Source: Rhode Island General Assembly, webserver.rilegislature.gov/Statutes/TITLE7/7-1.2/. Retrieved 2026-07-07. Concatenation of the chapter's official section pages.
§ 7-1.2-101. Short title.
This chapter is and may be cited as the “Rhode Island Business Corporation Act”.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-102. Reservation of power.
The general assembly at all times has power to prescribe any regulations, provisions, and limitations that it deems advisable, which regulations, provisions, and limitations are binding on any corporation subject to the provisions of this chapter. The general assembly has power to amend, repeal, or modify this chapter at pleasure.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-103. Effect of repeal of prior acts.
The repeal of a prior act by this chapter does not impair, diminish or affect any right, privilege or immunity accrued or established, any suit pending, any right of action conferred, or any duty, restriction, liability or penalty imposed or required, under the provisions of the act, prior to the repeal.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-104. Severability.
If any provision of this chapter or its application to any person or circumstance is held invalid by a court of competent jurisdiction, the invalidity does not affect other provisions or applications of the chapter that can be given effect without the invalid provision or application, and to this end the provisions of the chapter are severable.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-105. Execution, filing and recording of instruments.
(a) Whenever any instrument is to be filed with the secretary of state or in accordance with this chapter, the instrument must be executed as follows:
(1) The articles of incorporation, and any other instrument to be filed before the election of the initial board of directors if the initial directors were not named in the articles of incorporation, must be signed by the incorporator or incorporators (or, in the case of any such other instrument, such incorporator’s or incorporators’ successors and assigns).
(2) All other instruments must be signed:
(i) By any authorized officer of the corporation; or
(ii) If it appears from the instrument that there are no authorized officers, then by a majority of the directors or by the director or directors authorized by a majority of the directors; or
(iii) If it appears from the instrument that there are no authorized officers or directors, then by the holders of record of all outstanding shares, or by those holders of record designated by a majority of all outstanding shares; or
(b) Whenever this chapter requires any instrument to be acknowledged, such requirement is satisfied by either:
(1) The formal acknowledgment by any individual signing the instrument that it is his or her act and deed or the act and deed of the corporation, and that the facts stated therein are true. This acknowledgment must be made before an individual who is authorized by the law of the place of execution to take acknowledgment; or
(2) The signature, without more, of the individual or individuals signing the instrument, in which case such signature or signatures constitutes the affirmation or acknowledgment of the signatory, under penalties of perjury, that the instrument is that individual’s act and deed or the act and deed of the corporation, and that the facts stated therein are true.
(c) Whenever any instrument is to be filed with the secretary of state or in accordance with this section or chapter, such requirement means that:
(1) The signed instrument must be delivered to the office of the secretary of state in either paper format or electronic transmission or another medium authorized by the secretary of state;
(2) All taxes and fees authorized by law to be collected by the secretary of state in connection with the filing of the instrument must be tendered to the secretary of state; and
(3) Upon delivery of the instrument, the secretary of state shall record the date and time of its delivery. Upon such delivery and tender of the required taxes and fees, the secretary of state shall certify that the instrument has been filed in the secretary of state’s office by endorsing upon the signed instrument the word “Filed”, and the date and time of its filing. This endorsement is the “filing date” of the instrument, and is conclusive of the date and time of its filing in the absence of actual fraud.
(d) Any instrument filed in accordance with subsection (c) of this section is effective upon its filing date. Any instrument may provide that it is not to become effective until a specified time subsequent to the time it is filed, but not later than the 90th day after the date of its filing.
(e) If another section of this chapter specifically prescribes a manner of executing, acknowledging or filing a specified instrument or a time when that instrument becomes effective which differs from the corresponding provisions of this section, then such other section governs.
(f) Whenever any instrument authorized to be filed with the secretary of state under any provision of this chapter, has been so filed and is an inaccurate record of the corporate action therein referred to, or was defectively or erroneously executed, sealed or acknowledged, the instrument may be corrected by filing with the secretary of state a certificate of correction of the instrument which must be executed, acknowledged and filed in accordance with this section. The certificate of correction must specify the inaccuracy or defect to be corrected and set forth the portion of the instrument in corrected form. The corrected instrument must be specifically designated as such in its heading, specify the inaccuracy or defect to be corrected, and set forth the entire instrument in corrected form. An instrument corrected in accordance with this section is effective as of the date the original instrument was filed, except as to those individuals who are substantially and adversely affected by the correction and as to those individuals the instrument as corrected is effective from its filing date.
(g) Notwithstanding that any instrument authorized to be filed with the secretary of state under this chapter is when filed inaccurately, defectively or erroneously executed, sealed or acknowledged, or otherwise defective in any respect, the secretary of state has no liability to any individual for the preclearance for filing, the acceptance for filing or the filing and indexing of such instrument by the secretary of state.
(h) Any signature on any instrument authorized to be filed with the secretary of state under this chapter may be a facsimile or an electronically transmitted signature.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2008, ch. 57, § 2; P.L. 2008, ch. 123, § 2.
§ 7-1.2-106. Definitions.
As used in this chapter:
(1) “Articles of incorporation” means the original or restated articles of incorporation and all of their amendments including agreements of merger.
(2) “Authorized shares” means the shares of all classes which the corporation is authorized to issue.
(3) “Corporation” or “domestic corporation” means a corporation for profit subject to the provisions of this chapter, except a foreign corporation.
(4) “Delivering/Delivered” means either physically transferring a paper document to the secretary of state or transferring a document to the secretary of state by electronic transmission through a medium provided and authorized by the secretary of state.
(5) “Electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
(6) “Employee” includes officers but not directors. A director may accept duties which also make him or her an employee.
(7) “Filing” means delivered to the secretary of state in either paper format or electronic transmission through a medium provided and authorized by the secretary of state.
(8) “Foreign corporation” means a corporation for profit organized under laws other than the laws of this state for a purpose or purposes for which a corporation may be organized under this chapter.
(9) “Individual” means a natural person.
(10) “Insolvent” means the inability of a corporation to pay its debts as they become due in the usual course of its business.
(11) “Person” means an individual or an entity. An entity includes domestic and foreign business corporation, domestic and foreign nonprofit corporation; estate; trust; domestic and foreign unincorporated entity; and a state, the United States and a foreign government.
(12) “Shareholder” means one who is a holder of record of shares in a corporation.
(13) “Shares” means the units into which the proprietary interests in a corporation are divided.
(14) “Signature” or “Signed” or “Executed” means an original signature, facsimile, or an electronically transmitted signature submitted through a medium provided and authorized by the secretary of state.
(15) “State” means the state of Rhode Island.
(16) “Subscriber” means one who subscribes for shares in a corporation, whether before or after incorporation.
(17) The singular shall be construed to include the plural, the plural the singular, and the masculine the feminine, when consistent with the intent of this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2007, ch. 94, § 1; P.L. 2007, ch. 112, § 1; P.L. 2008, ch. 57,
§ 2; P.L. 2008, ch. 123, § 2.
§ 7-1.2-201. Incorporators and organization of the corporation.
(a) One or more individuals may act as incorporator or incorporators of a corporation by filing articles of incorporation for the corporation with the secretary of state.
(b) After incorporation:
(1) If initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws, and transacting on any other business to come before the meeting.
(2) If initial directors are not named in the articles of incorporation, the incorporator or incorporators shall hold an organizational meeting at the call of the majority of the incorporators:
(i) To elect directors and complete the organization of the corporation; or
(ii) To elect a board of directors who will complete the organization of the corporation.
(c) The incorporator or incorporators calling a meeting under this section shall give at least three (3) days’ notice of the meeting by mail to each incorporator. The notice must state the time and place of the meeting.
(d) The act or decision done or made by a majority of the incorporators are the act of the incorporators, provided that an action permitted to be taken at the meeting or meetings of incorporators under this section may be taken without a meeting if a consent, in writing, stating the action to be taken, is signed by all of the incorporators.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-202. Articles of incorporation.
(a) The articles of incorporation must state:
(1) A corporate name that satisfies the requirements of § 7-1.2-401.
(2) The total number of shares which the corporation has authority to issue, and if the corporation is to be authorized to issue more than one class of shares:
(i) The total number of shares of each class; and
(ii) A statement of all or any of the designations and the powers, preferences, and rights, including voting rights, and the qualifications, limitations, or restrictions of them, which are permitted by the provisions of this chapter in respect of any class or classes of shares of the corporation and the fixing of which by the articles of incorporation is desired, and an express grant of the authority as it may then be desired to grant to the board of directors to fix by vote or votes any of them that may be desired but which is not fixed by the articles.
(3) The address of its initial registered office, and the name of its initial registered agent at the address.
(4) The name and address of each incorporator.
(b) The articles of incorporation may state:
(1) A par value of authorized shares or classes of shares.
(2) Any provisions electing to provide preemptive rights to shareholders pursuant to the provisions of § 7-1.2-613.
(3) Any provision, not inconsistent with law, which the incorporators elect to set forth in the articles of incorporation for the regulation of the internal affairs of the corporation, including, but not limited to, a provision eliminating or limiting the personal liability of a director to the corporation or to its shareholders for monetary damages for breach of the director’s duty as a director; provided that the provision does not eliminate or limit the liability of a director for:
(i) Any breach of the director’s duty of loyalty to the corporation or its shareholders;
(ii) Acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
(iii) Liability imposed pursuant to the provisions of § 7-1.2-811; or
(iv) Any transaction from which the director derived an improper personal benefit (unless the transaction is permitted by § 7-1.2-807). No provision eliminating or limiting the personal liability of a director will be effective with respect to causes of action arising prior to the inclusion of the provision in the articles of incorporation of the corporation.
(v) Any provision which under this chapter is required or permitted to be set forth in the bylaws.
(4) If, pursuant to § 7-1.2-105(d), the corporate existence is to begin at a time subsequent to the issuance of the certificate of incorporation by the secretary of state, the date when corporate existence begins.
(c) The provisions permitted by subsection (b)(3) may also be included in the articles of incorporation or legislative charter of any existing or future financial institution, insurance company, public utility, or other quasi public corporation having purposes enumerated as exceptions to this chapter in § 7-1.2-301.
(d) The period of duration of a corporation is perpetual unless otherwise stated in the articles of incorporation.
(e) It is not necessary to set forth in the articles of incorporation any of the corporate powers enumerated in this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2006, ch. 163, § 1; P.L. 2006,
ch. 188, § 1.
§ 7-1.2-203. Bylaws.
(a) The bylaws may contain any provisions for the regulation and management of the affairs of the corporation not inconsistent with law or the articles of incorporation. The initial bylaws of a corporation must be adopted by its incorporators or by its board of directors at its organization meeting. Subsequently, the bylaws may be amended by the shareholders, or, unless otherwise provided in the articles of incorporation or bylaws, by the board of directors, but any amendment to the bylaws by the board of directors may be changed by the shareholders.
(b) Emergency bylaws.
(1) The board of directors of any corporation may adopt emergency bylaws, subject to repeal or change by action of the shareholders, which are, notwithstanding any different provision elsewhere in this chapter or in the articles of incorporation or bylaws, operative during any emergency in the conduct of the business of the corporation resulting from an attack on the United States or any nuclear or atomic disaster. The emergency bylaws may make any provision that may be practical and necessary for the circumstances of the emergency, including provisions that:
(i) A meeting of the board of directors may be called by any officer or director in any manner and under conditions prescribed in the emergency bylaws;
(ii) The director or directors in attendance at the meeting, or any greater number fixed by the emergency bylaws, constitutes a quorum; and
(iii) The officers or other individuals designated on a list approved by the board of directors before the emergency, all in the order of priority and subject to the conditions, and for a period of time (not longer than reasonably necessary after the termination of the emergency) that may be provided in the emergency bylaws or in the resolution approving the list, are, to the extent required to provide a quorum at any meeting of the board of directors, deemed directors for the meeting.
(2) The board of directors, either before or during any emergency, may provide, and from time to time modify, lines of succession in the event that during an emergency any or all officers or agents of the corporation are for any reason rendered incapable of discharging their duties.
(3) The board of directors, either before or during any emergency, may, effective in the emergency, change the head office or designate several alternative head offices or regional offices, or authorize the officers so to do.
(4) To the extent not inconsistent with any adopted emergency bylaws, the bylaws of the corporation remain in effect during any emergency, and upon its termination the emergency bylaws cease to be operative.
(5) Unless otherwise provided in emergency bylaws, notice of any meeting of the board of directors during any emergency may be given only to those directors that it may be feasible to reach at the time and by any means that may be feasible at the time, including publication or radio.
(6) To the extent required to constitute a quorum at any meeting of the board of directors during any emergency, the officers of the corporation who are present are, unless otherwise provided in emergency bylaws, deemed, in order of rank and within the same rank in order of seniority, directors for the meeting.
(7) No officer, director, or employee acting in accordance with any emergency bylaws is liable except for willful misconduct. No officer, director, or employee is liable for any action taken by him or her in good faith in an emergency in furtherance of the ordinary business affairs of the corporation even though not authorized by the bylaws then in effect.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-301. Purposes.
Corporations may be organized under this chapter for any lawful purpose or purposes, except for the purpose of carrying on within this state the business of a bank, savings bank, trust company, building and loan association, loan and investment company, safe deposit company, railroad, electric railroad or street railway company, telegraph or telephone company, gas or electric light, heat or power company, canal, aqueduct, or water company, turnpike company, or any corporation which now has or may subsequently have the right to take or condemn land or other property within this state under the power of eminent domain, or to exercise or acquire franchises in streets or highways of this state, and further except for the purpose of rendering the professional services specified in chapter 5.1 of this title which must be organized under the provisions of that chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-302. Powers.
(a) In addition to the powers enumerated below, every corporation, its officers, directors and shareholders possess and may exercise all the powers and privileges granted by this chapter or by any other law or by its articles of incorporation, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of its business.
(b) Each corporation has power to:
(1) Have perpetual existence unless a limited period of duration is stated in its articles of incorporation.
(2) Sue and be sued, complain and defend, in its corporate name.
(3) Have a corporate seal which may be altered at pleasure, and to use the seal by causing it, or a facsimile of it, to be impressed or affixed or reproduced in any other manner.
(4) Purchase, take, receive, lease, or otherwise acquire, own, hold, improve, use, and otherwise deal in and with, real or personal property, or any interest in that property, wherever situated.
(5) Sell, convey, mortgage, pledge, lease, exchange, transfer, and otherwise dispose of all or any part of its property and assets.
(6) Lend money and use its credit to assist its employees.
(7) Purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in, or obligations of, other domestic or foreign corporations, associations, partnerships, limited liability companies or individuals, or direct or indirect obligations of the United States or of any other government, state, territory, governmental district or municipality or of any of their instrumentalities.
(8) Make contracts and guarantees and incur liabilities, borrow money at the rate of interest that the corporation may determine, issue its notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its property, franchises, and income.
(9) Lend money for its corporate purposes, invest and reinvest its funds, and take and hold real and personal property as security for the payment of the funds loaned or invested.
(10) Conduct its business, carry on its operations, and have offices and exercise the powers granted by this chapter, within or without this state.
(11) Elect or appoint officers and agents of the corporation, and define their duties, and fix their compensation.
(12) Make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for the administration and regulation of the affairs of the corporation.
(13) Make donations for the public welfare or for charitable, scientific, or educational purposes.
(14) Transact any lawful business which the board of directors finds will aid governmental authority.
(15) Pay pensions and establish pension plans, pension trusts, profit sharing plans, stock bonus plans, stock option plans, and other incentive plans for any or all of its directors, officers, and employees.
(16) Provide insurance for its benefit on the life of any of its directors, officers, or employees, or on the life of any shareholder for the purpose of acquiring at his or her death shares of its stock owned by the shareholder.
(17) Be a promoter, partner, member, associate, or manager of any partnership, limited liability company, joint venture, trust, or other enterprise.
(18) Make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation.
(19) Indemnify any individual pursuant to § 7-1.2-814.
(20) Make guarantees, although not in furtherance of its corporate purposes, when authorized at a meeting of shareholders by the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on guarantees, or a greater percentage that is provided in the articles of incorporation or bylaws.
(21) If authorized by a like vote, to mortgage, pledge, or give a security interest in all or any of its property, franchises, and income to secure a guarantee or to secure obligations other than its own.
(c) Every corporation is governed by the provisions and is subject to the restrictions and liabilities contained in this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-303. Defense of ultra vires.
No act of a corporation and no conveyance or transfer of real or personal property to or by a corporation is invalid because the corporation was without capacity or power to do the act or to make or receive the conveyance or transfer, but the lack of capacity or power may be asserted:
(a) In a proceeding by a shareholder against the corporation to enjoin the doing of any act or the transfer of real or personal property by or to the corporation. If the unauthorized act or transfer sought to be enjoined is being, or is to be, performed or made pursuant to a contract to which the corporation is a party, the court may, if all of the parties to the contract are parties to the proceeding and if it deems the same to be equitable, set aside and enjoin the performance of the contract, and in so doing may allow to the corporation or to the other parties to the contract, as the case may be, compensation for the loss or damage sustained by either of them which may result from the action of the court in setting aside and enjoining the performance of the contract, but anticipated profits to be derived from the performance of the contract shall not be awarded by the court as a loss or damage sustained.
(b) In a proceeding by the corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through shareholders in a representative suit, against the incumbent or former officers or directors of the corporation.
(c) In a proceeding by the attorney general, as provided in this chapter, to dissolve the corporation, or in a proceeding by the attorney general to enjoin the corporation from the transaction of unauthorized business.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-401. Corporate name.
(a) The corporate name:
(1) Must contain the word “corporation”, “company”, “incorporated”, or “limited”, or an abbreviation of one of these words.
(2) Shall be distinguishable upon the records of the secretary of state from the name of any entity on file with the secretary of state or a name the exclusive right to which is, at the time filed, reserved or registered in the manner provided in this chapter, or the name of a corporation, whether business or nonprofit, limited partnership, limited liability partnership or limited liability company which has in effect a registration of its name as provided in this title, subject to the following:
(b) This provision does not apply if the applicant files with the secretary of state a certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the applicant to the use of the name in this state.
(c) The name may be the same as the name of a corporation or other association the certificate of incorporation or organization of which has been revoked by the secretary of state as permitted by law and the revocation has not been withdrawn within one year from the date of the revocation.
(d) A corporation with which another corporation, domestic or foreign, is merged, or which is formed by the reorganization of one or more domestic or foreign corporations or upon a sale, lease, or other disposition to, or exchange with, a domestic corporation of all or substantially all the assets of another corporation, domestic or foreign, including its name, may have the same name as that used in this state by any of the corporations if at the time the other corporation was organized under the laws of, or is authorized to transact business in, this state.
(e) Words and/or abbreviations that are required by statute to identify the particular type of business entity shall be disregarded when determining if a name is distinguishable upon the records of the secretary of state.
(f) The secretary of state shall promulgate rules and regulations defining the term “distinguishable upon the record” for the administration of this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2011, ch. 54,
§ 1; P.L. 2011, ch. 60, § 1.
§ 7-1.2-402. Fictitious business name.
(a) Any corporation organized and existing under the laws of this state or authorized to transact business in this state may transact business in this state under a fictitious name, provided that it files a fictitious business name statement in accordance with this section prior to the time it commences to transact the business under the fictitious name and the fictitious name satisfied the requirements of § 7-1.2-401(a)(2).
(b) The fictitious business name statement must be filed with the secretary of state and must be executed by an authorized officer of the corporation and must state:
(1) The fictitious business name to be used;
(2) The name of the applicant corporation and the state or territory under the laws of which it is incorporated, the date of its incorporation, and a brief statement of the business in which it is engaged; and
(3) The address of its registered office within the state.
(c) The fictitious business name statement expires upon the filing of the statement of abandonment of use of a fictitious business name registered in accordance with this section or upon the dissolution of the applicant corporation.
(d) The statement of abandonment of use of a fictitious business name under this section may be filed with the secretary of state on forms furnished by the secretary of state and must be executed by an authorized officer of the corporation and must state:
(1) The fictitious business name being abandoned;
(2) The date on which the original fictitious business name statement being abandoned was filed;
(3) The name of the applicant corporation and the state or territory under the laws of which it is incorporated; and
(4) The address of its registered office within the state.
(e) No domestic or foreign corporation transacting business under a fictitious business name contrary to the provisions of this section, or its assignee, may maintain any action upon or on account of any contract made, or transaction had, in the fictitious business name in any court of this state until a fictitious business name statement has been filed in accordance with this section.
(f) [Deleted by P.L. 2005, ch. 36, § 36 and by P.L. 2005, ch. 72, § 36.]
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36.
§ 7-1.2-403. Reserved name.
(a) The exclusive right to the use of a corporate name may be reserved by:
(1) Any individual intending to organize a corporation under this chapter.
(2) Any domestic corporation intending to change its name.
(3) Any foreign corporation intending to make application for a certificate of authority to transact business in this state.
(4) Any foreign corporation authorized to transact business in this state and intending to change its name.
(5) Any individual intending to organize a foreign corporation and intending to have the corporation make application for a certificate of authority to transact business in this state.
(b) The reservation is made by filing with the secretary of state an application to reserve a specified corporate name, executed by the applicant. If the secretary of state finds that the name is available for corporate use, the secretary of state shall reserve the name for the exclusive use of the applicant for a non-renewable period of one hundred and twenty (120) days.
(c) The right to the exclusive use of a specified corporate name so reserved may be transferred to any other person by filing in the office of the secretary of state a notice of the transfer, executed by the applicant for whom the name was reserved, and specifying the name and address of the transferee.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-404. Registered name.
(a) Any corporation organized and existing under the laws of any state or territory of the United States may register its corporate name under this chapter, provided its corporate name is distinguishable upon the records of the secretary of state from the name of any domestic corporation, limited partnership, limited liability partnership or limited liability company existing under the laws of this state, or the name of any foreign corporation, limited partnership, limited liability partnership or limited liability company authorized to transact business in this state, or any corporate name reserved, filed or registered under this title.
(b) The registration is made by:
(1) Filing with the secretary of state:
(i) An application for registration executed by an authorized officer of the corporation, stating the name of the corporation, the state or territory under the laws of which it is incorporated, the date of its incorporation, a statement that it is carrying on or doing business, and a brief statement of the business in which it is engaged; and
(ii) A certificate stating that the corporation is in good standing under the laws of the state or territory wherein it is organized, executed by the secretary of state of the state or territory or by any other official that may have custody of the records pertaining to corporations; and
(2) Paying to the secretary of state a registration fee.
(c) The registration is effective for a period of one year from the effective date of the application.
(d) A corporation, which has in effect a registration of its corporate name, may renew the registration from year to year by annually filing an application for renewal stating the facts required to be stated in an original application for registration and a certificate of good standing as required for the original registration. A renewal application must be filed prior to the expiration of the one-year period from the filing of an original application for registration or its last renewal and extends the registration for the following year.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36.
§ 7-1.2-501. Registered office and registered agent — Designation of registered agent without authority.
(a) Each corporation shall have and continuously maintain in this state:
(1) A registered office, which may be, but need not be, the same as its place of business.
(2) A registered agent, who may be:
(i) An individual resident in this state;
(ii) A domestic corporation, a domestic limited partnership, a domestic limited liability partnership, a domestic limited liability company; or
(iii) A foreign corporation, a foreign limited partnership, a foreign limited liability partnership or a foreign limited liability company authorized to transact business in this state, in each case, having a business office identical with the office of such registered agent which generally is open during normal business hours to accept service of process and otherwise perform the functions of a registered agent; provided, however, that in the case where the registered agent of a corporation is an attorney, the business address of the agent need not be identical with the registered office, but may be the usual business address of the attorney.
(b) Any incorporator, officer, agent, or servant of a corporation, who designates a registered agent for that corporation without the registered agent’s authority, is guilty of a misdemeanor and, upon conviction, may be punished by a fine of not more than one thousand dollars ($1,000) or by imprisonment of not more than one year, or both.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-502. Change of registered office or registered agent.
