, carry on its operations, and have and exercise the powers granted by this chapter in any state, foreign country, or other jurisdiction.
(Act 2019-94, §1; §10A-2A-17.06; renumbered by Act 2020-73, §9.)