(a) A corporation may change its registered office or change its registered agent, or both, upon filing in the office of the secretary of state a statement stating:
(1) The name of the corporation.
(2) The address of its then registered office.
(3) If the address of its registered office has changed, the new address of the registered office.
(4) The name of its then registered agent.
(5) If its registered agent has changed, the name of its successor registered agent.
(6) The address of its registered office and the address of the business office of its registered agent, as changed.
(b) The statement must be executed by the corporation by its authorized representative, and delivered to the secretary of state. If the secretary of state finds that the statement conforms to the provisions of this chapter, the secretary of state shall file the statement in his office, and upon that filing or upon a later date not more than thirty (30) days after the filing, as is set forth in the statement, the change of address of the registered office, or the appointment of a new registered agent, or both, as the case may be, becomes effective.
(c) Any registered agent of a corporation may resign as an agent upon filing a written notice of the resignation with the secretary of state, who shall immediately notify the corporation of the resignation at its registered office. The appointment of the agent terminates upon the expiration of thirty (30) days after receipt of the notice by the secretary of state.
(d) If a registered agent changes his or her or its business address to another place within the state, he or she or it may change the address and the address of the registered office of any corporations of which he or she or it is a registered agent by filing a statement as required above, except that it need be signed only by the registered agent and need not be responsive to subsection (a)(5) and must recite that a copy of the statement has been mailed to each corporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-503. Service of process on corporation.
(a) The registered agent appointed by a corporation is an agent of the corporation upon whom any process, notice, or demand required or permitted by law to be served upon the corporation may be served.
(b) Whenever a corporation fails to appoint or maintain a registered agent in this state, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then the secretary of state is an agent of the corporation upon whom any process, notice, or demand may be served. Service on the secretary of state of any process, notice, or demand is made by delivering to and leaving with him or her or with any clerk having charge of the corporation department of his or her office, duplicate copies of the process, notice, or demand. In the event any process, notice, or demand is served on the secretary of state, the secretary of state shall immediately forward one of the copies by certified mail, addressed to the corporation at its registered office. Any service upon the secretary of state is returnable in not less than thirty (30) days.
(c) The secretary of state shall maintain a record of any such service setting forth the name of the plaintiff and defendant, the title, docket number and nature of the proceeding in which process has been served upon the secretary of state, the fact that service has been effected pursuant to this subsection, the return date thereof, and the day and hour when the service was made. The secretary of state shall not be required to retain such information for a period longer than five (5) years from receipt of the service of process.
(d) Nothing contained in these provisions limits or affects the right to serve any process, notice, or demand required or permitted by law to be served upon a corporation in any other manner permitted by law.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-601. Right of corporation to acquire, dispose of and cancel its own shares.
(a) Unless a corporation’s articles of incorporation provide otherwise, subject to subsection (f), a corporation may at any time, by resolution of its board of directors, redeem purchase, take, receive, or otherwise acquire, hold, own, pledge, transfer or dispose of its own shares.
(b) In this section, “redeemable shares” means shares issued pursuant to § 7-1.2-602(c)(1). When redeemable shares are called for redemption, those shares are not outstanding shares for the purpose of voting or determining the total number of shares entitled to vote on any matter on and after the date on which written notice of redemption has been sent to holders thereof and a sum sufficient to redeem such shares has been set aside to pay the redemption price to the holders of the shares upon surrender of certificates therefor.
(c) When redeemable shares are redeemed or purchased by the corporation, the redemption or purchase effects a cancellation of the shares and a statement of cancellation must be filed pursuant to subsection (e).
(d) When shares of a corporation other than redeemable shares are purchased, a corporation may, at any time, by resolution of its board of directors, cancel all or any part of the shares of the corporation of any class or series reacquired by it by filing a statement of cancellation as provided in subsection (e).
(e) A statement of cancellation adopted by the board of directors must be delivered to the secretary of state for filing as follows:
(1) The statement of cancellation shall be executed by an authorized officer of the corporation, and must state:
(i) The name of the corporation.
(ii) The number of shares canceled through redemption or purchase, itemized by classes and series.
(iii) The aggregate number of issued shares, itemized by classes and series, after giving effect to the cancellation.
(iv) If the articles of incorporation provide that the canceled shares are not to be reissued, then the number of shares which the corporation has authority to issue, itemized by classes and series, after giving effect to the cancellation.
(2) An original statement of cancellation must be delivered to the secretary of state. If the secretary of state finds that the statement of cancellation conforms to law, the secretary of state shall, when all fees and franchise taxes have been paid:
(i) Endorse on the original the word “Filed”, and the month, day, and year of the filing.
(ii) File the original in his or her office.
(3) Upon filing of the statement of cancellation, the shares are restored to the status of authorized but unissued shares unless the articles of incorporation provide that the shares, when redeemed or purchased, are not to be reissued, in which case the filing of the statement of cancellation constitutes an amendment to the articles of incorporation and reduces the number of shares of the class canceled which the corporation is authorized to issue by the number of shares canceled.
(f) No redemption or purchase of shares may be made by a corporation if, after giving it effect:
(1) The corporation would be insolvent; or
(2) The corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the redemption, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those redeeming shares (unless such preferential rights are waived by a majority of the shareholders entitled to such preferential rights, voting by class).
The board of directors may base a determination that a redemption is not prohibited under subsection (f) either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
(g) Nothing contained in this section is construed to forbid the cancellation of shares in any other manner permitted by this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-602. Authorized shares — Shares in classes or series — Issuance of shares.
(a) Every corporation has the power to create and issue the number of shares stated in its articles of incorporation or any amendment thereto.
(b) Classes and series. As stated in the articles of incorporation or in any amendment thereto, or in the resolution or resolutions providing for the issue of such shares adopted by the board of directors pursuant to authority expressly vested in it by the provisions of its articles of incorporation, a corporation may issue one or more classes of shares, including one or more classes of common shares, or one or more series of shares within any class thereof, any or all of which classes or series of shares may be certificated or uncertificated, with par value or without par value, and which classes or series may have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof as are stated and expressed in the articles of incorporation or any amendment thereto, or in the resolution or resolutions providing for the issue of such shares adopted by the board of directors pursuant to the authority expressly vested in it by the provisions of its articles of incorporation.
(c) Without limiting the authority contained in these provisions, a corporation, when provided for in its articles of incorporation, may issue shares of preferred or special classes or series:
(1) Redeemable for cash, property, promissory notes or rights, including securities of any other corporation, at the option of either the holder or the corporation or upon the happening of a specified event, at the time or times, at the price or prices, or the rate or rates, and with the adjustments stated and expressed or provided for in the articles of incorporation or any amendment thereto, or in the vote or votes providing for the issuance of the shares adopted by the board of directors as previously provided; provided, however, that immediately following any such redemption the corporation must have outstanding one or more shares of one or more classes or series, which share, or shares together, have unlimited voting rights.
(2) Entitling the holders of the shares to cumulative, noncumulative, or partially cumulative dividends.
(3) Having preference over any other class or classes or series of shares as to the payment of dividends.
(4) Having preference in the assets of the corporation over any other class or classes or series of shares upon the voluntary or involuntary liquidation of the corporation.
(5) To the extent not inconsistent with this chapter, having limited or no voting rights, or having special voting rights including the power to elect one or more directors.
(6) Convertible into, or exchangeable for, at the option of either the holder or the corporation or upon the happening of a specified event, shares of any other class or classes or any other series of shares of the corporation, at such price or prices or at such rate or rates of exchange and with such adjustments as are stated in the articles of incorporation or in the resolution or resolutions providing for the issuance of such shares adopted by the board of directors.
(d) If the articles of incorporation expressly vest authority in the board of directors, then, to the extent that the articles of incorporation have not established series and fixed and determined the variations in the relative rights and preferences as between the series, the board of directors has authority to divide any or all of the classes into series and, within the limitations, if any, stated in the articles of incorporation, to fix and determine the relative rights and preferences of the shares of any series established.
(e)(1) Open-end investment company. Notwithstanding the provisions of subsections (a) and (b) of this section, the board of directors of a corporation that is registered or intends to register as an open-end investment company under the Investment Company Act of 1940, as heretofore or hereafter amended, after the registration as an open-end investment company takes effect, may increase or decrease the aggregate number of shares or the number of shares of any class or series that the corporation has authority to issue unless a provision has been included in the articles of incorporation of the corporation after July 1, 2001, prohibiting such an action by the board of directors to increase or decrease the aggregate number of shares or the number of shares of any class or series that the corporation has authority to issue.
(2) Conditional license of franchise. Any shares of a corporation which holds (directly or indirectly) a license or franchise from a governmental agency to conduct its business or is a member of a national securities exchange, which license, franchise or membership is conditioned upon some or all of the holders of its shares possessing prescribed qualifications may be made subject to redemption by the corporation to the extent necessary to prevent the loss of such license, franchise or membership or to reinstate it.
(f) Dividends. The holders of preferred or special shares of any class or of any series of shares are entitled to receive dividends at the rates, on the conditions and at the times that are stated and expressed in the articles of incorporation or in the vote or votes providing for the issue of the shares adopted by the board of directors as previously provided, payable in preference to, or in relation to, the dividends, payable on any other class or classes of shares, or of any other series of shares, and cumulative, non-cumulative or partially cumulative as is stated and expressed. When dividends upon the preferred and special shares, if any, to the extent of the preferences to which the shares are entitled, have been paid or declared and set apart for payment, a dividend on the remaining class or classes or series of shares may then be paid out of the remaining assets of the corporation available for dividends.
(g) Rights upon liquidation. The holders of the preferred or special shares of any class or of any series of shares are entitled to the rights upon the dissolution of, or upon any distribution of the assets or liquidation, voluntary or involuntary, of the corporation as are stated and expressed in the articles of incorporation or in the vote or votes providing for the issue of the shares adopted by the board of directors as previously provided.
(h) Facts ascertainable outside the articles of incorporation. Any of the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of any class or series of shares may be made dependent upon facts ascertainable outside the articles of incorporation or outside the resolution or resolutions providing for the issue of such shares adopted by the board of directors pursuant to authority expressly vested in it by its articles of incorporation, provided that the manner in which such facts operate upon the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of such class or series of shares is clearly and expressly set forth in the articles of incorporation or in the resolution or resolutions providing for the issue of such shares adopted by the board of directors. The term “facts”, as used in this subsection, includes, but is not limited to, the occurrence of any event, including a determination or action by any person, including the corporation.
(i) Amendment of rights and restrictions by board of directors. Subject to subsection (j), unless otherwise provided in the articles of incorporation, if no shares have been issued of a class or series established by resolution of the board of directors, the voting powers, designations, preferences, and relative, participating optional or other rights, if any or the qualifications, limitations or restrictions thereof, may be amended by a resolution or resolutions adopted by the board of directors.
(j)(1) Issuance. Before any corporation issues any shares of any class or of any series of any class of which the voting powers, designations, preferences, and relative, participating, optional, or other rights, if any, or the qualifications, limitations, or restrictions of the shares, if any, have not been stated in the articles of incorporation but are provided for in a vote or votes adopted by the board of directors pursuant to authority expressly vested in it by the provisions of the articles of incorporation, a certificate presenting a copy of the vote or votes and the number of shares of the class or series must be signed by an authorized officer of the corporation and filed in accordance with § 7-1.2-105. Upon filing, the certificate constitutes an amendment to the articles of incorporation.
(2) Increase or decrease of shares. Unless otherwise provided in any vote or votes, the number of shares of any class or series as stated in the vote or votes may be increased or decreased (but not below the number of shares then outstanding) by a certificate likewise made, signed, and filed presenting a statement that a specified increase or decrease in the number of shares had been authorized and directed by a vote or votes likewise adopted by the board of directors. If the number of shares is decreased, the number of shares specified in the certificate resume the status which they had before the adoption of the prior resolution.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-603. Subscription for shares.
(a) A subscription for shares entered into before incorporation is irrevocable for a period of six (6) months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation. A subscription for shares is not enforceable against a subscriber unless in writing and signed by the subscriber or by an agent of the subscriber.
(b) The board of directors may determine the payment terms of subscriptions for shares that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors must be uniform so far as practicable as to all shares of the same class or series, unless the subscription agreement specifies otherwise.
(c) Shares issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration specified in the subscription agreement.
(d) If a subscriber defaults in payment of money or property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as any other debt. Alternatively, unless the subscription agreement provides otherwise, the corporation may rescind the agreement and may sell the shares if the debt remains unpaid more than 20 days after the corporation sends written demand for payment to the subscriber.
(e) A subscription agreement entered into on or after incorporation is a contract between the subscriber and the corporation subject to § 7-1.2-604.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-604. Issuance of and consideration for shares.
(a) Shares with par value may be issued for such consideration having a value not less than the par value thereof, as determined from time to time by the board of directors, or by the shareholders if the articles of incorporation so provide.
(b) Shares without par value may be issued for such consideration as is determined from time to time by the board of directors, or by the shareholders if the articles of incorporation so provide.
(c) The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed or other securities of the corporation.
(d) Before the corporation issues shares, the board of directors must determine that the consideration received or to be received for shares to be issued is adequate. The determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of the shares relates to whether the shares are validly issued, fully paid and nonassessable.
(e) When the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued therefor are fully paid and nonassessable.
(f) The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid or the benefits received. If the services are not performed, the note is not paid, or the benefits are not received, the shares escrowed or restricted and the distributions credited may be cancelled in whole or part.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-605. Par value per share.
Solely for the purpose of any statute or regulation imposing any tax or fee based upon the capitalization of a corporation, unless otherwise stated in the articles of incorporation, all authorized shares of a corporation organized under this chapter are deemed to have a nominal or par value of one cent ($0.01) per share. If any federal or other statute or regulation applicable to a particular corporation requires that the shares of such corporation have a par value, such shares have the par value determined by the board of directors in order to satisfy the requirements of such statute or regulation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-606. Share rights and options.
Subject to any provisions in respect to rights and options stated in its articles of incorporation, a corporation may create and issue, whether or not in connection with the issuance and sale of any of its shares or other securities, rights or options entitling the holders to purchase from the corporation shares of any class or classes. Those rights or options are evidenced, and the recipients thereof designated, in any manner that the board of directors approves and, subject to the provisions of the articles of incorporation, shall state the terms upon which, the time or times within which and the price or prices at which the shares may be purchased from the corporation upon the exercise of any right or option. In the absence of fraud in the transaction, the judgment of the board of directors as to the adequacy of the consideration received for the rights or options is conclusive.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-607. Expenses of organization, reorganization and financing.
The reasonable charges and expenses of organization or reorganization of a corporation, and the reasonable expenses of and compensation for the sale or underwriting of its shares, may be paid or allowed by the corporation out of the consideration received by it in payment for its shares without rendering the shares not fully paid or assessable.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-608. Form and content of certificates.
(a) The shares of a corporation may but need not be represented by certificates as determined by the board of directors. Every holder of shares represented by certificates and upon request every holder of uncertificated shares is entitled to have a certificate signed by the officer or officers designated for the purpose by the bylaws of the corporation, and in the absence of any designation, by the chairperson or the vice chairperson of the board of directors, or the president or a vice president, and by the treasurer or the assistant treasurer, or the secretary or an assistant secretary of the corporation, representing the number of shares registered in certificate form and may be sealed with the seal of the corporation or a facsimile of the seal. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon the certificate has ceased to be the officer, transfer agent or registrar before the certificate is issued, it may be issued by the corporation with the same effect as if he or she were the officer, transfer agent or registrar at the date of its issue.
(b) Every certificate representing shares issued by a corporation which is authorized to issue shares of more than one class must state upon the face or back of the certificate, or state that the corporation will furnish to any shareholder upon request and without charge, a full statement of the designations, preferences, limitations and relative rights of the shares of each class authorized to be issued and, if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each series so far as the series have been fixed and determined and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series.
(c) Each certificate representing shares must state upon the face of the certificate:
(1) That the corporation is organized under the laws of this state.
(2) The name of the person to whom issued.
(3) The number and class of shares, and the designation of the series, if any, which the certificate represents.
(4) The par value of each of the shares, if any.
(d) No certificate may be issued for any share until the share is fully paid.
(e) Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner of the shares a written notice containing the information and statements required to be presented or stated on certificates pursuant to subsections (b) and (c) and § 7-1.2-609(b).
(f) Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series are identical.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-609. Share transfer and ownership restrictions.
(a) The shares of a corporation are personal property and are transferable in accordance with the provisions of § 6A-8-204, as amended from time to time, except as may otherwise be provided in this chapter.
(b) The articles of incorporation, bylaws, an agreement among all or less than all of the shareholders or an agreement between all or less than all of the shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted, unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.
(c) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this chapter and its existence is noted conspicuously on the front or back of the certificate or is noted in the initial transaction statement required by § 6A-8-204(2). Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.
(d) A restriction on the transfer, ownership or registration of transfer of shares is authorized:
(1) To maintain the corporation’s status when it is dependent on the number or identity of its shareholders;
(2) To preserve exemptions under federal or state securities law;
(3) To permit a corporation to qualify as:
(i) A real estate investment trust under the provisions of the Internal Revenue Code of 1986, as heretofore or hereafter amended, or regulations adopted thereunder; or
(ii) An investment company under the Investment Company Act of 1940, as heretofore or hereafter amended, or regulations adopted thereunder; and
(4) For any other reasonable purpose.
(e) A restriction on the transfer or registration of transfer of shares may:
(1) Obligate the shareholder first to offer the corporation or other persons (separately, consecutively or simultaneously) an opportunity to acquire the restricted shares;
(2) Obligate the corporation or other persons (separately, consecutively or simultaneously) to acquire the restricted shares;
(3) Require the corporation, the holders of any class of its shares or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable;
(4) Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
(f) For the purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-610. Fractional shares.
(a) A corporation may:
(1) Issue fractions of a share;
(2) Arrange for the disposition of fractional interests by those entitled to those interests;
(3) Pay in cash the fair value of fractions of a share as of the time when those entitled to receive the fractions are determined; or
(4) Issue scrip in registered or bearer form which entitles the holder to receive a certificate for a full share upon the surrender of the scrip aggregating a full share.
(b) A certificate for a fractional share, but not scrip, entitles unless it otherwise provides, the holder to exercise voting rights, to receive dividends on that share, and to participate in any of the assets of the corporation in the event of liquidation. The board of directors may issue scrip subject to the condition that it becomes void if not exchanged for certificates representing full shares before a specified date, or subject to the condition that the shares for which scrip is exchangeable may be sold by the corporation and the proceeds from the sale distributed to the holders of scrip, or subject to any other conditions which the board of directors deems advisable.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-611. Bonds — Facsimile signatures and seals.
The seal of the corporation and any or all signatures of the officers or other agents of the corporation upon a bond and any coupon attached to the bond may be facsimiles if the bond is countersigned by an officer or other agent of a trustee or other certifying or authenticating authority. In case any officer or other agent who has signed or whose facsimile signature has been placed upon the bond or coupon has ceased to be the officer or agent before the bond is issued, it may be issued by the corporation with the same effect as if he were the officer or agent at the date of its issue.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-612. Liability of subscribers and shareholders.
(a) A holder of or subscriber to shares of a corporation is under no obligation to the corporation or its creditors with respect to the shares other than the obligation to pay to the corporation the unpaid portion of the consideration for which the shares were issued or to be issued, which in no event may be less than the amount of the consideration for which the shares could be lawfully issued.
(b) Any person becoming an assignee or transferee of shares or of a subscription for shares in good faith and without knowledge or notice that the full consideration for the shares has not been paid is not personally liable to the corporation or its creditors for any unpaid portion of the consideration. An executor, administrator, conservator, guardian, trustee, assignee for the benefit of creditors or receiver is not personally liable to the corporation as a holder of or subscriber to shares of a corporation but the estate and funds in his or her hands are so liable.
(c) No pledgee or other holder of shares as collateral security is personally liable as a shareholder.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-613. Shareholder’s preemptive rights.
(a) Except to the extent limited or denied by this section or by the articles of incorporation, shareholders of a corporation incorporated prior to July 1, 2005, have a preemptive right to acquire unissued shares or securities convertible into shares or carrying a right to subscribe to or acquire shares. Unless otherwise provided in the articles of incorporation:
(1) No preemptive right exists:
(i) To acquire any shares issued to directors, officers, or employees pursuant to approval by the affirmative vote of the holders of a majority of the shares entitled to vote on the acquisition or when authorized by and consistent with a plan previously approved by a vote of shareholders; or
(ii) To acquire any shares sold other than for money.
(2) Holders of shares of any class that is preferred or limited as to dividends or assets are not entitled to any preemptive right.
(3) Holders of shares of any class are not entitled to any preemptive right to shares of any class that is preferred or limited as to dividends or assets or to any obligations, unless convertible into shares of that class or carrying a right to subscribe to or acquire shares of that class.
(4) Holders of shares without voting power have no preemptive right to shares with voting power.
(5) The preemptive right is only an opportunity to acquire shares or other securities under terms and conditions that the board of directors may fix for the purpose of providing a fair and reasonable opportunity for the exercise of the right.
(b) The shareholders of a corporation incorporated on or after July 1, 2005, do not have a preemptive right to acquire a corporation’s unissued shares or securities convertible into shares or carrying a right to subscribe for or acquire shares except to the extent the articles of incorporation so provide. A statement included in the articles of incorporation that “the corporation elects to have preemptive rights” (or words of similar import) means that the following principles apply except to the extent the articles of incorporation expressly provide otherwise:
(1) The shareholders of the corporation have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors, to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation’s unissued shares upon the decision of the board of directors to issue them.
(2) A shareholder may waive his or her preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
(3) There is no preemptive right with respect to:
(i) Shares issued as compensation to directors, officers, agents, or employees of the corporation, its subsidiaries or affiliates;
(ii) Shares issued to satisfy conversion or option rights created to provide compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;
(iii) Shares authorized in articles of incorporation that are issued within six (6) months from the effective date of incorporation; or
(iv) Shares sold otherwise than for money.
(4) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.
(5) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.
(6) Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person for a period of one year after being offered to shareholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the shareholders’ preemptive rights.
(c) For purposes of this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-614. Distributions to shareholders.
(a) Distributions of other than shares.
(1) The board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection (a)(3) of this section.
(2) If the board of directors does not fix the record date for determining shareholders entitled to a distribution (other than one involving a purchase, redemption, or other acquisition of the corporation’s shares), it is the date the board of directors authorizes the distribution.
(3) No distribution may be made if, after giving it effect:
(i) The corporation would be insolvent; or
(ii) The corporation’s total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution (unless such preferential rights are waived by a majority of the shareholders entitled to such preferential rights, voting by class).
(4) The board of directors may base a determination that a distribution is not prohibited under subsection (a)(3) of this section either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
(5) Except as provided in subsection (a)(7) of this section, the effect of a distribution under subsection (a)(3) of this section is measured:
(i) In the case of distribution by purchase, redemption or other acquisition of the corporation’s shares, as of the earlier of (A) the date money or other property is transferred or debt incurred by the corporation or (B) the date the shareholder ceases to be a shareholder with respect to the acquired shares;
(ii) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and
(iii) In all other cases, as of (A) the date the distribution is authorized if the payment occurs within one hundred twenty (120) days after the date of authorization or (B) the date the payment is made if it occurs more than one hundred twenty (120) days after the date of authorization.
(6) A corporation’s indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation’s indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.
(7) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (a)(3) of this section if its terms of the indebtedness provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.
(b) Distributions of shares.
(1) Unless the articles of incorporation provide otherwise, shares may be issued pro rata and without consideration to the corporation’s shareholders or to the shareholders of one or more classes or series. An issuance of shares under this subsection is a share distribution.
(2) Shares of one class or series may not be issued as a share distribution in respect to shares of another class or series unless (i) the articles of incorporation so authorize, (ii) a majority of the votes entitled to be cast by the class or series to be issued approve the issue, or (iii) there are not outstanding shares of the class or series to be issued.
(3) If the board of directors does not fix a record date for determining shareholders entitled to share distribution, then it is the date the board of directors authorizes the share distribution.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2006, ch. 163, § 1; P.L. 2006, ch. 188, § 1.
§ 7-1.2-701. Meetings of shareholders.
(a) Meetings of shareholders may be held at any place, either within or without this state, that may be stated in or fixed in accordance with the bylaws. If no other place is stated or fixed, all meetings will be held at the registered office of the corporation. An annual meeting of shareholders may be held at any time that is stated or fixed in accordance with the bylaws. Failure to hold the annual meeting at the designated time does not work a forfeiture or dissolution of the corporation. If the annual meeting is not held within any thirteen (13) month period the superior court may, in its discretion, on the application of any shareholder, summarily order a meeting to be held.
(b) Special meetings of the shareholders may be called by the board of directors, or by a person or persons that may be authorized by the articles of incorporation or by the bylaws.
(c) Notice of any meeting of shareholders must be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote at the meeting in the manner prescribed by § 7-1.2-702.
(d) Unless the bylaws require otherwise, if an annual or special shareholders’ meeting is adjourned to a different date, time or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed pursuant to the articles of incorporation, the bylaws or otherwise, however, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date.
(e) A shareholder’s attendance at a meeting:
(1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and
(2) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.
(f) Upon the application of any shareholder, director or person aggrieved, the superior court for the county where the principal office of the corporation is located, shall immediately hear and determine the petition of the aggrieved with respect to the following:
(1) The validity of any election or appointment of any director or officer of a corporation and the right of any person to hold the office;
(2) If any office is claimed by more than one individual, the individual entitled to the office;
(3) The voting and other rights of persons claiming rights in respect of the contested election or appointment; or
(4) Failure of the corporation to hold an annual meeting within any thirteen (13) month period. The superior court may confirm the election or appointment, order a new election, or direct any other relief that may be just and proper.
(g) If authorized by the board of directors in its sole discretion or by the bylaws, and subject to such guidelines and procedures as the board of directors may adopt or the bylaws may prescribe, shareholders and proxy holders not physically present at a meeting of shareholders may, by means of remote communication:
(1) Participate in a meeting of shareholders; and
(2) Be deemed present in person and vote at a meeting of shareholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that:
(i) The corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a shareholder or proxy holder;
(ii) The corporation shall implement reasonable measures to provide such shareholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and
(iii) If any shareholder or proxy holder votes or takes other action at the meeting by means of remote communication, the corporation shall maintain a record of that vote or other action.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-702. Notice to shareholders.
(a) Any notice to shareholders given by the corporation under any provision of this chapter, the articles of incorporation or the bylaws is effective if given in writing, or by facsimile or a form of electronic transmission consented to by the shareholder to whom the notice is given. Any consent to alternative notice is revocable by the shareholder by written notice to the corporation. Any consent to alternative notice is deemed revoked if:
(1) The corporation is unable to deliver by facsimile or electronic transmission two (2) consecutive notices given by the corporation in accordance with such consent; and
(2) Such inability becomes known to the secretary or an assistant secretary of the corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation does not invalidate the action.
(b) If mailed, the notice is deemed to be delivered when deposited in the United States mail addressed to the shareholder at his or her address as it appears on the stock transfer books of the corporation, with prepaid postage on the mail.
(c) In the case of any corporation which has fifty (50) or more shareholders of record, if two (2) successive notices, reports or other communications addressed to a shareholder of the corporation at the address of the shareholder appearing on the books of the corporation have been returned to the corporation by the United States postal service marked to indicate that the United States postal service is unable to deliver the notices, reports or other communications to the shareholder at the address, all future notices, reports or other communications are deemed to have been given without further mailing if they are available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice, report, or other communication to other shareholders.
(d) A shareholder may waive any notice required by this section, the articles of incorporation, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-703. Closing of transfer books and fixing record date.
(a) For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment of a meeting of shareholders, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors of a corporation may provide that stock transfer books are closed for a stated period, not less than that specified in any applicable bylaw and not more than sixty (60) days. In lieu of closing the stock transfer books, the bylaws, or in the absence of an applicable bylaw, the board of directors may fix in advance a date as the record date for any determination of shareholders, the date in any case to be not more than sixty (60) days prior to the date on which the particular action, requiring the determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring the dividend is adopted, as the case may be, is the record date for the determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, the determination applies to any adjournment of the meeting.
(b) In order that the corporation may determine the shareholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date may not precede the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date has been fixed by the board of directors, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by this chapter, is the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in this state, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Delivery made to a corporation’s registered office must be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by this chapter, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting is the close of business on the day on which the board of directors adopts the resolution taking such prior action.
(c) A determination of shareholders entitled to notice of or to vote at a shareholders’ meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-704. Voting list.
(a) After fixing a record date for a meeting, a corporation shall prepare a list of the names of all its shareholders who are entitled to notice of a shareholders’ meeting.
(b) The shareholders’ list must be available for inspection by any shareholder, at least ten (10) days before the meeting for which the list was prepared and continuing through the meeting, at the corporation’s registered office or principal place of business. A shareholder, his or her agent or attorney is entitled on written demand to inspect the list during regular business hours during the period it is available for inspection.
(c) The corporation shall make the shareholders’ list available to any shareholder in attendance, whether in person or by remote communication, and any shareholder, his or her agent, or attorney is entitled to inspect the list at any time during the meeting or any adjournment.
(d) The persons who appear from the list to be shareholders entitled to vote at the meeting may vote at the meeting.
(e) If the right to vote at any meeting is challenged, the person presiding at the meeting shall rely on the list to determine the right of the challenged person to vote.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2018, ch. 346, § 2.
§ 7-1.2-705. Quorum of shareholders required for shareholders’ action.
(a) Unless otherwise provided in the articles of incorporation or bylaws, a majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum at a meeting of shareholders, but in no event does a quorum consist of less than one-third (⅓) of the shares entitled to vote at the meeting. If a quorum is present, unless the vote of a greater number or voting by classes is required by this chapter or the articles of incorporation or bylaws, in all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter is the act of the shareholders.
(b) Directors are elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. No amendment to the bylaws made by the board of directors pursuant to § 7-1.2-203 may require a greater number or voting by classes.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-706. Greater voting requirements.
Whenever, with respect to any action to be taken by the shareholders of a corporation, the articles of incorporation require the vote of the holders of a greater proportion of the shares, or of any class or series of the shares, than required by this chapter with respect to the action, the provisions of the articles of incorporation control. An amendment of the articles of incorporation which changes or deletes a provision is authorized by the same vote as would be required to take action under the provision.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-707. Action by shareholders without a meeting.
(a) Any action required or permitted to be taken at a meeting of shareholders by this chapter, or the articles of incorporation or bylaws of a corporation, may be taken without a meeting if all the shareholders entitled to vote on the action consent to the action in writing.
(b)(1) Except for actions pursuant to § 7-1.2-1002 or § 7-1.2-1102, any action required or permitted to be taken at a meeting of shareholders by this chapter or the articles of incorporation or bylaws of a corporation, may be taken without a meeting upon the written consent of less than all the shareholders entitled to vote on the action, if:
(i) Shareholders who consent would be entitled to cast at least the minimum number of votes that would be required to take the action at a meeting at which all shareholders entitled to vote on the action are present and voting in person or by proxy; and
(ii) Action pursuant to this section is authorized by the articles of incorporation.
(2) Prompt notice of the action must be given to all shareholders who would have been entitled to vote upon the action if the meeting were held.
(c) Whenever action is taken pursuant to this section, the written consents of the shareholders consenting to the action must be filed with the minutes of proceedings of shareholders.
(d) Any action taken pursuant to this section has the same effect for all purposes as if the action had been taken at a meeting of the shareholders.
(e) If any other provision of this chapter requires the filing of a certificate upon the taking of an action by shareholders, and action is taken in the manner authorized by this section, the certificate must state that the action was taken without a meeting pursuant to the written consents of the shareholders and must include the number of shares represented by the consents.
(f) The record date for determining shareholders entitled to express consent in writing, without a meeting, is determined in accordance with § 7-1.2-703 and, if no record date is fixed for the determination of shareholders entitled to vote by written consent, the date on which such request for written consent is delivered, in accordance with § 7-1.2-702, to shareholders is the record date for the determination of shareholders entitled to express such written consent.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-708. Voting of shares.
(a) Each outstanding share, regardless of series or class, is entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are limited, enlarged or denied by the articles of incorporation as permitted by this chapter. If the articles of incorporation provide for more or less than one vote for any share, on any matter, every reference in this chapter to a majority or other proportion of shares refers to a majority or other proportion of votes entitled to be cast.
(b) Shares held, directly or indirectly, by another corporation if a majority of the shares entitled to vote for the election of directors of the other corporation is held by the corporation, may not be voted at any meeting or counted in determining the total number of outstanding shares at any given time. Nothing contained in these provisions is construed as limiting the right of any corporation to vote shares, including, but not limited to, its own shares, held in a fiduciary capacity.
(c) Every shareholder entitled to vote at a meeting of shareholders or to express consent without a meeting may authorize another person or persons to act for him or her by proxy, executed, in writing, by the shareholder or by his or her duly authorized attorney in fact. No proxy is valid after three (3) years from the date of its execution, unless otherwise provided in the proxy.
(1) Without limiting the manner in which a shareholder may authorize another person or persons to act for him or her as proxy pursuant to subsection (c) of this section, the following constitutes a valid means by which a shareholder may grant that authority:
(i) A shareholder may execute a writing authorizing another person or persons to act for him or her as proxy. Execution may be accomplished by the shareholder or his or her authorized officer, director, employee or agent signing the writing or causing his or her signature to be affixed to the writing by any reasonable means including, but not limited to, facsimile signature.
(ii) A shareholder may authorize another person or persons to act for him or her as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission, including internet and telephonic transmissions, to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or an agent authorized by the person who will be the holder of the proxy to receive the transmission, provided that the telegram, cablegram or other means of electronic transmission must either state or be submitted or communicated with information from which it can be determined that the telegram, cablegram or other electronic transmission, including internet and telephonic transmissions, was authorized by the shareholder. If it is determined that the telegrams, cablegrams or other electronic transmissions, including internet and telephonic transmissions, are valid, the inspectors or, if there are no inspectors, the other persons making that determination, shall specify the information upon which they relied.
(2) Any reliable reproduction of the writing or transmission created pursuant to this section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that the copy, facsimile telecommunication or other reproduction is a complete reproduction of the entire original writing or transmission.
(3) The death or incapacity of the shareholder appointing a proxy does not affect the right of the corporation to accept the proxy’s authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his or her authority under the appointment.
(d) The articles of incorporation may provide that at each election of directors, or at elections held under specified circumstances, every shareholder entitled to vote at the election has the right to vote, in person or by proxy, the number of shares owned by him or her for as many persons as there are directors to be elected and for whose election he or she has a right to vote, or to cumulate his or her votes by giving one candidate as many votes as the number of directors multiplied by the number of his or her shares equals, or by distributing the votes on the same principle among any number of the candidates.
(e) Shares standing in the name of another corporation, domestic or foreign, may be voted by any officer, agent or proxy that the bylaws of the corporation may prescribe or, in the absence of a provision, as the board of directors of the corporation may determine.
(f) Shares held by an administrator, executor, guardian, custodian under a gift to minors act, conservator or trustee may be voted by him or her, either in person or by proxy, without a transfer of the shares into his or her name.
(g) Shares held by two (2) or more persons as joint tenants or as tenants in common may be voted at any meeting of the shareholders by any one of the persons, unless another joint tenant or tenant in common seeks to vote any of the shares in person or by proxy. In the latter event, the written agreement, if any, which governs the manner in which the shares are voted, controls if presented at the meeting. If there is no agreement presented at the meeting, the majority in number of the joint tenants or tenants in common present control the manner of voting. If there is no majority, or if there are two (2) joint tenants or tenants in common, both of whom seek to vote the shares, the shares, for the purpose of voting, must be divided equally among the joint tenants or tenants in common present.
(h) Shares standing in the name of a receiver may be voted by the receiver, and shares held by or under the control of a receiver may be voted by the receiver without the transfer of those shares into his or her name if authority to do so is contained in an appropriate order of the court by which the receiver was appointed.
(i) A shareholder whose shares are pledged is entitled to vote the shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee is entitled to vote the shares so transferred.
(j) On and after the date on which written notice of redemption of redeemable shares has been mailed to the holders of the shares and a sum sufficient to redeem the shares has been deposited with a bank or trust company with irrevocable instruction and authority to pay the redemption price to the holders of the shares upon surrender of certificates for the shares, the shares are not entitled to vote on any matter and are not deemed to be outstanding shares.
(k)(1) An executed proxy is irrevocable if it specifies that it is irrevocable and if, and only so long as, it is coupled with an interest sufficient in law to support an irrevocable power coupled with it. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the shares itself or an interest in the corporation generally.
(2) Without limiting the generality of subsection (k)(1) and subject to that subsection, a proxy is coupled with an interest and is irrevocable if it is held by any of the following or a nominee of any of the following:
(i) A pledgee under a valid pledge;
(ii) A person who has agreed to purchase the shares under an executory contract of sale;
(iii) A creditor or creditors of the corporation who extend or continue credit to the corporation in consideration of the proxy if the proxy states that it was given in consideration of the extension or continuation of credit, the amount of the credit, and the name of the person extending or continuing credit; and
(iv) A person who has contracted to perform services for the corporation if a proxy is required by the contract of employment, as part of the consideration for the contract of employment, if the proxy states that it was given in consideration of the contract of employment, the name of the employee, and the period of employment contracted for; provided the proxies are respectively revocable after the pledge is redeemed, or the executory contract of sale is performed, or the debt of the corporation is paid, or the period of employment has terminated.
(3) A provision contained in a proxy making it irrevocable is not enforceable against a purchaser for value of the shares subject to the provision without actual knowledge of the existence of the provision, unless notice of the proxy and its irrevocability appears plainly on the certificate or certificates representing the shares; provided that if such shares are uncertificated, a provision contained in a proxy making it irrevocable is enforceable against a purchaser for value of the shares subject to the provision without actual knowledge of the existence of the provision if, and only if, notice of the proxy and its irrevocability was provided in writing to such purchaser prior to the consummation of the purchase of such shares.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-709. Voting trusts and agreements among shareholders.
(a) Any number of shareholders of a corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period not to exceed ten (10) years, by entering into a written voting trust agreement specifying the terms and conditions of the voting trust, by depositing a counterpart of the agreement with the corporation at its registered office, and by transferring their shares to the trustee or trustees for the purposes of the agreement. The trustee or trustees shall keep a record of the holders of voting trust certificates evidencing a beneficial interest in the voting trust, giving the names and addresses of all the holders and the number and class of the shares in respect of which the voting trust certificates held by each are issued, and shall deposit a copy of the record with the corporation at its registered office. The counterpart of the voting trust agreement and the copy of the record deposited with the corporation are subject to the same right of examination by a shareholder of the corporation, in person or by agent or attorney, as are the books and records of the corporation, and the counterpart and the copy of the record is subject to examination by any holder of record of voting trust certificates, either in person or by agent or attorney, at any reasonable time for any proper purpose. The trust certificates must state that they are issued pursuant to the voting trust agreement, and that fact must be stated in the stock ledger of the corporation.
(b) Agreements among shareholders regarding the voting of their shares are valid and enforceable in accordance with their terms for a period not to exceed ten (10) years. An agreement is not subject to the provision of this section regarding voting trusts unless it is stated in the agreement that it is a voting trust.
(c) The provisions of this section are construed as permissive and should not be interpreted to invalidate any voting or other agreement among shareholders, or any irrevocable proxy which is otherwise not illegal.
(d) A voting trust or shareholders agreement may at any time or times be extended for an additional period not in excess of ten (10) years, but the extension is binding only with respect to those shares owned of record or beneficially by parties to the extension.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-710. Voting and inspection rights of bondholders and debenture holders.
The articles of incorporation may, to the extent and in the manner provided in the articles of incorporation, confer on the holders of bonds or other evidences of indebtedness of the corporation rights to vote in the election of directors and on any other matters on which shareholders may vote and rights to inspect the books and records of the corporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-711. Actions by shareholders.
(a) Definitions. In this section:
(1) “Derivative proceeding” means a civil suit in the right of a domestic corporation or, to the extent provided in subsection (h) of this section, in the right of a foreign corporation.
(2) “Shareholder” includes a beneficial owner whose shares are held in a voting trust or held by a nominee on the beneficial owner’s behalf.
(b) Standing. A shareholder may not commence or maintain a derivative proceeding unless the shareholder:
(i) Was a shareholder of the corporation at the time of the act or omission complained of or became a shareholder through transfer by operation of law from one who was a shareholder at that time; and
(ii) Fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
(c) Demand. No shareholder may commence a derivative proceeding until:
(1) A written demand had been made upon the corporation to take suitable action; and
(2) Ninety (90) days have expired from the date the demand was made unless the shareholder has earlier been notified that the demand has been rejected by the corporation or unless irreparable injury to the corporation would result by waiting for the expiration of the ninety (90) day period.
(d) Stay of proceedings. If the corporation commences an inquiry into the allegations made in the demand or complaint, the court may stay any derivative proceeding for such period as the court deems appropriate.
(e) Dismissal.
(1) On motion by the corporation, the court shall dismiss a derivative proceeding if one of the groups specified in subsection (e)(2) or (e)(6) has determined in good faith after conducting a reasonable inquiry upon which its conclusions are based that the maintenance of the derivate proceedings is not in the best interests of the corporation.
(2) Unless a panel is appointed pursuant to subsection (e)(6), the determination in subsection (e)(1) must be made by:
(i) A majority vote of independent directors present at a meeting of the board of directors if the independent directors constitute a quorum; or
(ii) A majority vote of a committee consisting of two (2) or more independent directors appointed by majority vote of independent directors present at a meeting of the board of directors, whether or not such independent directors constituted a quorum.
(3) None of the following by itself causes a director to be considered not independent for purposes of this section:
(i) The nomination or election of the directors or persons who are defendants in the derivative proceedings or against whom action is demanded;
(ii) The naming of the director as a defendant in the derivative proceeding or as a person against whom action is demanded; or
(iii) The approval by the director of the act being challenged in the derivative proceeding or demand if the act resulted in no personal benefit to the director.
(4) If a derivative proceeding is commenced after a determination has been made rejecting a demand by a shareholder, the complaint must allege with particularity facts establishing either (A) that a majority of the board of directors did not consist of independent directors at the time the determination was made, or (B) that the requirements of subsection (e)(1) of this section have not been met.
(5) If a majority of the board of directors does not consist of independent directors at the time the determination is made, the corporation has the burden of proving that the requirements of subsection (e)(1) have been met. If a majority of the board of directors consists of independent directors at the time the determination is made, the plaintiff has the burden of proving that the requirements of subsection (e)(1) have not been met.
(6) The court may appoint a panel of one or more independent persons upon motion by the corporation to make a determination whether the maintenance of the derivative proceeding is in the best interests of the corporation. In such case, the plaintiff has the burden of proving that the requirements of subsection (e)(1) have not been met.
(f) Discontinuance or settlement. A derivative proceeding may not be discontinued or settled without the court’s approval. If the court determines that a proposed discontinuance or settlement will substantially affect the interests of the corporation’s shareholders or a class of shareholders, the court shall direct that notice be given to the shareholders affected.
(g) Payment of expenses. On termination of the derivative proceeding the court may:
(1) Order the corporation to pay the plaintiff’s reasonable expenses (including counsel fees) incurred in the proceeding if it finds that the proceeding has resulted in a substantial benefit to the corporation;
(2) Order the plaintiff to pay any defendant’s reasonable expenses (including counsel fees) incurred in defending the proceeding if it finds that the proceeding was commenced or maintained without reasonable cause or for an improper purpose; or
(3) Order a party to pay an opposing party’s reasonable expenses (including counsel fees) incurred because of the filing of a pleading, motion or other paper, if it finds that the pleading, motion or other paper was not well grounded in fact, after reasonable inquiry, or warranted by existing law or a good faith argument for the extension, modification or reversal of existing law and was interposed for an improper purpose, such as to harass or cause unnecessary delay or needless increase in the cost of litigation.
(h) Applicability to foreign corporations. In any derivative proceeding in the right of a foreign corporation, the matters covered by this subchapter are governed by the laws of the jurisdiction of incorporation of the foreign corporation except for subsections (d), (f), and (g) of this section.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2018, ch. 346, § 2.
§ 7-1.2-801. Board of directors.
(a) Except as may be otherwise provided in this chapter or in the articles of incorporation, the business and affairs of a corporation are managed by a board of directors. Directors need not be residents of this state or shareholders of the corporation unless the articles of incorporation or bylaws require it. The articles of incorporation or bylaws may prescribe other qualifications for directors. The board of directors has authority to fix the compensation of directors unless otherwise provided in the articles of incorporation.
(b) A director shall discharge his duties as a director, including his duties as a member of a committee:
(1) In good faith;
(2) With the care that a person in a like position would reasonably believe appropriate under similar circumstances; and
(3) In a manner he or she reasonably believes to be in the best interests of the corporation.
(c) In discharging his or her duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
(1) One or more officers or employees of the corporation whom the director reasonably believes to be reliable and competent in the matters presented;
(2) Legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person’s professional or expert competence; or
(3) A committee of the board of directors of which he or she is not a member if the director reasonably believes the committee merits confidence.
(d) A director is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (c) unwarranted.
(e) A director is not liable for any action taken as a director, or any failure to take any action, if he or she performed the duties of his or her office in compliance with this section.
(f) For the purposes of subsections (b) through (e), “corporation” also includes any financial institution, insurance company, public utility or other quasi-public corporation having purposes enumerated as exceptions to this chapter in § 7-1.2-301 and the provisions of subsections (b) through (e) of this section are applicable to the directors of that corporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-802. Number and election of directors.
The board of directors of a corporation consists of one or more members. The number of directors is fixed by, or in the manner provided in, the articles of incorporation or the bylaws. The number of directors may be increased or decreased from time to time by amendment to, or in the manner provided in, the articles of incorporation or the bylaws, but no decrease has the effect of shortening the term of any incumbent director. If the articles of incorporation provide for the election of directors in the manner specified in subsection (d) of § 7-1.2-708, the number of directors may not be decreased unless approved by the shareholders with less than the number of shares previously entitled to elect one director voting against the decrease. Initial directors hold office until the first annual meeting of shareholders, and until their successors have been elected and qualified. At the first annual meeting of shareholders and at each subsequent annual meeting, the shareholders shall elect directors to hold office until the next succeeding annual meeting, except in the case of the classification of directors as permitted by this chapter. Each director holds office for the term for which he or she is elected and until his or her successor has been elected and qualified. Any director may resign at any time upon notice given in writing to the corporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.
§ 7-1.2-803. Classification of directors.
When the board of directors consists of nine (9) or more members, in lieu of electing the whole number of directors annually, the articles of incorporation may provide that the directors be divided into either two (2) or three (3) classes, each class to be as nearly equal in number as possible, the term of office of directors of the first class to expire at the first annual meeting of shareholders after their election, that of the second class to expire at the second annual meeting after their election, and that of the third class, if any, to expire at the third annual meeting after their election. At each annual meeting after the classification, the number of directors equal to the number of the class whose term expires at the time of the meeting will be elected to hold office until the second succeeding annual meeting, if there are two (2) classes, or until the third succeeding annual meeting, if there are three (3) classes. No classification of directors is effective prior to the first annual meeting of shareholders. The articles of incorporation may confer upon holders of any class or series of shares the right to elect one or more directors who serve for any term and have any voting powers stated in the articles of incorporation. The terms of office and voting powers of the directors elected in the manner provided in the articles of incorporation may be greater than or less than those of any other director or class of directors.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-804. Vacancies.
Any vacancy occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors. A director elected to fill a vacancy is elected for the unexpired term of his or her predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by the board of directors for a term of office continuing only until the next election of directors by the shareholders. If at any time, by reason of death, resignation or other cause, a corporation should have no directors in office, then any officer or any shareholder or an executor, administrator, trustee or guardian of a shareholder, or other fiduciary entrusted with like responsibility for the person or estate of a shareholder, may call a special meeting of shareholders in accordance with the provisions of the articles of incorporation or the bylaws, or may apply to the superior court for a decree summarily ordering a meeting for the purposes of conducting an election.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-805. Removal of directors.
(a) Any or all of the directors may be removed for cause by vote of the shareholders. The articles of incorporation or the specific provisions of a bylaw adopted by the shareholders may provide for the removal by action of the board, except in the case of any director elected by cumulative voting, or by the holders of the shares of any class or series, or holders of bonds, voting as a class, when entitled by the provisions of the articles of incorporation.
(b) Unless the articles of incorporation provide that directors may be removed only for cause, any or all of the directors may be removed without cause by vote of the shareholders.
(c) The removal of directors, with or without cause, as provided in subsections (a) and (b) of this section is subject to the following:
(1) In the case of a corporation having cumulative voting, no director may be removed when the votes cast against his or her removal would be sufficient to elect him or her if voted cumulatively at an election at which the same total number of votes were cast and the entire board, or the entire class of directors of which he or she is a member, were then being elected; and
(2) When by the provisions of the articles of incorporation the holders of the shares of any class or series, or holders of bonds, voting as a class, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series or the holders of the bonds, voting as a class.
(d) An action to procure a judgment removing a director for cause may be brought by the attorney general or by the holders of ten percent (10%) of the outstanding shares, whether or not entitled to vote. The court having jurisdiction may bar from reelection any directors so removed for a period fixed by the court.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-806. Quorum of directors.
A majority of the number of directors fixed by or in the manner provided in the articles of incorporation or the bylaws, or by the shareholders or in the absence of a bylaw or shareholder action fixing the number of directors, then of the number stated in the articles of incorporation, constitutes a quorum for the transaction of business unless a greater number is required by the articles of incorporation or the bylaws. The act of the majority of the directors present at a meeting at which a quorum is present is the act of the board of directors, unless the act of a greater number is required by the articles of incorporation or the bylaws.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-807. Director and officer conflicts of interest.
(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 organization in which one or more of its directors or officers are directors or officers or have a financial interest, is void or voidable nor are the directors or officers liable with respect to the contract or transaction solely for this reason, or solely because the director or officer is present at, or participates in, the meeting of the board or committee of the board which authorizes the contract or transaction, or solely because his or her or their votes are counted for that purpose, if:
(1) The material facts as to his or her or their interest or relationship are disclosed or are known to the board of directors or the committee, and the board of directors or committee authorizes, approves, or ratifies the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors are less than a quorum; or
(2) The material facts as to his or her or their interest or relationship are disclosed or are known to the shareholders entitled to vote on the contract or transaction, and the contract or transaction is specifically authorized, approved, or ratified by vote of the shareholders; or
(3) The contract or transaction is fair and reasonable as to the corporation.
(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.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-808. Executive and other committees.
Unless otherwise restricted or limited by the articles of incorporation or the bylaws, the board of directors, by resolution adopted by a majority of the full board of directors, may designate from among its members an executive committee and one or more other committees each of which, to the extent provided in the resolution or in the articles of incorporation or the bylaws of the corporation, have and may exercise all the authority of the board of directors, but no committee has the authority of the board of directors in reference to amending the articles of incorporation, adopting a plan of merger, recommending to the shareholders the sale, lease, exchange, or other disposition of all or substantially all the property and assets of the corporation other than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution or revocation of the corporation, or amending the bylaws of the corporation. The designation of any committee and the delegation to the committee of authority does not operate to relieve the board of directors, or any member of the board, of any responsibility imposed by law.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-809. Place, notice, and form of notice of directors’ and committee meetings.
(a) Meetings of the board of directors, or any committee designated by the board, regular or special, may be held either within or without this state.
(b) Regular meetings of the board of directors or any committee designated by the board may be held with or without notice as prescribed in the bylaws. Unless the articles of incorporation or the bylaws provide for an alternative period, special meetings of the board of directors or any committee designated by the board must be preceded by at least two (2) days’ notice of the date, time, and place of the meeting. Attendance of a director at a meeting constitutes a waiver of notice of the meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors or any committee designated by the board of directors need be specified in the notice or waiver of notice of the meeting unless required by the bylaws. Except as may be otherwise restricted by the articles of incorporation or bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board or committee by means of a conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other at the same time and participation by those means constitutes presence in person at a meeting.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-810. Action by directors without a meeting.
Unless otherwise provided by the articles of incorporation or bylaws, any action required by this chapter to be taken at a meeting of the directors of a corporation, or any action which may be taken at a meeting of the directors or of a committee, may be taken without a meeting if all of the directors, or all of the members of the committee, as the case may be, consent thereto in writing or by electronic transmission, before or after the action, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board or committee. The consent has the same effect as a unanimous vote for all purposes, and that may be stated in any certificate or other document filed with the secretary of state.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-811. Liability of directors in certain cases.
(a) In addition to any other liabilities imposed by law upon directors of a corporation:
(1) Directors of a corporation who vote for or assent to the declaration of any dividend or other distribution of the assets of a corporation to its shareholders contrary to the provisions of this chapter or contrary to any restrictions contained in the articles of incorporation, are jointly and severally liable to the corporation for the amount of the dividend which is paid or the value of the assets which are distributed in excess of the amount of the dividend or distribution which could have been paid or distributed without a violation of the provisions of this chapter or the restrictions in the articles of incorporation.
(2) Directors of a corporation who vote for or assent to the purchase of its own shares contrary to the provisions of this chapter are jointly and severally liable to the corporation for the amount of consideration paid for the shares which is in excess of the maximum amount which could have been paid for the shares without a violation of the provisions of this chapter.
(3) Directors of a corporation who vote for or assent to any distribution of assets of a corporation to its shareholders during the liquidation of the corporation without the payment and discharge of, or making adequate provision for, all known debts, obligations, and liabilities of the corporation are jointly and severally liable to the corporation for the value of the assets which are distributed, to the extent that the debts, obligations, and liabilities of the corporation are not subsequently paid and discharged.
(b) A director who is present at a meeting of its board of directors at which action on any corporate matter is taken is presumed to have assented to the action taken unless his or her dissent is entered in the minutes of the meeting or unless he or she files his or her written dissent to the action with the person acting as the secretary of the meeting before the meeting’s adjournment or forwards the dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. The right to dissent does not apply to a director who voted in favor of the action.
(c) A director is not liable under this section if under the circumstances he or she acted with due care and in good faith, and without limiting the generality of what has just been stated, is not liable if he or she relied in good faith upon financial statements of the corporation represented to him or her to be correct and to be based upon generally accepted accounting principles by the president or the officer of the corporation having charge of its books of account, or stated in a written report by an independent public or certified public accountant or firm of accountants fairly to reflect the financial condition of the corporation.
(d) Any director against whom a claim is asserted under or pursuant to this section for the payment of a dividend or other distribution of assets of a corporation and who is held liable on the claim, is entitled to contribution from the shareholders who accepted or received any dividend or assets, knowing the dividend or distribution to have been made in violation of this chapter, in proportion to the amounts received by them respectively.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-812. Officers.
(a) The officers of a corporation consist of a president, a secretary, and a treasurer, and such other officers as are authorized by the bylaws or the board of directors each of whom is elected by the board of directors or by the shareholders at a time and in a manner as prescribed by the bylaws. Any other officers and assistant officers and agents that are necessary may be elected or appointed by the board of directors or by the shareholders or chosen in another manner prescribed by the bylaws. Any two (2) or more offices may be held by the same person. A failure to elect officers does not dissolve or otherwise affect the corporation.
(b) All officers of the corporation, as between themselves and the corporation, have the authority and perform any duties in the management of the corporation that may be provided in the bylaws, or that may be determined by resolution of the board of directors, subject to any limitations on the authority contained in the bylaws.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-813. Resignation and removal of officers.
An officer may resign at any time by delivering notice to the corporation. Any officer may be removed at any time with or without cause by the board of directors or by any other manner permitted by the articles of incorporation or the bylaws. Election, appointment or removal of an officer or agent does not of itself create contract rights.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-814. Indemnification.
(a) Definitions. As used in this section:
(1) “Director” or “officer” means any individual who is or was a director or officer of the corporation and any individual who, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, other enterprise, employee benefit plan, or other entity. A director or officer is considered to be serving an employee benefit plan at the corporation’s request if his or her duties to the corporation also impose duties on, or otherwise involve services by, him or her to the plan or participants on or beneficiaries of the plan. “Director” or “officer” includes, unless the context requires otherwise, the estate or personal representative of the director or officer.
(2) “Corporation” includes:
(i) Any domestic or foreign corporation, profit or nonprofit;
(ii) Any domestic or foreign predecessor entity of the corporation in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction; and
(iii) Any of the classes of quasi public corporations with purposes enumerated as exceptions in § 7-1.2-301 to the extent that the corporations are not subject to other provisions of the general laws or special acts authorizing indemnification of their directors and officers.
(3) “Expenses” include attorneys’ fees.
(4) “Liability” means the obligation to pay a judgment, penalties, fines (including an excise tax assessed with respect to an employee benefit plan), settlements, or reasonable expenses actually incurred by the person in connection with the proceeding.
(5) “Official capacity” means:
(i) When used with respect to a director, the office of director in the corporation; and
(ii) When used with respect to an officer, as contemplated in subsection (i), the office in a corporation held by the officer. “Official capacity” does not include service for an individual other than a director, as contemplated in subsection (a)(1), the elective or appointive office in the corporation held by the officer or the employment or agency relationship undertaken by the employee or agent on behalf of the corporation, but in each case does not include service for any other foreign or domestic corporation or any partnership, joint venture, trust, other enterprise, or employee benefit plan.
(6) “Party” includes an individual who was, is, or is threatened to be made, a named defendant or respondent in a proceeding.
(7) “Proceeding” means any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative.
(b) Permissible indemnification.
(1) Except as otherwise provided in this section, a corporation has power to indemnify any individual made a party to any proceeding by reason of the fact that he or she is or was a director if:
(i) He or she conducted himself or herself in good faith; and
(ii) He or she reasonably believed:
(A) In the case of conduct in his or her official capacity with the corporation, that his or her conduct was in its best interests; and
(B) In all other cases, that his or her conduct was at least not opposed to the corporation’s best interests; and
(iii) In the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful; or
(iv) He or she engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation.
(2) A director’s conduct with respect to an employee benefit plan for a purpose he or she reasonably believed to be in the interests of the participants and beneficiaries of the plan is deemed to be for a purpose which is not opposed to the best interests of the corporation in accordance with (b)(1)(ii)(B).
(3) The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the individual did not meet the requisite standard of conduct set forth in this subsection.
(4) Unless ordered by a court under subsection (d) of this section, a corporation may not indemnify a director:
(i) In connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding (if it is determined that the director has met the relevant standard of conduct under (b)(1)(i) and (ii)); or
(ii) In connection with any proceeding for which the director was adjudged liable to the corporation on the basis that he or she received an improper personal benefit, whether or not involving action in his or her official capacity.
(c) Mandatory indemnification. Unless limited by the articles of incorporation, a director who has been wholly successful, on the merits or otherwise, in the defense of any proceeding referred to in subsection (b) of this section is indemnified against reasonable expenses incurred by him or her in connection with the proceeding.
(d) Court-ordered indemnification.
(1) A court of appropriate jurisdiction, upon application of a director and any notice that the court requires, has authority to order indemnification in the following circumstances:
(i) If the court determines a director is entitled to reimbursement under subsection (c) of this section, the court shall order indemnification, in which case the director is also entitled to recover the expenses of securing the reimbursement; or
(ii) If the court determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not he or she has met the standard of conduct set forth in subsection (b)(1) or (b)(2) or has been adjudged liable in the circumstances described in subsection (b)(4)(ii), the court may order such indemnification as the court shall deem proper, except that indemnification with respect to any proceeding by or in the right of the corporation or in which liability has been adjudged in the circumstances described in subsection (b)(4)(i) is limited to expenses.
(2) A court of appropriate jurisdiction may be the same court in which the proceeding involving the director’s liability took place.
(e) Advance for expenses. Reasonable expenses incurred by a director who is a party to a proceeding may be paid or reimbursed by the corporation in advance of the final disposition of the proceeding upon receipt by the corporation of:
(1) A written affirmation by the director of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation as authorized in this section; and
(2) A written undertaking by or on behalf of the director to repay the amount if the court determines that he or she has not met that standard of conduct, and after a determination that the facts then known to those making the determination would not preclude indemnification under this section. The undertaking required by this subdivision must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment. Determinations and authorizations of payments under this subsection are made in the manner specified in subsection (f).
(f) Determination and authorization of indemnification.
(1) No indemnification under subsection (b) may be made by the corporation unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because he or she has met the standard of conduct set forth in subsection (b). The determination must be made:
(i) By the board of directors by a majority vote of a quorum consisting of directors not at the time parties to the proceeding; or
(ii) If such a quorum cannot be obtained, then by a majority vote of a committee of the board, duly designated to act in the matter by a majority vote of the full board (in which designation directors who are parties may participate), consisting solely of two (2) or more directors not at the time parties to the proceeding; or
(iii) By special legal counsel, selected by the board of directors or a committee of the board by vote as set forth in subsection (f)(1)(i) or (f)(1)(ii), or, if the requisite quorum of the full board cannot be obtained for the vote and the committee cannot be established, by a majority vote of the full board (in which selection directors who are parties may participate); or
(iv) By the shareholders.
(2) Authorization of indemnification and determination as to reasonableness of expenses are made in the same manner as the determination that indemnification is permissible, except that if the determination that indemnification is permissible is made by special legal counsel, authorization of indemnification and determination as to reasonableness of expenses must be made in a manner specified in subsection (f)(1)(iii) for the selection of the counsel. Shares held by directors who are parties to the proceeding may not be voted on the subject matter under this subsection.
(g) Variation by corporate action. The indemnification provided by this section is not deemed exclusive of any other rights to which those seeking indemnification are entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office, and continues as to an individual who has ceased to be a director, officer, partner, trustee, employee, or agent and inures to the benefit of the heirs, executors, and administrators of an individual. Nothing contained in this section limits the corporation’s power to pay or reimburse expenses incurred by a director in connection with his or her appearance as a witness in a proceeding at a time when he or she has not been made a named defendant or respondent in the proceeding.
(h) Officers. Unless limited by the articles of incorporation:
(1) An officer of the corporation is indemnified under this section as and to the same extent provided for a director, and is entitled to the same extent as a director to seek indemnification pursuant to the provisions of this section;
(2) A corporation has the power to indemnify and to advance expenses to an officer, employee, or agent of the corporation to the same extent that it may indemnify and advance expenses to directors pursuant to this section; and
(3) A corporation, in addition, has the power to indemnify and to advance expenses to an officer, employee, or agent who is not a director to a further extent, consistent with law, that is provided by its articles of incorporation, bylaws, general or specific action of its board of directors, or contract.
(i) Insurance. A corporation has the power to purchase and maintain insurance on behalf of any individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan, against any liability asserted against him or her and incurred by him or her in any corporate capacity or arising out of his or her status as a director, officer, employee, or agent of the corporation, whether or not the corporation would have the power to indemnify him or her against the liability under the provisions of this section.
(j) Shareholder approval. Any indemnification of, or advance of expenses to, a director in accordance with this section, if arising out of a proceeding by or in the right of the corporation, must be reported, in writing, to the shareholders with or before the notice of the next shareholders’ meeting.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2007, ch. 98, § 1; P.L. 2007, ch. 107, § 1.
§ 7-1.2-901. Right to amend articles of incorporation.
A corporation may amend its articles of incorporation, from time to time, in any and all respects as is desired, to the extent that its articles of incorporation, as amended, contain only provisions that might be lawfully contained in original articles of incorporation filed as of the time of the filing of the amendment, and, if a change in shares or the rights of shareholders, or an exchange, reclassification, subdivision, combination or cancellation of shares or rights of shareholders is to be made, the provisions that may be necessary to effect the change, exchange, reclassification, subdivision, combination or cancellation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-902. Right to amend legislative charters.
Any corporation created by special act of the general assembly, which is organized under this chapter, whose charter is subject to amendment or repeal at the will of the general assembly, may make amendment to its charter that corporations organized under this chapter may make to their articles of incorporation under § 7-1.2-901. The proposed amendment is effected and evidenced in the same manner, by the same vote and upon the same terms and conditions as are prescribed in §§ 7-1.2-903 and 7-1.2-904.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-903. Procedure to amend articles of incorporation.
(a) Amendments to a corporations articles of incorporation are made in the following manner:
(1) The board of directors adopts a resolution setting forth the proposed amendment and directing that it be submitted to a vote at a meeting of shareholders, which may be either the annual or a special meeting. If no shares have been issued, the amendment is adopted by resolution of the board of directors and the provisions subsequently stated for adoption by shareholders do not apply. The resolution may incorporate the proposed amendment in restated articles of incorporation which contain a statement that, except for the designated amendment, the restated articles of incorporation correctly state without change the corresponding provisions of the articles of incorporation as previously amended, and that the restated articles of incorporation, together with the designated amendment, supersede the original articles of incorporation and all amendments to those articles.
(2) Written notice stating the proposed amendment or a summary of the changes to be affected by the amendment must be given to each shareholder entitled to vote on the amendment within the time and in the manner provided in this chapter for the giving of notice of meetings of shareholders. If the meeting is an annual meeting, the proposed amendment or the summary may be included in the notice of the annual meeting.
(3) At the meeting a vote of the shareholders entitled to vote on the amendment must be taken on the proposed amendment. The proposed amendment is adopted upon receiving the affirmative vote of the holders of a majority of the shares entitled to vote on the amendment unless any class of shares is entitled to vote on the amendment as a class, pursuant to either the articles of incorporation or the provisions of § 7-1.2-904, in which event approval of the proposed amendment also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class on the amendment.
(b) Any number of amendments may be submitted to the shareholders, and voted upon by them, at one meeting.
(c) The resolution authorizing a proposed amendment to the articles of incorporation may provide that at any time prior to the filing of the amendment with the secretary of state, notwithstanding authorization of the proposed amendment by the shareholders of the corporation, the board of directors may abandon the proposed amendment without further action by the shareholders.
(d) Whenever the articles of incorporation require for action by the board of directors, by the holders of any class or series of shares or by the holders of any other securities having voting power the vote of a greater number or proportion than is required by any section of this title, the provision of the articles of incorporation requiring such greater vote may not be altered, amended or repealed except by such greater vote.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-904. Class voting on amendments.
(a) Except as otherwise provided in this section, the holders of the outstanding shares of a class are entitled to vote as a class upon a proposed amendment, whether or not entitled to vote on the amendment by the provisions of the articles of incorporation, if the amendment would:
(1) Increase or decrease the aggregate number of authorized shares of the class.
(2) Increase or decrease the par value of the shares of the class.
(3) Effect an exchange, reclassification, or cancellation of all or part of the shares of the class.
(4) Effect an exchange, or create a right of exchange, of all or any part of the shares of another class into the shares of the class.
(5) Change the designations, preferences, limitations, or relative rights of the shares of the class.
(6) Change the shares of the class, whether with or without par value, into the same or a different number of shares, either with or without par value, of the same class or another class or classes.
(7) Create a new class of shares having rights and preferences prior and superior to the shares of the class, or increase the rights and preferences or the number of authorized shares of any class having rights and preferences prior or superior to the shares of the class.
(8) In the case of a preferred or special class of shares, divide the shares of the class into series and fix and determine the designation of the series and the variations in the relative rights and preferences between the shares of the series, or authorize the board of directors to do so.
(9) Limit or deny any existing preemptive rights of the shares of the class.
(10) Cancel or otherwise affect dividends on the shares of the class which have accrued but have not been declared.
(b) If the proposed amendment would affect only the shares of one series of a class and not the entire class, then only the shares of the series so affected is considered a separate class for the purpose of this section. Any class and any series within a class is considered a separate class for purposes of this section if the effect of the proposed amendment upon the class or series would be different than the effect of the amendment upon the other classes or other series within the class. If the proposed amendment would affect two (2) or more classes or series within a class in the same way, but would not affect the remaining classes or series within the class in the same way, the two (2) or more classes or series affected in the same way are together considered a separate class for purposes of this section. Except as otherwise provided in the articles of incorporation or the certificate referred to in § 7-1.2-602, if the proposed amendment would have no effect upon one or more classes or series of a class, the classes or series are not entitled to any vote on the proposed amendment and, for the purposes of this section, are not counted in determining the number of shares constituting the class.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-905. Articles of amendment.
(a) The corporation may amend its articles of incorporation by filing with the secretary of state articles of amendment which must state:
(1) The name of the corporation.
(2) The amendment so adopted.
(3) The date of the adoption of the amendment by the shareholders or by the board of directors where no shares have been issued.
(b) No amendment may affect any existing cause of action in favor of or against the corporation, or any pending suit to which the corporation is a party, or the existing rights of persons other than shareholders; and, in the event the corporate name is changed by amendment, no suit brought by or against the corporation under its former name abates for that reason.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-906. Restated articles of incorporation.
(a) The corporation may at any time restate its articles of incorporation as previously amended by filing with the secretary of state restated articles of incorporation. The restated articles of incorporation may include one or more amendments to the articles of incorporation adopted in accordance with the provisions of § 7-1.2-903.
(b) The restated articles of incorporation must state all of the provisions of the articles of incorporation as previously amended, the additional amendments to the articles of incorporation, if any, together with a statement that such additional amendments were adopted in accordance with the provisions of § 7-1.2-903, and a further statement that, except for the designated amendments, if any, the restated articles of incorporation correctly set forth without change the corresponding provisions of the articles of incorporation as previously amended, and that the restated articles of incorporation, together with the designated amendments, if any, supersede the original articles of incorporation and all previous amendments to the articles of incorporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36.
§ 7-1.2-907. Amendment of articles of incorporation in reorganization proceedings.
(a) Whenever a plan of reorganization of a corporation has been confirmed by decree or order of a court of competent jurisdiction in proceedings for the reorganization of the corporation, pursuant to the provisions of any applicable statute of the United States relating to reorganizations of corporations, the articles of incorporation of the corporation may be amended, in the manner provided in this section, in as many respects as are necessary to carry out the plan and put into effect, as long as the articles of incorporation, as amended, contain only provisions that might be lawfully contained in original articles of incorporation at the time of making the amendment.
(b) Articles of amendment approved by decree or order of the court must be executed by the trustee or trustees of such corporation appointed in the reorganization proceedings (or a majority thereof), or if none are appointed and acting, by the person or persons that the court designates or appoints for the purpose, and must state the name of the corporation, the amendments of the articles of incorporation approved by the court, the date of the decree or order approving the articles of amendment, the title of the proceedings in which the decree or order was entered, and a statement that the decree or order was entered by a court having jurisdiction of the proceedings for the reorganization of the corporation pursuant to the provisions of an applicable statute of the United States.
(c) This section does not apply to such corporation upon the entry of a final decree in the reorganization proceedings closing the case and discharging the trustee or trustees, if any.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1001. Procedure for merger.
(a) Any two (2) or more domestic corporations may merge into one of the corporations, or into a new corporation, pursuant to a plan of merger approved in the manner provided in this chapter.
(b) The board of directors of each corporation shall, by resolution adopted by each board, approve a plan of merger stating:
(1) The names of the corporations proposing to merge, and the name of the corporation which will survive or result from the merger, which is hereinafter designated as the surviving corporation.
(2) The terms and conditions of the proposed merger.
(3) The manner and basis of converting the shares of each merging corporation (other than those held by the surviving corporation, if any) into shares or obligations or other securities of the surviving corporation or, in whole or in part, into cash, property, or shares, obligations, or other securities of any other corporation.
(4) Any amendments to the articles of incorporation of the surviving corporation to be effected by the merger, or if no amendments are desired, a statement that the articles of incorporation of one of the corporations are the articles of incorporation of the surviving corporation, or in the case of a new corporation, all of the statements required to be stated in articles of incorporation for corporations organized under this chapter.
(5) Any other provisions with respect to the proposed merger that are deemed necessary or desirable.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1002. Approval by shareholders of merger.
(a) The board of directors of each corporation, upon approving the plan of merger, shall, by resolution, direct that the plan be submitted to a vote at a meeting of shareholders, which may be either an annual or a special meeting. Written notice must be given to each shareholder, whether or not entitled to vote at the meeting, not less than twenty (20) days before the meeting, in the manner provided in this chapter for the giving of notice of meetings of shareholders, and, whether the meeting is an annual or a special meeting, must state that the purpose or one of the purposes is to consider the proposed plan of merger. A copy or a summary of the plan of merger, as the case may be, together with a statement of the shareholder’s right to dissent and a copy or a summary of § 7-1.2-1202, must be included in or enclosed with the notice except where no such right is available.
(b) At each meeting, shareholders shall vote on the proposed plan of merger. The plan of merger is approved upon receiving the affirmative vote of the holders of a majority of the shares entitled to vote on the plan of merger of each corporation, unless any class of shares of any corporation is entitled to vote as a class on it, in which event, as to the corporation, approval of the plan of merger also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class on it. Any class of shares of the surviving corporation and the merged corporation in a merger is entitled to vote as a class, whether or not the class is otherwise entitled to vote, if the plan of merger contains any provision which, if contained in a proposed amendment to articles of incorporation, would entitle the class of shares to a class vote.
(c)(1) Notwithstanding the foregoing provisions of this section, except as may be required by the articles of incorporation, no approval of a plan of merger by the shareholders of the surviving corporation in a merger, and no notice to any of the shareholders of the corporation, are required if:
(i) The plan of merger does not amend the articles of incorporation of the corporation;
(ii) The plan of merger does not involve the issuance or transfer by the corporation (either directly or through the medium of options or warrants for, or shares or debt instruments convertible within one year into, the shares) of shares possessing more than twenty percent (20%) of the total combined voting power of all classes of shares then entitled to vote for the election of directors which will be outstanding immediately after the merger; and
(iii) Each shareholder of the corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical preferences, limitations, and relative rights, immediately after the effective date of change.
(2) If a plan of merger is adopted by the surviving corporation in a merger without any approval by its shareholders, pursuant to the provisions of this subsection, that fact must be certified in the articles of merger.
(d) After approval as already stated by each corporation, and at any time prior to the filing of the articles of merger, the merger may be abandoned pursuant to provisions for abandonment, if any, set forth in the plan of merger.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1003. Articles of merger.
(a) Upon approval, articles of merger must be executed by each corporation by its authorized representative and must state:
(1) The plan of merger; and
(2) If, pursuant to § 7-1.2-1005, the merger is to become effective at a time subsequent to the issuance of the certificate of merger by the secretary of state, the date when the merger is to become effective.
(b) The original articles of merger must be delivered to the secretary of state. If the secretary of state finds that the articles conform to law, and all fees and taxes have been paid, the secretary of state shall:
(1) Endorse on the original the word “Filed”, and the month, day, and year of the filing;
(2) File the original in his or her office; and
(3) Issue a certificate of merger.
(c) The secretary of state shall deliver the certificate of merger to the surviving or new corporation, as the case may be, or its representative.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371,
§ 1; P.L. 2017, ch. 376, § 1.
§ 7-1.2-1004. Merger of subsidiary corporation.
(a) Any corporation owning at least ninety percent (90%) of the outstanding shares of each class of another corporation may merge the other corporation into itself without approval by a vote of the shareholders of either corporation. Its board of directors shall, by resolution, approve a plan of merger stating:
(1) The name of the subsidiary corporation and the name of the corporation owning at least ninety percent (90%) of its shares, which is subsequently in these provisions designated as the surviving corporation.
(2) The manner and basis of converting the shares of the subsidiary corporation (other than those held by the surviving corporation) into shares or other securities or obligations of the surviving corporation or of any other corporation, or in whole or in part, into cash or other consideration to be paid upon the surrender of each share of the subsidiary corporation.
(b) A copy of the plan of merger must be mailed to each shareholder of the subsidiary corporation.
(c) Articles of merger must be executed by the surviving corporation by an authorized representative and must state:
(1) The plan of merger; and
(2) If, pursuant to § 7-1.2-1005, the merger is to become effective at a time subsequent to the issuance of the certificate of merger by the secretary of state, the date when the merger is to become effective.
(d) On and after the thirtieth (30th) day after the mailing of a copy of the agreement of merger to shareholders of the subsidiary corporation or upon the waiver of the mailing by the holders of all outstanding shares, original articles of merger must be delivered to the secretary of state. If the secretary of state finds that the articles conform to law, the secretary of state shall, when all fees and franchise taxes have been paid:
(1) Endorse on the original the word “Filed”, and the month, day, and year of the filing;
(2) File the original in his or her office; and
(3) Issue a certificate of merger.
(e) The secretary of state shall deliver the certificate of merger to the surviving corporation or its representative.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2006, ch. 163, § 1; P.L. 2006, ch. 188, § 1.
§ 7-1.2-1005. Effect of merger.
(a) A merger becomes effective upon the issuance of a certificate of merger by the secretary of state or on a later date as is stated in the plan.
(b) When a merger becomes effective:
(1) The several corporations, parties to the plan of merger, are a single corporation, which is that corporation designated in the plan of merger as the surviving or new corporation.
(2) The separate existence of all corporations, parties to the plan of merger, except the surviving or new corporation, ceases.
(3) The surviving or new corporation has all the rights, privileges, immunities, and powers and is subject to all the duties and liabilities of a corporation organized under this chapter.
(4) The surviving or new corporation at that time and subsequently possesses all the rights, privileges, immunities, and franchises, as well of a public as of a private nature, of each of the merging corporations; and all property, real, personal, and mixed, all debts due on whatever account, including subscriptions to shares, all other choses in action, and all and every other interest of or belonging to or due to each of the corporations merged, is taken and deemed to be transferred to and vested in the single corporation without further act or deed; and the title to any real estate, or any interest in real estate, vested in any of the corporations does not revert or is in any way impaired because of the merger.
(5) The surviving or new corporation is subsequently responsible and liable for all the liabilities and obligations of each of the corporations merged or consolidated; and any claim existing or action or proceeding pending by or against any of the corporations may be prosecuted as if the merger had not taken place, or the surviving or new corporation may be substituted in its place. Neither the rights of creditors nor any liens upon the property of any corporation is impaired by the merger.
(6) The articles of incorporation of the surviving corporation are deemed to be amended to the extent, if any, that changes in its articles of incorporation are stated in the plan of merger; or, in the case of a new corporation, the statements in the articles of merger which are required or permitted to be stated in the articles of incorporation of corporations organized under this chapter are deemed to be the original articles of incorporation of the new corporation.
(7) The shares of the corporation or corporations party to the plan that are, under the terms of the plan, to be converted or exchanged, cease to exist, and the holders of the shares are entitled only to the shares, obligations, other securities, cash, or other property into which they have been converted or for which they have been exchanged in accordance with the plan, subject to any rights under § 7-1.2-1201.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1006. Merger of domestic and foreign corporations or other business entities.
(a) One or more foreign corporations or other domestic or foreign business entities, and one or more domestic corporations may be merged in the following manner, if the merger is permitted by the laws of the state under which each foreign corporation or other business entity, is organized:
(1) Each domestic corporation shall comply with the provisions of this chapter with respect to the merger of domestic corporations, and each foreign corporation or other business entity, shall comply with the applicable provisions of the laws of the state under which it is organized.
(2) If the surviving or new corporation, or other business entity, as the case may be, is to be governed by the laws of any state other than this state, it shall comply with the provisions of this chapter with respect to foreign corporations (or in the case of other business entities, such chapter of the Rhode Island general laws relating to such other business entities) if it is to transact business in this state, and in every case it shall file with the secretary of state of this state:
(i) An agreement that it may be served with process in this state in any proceeding for the enforcement of any obligation of any domestic corporation which is a party to the merger and in any proceeding for the enforcement of the rights of a dissenting shareholder of any domestic corporation against the surviving or new corporation;
(ii) An irrevocable appointment of the secretary of state of this state as its agent to accept service of process in any proceeding; and
(iii) An agreement that it will promptly pay to the dissenting shareholders of any domestic corporation the amount, if any, to which they are entitled under the provisions of this chapter regarding the rights of dissenting shareholders.
(b) The effect of the merger is the same as in the case of the merger of domestic corporations, if the surviving or new corporation or other business entity is to be governed by the laws of this state. If the surviving or new corporation is to be governed by the laws of any state other than this state, the effect of the merger is the same as in the case of the merger of domestic corporations except insofar as the laws of the other state provide otherwise.
(c) At any time prior to the filing of the articles of merger, the merger may be abandoned pursuant to provisions for abandonment, if any, stated in the plan of merger.
(d) As used in this section, “other business entity” means a business trust or association, a real estate investment trust, a common-law trust, a limited liability company or an unincorporated business, including a partnership, whether general or limited.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2007, ch. 96, § 1; P.L. 2007,
ch. 110, § 1.
§ 7-1.2-1007. Conversion of other entities to a domestic corporation.
(a) As used in this section, the term “other entity” means a limited liability company, business trust or association, real estate investment trust, common-law trust, or any other unincorporated business or entity including a partnership (whether general or limited, including a registered limited liability partnership) or a foreign corporation.
(b) Any other entity may convert to a corporation of this state by complying with subsection (h) of this section and filing in the office of the secretary of state:
(1) A certificate of conversion to corporation that has been executed in accordance with subsection (i) of this section and filed in accordance with § 7-1.2-105; and
(2) Articles of incorporation that have been executed, acknowledged and filed in accordance with § 7-1.2-105.
(c) The certificate of conversion to corporation shall state:
(1) The date on which and jurisdiction where the other entity was first created, incorporated, formed or otherwise came into being and, if it has changed, its jurisdiction immediately prior to its conversion to a domestic corporation;
(2) The name and type of the other entity immediately prior to the filing of the certificate of conversion to corporation; and
(3) The name of the corporation as set forth in its articles of incorporation filed in accordance with subsection (b) of this section.
(d) Upon the effective time of the certificate of conversion to corporation and the articles of incorporation, the other entity shall be converted to a corporation of this state and the corporation shall thereafter be subject to all of the provisions of this title, except that notwithstanding § 7-1.2-105(d) the existence of the corporation shall be deemed to have commenced on the date the other entity commenced its existence in the jurisdiction in which the other entity was first created, formed, incorporated or otherwise came into being.
(e) The conversion of any other entity to a corporation of this state shall not be deemed to affect any obligations or liabilities of the other entity incurred prior to its conversion to a corporation of this state or the personal liability of any person incurred prior to such conversion.
(f) When an other entity has been converted to a corporation of this state pursuant to this section, the corporation of this state shall, for all purposes of the laws of the state of Rhode Island, be deemed to be the same entity as the converting other entity. When any conversion shall have become effective under this section, for all purposes of the laws of the state of Rhode Island, all of the rights, privileges and powers of the other entity that has converted, and all property, real, personal and mixed, and all debts due to such other entity, as well as all other things and causes of action belonging to such other entity, shall remain vested in the domestic corporation to which such other entity has converted and shall be the property of such domestic corporation and that title to any real property vested by deed or otherwise in such other entity shall not revert to such other entity or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such other entity shall be preserved unimpaired, and all debts, liabilities and duties of the other entity that has converted shall remain attached to the corporation of this state to which such other entity has converted, and may be enforced against it to the same extent as if said debts, liabilities and duties had originally been incurred or contracted by it in its capacity as a corporation of this state. The rights, privileges, powers and interests in property of the other entity, as well as the debts, liabilities and duties of the other entity, shall not be deemed, as a consequence of the conversion, to have been transferred to the domestic corporation to which such other entity has converted for any purpose of the laws of the state of Rhode Island.
(g) Unless otherwise agreed for all purposes of the laws of the state of Rhode Island or as required under applicable non-Rhode Island law, the converting other entity shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of such other entity and shall constitute a continuation of the existence of the converting other entity in the form of a corporation of this state.
(h) Prior to filing a certificate of conversion to corporation with the office of the secretary of state, the conversion shall be approved in the manner provided for by the document, instrument, agreement or other writing, as the case may be, governing the internal affairs of the other entity and the conduct of its business or by applicable law, as appropriate, and articles of incorporation shall be approved by the same authorization required to approve the conversion.
(i) The certificate of conversion to corporation shall be signed by any person who is authorized to sign the certificate of conversion to corporation on behalf of the other entity.
(j) In connection with a conversion hereunder, rights or securities of, or interests in, the other entity which is to be converted to a corporation of this state may be exchanged for or converted into cash, property, or shares of stock, rights or securities of such corporation of this state or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, or shares of stock, rights or securities of or interests in another domestic corporation or other entity or may be cancelled.
History of Section.
P.L. 2007, ch. 94, § 2; P.L. 2007, ch. 112, § 2.
§ 7-1.2-1008. Conversion of a domestic corporation to other entities.
(a) A corporation of this state may, upon the authorization of such conversion in accordance with this section, convert to a limited liability company, business trust or association, real estate investment trust, common-law trust, or any other unincorporated business or entity, including a partnership (whether general or limited, including a registered limited liability partnership), or a foreign corporation.
(b) The board of directors of the corporation that desires to convert under this section shall adopt a resolution approving such conversion, specifying the type of entity into which the corporation shall be converted and recommending the approval of such conversion by the stockholders of the corporation. Such resolution shall be submitted to the stockholders of the corporation at an annual or special meeting. Due notice of the time and purpose of the meeting shall be mailed to each holder of stock, whether voting or nonvoting, of the corporation at the address of the stockholder, as it appears on the records of the corporation, at least twenty (20) days prior to the date of the meeting. At the meeting, the resolution shall be considered and a vote taken for its adoption or rejection. If all outstanding shares of stock of the corporation, whether voting or nonvoting, shall be voted for the adoption of the resolution, the conversion shall be authorized.
(c) If a corporation shall convert in accordance with this section to another entity organized, formed, or created under the laws of a jurisdiction other than the state of Rhode Island or to a Rhode Island unincorporated “other entity”, upon payment of all fees and taxes by the corporation, the corporation shall file with the secretary of state a certificate of conversion to non-Rhode Island entity, executed in accordance with § 7-1.2-105, that certifies:
(1) The name of the corporation, and if it has been changed, the name under which it was originally incorporated;
(2) The date of filing of its original articles of incorporation with the secretary of state;
(3) The name and jurisdiction of the entity and type of entity to which the corporation shall be converted;
(4) That the conversion has been approved in accordance with the provisions of this section;
(5) The agreement of the corporation that it may be served with process in the state of Rhode Island in any action, suit, or proceeding for enforcement of any obligation of the corporation arising while it was a corporation of this state, and that it irrevocably appoints the secretary of state as its agent to accept service of process in any such action, suit, or proceeding; and
(6) The address to which a copy of the process referred to in subsection (c)(5) of this section shall be mailed to it by the secretary of state. In the event of such service upon the secretary of state in accordance with subsection (c)(5) of this section, the secretary of state shall forthwith notify such corporation that has converted out of the state of Rhode Island by letter, certified mail, return receipt requested, directed to such corporation that has converted out of the state of Rhode Island at the address so specified, unless such corporation shall have designated in writing to the secretary of state a different address for such purpose, in which case it shall be mailed to the last address designated. Such letter shall enclose a copy of the process and any other papers served on the secretary of state pursuant to this subsection. It shall be the duty of the plaintiff in the event of such service to serve process and any other papers in duplicate; to notify the secretary of state that service is being effected pursuant to this subsection; and to pay the secretary of state the sum of fifteen dollars ($15.00) for the use of the state, which sum shall be taxed as part of the costs in the proceeding, if the plaintiff shall prevail therein. The secretary of state shall maintain an alphabetical record of any such service setting forth the name of the plaintiff and the defendant; the title, docket number and nature of the proceeding in which process has been served; the fact that service has been effected pursuant to this subsection; the return date thereof; and the day and hour service was made. The secretary of state shall not be required to retain such information longer than five (5) years from receipt of the service of process.
(d) Upon the filing in the office of the secretary of state of a certificate of conversion to non-Rhode Island entity in accordance with subsection (c) of this section, or upon the future effective date or time of the certificate of conversion to non-Rhode Island entity and payment to the secretary of state of all fees prescribed under this title, the secretary of state shall certify that the corporation has filed all documents and paid all fees required by this title, and thereupon the corporation shall cease to exist as a corporation of this state at the time the certificate of conversion becomes effective in accordance with § 7-1.2-105. Such certificate of the secretary of state shall be prima facie evidence of the conversion by such corporation out of the state of Rhode Island.
(e) The conversion of a corporation out of the state of Rhode Island in accordance with this section and the resulting cessation of its existence as a corporation of this state pursuant to a certificate of conversion to non-Rhode Island entity shall not be deemed to affect any obligations or liabilities of the corporation incurred prior to such conversion or the personal liability of any person incurred prior to such conversion, nor shall it be deemed to affect the choice of law applicable to the corporation with respect to matters arising prior to such conversion.
(f) Unless otherwise provided in a resolution of conversion adopted in accordance with this section, the converting corporation shall not be required to wind up its affairs or pay its liabilities and distribute its assets, and the conversion shall not constitute a dissolution of such corporation.
(g) In connection with a conversion of a domestic corporation to another entity pursuant to this section, shares of stock of the corporation of this state that is to be converted may be exchanged for or converted into cash, property, rights or securities of, or interests in, the entity to which the corporation of this state is being converted or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, shares of stock, rights or securities of, or interests in, another domestic corporation or other entity or may be cancelled.
(h) When a corporation has been converted to another entity or business form pursuant to this section, the other entity or business form shall, for all purposes of the laws of the state of Rhode Island, be deemed to be the same entity as the corporation. When any conversion shall have become effective under this section, for all purposes of the laws of the state of Rhode Island, all of the rights, privileges, and powers of the corporation that has converted, and all property, real, personal, and mixed, and all debts due to such corporation, as well as all other things and causes of action belonging to such corporation, shall remain vested in the other entity or business form to which such corporation has converted and shall be the property of such other entity or business form, and the title to any real property vested by deed or otherwise in such corporation shall not revert to such corporation or be in any way impaired by reason of this chapter; but all rights of creditors and all liens upon any property of such corporation shall be preserved unimpaired, and all debts, liabilities, and duties of the corporation that has converted shall remain attached to the other entity or business form to which such corporation has converted, and may be enforced against it to the same extent as if said debts, liabilities, and duties had originally been incurred or contracted by it in its capacity as such other entity or business form. The rights, privileges, powers, and interest in property of the corporation that has converted, as well as the debts, liabilities, and duties of such corporation, shall not be deemed, as a consequence of the conversion, to have been transferred to the other entity or business form to which such corporation has converted for any purposes of the laws of the state of Rhode Island.
(i) No vote of stockholders of a corporation shall be necessary to authorize a conversion if no shares of the stock of such corporation shall have been issued prior to the adopting by the board of directors of the resolution approving the conversion.
History of Section.
P.L. 2007, ch. 94, § 2; P.L. 2007, ch. 112, § 2; P.L. 2011, ch. 77, § 2; P.L. 2011,
ch. 82, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371, §
1; P.L. 2017, ch. 376, § 1.
§ 7-1.2-1101. Sale of assets in regular course of business and mortgage or pledge of assets.
The sale, lease, exchange, or other disposition of all, or substantially all, the property and assets of a corporation in the usual and regular course of its business, and the mortgage or pledge of any or all property and assets of a corporation, whether or not in the usual and regular course of business, may be made upon terms and conditions and for any consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as is authorized by its board of directors; and in any case no authorization or consent of the shareholders is required.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1102. Sale of assets other than in regular course of business.
A sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of a corporation, if not in the usual and regular course of its business, may be made upon terms and conditions and for any consideration, which may consist in whole or in part of money or property, real or personal, including shares of any other corporation, domestic or foreign, as is authorized in the following manner:
(a) The board of directors’ adoption of a resolution recommending the sale, lease, exchange, or other disposition, and directing the submission of the resolution to a vote at a meeting of shareholders, which may be either an annual or a special meeting.
(b) Written notice must be given to each shareholder, whether or not entitled to vote at the meeting, not less than twenty (20) days before the meeting, in the manner provided in this chapter for the giving of notice of meeting of shareholders. The notice must state whether the meeting is an annual or a special meeting, and that the purpose, or one of the purposes, is to consider the proposed sale, lease, exchange, or other disposition. A statement of the shareholder’s right to dissent and a copy or summary of § 7-1.2-1202 must be included in or enclosed with the notice.
(c) At the meeting the shareholders may authorize the sale, lease, exchange, or other disposition and may fix, or may authorize the board of directors to fix, any or all of the terms and conditions of it and the consideration to be received by the corporation for it. The authorization requires the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on the authorization, unless any class of shares is entitled to vote on it as a class, pursuant to the articles of incorporation, in which event approval of the resolution also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class on the resolution.
(d) After the authorization by a vote of shareholders, the board of directors nevertheless, in its discretion, may abandon the sale, lease, exchange, or other disposition of assets, subject to the rights of third parties under any related contracts, without any further action or approval by shareholders.
(e) A transfer of all or substantially all of the property and assets of a corporation:
(i) To one or more subsidiary corporations in which the transferor corporation owns shares possessing at least two-thirds (⅔) of the total combined voting power of all classes of shares entitled to vote at that time for election of directors; or
(ii) For cash, with or without an assumption of liabilities of the transferor corporation is governed by the provisions of § 7-1.2-1101 and not by this section. The sale, lease, exchange, or other disposition of all, or substantially all, the property and assets, with or without the good will, of one or more subsidiaries in which the parent corporation owns shares possessing two-thirds (⅔) or more of the total combined voting power of all classes of shares entitled at that time to vote for the election of directors is treated as a disposition of all, or substantially all, the property and assets of the parent corporation within the meaning of this section if the shares of the subsidiary or subsidiaries constitute all or substantially all the property and assets of the parent corporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1201. Right of shareholders to dissent.
(a) Any shareholder of a corporation has the right to dissent from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party, provided articles of merger have been filed in connection with the transaction under § 7-1.2-1003, unless the corporation is the surviving corporation in a merger and the approval of its shareholders was not required by virtue of the provisions of either § 7-1.2-1002 or § 7-1.2-1004; or
(2) Any sale or exchange of all or substantially all of the property and assets of a corporation which requires the approval of the shareholders under § 7-1.2-1102.
(b) A shareholder may not dissent as to less than all of the shares registered in his or her name which are owned beneficially by him or her. A nominee or fiduciary may not dissent on behalf of any beneficial owner as to less than all of the shares of the owner registered in the name of the nominee or fiduciary.
(c) Unless otherwise provided in the articles of incorporation of the issuing corporation, there is no right to dissent for the holders of the shares of any class or series which, on the date fixed to determine the shareholders entitled to receive notice of the proposed transaction (or a copy of the agreement of merger under § 7-1.2-1004), were:
(1) Registered on a national securities exchange or included as national market securities in the national association of securities dealers automated quotations system or any successor national market system; or
(2) Held of record by not less than two thousand (2,000) shareholders.
(d) A shareholder entitled to the right to dissent under this section may not challenge a completed corporate action for which the right to dissent is available unless such corporate action:
(1) Was not effectuated in accordance with the applicable provisions of this chapter or the corporation’s articles of incorporation, bylaws or board of directors’ resolution authorizing the corporate action; or
(2) Was procured as a result of fraud or material misrepresentation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1202. Rights of dissenting shareholders.
(a) Any shareholder electing to exercise the right of dissent shall file with the corporation, prior to or at the meeting of shareholders at which the proposed corporate action is submitted to a vote, a written objection to the proposed corporate action. If the proposed corporate action is approved by the required vote and the shareholder has not voted in favor of it, the shareholder may, within ten (10) days after the date on which the vote was taken, or if a corporation is to be merged without a vote of its shareholders into another corporation, any of its shareholders may, within fifteen (15) days after the plan of the merger has been mailed to the shareholders, make written demand on the corporation, or, in the case of a merger, on the surviving or new corporation, domestic or foreign, for payment of the fair value of the shareholder’s shares. If the proposed corporate action is effected, the corporation shall pay to the shareholder, upon surrender of the certificate or certificates representing the shares, the fair value of the shares as of the day prior to the date on which the vote was taken approving the proposed corporate action, excluding any appreciation or depreciation in anticipation of the corporate action. Any shareholder failing to make demand within the ten (10) day period or the fifteen (15) day period, as the case may be, is bound by the terms of the proposed corporate action. Any shareholder making the demand is thereafter only entitled to payment as provided in this section and is not entitled to vote or to exercise any other rights of a shareholder.
(b) No demand may be withdrawn unless the corporation consents to it. If, however, the demand is withdrawn upon consent, or if the proposed corporate action is abandoned or rescinded or the shareholders revoke the authority to effect the action, or if, in the case of a merger, on the date of the filing of the articles of merger the surviving corporation is the owner of all the outstanding shares of the other corporations, domestic and foreign, that are parties to the merger, or if no demand or petition for the determination of fair value by a court has been made or filed within the time provided in this section, or if a court of competent jurisdiction determines that the shareholder is not entitled to the relief provided by this section, then the right of the shareholder to be paid the fair value of his or her shares ceases and his status as a shareholder is restored, without prejudice to any corporate proceedings taken during the interim.
(c) Within ten (10) days after the corporate action is effected, the corporation, or, in the case of a merger, the surviving or new corporation, domestic or foreign, shall give written notice of the action to each dissenting shareholder who has made demand as provided in these provisions, and shall make a written offer to each dissenting shareholder to pay for the shares at a specified price deemed by the corporation to be the fair value of the shares. The notice and offer must be accompanied by a balance sheet of the corporation the shares of which the dissenting shareholder holds, as of the latest available date and not more than twelve (12) months prior to the making of the offer, and a profit and loss statement of the corporation for the twelve (12) month period ended on the date of the balance sheet.
(d) If within thirty (30) days after the date on which the corporate action was effected the fair value of the shares is agreed upon between any dissenting shareholder and the corporation, payment for the shares must be made within ninety (90) days after the date on which the corporate action was effected, upon surrender of the certificate or certificates representing the shares. Upon payment of the agreed value, the dissenting shareholder ceases to have any interest in the shares.
(e) If within the period of thirty (30) days a dissenting shareholder and the corporation do not agree on the matter, then the corporation, within thirty (30) days after receipt of written request for the filing from any dissenting shareholder given within sixty (60) days after the date on which the corporate action was effected, shall, or at its election at any time within the period of sixty (60) days may, file a petition in any court of competent jurisdiction in the county in this state where the registered office of the corporation is located praying that the fair value of the shares is found and determined. If, in the case of a merger, the surviving or new corporation is a foreign corporation without a registered office in this state, the petition must be filed in the county where the registered office of the domestic corporation was last located. If the corporation fails to institute the proceeding as provided, any dissenting shareholder may do so in the name of the corporation. All dissenting shareholders, wherever they reside, must be made parties to the proceeding as an action against their shares quasi in rem. A copy of the petition must be served on each dissenting shareholder who is a resident of this state and served by registered or certified mail on each dissenting shareholder who is a nonresident. Service on nonresidents may also be made by publication as provided by law. The jurisdiction of the court is plenary and exclusive. All shareholders who are parties to the proceeding are entitled to judgment against the corporation for the amount of the fair value of their shares. The court may, if it so elects, appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the power and authority that is specified in the order of their appointment or an amendment of the order. The judgment is payable only upon and concurrently with the surrender to the corporation of the certificate or certificates representing the shares. Upon payment of the judgment, the dissenting shareholder ceases to have any interest in the shares.
(f) The judgment should include an allowance for interest at the rate of interest on judgments in civil actions from the date on which the vote was taken on the proposed corporate action to the date of payment.
(g) The court shall determine and assess the costs and expenses of any proceeding against the corporation, but all or any part of the costs and expenses may be apportioned and assessed as the court deems equitable against any or all of the dissenting shareholders who are parties to the proceeding to whom the corporation has made an offer to pay for the shares if the court finds that the action of the shareholders in failing to accept the offer was arbitrary or vexatious or not in good faith. The expenses include reasonable compensation for and reasonable expenses of the appraisers, but exclude the fees and expenses of counsel for and experts employed by any party; but if the fair value of the shares as determined materially exceeds the amount which the corporation offered to pay for the shares, or if no offer was made, the court in its discretion may award to any shareholder who is a party to the proceeding a sum that the court determines to be reasonable compensation to any expert or experts employed by the shareholder in the proceeding.
(h) Within twenty (20) days after demanding payment for his or her shares, each shareholder demanding payment shall submit the certificate or certificates representing his or her shares to the corporation for notation on the certificate that the demand has been made. His or her failure to do so may, at the option of the corporation, terminate his or her rights under this section unless a court of competent jurisdiction, for good and sufficient cause shown, directs otherwise. If shares represented by a certificate on which notation has been made are transferred, each new certificate issued for the shares must bear similar notation, together with the name of the original dissenting holder of the shares, and a transferee of the shares acquires by the transfer no rights in the corporation other than those which the original dissenting shareholder had after making demand for payment of the fair value of the shares.
(i) Shares acquired by a corporation pursuant to payment of the agreed value for the shares or to payment of the judgment entered for the shares, as provided in this section, may be held and disposed of by the corporation. However, in the case of a merger, they may be held and disposed of as the plan of merger otherwise provides.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1301. Voluntary dissolution by incorporators.
(a) A corporation that has not commenced business and that has not issued any shares, may be voluntarily dissolved by its incorporators at any time in the following manner:
(1) Articles of dissolution are executed by a majority of the incorporators, and verified by them, and state:
(i) The name of the corporation;
(ii) The date of issuance of its certificate of incorporation;
(iii) That none of its shares have been issued;
(iv) That the corporation has not commenced business;
(v) That the amount, if any, actually paid in on subscriptions for its shares, less any part of the amount disbursed for necessary expenses, has been returned to those entitled to it;
(vi) That no debts of the corporation remain unpaid; and
(vii) That a majority of the incorporators elect that the corporation be dissolved.
(2) The original articles of dissolution are delivered to the secretary of state. If the secretary of state finds that the articles of dissolution conform to law, the secretary of state shall, when all fees and taxes have been paid:
(i) Endorse on the original the word “Filed”, and the month, day, and year of the filing;
(ii) File the original in his or her office; and
(iii) Issue a certificate of dissolution.
(3) If the corporation is dissolved prior to the effective date stated on the articles of incorporation, no taxes shall be due.
(b) The certificate of dissolution is delivered to the incorporators or their representative. Upon the issuance of the certificate of dissolution by the secretary of state, the existence of the corporation ceases.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2007, ch. 95, § 1; P.L. 2007, ch. 111, § 1; P.L. 2015, ch. 80,
§ 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371, § 1; P.L. 2017, ch. 376, § 1.
§ 7-1.2-1302. Voluntary dissolution by consent of shareholders.
(a) A corporation may be voluntarily dissolved by the written consent of all of its shareholders entitled to vote thereon.
(b) Upon the adoption of the resolution:
(1) The corporation shall immediately deliver notice of the adoption of such resolution to each known creditor of the corporation.
(2) The corporation shall proceed to collect its assets, sell or otherwise dispose of those of its properties that are not to be distributed in kind to its shareholders, pay, satisfy, and discharge its liabilities and obligations and do all other acts required to liquidate its business and affairs. After paying or adequately providing for the payment of all its obligations, the corporation distributes the remainder of its assets, either in cash or in kind, among its shareholders according to their respective rights and interests.
(3) The corporation, at any time during the liquidation of its business and affairs, may apply to a court of competent jurisdiction within the state and county in which the registered office or principal place of business of the corporation is situated, to have the liquidation continued under the supervision of the court as provided in this chapter.
(c) Upon the completion of the actions set forth in subsection (b) of this section, the corporation shall execute and file articles of dissolution in accordance with the provisions of §§ 7-1.2-1308 and 7-1.2-1309.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2007, ch. 98, § 1; P.L. 2007, ch. 107, § 1.
§ 7-1.2-1303. Voluntary dissolution by act of corporation.
A corporation may be dissolved by the act of the corporation, when authorized in the following manner:
(1) The board of directors adopts a resolution recommending that the corporation be dissolved, and directing that the question of the dissolution be submitted to a vote at a meeting of the shareholders, which may be either an annual or a special meeting.
(2) Written notice is given to each shareholder entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of meetings of shareholders, and, whether the meeting is an annual or special meeting, states that the purpose, or one of the purposes, of the meeting is to consider the advisability of dissolving the corporation.
(3) At the meeting a vote of shareholders entitled to vote at the meeting is taken on a resolution to dissolve the corporation. The resolution is adopted upon receiving the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on the resolution, unless any class of shares is entitled to vote on the resolution as a class, in which event approval of the resolution also requires the affirmative vote of the holders of a majority of the shares of each class of shares entitled to vote as a class and of the total shares entitled to vote on the resolution.
(4) The corporation shall immediately deliver notice of the adoption of such resolution by a vote of the shareholders to each known creditor of the corporation.
(5) The corporation shall proceed to collect its assets, sell or otherwise dispose of those of its properties that are not to be distributed in kind to its shareholders, pay, satisfy, and discharge its liabilities and obligations and do all other acts required to liquidate its business and affairs. After paying or adequately providing for the payment of all its obligations, the corporation distributes the remainder of its assets, either in cash or in kind, among its shareholders according to their respective rights and interests.
(6) The corporation, at any time during the liquidation of its business and affairs, may apply to a court of competent jurisdiction within the state and county in which the registered office or principal place of business of the corporation is situated, to have the liquidation continued under the supervision of the court as provided in this chapter.
(7) Upon the completion of actions set forth in subsections (1) — (6) of this section, the corporation shall execute and file articles of dissolution in accordance with the provisions of §§ 7-1.2-1308 and 7-1.2-1309.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2007, ch. 98, § 1; P.L. 2007, ch. 107, § 1.
§ 7-1.2-1304. Revocation of voluntary dissolution proceedings by consent of shareholders.
(a) By the written consent of all of its shareholders entitled to vote thereon, a corporation may, within one hundred twenty (120) days of its effective date of the articles of dissolution, revoke voluntary dissolution proceedings previously taken, in the following manner:
(b) Upon the execution of the written consent, a statement of revocation of voluntary dissolution proceedings is executed by the corporation by its authorized representative. The statement proclaims:
(1) The name of the corporation.
(2) The names and respective addresses of its officers.
(3) The names and respective addresses of its directors.
(4) A copy of the written consent signed by all shareholders of the corporation revoking the voluntary dissolution proceedings.
(5) That the written consent has been signed by all shareholders entitled to vote thereon of the corporation or signed in their names by their authorized attorneys.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1305. Revocation of voluntary dissolution proceedings by act of corporation.
By the act of the corporation, a corporation may, at any time within one hundred twenty (120) days of its effective date of the articles of dissolution, revoke voluntary dissolution proceedings previously taken, in the following manner:
(a) The board of directors adopts a resolution recommending that the voluntary dissolution proceedings be revoked, and directing that the question of the revocation be submitted to a vote at a special meeting of shareholders.
(b) Written notice, stating that the purpose, or one of the purposes, of the meeting is to consider the advisability of revoking the voluntary dissolution proceedings, is given to each shareholder entitled to vote at the meeting within the time and in the manner provided in this chapter for the giving of notice of special meetings of shareholders.
(c) At the meeting, a vote of the shareholders entitled to vote at the meeting is taken on a resolution to revoke the voluntary dissolution proceedings, which requires for its adoption the affirmative vote of the holders of a majority of the shares entitled to vote on the resolution.
(d) Upon the adoption of the resolution, a statement of revocation of voluntary dissolution proceedings is executed by the corporation by its authorized representative. The statement proclaims:
(1) The name of the corporation.
(2) The names and respective addresses of its officers.
(3) The names and respective addresses of its directors.
(4) A copy of the resolution adopted by the shareholders revoking the voluntary dissolution proceedings.
(5) The number of shares outstanding.
(6) The number of shares voted for and against the resolution, respectively.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1306. Filing of statement of revocation of voluntary dissolution proceedings.
The statement of revocation of voluntary dissolution proceedings, whether by consent of shareholders or by act of the corporation, is delivered to the secretary of state. If the secretary of state finds that the statement conforms to law, the secretary of state shall, when all fees and franchise taxes have been paid:
(a) Endorse on the original the word “Filed”, and the month, day, and year of the filing.
(b) File the original in his or her office.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1307. Effect of statement of revocation of voluntary dissolution proceedings.
(a) Upon the filing by the secretary of state of a statement of revocation of voluntary dissolution proceedings, whether by consent of its shareholders or by act of the corporation, the revocation of the voluntary dissolution proceedings becomes effective and the corporation may again carry on its business.
(b) Revocation of dissolution is effective upon the effective date of the statement of revocation of voluntary dissolution.
(c) When the revocation of dissolution is effective, it relates back to and takes effect as of the effective date of the dissolution and the corporation resumes carrying on its business as if dissolution had never occurred, except as subsequently provided.
(d) If, as permitted by the provisions of this title, another corporation, whether business or nonprofit, limited partnership, limited liability partnership or limited liability company, domestic or foreign, qualified to transact business in this state, bears or has filed a fictitious business name statement with respect to or reserved or registered a name which is not distinguishable upon the records of the secretary of state from the name of a corporation with respect to which the certificate of voluntary dissolution is proposed to be withdrawn, then the secretary of state shall condition effectiveness of the statement of revocation of voluntary dissolution upon the amendment by the corporation of its articles of incorporation or otherwise complying with the provisions of this chapter with respect to the use of a name available to it under the laws of this state so as to designate a name which is distinguishable upon the records of the secretary of state from its former name.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1.
§ 7-1.2-1308. Articles of dissolution.
The corporation shall execute articles of dissolution by its authorized officer. The statement proclaims:
(a) The name of the corporation.
(b) That all debts, obligations, and liabilities of the corporation have been paid, discharged or have been subject to a completed bankruptcy proceeding under Title 11 of the U.S. Code.
(c) That all the remaining property and assets of the corporation have been distributed among its shareholders in accordance with their respective rights and interests.
(d) That there are not suits pending against the corporation in any court, or that adequate provision has been made for the satisfaction of any judgment, order, or decree that may be entered against it in any pending suit.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2014, ch. 485, § 1; P.L. 2014,
ch. 511, § 1.
§ 7-1.2-1309. Filing of articles of dissolution.
(a) The articles of dissolution are delivered to the secretary of state. If the secretary of state finds that the articles of dissolution conform to law, the secretary of state shall, when all fees and taxes have been paid:
(1) Endorse on the original the word “Filed”, and the month, day, and year of the filing;
(2) File the original in his or her office; and
(3) Issue a certificate of dissolution.
(b) The certificate of dissolution is delivered to the representative of the dissolved corporation. Upon the issuance of the certificate of dissolution the existence of the corporation ceases, except for the purpose of suits, other proceedings, and appropriate corporate action by shareholders, directors, and officers as provided in this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371,
§ 1; P.L. 2017, ch. 376, § 1.
§ 7-1.2-1310. Revocation of articles of incorporation.
(a) The articles of incorporation of a corporation may be revoked by the secretary of state upon the conditions prescribed in this section when it is established that:
(1) The corporation procured its articles of incorporation through fraud; or
(2) The corporation has continued to exceed or abuse the authority conferred upon it by law; or
(3) The corporation has failed to file its annual report within the time required by this chapter, or with respect to any corporation in good corporate standing on the records of the secretary of state on or after July 1, 2019, has failed to pay any required fees to the secretary of state when they have become due and payable, or the secretary of state has received notice from the division of taxation, in accordance with § 44-11-26.1, that the corporation has failed to pay corporate taxes; or
(4) The corporation has failed for thirty (30) days to appoint and maintain a registered agent in this state as required by this chapter; or
(5) The corporation has failed, after change of its registered office or registered agent, to file in the office of the secretary of state a statement of the change as required by this chapter; or
(6) The corporation has failed to file in the office of the secretary of state any amendment to its articles of incorporation or any articles of merger within the time prescribed by this chapter; or
(7) A misrepresentation has been made of any material matter in any application, report, affidavit, or other document submitted by the corporation pursuant to this chapter.
(b) No articles of incorporation of a corporation may be revoked by the secretary of state unless:
(1) The secretary of state gives the corporation notice thereof not less than sixty (60) days prior to such revocation by regular mail addressed to the registered office of the corporation in this state on file with the secretary of state’s office, which notice shall specify the basis for the revocation; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned as undeliverable by the United States Postal Service for any reason, or if the revocation notice is returned as undeliverable by the United States Postal Service for any reason, the secretary of state gives notice as follows:
(i) To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
(ii) In the case of a domestic corporation that has not yet filed an annual report, then to any one of the incorporators listed on the articles of incorporation, and no further notice is required; and
(2) The corporation fails prior to revocation to file the annual report or pay the fees, or file the required statement of change of registered agent or registered office, or file the articles of amendment or articles of merger, or correct the misrepresentation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2017, ch. 371, § 1; P.L. 2017,
ch. 376, § 1.
§ 7-1.2-1311. Issuance of certificates of revocation.
(a) Upon revoking any certificate of incorporation, the secretary of state shall:
(1) Issue a certificate of revocation;
(2) File the certificate in his or her office; and
(3) Send to the corporation by regular mail a copy of the certificate of revocation, addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the revocation certificate is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
(i) To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
(ii) In the case of a domestic corporation which has not yet filed an annual report, then to any one of the incorporators listed on the articles of incorporation, and no further notice is required.
(b) Upon the issuance of the certificate of revocation, the authority of the corporation to transact business in this state ceases.
(c) Notwithstanding anything to the contrary, the issuance of a certificate of revocation of a corporation does not terminate the authority of its registered agent.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1312. Withdrawal of certificate of revocation.
(a) Within twenty (20) years after issuing a certificate of revocation as provided in § 7-1.2-1311, the secretary of state may withdraw the certificate of revocation and retroactively reinstate the corporation in good standing as if its articles of incorporation had not been revoked, except as subsequently provided:
(1) Upon the filing by the corporation of the documents it had previously failed to file as set forth in subdivisions (3) — (6) of § 7-1.2-1310(a);
(2) Upon the payment by the corporation of a penalty for each year or part of a year that has elapsed since the issuance of the certificate of revocation; and
(3) Upon the filing by the corporation of a certificate of good standing from the Rhode Island division of taxation.
(b) If, as permitted by the provisions of this title, another corporation, whether business or nonprofit, limited partnership, limited liability partnership or limited liability company, or domestic or foreign, qualified to transact business in this state, bears or has filed a fictitious business name statement with respect to or reserved or registered a name that is not distinguishable upon the records of the secretary of state from the name of a corporation with respect to which the certificate of revocation is proposed to be withdrawn, then the secretary of state shall condition the withdrawal of the certificate of revocation upon the reinstated corporation’s amending its articles of incorporation or otherwise complying with the provisions of this chapter with respect to the use of a name available to it under the laws of this state so as to designate a name which is distinguishable upon the records of the secretary of state from its former name.
(c) Upon the withdrawal of the certificate of revocation and reinstatement of the corporation in good standing as provided in subsection (a) of this section, title to any real estate, or any interest in real estate, held by the corporation at the time of the issuance of the certificate of revocation and not conveyed subsequent to the revocation of its articles of incorporation is deemed to be revested in the corporation without further act or deed.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2006, ch. 163,
§ 1; P.L. 2006, ch. 188, § 1; P.L. 2021, ch. 385, § 1, effective July 13, 2021; P.L.
2021, ch. 386, § 1, effective July 13, 2021.
§ 7-1.2-1313. Appeal from revocation of articles of incorporation.
Any corporation aggrieved by the action of the secretary of state in revoking its articles of incorporation may appeal the action in the manner provided in § 7-1.2-1601.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1314. Jurisdiction of court to liquidate assets and business of corporation.
(a) The superior court has full power to liquidate the assets and business of a corporation:
(1) In an action by a shareholder when it is established that, whether or not the corporate business has been or could be operated at a profit, dissolution would be beneficial to the shareholders because:
(i) The directors or those other individuals who may be responsible for management pursuant to § 7-1.2-1701(a) are deadlocked in the management of the corporate affairs and the shareholders are unable to break the deadlock; or
(ii) The acts of the directors or those in control of the corporation are illegal, oppressive, or fraudulent; or
(iii) The shareholders are deadlocked in voting power, and have failed, for a period which includes at least two (2) consecutive annual meeting dates, to elect successors to directors whose terms have expired or would have expired upon the election and qualification of their successors; or
(iv) The corporate assets are being misapplied or are in danger of being wasted or lost; or
(v) Two (2) or more factions of shareholders are divided and there is such internal dissension that serious harm to the business and affairs of the corporation is threatened; or
(vi) The holders of one-half (½) or more of all the outstanding shares of the corporation have voted to dissolve the corporation;
(2)(i) In an action by a creditor:
(A) When it is established that the corporation is insolvent; or
(B) When it is established that the corporate assets are being misapplied or are in danger of being wasted or lost.
(ii) If it is established that the claim of a creditor has been reduced to judgment and an execution on the judgment returned unsatisfied or that a corporation has admitted, in writing, that the claim of a creditor is due and owing, the establishment of the facts are prima facie evidence of insolvency.
(iii) Every petition filed by a creditor for the liquidation of the assets and business of a corporation must contain a statement as to whether the creditor is or is not an officer, director, or shareholder of the corporation. Every petition for the liquidation of the assets and business of a corporation filed by an officer, director, or shareholder of a corporation or by a creditor who is an officer, director or shareholder, must contain, to the best of petitioner’s knowledge, information, and belief, the names and addresses of all known creditors of any class of the corporation.
(3) When an action has been filed by the attorney general to dissolve a corporation and it is established that liquidation of its business and affairs should precede the entry of a decree of dissolution.
(b) Proceedings under subsections (a)(1) or (a)(2) should be brought in the county in which the registered or principal office of the corporation is situated.
(c) It is not necessary to make shareholders parties to any action or proceeding unless relief is sought against them personally.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1315. Avoidance of dissolution by share buyout.
Whenever a petition for dissolution of a corporation is filed by one or more shareholders (subsequently in this section referred to as the “petitioner”) pursuant to either § 7-1.2-1314 or a right to compel dissolution which is authorized under § 7-1.2-1701 or is otherwise valid, one or more of its other shareholders may avoid the dissolution by filing with the court prior to the commencement of the hearing, or, in the discretion of the court, at any time prior to a sale or other disposition of the assets of the corporation, an election to purchase the shares owned by the petitioner at a price equal to their fair value. If the shares are to be purchased by other shareholders, notice must be sent to all shareholders of the corporation other than the petitioner, giving them an opportunity to join in the election to purchase the shares. If the parties are unable to reach an agreement as to the fair value of the shares, the court shall, upon the giving of a bond or other security sufficient to assure to the petitioner payment of the value of the shares, stay the proceeding and determine the value of the shares, in accordance with the procedure set forth in § 7-1.2-1202, as of the close of business on the day on which the petition for dissolution was filed. Upon determining the fair value of the shares, the court shall state in its order directing that the shares be purchased, the purchase price and the time within which the payment is to be made, and may decree any other terms and conditions of sale that it determines to be appropriate, including payment of the purchase price in installments extending over a period of time, and, if the shares are to be purchased by shareholders, the allocation of shares among shareholders electing to purchase them, which, so far as practicable, are to be proportional to the number of shares previously owned. The petitioner is entitled to interest, at the rate on judgments in civil actions, on the purchase price of the shares from the date of the filing of the election to purchase the shares, and all other rights of the petitioner as owner of the shares terminate on that date. The costs of the proceeding, which include reasonable compensation and expenses of appraisers but not fees and expenses of counsel or of experts retained by a party, will be allocated between or among the parties as the court determines. Upon full payment of the purchase price, under the terms and conditions specified by the court, or at any other time that is ordered by the court, the petitioner shall transfer the shares to the purchaser.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1316. Procedure in liquidation of corporation by court.
(a) In proceedings to liquidate the assets and business of a corporation the court has general equity jurisdiction and power to issue any orders, injunctions, and decrees that justice and equity require, to appoint a receiver or receivers pendente lite, with any powers and duties that the court, from time to time, directs, and to take any other proceedings that are requisite to preserve the corporate assets wherever situated, and carry on the business of the corporation until a full hearing can be had.
(b) After a hearing had upon any notice that the court directs to be given to all parties to the proceedings and to any other parties in interest designated by the court, the court may appoint a liquidating receiver or receivers with authority to take charge of any of the corporation’s estate and effects of which he or she has been appointed receiver and to collect the assets of the corporation, including all amounts owing to the corporation whether by shareholders on account of any unpaid portion of the consideration for the issuance of shares or otherwise.
(c) The hearing date for the appointment of a permanent receiver is not to be more than twenty-one (21) days after commencement of the action, unless the hearing date is extended by the court for good cause shown.
(d) The liquidating receiver or receivers has authority subject to court order, to sue and defend in all courts in his or her own name as receiver of the corporation, or in its name, to intervene in any action or proceeding relating to its assets or business, to compromise any dispute or controversy, to preserve the assets of the corporation, to carry on its business, to sell, convey, and dispose of all or any part of the assets of the corporation wherever situated, either at public or private sale, to redeem any mortgages, security interests, pledges, or liens of or upon any of its assets, and generally to do all other acts which might be done by the corporation or that is necessary for the administration of his or her trust according to the course of equity. The assets of the corporation or the proceeds resulting from a sale, conveyance, or other disposition of the assets will be applied to the expenses of the liquidation and to the payment of the liabilities and obligations of the corporation, and any remaining assets or proceeds will distributed under the direction of the court among its shareholders according to their respective rights and interests. The order appointing the receiver or receivers sets forth their powers and duties. The powers and duties may be increased or diminished at any time during the proceeding.
(e) The court has power to allow from time to time as expenses of the liquidation compensation to the receiver or receivers and to attorneys in the proceeding, and to direct the payment of the compensation out of the assets of the corporation or the proceeds of any sale or disposition of the assets.
(f) The court appointing the receiver has exclusive jurisdiction of the corporation and its property, wherever situated, and of all questions arising in the proceedings concerning the property.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1317. Bond of receivers.
A receiver shall in all cases give any bond that the court directs with any sureties that the court requires.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1318. Filing of claims in liquidation proceedings.
In proceedings to liquidate the assets and business of a corporation, the court may require all creditors of the corporation to file with the receiver, in any form that the court prescribes, proofs under oath of their respective claims. If the court requires the filing of claims, it shall fix a date, which is not to be less than four (4) months from the date of the order, as the last day for the filing of claims, and shall prescribe the notice that is to be given to creditors and claimants of the fixed date. Prior to the fixed date, the court may extend the time for the filing of claims. Creditors and claimants failing to file proofs of claim on or before the fixed date may be barred, by court order, from participating in the distribution of the assets of the corporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1319. Discontinuance of liquidation proceedings.
The liquidation of the assets and business of a corporation may be discontinued at any time during the liquidation proceedings when it is established that cause for liquidation no longer exists. In the event that the court dismisses the proceedings, it shall direct the receiver to redeliver to the corporation all its remaining property and assets, and shall order any notice to creditors that the court deems proper under the circumstances.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1320. Decree of involuntary dissolution.
In proceedings to liquidate the assets and business of a corporation, when the costs and expenses of the proceedings and all debts, obligations, and liabilities of the corporation have been paid and discharged and all of its remaining property and assets distributed to its shareholders, or in case its property and assets are not sufficient to satisfy and discharge the costs, expenses, debts, and obligations, all the property and assets have been applied as far as they will go to their payment, the court shall enter a decree dissolving the corporation, at which time the existence of the corporation ceases.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1321. Filing of decree of dissolution.
In case the court enters a decree dissolving a corporation, it is the duty of the clerk of the court to file a certified copy of the decree with the secretary of state. There is no fee charged by the secretary of state for that filing.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1322. Deposit with state treasury of amount due certain shareholders.
Upon the voluntary or involuntary dissolution of a corporation, the portion of the assets distributable to a creditor or shareholder who is unknown or cannot be found, or who is under disability and there is no person legally competent to receive the distributive portion, will be reduced to cash and deposited with the general treasury and paid over to the creditor or shareholder or to his or her legal representative upon satisfactory proof to the general treasury of his or her right to the payment.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1323. Jurisdiction of court to appoint a receiver.
Upon the establishment of any of the grounds for liquidation of the assets and business of
(1) A domestic corporation or
(2) A foreign corporation, to the extent the foreign corporation has assets within the state, stated in § 7-1.2-1314, and upon the establishment that the liquidation would not be appropriate, the superior court has full power to appoint a receiver, with any powers and duties that the court, from time to time, directs, and to take any other proceedings that the court deems advisable under the circumstances. The provisions of §§ 7-1.2-1314 — 7-1.2-1322, insofar as they are consistent with the nature of the proceeding, apply to the proceeding, and in the proceeding the court has the full powers of a court of equity to make or enter any orders, injunctions, and decrees and grant any other relief in the proceeding that justice and equity require.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1324. Survival of remedy after dissolution.
The dissolution of a corporation either:
(a) By the issuance of a certificate of dissolution by the secretary of state; or
(b) By a decree of court when the court has not liquidated the assets and business of the corporation as provided in this chapter; or
(c) By expiration of its period of duration; does not take away or impair any remedy available to or against the corporation, its directors, officers, or shareholders, for any right or claim existing, or any liability incurred, prior to the dissolution if action or other proceeding on the right, claim, or liability is commenced within two (2) years after the date of the dissolution. Any action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name. The shareholders, directors, and officers have power to take any corporate or other action that is appropriate to protect the remedy, right, or claim. If the corporation was dissolved by the expiration of its period of duration, the corporation may amend its articles of incorporation at any time during the period of two (2) years so as to extend its period of duration.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1325. Continuation of certain corporate powers.
Any corporation dissolved in any manner under this chapter or any corporation whose existence is terminated under § 44-12-8 or any corporation whose articles of incorporation are revoked by the secretary of state under § 7-1.2-1310 nevertheless continues for five (5) years after the date of the dissolution, termination, or revocation for the purpose of enabling it to settle and close its affairs, to dispose of and convey its property, to discharge its liabilities, and to distribute its assets, but not for the purpose of continuing the business for which it was organized. The shareholders, directors, and officers have power to take any corporate or other action that is appropriate to carry out the purposes of this section.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1401. Admission of foreign corporation and other entities.
(a) No foreign corporation has the right to transact business in this state until it has procured a certificate of authority to do so from the secretary of state. No foreign corporation is entitled to procure a certificate of authority under this chapter to transact any business in this state which a corporation organized under this chapter is not permitted to transact. A foreign corporation may not be denied a certificate of authority because the laws of the state or country under which the corporation is organized governing its organization and internal affairs differ from the laws of this state, and nothing contained in this chapter authorizes this state to regulate the organization or the internal affairs of the corporation.
(b) Without excluding other activities which may not constitute transacting business in this state, a foreign corporation is not considered to be transacting business in this state, for the purposes of this chapter, because of carrying on in this state any one or more of the following activities:
(1) Maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting the settlement of the suit or the settlement of claims or disputes.
(2) Holding meetings of its directors or shareholders or carrying on other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer, exchange, and registration of its securities, or appointing and maintaining trustees or depositaries with relation to its securities.
(5) Effecting sales through independent contractors.
(6) Soliciting or procuring orders, whether by mail or through employees or agents or otherwise, where the orders require acceptance outside of this state before becoming binding contracts.
(7) Creating, as borrower or lender, or acquiring indebtedness or mortgages or other security interests in real or personal property.
(8) Securing or collecting debts or enforcing any rights in property securing the debts.
(9) Transacting any business in interstate commerce.
(10) Conducting an isolated transaction completed within a period of thirty (30) days and not in the course of a number of repeated transactions of like nature.
(11) Acting as a general partner of a limited partnership which has filed a certificate of limited partnership as provided in § 7-13-8 or has registered with the secretary of state as provided in § 7-13-49.
(12) Acting as a member of a limited liability company which has registered with the secretary of state as provided in § 7-16-49.
(c) Any “other entity”, as defined in § 7-16-5.1(a), Massachusetts trust or business trust established by law of any other state, desiring to do business in this state, is deemed to be a foreign corporation and is required to register under, and comply with the provisions of, this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1402. Powers of foreign corporation.
A foreign corporation which has received a certificate of authority under this chapter, until a certificate of revocation or of withdrawal has been issued as provided in this chapter, enjoys the same, but no greater, rights and privileges as a domestic corporation organized for the purposes stated in the application pursuant to which the certificate of authority is issued; and, except as otherwise provided in this chapter, is subject to the same duties, restrictions, penalties, and liabilities now or subsequently imposed upon a domestic corporation of like character.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1403. Corporate name of foreign corporation.
The secretary of state shall not issue a certificate of authority or amended certificate of authority to a foreign corporation unless the corporate name of the corporation:
(a) Contains the word “corporation”, “company”, “incorporated”, or “limited”, or contains an abbreviation of one of these words, or the corporation, for use in this state, adds at the end of its name one of the words or an abbreviation of the word.
(b) Does not contain any word or phrase which indicates or implies that it is organized for any purpose other than one or more of the purposes contained in its articles or certificate of incorporation or that it is authorized or empowered to conduct the business of any types prohibited by § 7-1.2-301.
(c) Is distinguishable upon the records of the secretary of state from the name of any entity on file with the secretary of state or a name the exclusive right to which is, at the time, filed, reserved or registered in the manner provided in this title, subject to the following:
(1) This provision does not apply if the foreign corporation applying for a certificate of authority files with the secretary of state any one of the following:
(i) A fictitious business name statement pursuant to § 7-1.2-402; or
(ii) A certified copy of a final decree of a court of competent jurisdiction establishing the prior right of the foreign corporation to the use of the name in this state; and
(2) The name may be the same as the name of a corporation or other association, the articles of incorporation or organization of which has been revoked by the secretary of state and the revocation has not been withdrawn within one year from the date of the revocation.
(3) Words and/or abbreviations that are required by statute to identify the particular type of business entity shall be disregarded when determining if a name is distinguishable upon the records of the secretary of state.
(4) The secretary of state shall promulgate rules and regulations defining the term “distinguishable upon the record” for the administration of this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36; P.L. 2011, ch. 54, § 1; P.L. 2011, ch. 60, § 1.
§ 7-1.2-1404. Change of name by foreign corporation.
Whenever a foreign corporation which is authorized to transact business in this state changes its name to one that does not satisfy the requirements of § 7-1.2-1403, it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of § 7-1.2-1403 and obtains an amended certificate of authority under § 7-1.2-1411.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1405. Application for certificate of authority.
In order to procure a certificate of authority to transact business in this state, a foreign corporation must make application for the certificate of authority to the secretary of state, which application includes:
(a) The name of the corporation and the state or country under the laws of which it is incorporated.
(b) The name which the corporation elects to use in this state in accordance with § 7-1.2-1403.
(c) The date of incorporation and the period of duration of the corporation.
(d) The street address of the principal office of the corporation.
(e) The name and address of its proposed registered agent in this state.
(f) The purpose or purposes of the corporation which it proposes to pursue in the transaction of business in this state.
(g) The names and respective addresses of the directors of the corporation if the state or country under the laws of which it was incorporated requires that it have directors and if not, the names and respective addresses of its principal officers.
(h) A statement of the aggregate number of shares which the corporation has authority to issue, itemized by classes, par value of shares, shares without par value, and series, if any, within a class.
(i) An estimate, expressed as a percentage, of the proportion that the estimated value of the property of the corporation to be located within this state during the following year bears to the value of all property of the corporation to be owned during the following year, wherever located, and an estimate, expressed as a percentage, of the proportion that the gross amount of business to be transacted by the corporation at or from places of business in this state during the following year bears to the gross amount which will be transacted by the corporation during the following year.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2011, ch. 53, § 1; P.L. 2011, ch. 64, § 1; P.L. 2018, ch. 346,
§ 2.
§ 7-1.2-1406. Filing of application for certificate of authority.
(a) A foreign corporation must deliver the application for a certificate of authority to the secretary of state, together with a certificate of good standing issued by the proper officer of the state or country under the laws of which it is incorporated.
(b) If the secretary of state finds that the application conforms to law, the secretary of state shall, when all fees have been paid:
(1) Endorse on the original of the application the word “Filed”, and the month, day, and year of the filing.
(2) File in his or her office the original of the application and a certificate of good standing issued by the proper officer of the state or country under the laws of which it is incorporated.
(3) Issue a certificate of authority to transact business in this state.
(c) The secretary of state shall deliver the certificate of authority to the corporation or its representative.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1407. Effect of certificate of authority.
Upon the issuance of a certificate of authority by the secretary of state, the corporation is authorized to transact business in this state for the purposes stated in its application, subject, however, to the right of this state to suspend or to revoke the authority as provided in this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1408. Registered office and registered agent of foreign corporation.
(a) Each foreign corporation authorized to transact business in this state must have and continuously maintain in this state a registered agent, who is either:
(1) An individual resident in this state; or
(2) A corporation, limited partnership, limited liability partnership, limited liability company, and in each case either domestic or one authorized to transact business in this state.
(b) Foreign corporations who are the holders of mortgages on real estate located within this state which do not maintain the loan documentation and records within the state shall authorize the registered agent to accept mortgage discharge payment and to issue a discharge of the mortgages upon the payment.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1409. Change of registered office or registered agent of foreign corporation.
(a) A foreign corporation authorized to transact business in this state may change its registered office or change its registered agent, or both, upon filing in the office of the secretary of state a statement stating:
(1) The name of the corporation.
(2) The address of its then registered office.
(3) If the address of its registered office is changed, the address to which the registered office is to be changed.
(4) The name of its then registered agent.
(5) If its registered agent is changed, the name of its successor registered agent.
(6) The address of its registered office and the address of the business office of its registered agent, as changed.
(b) The statement must be executed by an authorized representative of the corporation and delivered to the secretary of state. If the secretary of state finds that the statement conforms to the provisions of this chapter, the secretary of state shall file the statement in his or her office, and upon the filing, the change of address of the registered office, or the appointment of a new registered agent, or both, becomes effective.
(c) Any registered agent of a foreign corporation may resign as the agent upon filing a written notice of resignation with the secretary of state, who shall immediately mail a copy of the notice to the corporation at its principal office in the state or country under the laws of which it is incorporated. The appointment of the agent terminates upon the expiration of thirty (30) days after receipt of the notice by the secretary of state.
(d) If a registered agent changes his or her or its business address to another place within the state, he or she or it may change the address and the address of the registered office of any corporations of which he or she or it is registered agent by filing a statement as required above except that it must be signed only by the registered agent, need not be responsive to subsection (a)(5), and must recite that a copy of the statement has been mailed to each corporation.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1410. Service of process on foreign corporation.
(a) The registered agent appointed by a foreign corporation authorized to transact business in this state is an agent of the corporation upon whom any process, notice, or demand required or permitted by law to be served upon the corporation may be served.
(b) Whenever a foreign corporation authorized to transact business in this state fails to appoint or maintain a registered agent in this state, or whenever any registered agent cannot with reasonable diligence be found at the registered office, or whenever the certificate of authority of a foreign corporation is suspended or revoked, the secretary of state is an agent of the corporation upon whom any process, notice, or demand may be served. Service on the secretary of state of any process, notice, or demand must be made by delivering to and leaving with him or her, or with any clerk having charge of the corporation department of his or her office, duplicate copies of the process, notice, or demand. In the event any process, notice, or demand is served on the secretary of state, the secretary of state shall immediately forward one of the copies by registered mail, addressed to the corporation at its principal office if known to him or her, in the state or country under the laws of which it is incorporated. Any service had in this manner on the secretary of state is returnable in not less than thirty (30) days.
(c) Every foreign corporation as a condition precedent to carrying on business in this state must, and by so carrying on business in this state does, consent that any process, including the process of garnishment, may be served upon the secretary of state in the manner provided by this section, except that notice of the service must be given by the plaintiff or his or her attorney in the manner as the court in which the action is commenced or pending orders as affording the corporation reasonable opportunity to defend the action or to learn of the garnishment. Notwithstanding the preceding requirements, however, once service has been made on the secretary of state as provided, the court has the authority in the event of failure to comply with the requirement of notice to the foreign corporation to order notice that is sufficient to apprise it of the pendency of the action against it, and additionally, may extend the time for answering by the foreign corporation.
(d) The secretary of state shall keep a record of all processes, notices, and demands served upon him or her under this section, and record in the record the time of the service and his or her action on it.
(e) Nothing contained in these provisions limits or affects the right to serve any process, notice, or demand, required or permitted by law to be served upon a corporation in any manner now or subsequently permitted by law.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1411. Amended certificate of authority.
(a) A foreign corporation authorized to transact business in this state shall make application for and procure an amended certificate of authority if it changes its corporate name, increases its number of authorized shares, or desires to pursue in this state other or additional purposes than those stated in its prior application for a certificate of authority.
(b) The requirements in respect to the form and contents of the application, the manner of its execution, the filing of the application with the secretary of state, the issuance of an amended certificate of authority, and the effect of it, is the same as in the case of an original application for a certificate of authority.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1411.1. Foreign application for transfer of authority.
(a) A duly authorized foreign corporation in the state of Rhode Island that converts into any form of foreign other entity subject to the provisions of title 7 and the resulting entity is required to file for authority to transact business in this state may apply for a transfer of authority in the office of the secretary of state by filing:
(1) An application for transfer of authority that has been executed and filed in accordance with the provisions of § 7-1.2-105; and
(2) An application for authority to transact business in the state of Rhode Island for the resulting entity type; and
(3) A certificate of legal existence or good standing issued by the proper officer of the state or country under the laws of which the resulting entity has been formed.
(b) The application for transfer of authority shall state:
(1) The name of the corporation;
(2) The type of other entity into which it has been converted; and
(3) The jurisdiction whose laws govern its internal affairs.
(c) Upon the effective time and date of the application for transfer of authority, the authority of the corporation authorized to transact business under this chapter shall be transferred without interruption to the other entity which shall thereafter hold such authority subject to the provisions of the laws of the state of Rhode Island applicable to that type of resulting entity.
History of Section.
P.L. 2012, ch. 71, § 1; P.L. 2012, ch. 79, § 1.
§ 7-1.2-1412. Withdrawal of foreign corporation.
(a) A foreign corporation authorized to transact business in this state may withdraw from this state upon procuring from the secretary of state a certificate of withdrawal. To procure a certificate of withdrawal, the foreign corporation must deliver to the secretary of state an application for withdrawal, stating:
(1) The name of the corporation and the state or country under the laws of which it is incorporated.
(2) That the corporation is not transacting business in this state.
(3) That the corporation surrenders its authority to transact business in this state.
(4) That the corporation revokes the authority of its registered agent in this state to accept service of process and consents that service of process in any action, suit, or proceeding based upon any cause of action arising in this state during the time the corporation was authorized to transact business in this state may subsequently be made on the corporation by service on the secretary of state.
(5) The post office address to which the secretary of state may mail a copy of any process against the corporation that is served on the secretary of state.
(b) If the corporation is in the hands of a receiver or trustee, the application for withdrawal must be executed on behalf of the corporation by the receiver or trustee.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1413. Filing of application for withdrawal.
(a) An original application for withdrawal must be delivered to the secretary of state. If the secretary of state finds that the application conforms to the provisions of this chapter, the secretary of state shall, when all fees and taxes have been paid:
(1) Endorse on the original the word “Filed”, and the month, day, and year of the filing;
(2) File the original in his or her office; and
(3) Issue a certificate of withdrawal.
(b) The secretary of state shall deliver the certificate of withdrawal to the corporation or its representative. Upon the issuance of the certificate of withdrawal, the authority of the corporation to transact business in this state ceases.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2015, ch. 80, § 1; P.L. 2015, ch. 88, § 1; P.L. 2017, ch. 371,
§ 1; P.L. 2017, ch. 376, § 1.
§ 7-1.2-1414. Revocation of certificate of authority.
(a) The certificate of authority of a foreign corporation to transact business in this state may be revoked by the secretary of state under the conditions prescribed in this section when:
(1) The corporation fails to file its annual report within the time required by this chapter, or with respect to any corporation in good corporate standing on the records of the secretary of state on or after July 1, 2019, has failed to pay any required fees to the secretary of state when they have become due and payable, or the secretary of state has received notice from the division of taxation, in accordance with § 44-11-26.1, that the corporation has failed to pay corporate taxes; or
(2) The corporation fails to appoint and maintain a registered agent in this state as required by this chapter; or
(3) The corporation fails, after changing its registered office or registered agent, to file in the office of the secretary of state a statement of the change as required by this chapter; or
(4) The corporation fails to file in the office of the secretary of state any amendment to its articles of incorporation or any articles of merger within the time prescribed by this chapter; or
(5) A misrepresentation has been made of any material matter in any application, report, affidavit, or other document submitted by the corporation pursuant to this chapter.
(b) No certificate of authority of a foreign corporation may be revoked by the secretary of state unless the secretary of state has given the corporation notice thereof not less than sixty (60) days prior to such revocation, by regular mail addressed to the registered agent of the corporation in this state on file with the secretary of state’s office, which notice shall specify the basis for the revocation; provided, however, that if a prior mailing addressed to the registered office of the corporation in this state currently on file with the secretary of state’s office has been returned as undeliverable by the United States Postal Service for any reason, or if the revocation notice is returned as undeliverable by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
(1) To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
(2) In the case of a foreign corporation that has not yet filed an annual report, then to the corporation at its principal office shown in its application for certificate of authority, and no further notice is required.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2017, ch. 371, § 1; P.L. 2017,
ch. 376, § 1.
§ 7-1.2-1415. Issuance of certificate of revocation.
(a) Upon revoking any certificate of authority, the secretary of state shall:
(1) Issue a certificate of revocation.
(2) File the certificate in his or her office.
(3) Send to the corporation by regular mail the certificate of revocation, addressed to the registered office of the corporation in this state on file with the secretary of state’s office; provided, however, that if a prior mailing addressed to the registered agent of the corporation in this state currently on file with the secretary of state’s office has been returned to the secretary of state as undeliverable by the United States Postal Service for any reason, or if the revocation certificate is returned as undeliverable to the secretary of state’s office by the United States Postal Service for any reason, the secretary of state shall give notice as follows:
(i) To the corporation at its principal office of record as shown in its most recent annual report, and no further notice is required; or
(ii) In the case of a foreign corporation that has not yet filed an annual report then to the corporation at its principal office shown in its application for certificate of authority, and no further notice is required.
(b) Upon the issuance of the certificate of revocation, the authority of the corporation to transact business in this state ceases.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1416. Withdrawal of certificate of revocation.
(a) Within twenty (20) years after issuing a certificate of revocation as provided in § 7-1.2-1415, the secretary of state may withdraw the certificate of revocation and retroactively reinstate the corporation in good standing as if its certificate of incorporation had not been revoked, except as subsequently provided:
(1) Upon the filing by the corporation of the documents it had previously failed to file as set forth in subsections (a)(1) — (a)(4) of § 7-1.2-1414;
(2) Upon the payment by the corporation of a penalty for each year or part of a year that has elapsed since the issuance of the certificate of revocation; and
(3) Upon the filing by the corporation of a certificate of good standing from the Rhode Island division of taxation.
(b) If, as permitted by the provisions of this title, another corporation, whether business or nonprofit limited partnership, limited liability partnership or limited liability company, or domestic or foreign, qualified to transact business in this state, bears or has filed a fictitious business name statement with respect to or reserved or registered a name that is not distinguishable upon the records of the secretary of state from the name of a corporation with respect to which the certificate of revocation is proposed to be withdrawn, then the secretary of state shall condition the withdrawal of the certificate of revocation upon the reinstated corporation’s amending its articles of incorporation or otherwise complying with the provisions of this chapter with respect to the use of a name available to it under the laws of this state so as to designate a name which is distinguishable upon the records of the secretary of state from its former name.
(c) Upon the withdrawal of the certificate of revocation and reinstatement of the corporation in good standing as provided in subsection (a), title to any real estate, or any interest in real estate, held by the corporation at the time of the issuance of the certificate of revocation and not conveyed subsequent to the revocation of its certificate of incorporation, shall be deemed to be revested in the corporation without further act or deed.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 36, § 36; P.L. 2005,
ch. 72, § 36; P.L. 2005, ch. 120, § 1; P.L. 2005, ch. 130, § 1; P.L. 2021, ch. 385,
§ 1, effective July 13, 2021; P.L. 2021, ch. 386, § 1, effective July 13, 2021.
§ 7-1.2-1417. Application to corporations previously authorized to transact business in this state.
Foreign corporations which are authorized to transact business in this state as of May 14, 1969, for a purpose or purposes for which a corporation might secure authority under this chapter, are, subject to the limitations stated in their certificates of authority, entitled to all the rights and privileges applicable to foreign corporations procuring certificates of authority to transact business in this state under this chapter, and as of May 14, 1969, the corporations are subject to all the limitations, restrictions, liabilities, and duties prescribed in these provisions for foreign corporations procuring certificates of authority to transact business in this state under this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1418. Transacting business without certificate of authority.
(a) No foreign corporation transacting business in this state without a certificate of authority is permitted to maintain any action, suit, or proceeding in any court of this state, until the corporation has obtained a certificate of authority. Nor may any action, suit, or proceeding be maintained in any court of this state by any successor or assignee of the corporation on any right, claim, or demand arising out of the transaction of business by the corporation in this state, until a certificate of authority has been obtained by the corporation or by its successor.
(b) The failure of a foreign corporation to obtain a certificate of authority to transact business in this state does not impair the validity of any contract or act of the corporation, and does not prevent the corporation from defending any action, suit, or proceeding in any court of this state.
(c) A foreign corporation which transacts business in this state without a certificate of authority is liable to this state, for the years or parts of years during which it transacted business in this state without a certificate of authority, in an amount equal to all fees and franchise taxes which would have been imposed upon the corporation had it duly applied for and received a certificate of authority to transact business in this state as required by this chapter and subsequently filed all reports required by this chapter, plus all penalties imposed by this chapter for failure to pay the fees and franchise taxes. The attorney general may bring proceedings to recover all amounts due this state under the provisions of this section.
(d) The superior court has jurisdiction to enjoin any foreign corporation, or any agent of a foreign corporation, from transacting any business in this state if the corporation fails to comply with any section of this chapter applicable to it or if the corporation secured a certificate of the secretary of state under §§ 7-1.2-1405 and 7-1.2-1406 on the basis of false or misleading representations. The attorney general may, upon motion or upon the relation of proper parties, proceed for this purpose by complaint in any county in which the corporation is doing business.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1501. Annual reports of domestic and foreign corporations.
(a) Each domestic corporation, and each foreign corporation authorized to transact business in this state, shall file, within the time prescribed by this chapter, an annual report stating:
(1) The name of the corporation and the state or country under the laws of which it is incorporated;
(2) A brief statement of the character of the business in which the corporation is actually engaged in this state;
(3) The names and respective addresses of the directors and officers of the corporation;
(4) [Deleted by P.L. 2021, ch. 137, § 1 and P.L. 2021, ch. 138, § 1.]
(5) A statement of the aggregate number of issued shares, itemized by classes, par value of shares, if any, and series, if any, within a class; and
(6) Any additional information that is required by the secretary of state.
(b) The annual report must be made on forms prescribed and furnished by the secretary of state, and the information contained therein must be given as of the date of the execution of the report. It must be executed on behalf of the corporation by its authorized representative, or, if the corporation is in the hands of a receiver or trustee, it must be executed on behalf of the corporation by the receiver or trustee.
(c) The annual report of a domestic or foreign corporation must be delivered to the secretary of state between February 1 and May 1 of each year, except that the first annual report of a domestic or foreign corporation must be filed between February 1 and May 1 of the year following the calendar year in which its articles of incorporation were filed with or its certificate of authority was issued by the secretary of state. Proof to the satisfaction of the secretary of state that prior to May 1 the report was deposited in the United States mail in a sealed envelope, properly addressed, with postage prepaid, is deemed to be a compliance with this requirement.
(d) If the secretary of state finds that the annual report conforms to the requirements of this chapter, the secretary of state shall file the report. If the secretary of state finds that it does not conform, the secretary of state shall promptly return the report to the corporation for any necessary corrections, in which event the penalties subsequently prescribed for failure to file the report within the time previously provided do not apply if the report is corrected to conform to the requirements of this chapter and returned to the secretary of state within thirty (30) days from the date on which it was mailed to the corporation by the secretary of state.
(e) Each corporation, domestic or foreign, that fails or refuses to file its annual report for any year within thirty (30) days after the time prescribed by this chapter is subject to a penalty of twenty-five dollars ($25.00) per year.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2021, ch. 137, § 1, effective January 1, 2022; P.L. 2021, ch. 138,
§ 1, effective January 1, 2022.
§ 7-1.2-1502. Books and records.
(a) Each corporation shall keep correct and complete books and records of account, keep minutes of the proceedings of its shareholders and of the board of directors and committees of the board, and shall also keep at its registered office or principal place of business, legal counsel’s office, or at the office of its transfer agent or registrar, a record of its shareholders giving the names and addresses of all shareholders and the number and class of the shares held by each. Any books, records, and minutes may be in written form or any other form capable of being converted into written form within a reasonable time.
(b) Any director, shareholder or holder of voting trust certificates for shares of a corporation, upon written demand stating the purpose for the demand, has the right to examine, in person, or by agent or attorney, at any reasonable time or times, for any proper purpose, its relevant books and records of account, minutes, and record of shareholders and to make extracts from those books and records of account, minutes, and record of shareholders.
(c) Any officer or agent who, or a corporation which, refuses to allow any shareholder or holder of voting trust certificates, or his or her agent or attorney, to examine and make extracts from its books and records of account, minutes, and record of shareholders, for any proper purpose, is liable to the shareholder or holder of voting trust certificates in a penalty of ten percent (10%) of the value of the shares owned by the shareholder, or in respect of which the voting trust certificates are issued, in addition to any other damages or remedy afforded him or her by law. It is a defense to any action for penalties under this section that the person bringing the suit has within two (2) years sold or offered for sale any list of shareholders or of holders of voting trust certificates for shares of the corporation or any other corporation or has aided or abetted any person in procuring any list of shareholders or of holders of voting trust certificates for that purpose, or has improperly used any information secured through any prior examination of the books and records of account, or minutes, or record of shareholders, or of holders of voting trust certificates for shares of the corporation or any other corporation, or was not acting in good faith or for a proper purpose in making his or her demand.
(d) Nothing contained in these provisions impairs the power of any court of competent jurisdiction, upon proof by a director, shareholder or holder of voting trust certificates of proper purpose, to compel the production for examination by the director, shareholder or holder of voting trust certificates of the books and records of account, minutes, and record of shareholders of a corporation.
(e) Upon the written request of any director, shareholder or holder of voting trust certificates for shares of a corporation, the corporation shall mail to the director, shareholder or holder of voting trust certificates its most recent financial statements showing in reasonable detail its assets and liabilities and the results of its operations.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1601. The secretary of state.
(a) The secretary of state has the reasonably necessary power and authority to enable him or her to administer this chapter efficiently and to perform the duties imposed upon the secretary by this chapter.
(b) The secretary of state shall charge and collect in accordance with the provisions of this chapter:
(1) Fees for filing documents and issuing certificates.
(2) Miscellaneous charges.
(3) License fees.
(c) The secretary of state shall, between the first (1st) and fifteenth (15th) day of each month, make an itemized return, in writing, to the state controller of the amount of all fees and charges collected by him or her in the prior month, and pay to the general treasurer all of the state moneys in his or her hands.
(d) All reports required by this chapter to be filed in the office of the secretary of state must be made on forms which are prescribed and furnished by the secretary of state. Forms for all other documents to be filed in the office of the secretary of state may be furnished by the secretary of state on request for the forms, but the use of the forms, unless otherwise specifically prescribed in this chapter, is not mandatory.
(e)(1) If the secretary of state fails to approve any articles of incorporation, amendment, merger, or dissolution, or any other document required by this chapter to be approved by the secretary of state before the document is filed in his or her office, the secretary of state shall, within ten (10) days after the delivery of the document to the secretary of state, give written notice of disapproval to the person or corporation, domestic or foreign, delivering the document, specifying the reasons for the disapproval. From the disapproval the person or corporation may appeal to the superior court of the county in which the registered office of the corporation is, or is proposed to be, situated by filing with the clerk of the court a petition setting forth a copy of the articles or other document sought to be filed and a copy of the written disapproval of the document by the secretary of state; at which time the matter may be tried de novo by the court, and the court shall either sustain the action of the secretary of state or direct the secretary to take any action that the court deems proper.
(2) If the secretary of state revokes the certificate of authority to transact business in this state of any foreign corporation pursuant to the provisions of §§ 7-1.2-1414 and 7-1.2-1415, in addition to the remedy provided in § 7-1.2-1416, the foreign corporation may likewise appeal to the superior court of the county where the registered office of the corporation in this state is situated, by filing with the clerk of the court a petition setting forth a copy of its certificate of authority to transact business in this state and a copy of the notice of revocation given by the secretary of state; at that time the matter may be tried de novo by the court, and the court shall either sustain the action of the secretary of state or direct the secretary to take any action that the court deems proper.
(3) Appeals from all final orders and judgments entered by the superior court under this section in review of any ruling or decision of the secretary of state may be taken as in other civil actions.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1602. Fees and charges payable to the secretary of state upon filing, certifying or copying of papers.
(a) The secretary of state shall charge and collect for filing:
(1) Articles of incorporation and issuing a certificate of incorporation, seventy dollars ($70.00).
(2) Articles of amendment and issuing a certificate of amendment, fifty dollars ($50.00).
(3) Restated articles of incorporation, seventy dollars ($70.00).
(4) Articles of merger or consolidation and issuing a certificate of merger or consolidation, one hundred dollars ($100).
(5) An application to reserve a corporate name, fifty dollars ($50.00).
(6) A notice of transfer of a reserved corporate name, fifty dollars ($50.00).
(7)(i) Filing a statement of change of registered agent and registered office or filing a statement of change of registered agent, twenty dollars ($20.00).
(ii) Filing a statement of change of registered office only, without fee.
(8) A statement of the establishment of a series of shares, ten dollars ($10.00).
(9) A statement of cancellation of shares, ten dollars ($10.00).
(10) A statement of reduction of stated capital, ten dollars ($10.00).
(11) A statement of intent to dissolve, without fee.
(12) A statement of revocation of voluntary dissolution proceedings, ten dollars ($10.00).
(13) Articles of dissolution, fifty dollars ($50.00).
(14) An application of a foreign corporation for a certificate of authority to transact business in this state and issuing a certificate of authority, one hundred fifty dollars ($150).
(15) An application of a foreign corporation for an amended certificate of authority to transact business in this state and issuing an amended certificate of authority, seventy-five dollars ($75.00).
(16) A copy of an amendment to the articles of incorporation of a foreign corporation holding a certificate of authority to transact business in this state, fifty dollars ($50.00).
(17) A copy of articles of merger of a foreign corporation holding a certificate of authority to transact business in this state, fifty dollars ($50.00).
(18) An application for withdrawal of a foreign corporation and issuing a certificate of withdrawal, fifty dollars ($50.00).
(19) An annual report, fifty dollars ($50.00).
(20) Registered name application, fifty dollars ($50.00).
(21) Certificate of good standing/letter of status, twenty dollars ($20.00).
(22) Certificate of fact, thirty dollars ($30.00).
(23) Any other statement or report, except an annual report, of a domestic or foreign corporation, ten dollars ($10.00).
(24) A certificate of conversion to a non-Rhode Island entity, fifty dollars ($50.00).
(b) The secretary of state shall charge and collect:
(1) To withdraw the certificate of revocation of a corporation, whether domestic or foreign, a penalty in the amount of fifty dollars ($50.00) for each year or part of a year that has elapsed since the issuance of the certificate of revocation.
(2) For furnishing a certified copy of any document, instrument, or paper relating to a corporation, fifteen cents ($.15) per page and ten dollars ($10.00) for the certificate and affixing the seal to it.
(3) At the time of any service of process on him or her as resident agent of a corporation, fifteen dollars ($15.00), which amount may be recovered as taxable costs by the party to the suit or action making the service if the party prevails in the suit or action.
(c)(1) The secretary of state shall charge and collect from each domestic corporation license fees, based on the number of shares which it has authority to issue or the increase in the number of shares which it has authority to issue, at the time of:
(i) Filing articles of incorporation;
(ii) Filing articles of amendment increasing the number of authorized shares; and
(iii) Filing articles of merger increasing the number of authorized shares which the surviving or new corporation, if a domestic corporation, has the authority to issue above the aggregate number of shares which the constituent domestic corporations and constituent foreign corporations authorized to transact business in this state had authority to issue.
(2) The license fees charged to a domestic corporation are as follows:
(i) One hundred sixty dollars ($160) for less than seventy-five million (75,000,000) authorized shares; and
(ii) One-fifth (⅕) cent per share of each authorized share for seventy-five million (75,000,000) shares or greater.
(3) The above license fee calculations also apply when a corporation files an amendment or merger showing an increase in authorized shares.
(d)(1) The secretary of state shall charge and collect from each foreign corporation license fees at the time of:
(i) Filing an application for a certificate of authority to transact business in this state;
(ii) Filing articles of amendment which increased the number of authorized shares; and
(iii) Filing articles of merger which increased the number of authorized shares which the surviving or new corporation, if a foreign corporation, has authority to issue above the aggregate number of shares which the constituent domestic corporations and constituent foreign corporations authorized to transact business in this state had authority to issue.
(2) The license fees charged to a foreign corporation are as follows:
(i) One hundred sixty dollars ($160) for less than seventy-five million (75,000,000) authorized shares represented in the State of Rhode Island; and
(ii) One-fifth (⅕) cent per share of each authorized share for 75,000,000 shares or greater.
(3) The above license fee calculations also apply when a corporation files an amendment or merger showing an increase in authorized shares.
(4) The number of authorized shares represented in this state is that proportion of its total authorized shares which the sum of the value of its property located in this state and the gross amount of business transacted by it at or from places of business in this state bears to the sum of the value of all of its property, wherever located, and the gross amount of its business, wherever transacted. The proportion is determined from information contained in the application for a certificate of authority to transact business in this state or in the application for an amended certificate of authority to transact business in this state.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1; P.L. 2011, ch. 52, § 2; P.L. 2011, ch. 61, § 2.
§ 7-1.2-1603. Penalties imposed upon officers and directors.
Any individual who signs any articles, statement, report, application, or other document intended to be filed with the secretary of state that is known to the individual to be false in any material respect, is guilty of a misdemeanor, and upon conviction of it may be fined in any amount not exceeding five hundred dollars ($500). For purposes of this chapter, a document is signed whether by any manual, facsimile or electronic signature.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1604. Interrogatories.
(a) The secretary of state may propound to any domestic or foreign corporation subject to the provisions of this chapter, and to any of its officers or directors, any interrogatories that may be reasonably necessary and proper to enable the secretary of state to ascertain whether the corporation has complied with all the applicable provisions of this chapter. The interrogatories must be answered within thirty (30) days after their mailing, or within any additional time that is fixed by the secretary of state, and the answers to the interrogatories must be full and complete and made in writing and under oath. If the interrogatories are directed to an individual they must be answered by him or her, and if directed to a corporation they must be answered by the president, vice president, secretary, or assistant secretary of the corporation. The secretary of state need not file any document to which the interrogatories relate until the interrogatories are answered as provided in these provisions, and not then if the interrogatory answers disclose that the document is not in conformity with the provisions of this chapter. The secretary of state shall certify to the attorney general, for any action that the attorney general deems appropriate, all interrogatories and their answers which disclose a violation of any of the provisions of this chapter.
(b) Each corporation, domestic or foreign, that fails or refuses to answer truthfully and fully within the time prescribed by this chapter interrogatories propounded by the secretary of state, in accordance with the provisions of this chapter, is guilty of a misdemeanor and upon conviction of it may be fined in any amount not exceeding five hundred dollars ($500).
(c) Interrogatories propounded by the secretary of state and the answers to the interrogatories are not open to public inspection, nor may the secretary of state disclose any facts or information obtained from them except insofar as the secretary’s official duty requires the facts or information to be made public or in the event the interrogatories or their answers are required for evidence in any criminal proceedings or in any other action by this state.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1605. Certificates and certain copies to be received in evidence.
All certificates issued by the secretary of state in accordance with the provisions of this chapter, and all copies of documents filed in his or her office in accordance with the provisions of this chapter when certified by the secretary, is prima facie evidence of the facts stated in them. A certificate by the secretary of state under the great seal of this state, as to the existence or nonexistence of the facts relating to corporations is prima facie evidence of the existence or nonexistence of the facts stated in them.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1701. Close corporations.
(a) Provisions of the articles of incorporation or bylaws of a corporation organized under this chapter, or provisions of an agreement relating to a corporation, which would otherwise be invalid because they:
(1) Restrict, or assign to one or more shareholders or other individuals, any or all of the powers normally vested in the board of directors or provide that there is no board of directors; or
(2) Grant the right to one or more shareholders to dissolve the corporation at will or on the occurrence of a specified contingency; or
(3) Impose too great a restraint on the transfer of shares of the corporation; are nevertheless valid if the provisions have been approved by all the shareholders of the corporation and if the corporation’s original or amended articles of incorporation contain a heading immediately after the name of the corporation stating that it is a close corporation pursuant to § 7-1.2-1701. This subsection does not invalidate any provision in articles of incorporation, bylaws, or agreements that would otherwise be valid.
(b) The provisions of § 7-1.2-709 limiting the duration of a voting trust or shareholders’ agreement to ten (10) years is not applicable to a close corporation that complies with subsection (a). If close corporation status is terminated pursuant to subsection (d), the effective term of a voting trust or shareholders’ agreement is ten (10) years from the termination or the term provided therein, whichever is shorter.
(c) The effect of any provision authorized by subsection (a)(1) is to relieve the directors and to impose on the individual or individuals undertaking to exercise responsibility the liability for managerial acts or omissions that would otherwise be imposed on directors to the extent that and so long as the discretion or powers of the board in its management of corporate affairs is controlled by any such provision. Action which is valid pursuant to subsection (a)(1) is deemed to be action by the board of directors for purposes of compliance with any provision of this chapter providing for action by the board of directors.
(d) If a close corporation’s original or amended articles of incorporation so provide, the corporation need not hold an annual meeting of shareholders unless one or more shareholders deliver written notice to the corporation requesting a meeting at least thirty (30) days before the meeting date stated or fixed in accordance with the bylaws of the corporation.
(e)(1) The articles of incorporation must be amended to terminate close corporation status pursuant to this section if:
(i) All of the shareholders, or such lessor number as may be specified in the articles of incorporation, the bylaws, or an agreement relating to the corporation, approve the termination; or
(ii) There are more than thirty (30) shareholders of record and any shareholder, after thirty (30) days’ notice to the corporation of his or her intention to do so during which time the number is not reduced to thirty (30) or less, demands termination; or
(iii) Any individual who acquires of record shares of the corporation without notice or knowledge of its close corporation status demands termination; provided, that notice shall be conclusively presumed if certificates representing the shares so acquired state on their face, under the name of the corporation, that it is a close corporation pursuant to this section.
(2) If the directors and shareholders fail to effect the amendment promptly, the superior court shall have jurisdiction to enter whatever order is necessary to effect the amendment. The termination shall not affect the validity of any provision relating to the corporation or its management which would be valid, notwithstanding the provisions of this section.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1801. Unauthorized assumption of corporate powers.
All individuals who assume to act as a corporation without authority so to do are jointly and severally liable for all debts and liabilities incurred or arising as a result of that action.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1802. Application to existing corporations organized under general acts.
The provisions of this chapter apply to all existing corporations organized under any general act of this state providing for the organization of corporations for a purpose or purposes for which a corporation might be organized under this chapter, where the power has been reserved to amend, repeal, or modify the act under which the corporation was organized and where the act is repealed by this chapter.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1803. Application to foreign and interstate commerce.
The provisions of this chapter apply to commerce with foreign nations and among the several states only insofar as the provisions are permitted under the constitution of the United States.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2.
§ 7-1.2-1804. Applicability to corporations created by special acts.
The provisions of this chapter apply to all existing corporations previously or subsequently created by any special act of the general assembly of a kind that could be organized under this chapter, except insofar as the provisions are inconsistent with the provisions of any applicable special act passed after May 5, 1920, or with the provisions of any applicable special act passed that are not subject to amendment or repeal at the will of the general assembly. A corporation created by special act of the kind that could be organized under this chapter, but whose charter is not subject to amendment, repeal, or modification by the general assembly, may at a called meeting for the purpose, by a unanimous vote of its shareholders or members, adopt the provisions of this chapter upon the filing in the office of the secretary of state of a certified copy of the vote, attested by its president or vice president and its secretary or assistant secretary under its corporate seal, and the payment to the secretary of state of the fee prescribed by § 7-1.2-1602. The corporation is subsequently governed in all respects by the provisions of this chapter and its charter shall subsequently be subject to amendment or repeal at the will of the general assembly.
History of Section.
P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch. 120, § 1; P.L. 2005,
ch. 130, § 1.
§ 7-1.2-1805. Confirmation of state fees and taxes.
(a) Notwithstanding any other provisions of the general laws, when any section of this chapter refers to state fees and/or taxes paid as required by § 44-11-2, the division of taxation is authorized to respond and share tax information with the secretary of state’s office in response to a request from that office regarding an entity’s tax status as compliant or noncompliant.
(b) If the secretary of state’s office receives notice from the division of taxation that the corporation has failed to pay any fees or taxes due to this state, the secretary of state shall issue notice and begin revocation proceedings in accordance with the provisions of § 7-1.2-1310 or § 7-1.2-1414.
(c) The notice of revocation may state as the basis for revocation that the taxpayer failed to pay state fees and/or taxes as required by § 44-11-2 to the division of taxation. However, the secretary of state’s office must otherwise protect all state and federal tax information in its custody as required by § 44-11-26.1 and refrain from disclosing any other specific tax information.
(d) For filings remitted and recorded in accordance with any section of this chapter that refers to state fees and/or taxes paid as required by § 44-11-2, the secretary of state’s office may request from the division of taxation a tax status check as outlined in subsection (a) of this section. If the secretary of state’s office receives notice from the division of taxation that the corporation has failed to pay any fees or taxes due to this state, the secretary of state shall begin revocation proceedings in accordance with subsections (b) and (c) of this section.
History of Section.
P.L. 2024, ch. 148, § 1, effective January 1, 2025; P.L. 2024, ch. 150, § 1, effective
January 1, 2025.