Senate Bill No. 522
(By Senators Kessler, Hunter, Minard, Deem, Unger, Rowe and Caldwell)
____________
[Introduced March 19, 2001;
referred to the Committee on the Judiciary.]
____________

A BILL to amend the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new chapter, designated chapter thirty-one-e, relating to West Virginia nonprofit corporation act.

Be it enacted by the Legislature of West Virginia:
That the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new chapter, designated chapter thirty-one-e, to read as follows:

§31E-1-102. Reservation of power to amend or repeal.

(1)Articles of incorporation $______.

(2)Application for use of indistinguishable name $______.

$______.

(4)Notice of transfer of reserved name $______.

(5)Application for registered name $______.

(6)Application for renewal of registered name $______.

(7)Corporation's statement of change of

registered agent or registered office or both $______.

(8)Agent's statement of change of registered

(9)Agent's statement of resignation No fee.

(10)Amendment of articles of incorporation $______.

with amendment of articles

$______.

(12)Articles of merger or share exchange $______.

(13)Articles of dissolution

$______.

(14)Articles of revocation of dissolution $______.

(15)Certificate of administrative dissolution No fee.

(16)Application for reinstatement following

administrative dissolution $______.

(17)Certificate of reinstatement

No fee.

(18)Certificate of judicial dissolution No fee.

$______.

(21)Application for certificate of withdrawal $______.

(22)Certificate of revocation of authority to

transact business No fee

$______.

(24)Articles of correction

$______.

(25)Application for certificate of existence or

authorization

$______.

(26)Any other document required or permitted

to be filed by this chapter

$______.

§31E-1-126. Appeal from secretary of state's refusal to file document.

(a) Corporations may be organized under this chapter for any lawful purpose, including any one or more of the following purposes: charitable, benevolent, eleemosynary, educational, civic, patriotic, political, social, fraternal, literary, cultural, athletic, scientific, agricultural, horticultural, animal husbandry, and professional commercial, industrial or trade association.
(b) No charters or certificates of incorporation shall be granted or issued to any church or religious denomination.
§31E-3-302. General powers.
Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including without limitation power:
(1) To sue and be sued, complain and defend in its corporate name;
(2) To have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing it or in any other manner reproducing it;
(3) To make and amend bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for managing and regulating the affairs of the corporation;
(4) To purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property, or any legal or equitable interest in property, wherever located;
(5) To sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property;
(6) To purchase, receive, subscribe for, or otherwise acquire; own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of; and deal in and with shares or other interests in, or obligations of, any other entity;
(7) To make contracts and guarantees, incur liabilities, borrow money, issue its notes, bonds, and other obligations (which may be convertible into or include the option to purchase other securities of the corporation), and secure any of its obligations by mortgage, deed of trust, or pledge of any of its property, franchises, or income;
(8) To lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment;
(9) To be a promoter, partner, member, associate, or manager of any partnership, joint venture, trust, or other entity;
(10) To conduct its activities, locate offices, and exercise the powers granted by this chapter within or without this state;
(11) To elect directors and appoint officers, employees, and agents of the corporation, define their duties, and fix their compensation;
(12) To pay pensions and establish pension plans, pension trusts, profit sharing plans, share bonus plans, share option plans, and benefit or incentive plans for any or all of its current or former directors, officers, employees, and agents;
(13) To make donations for the public welfare or for charitable, scientific, or educational purposes, and for other purposes that further the corporate interest;
(14) To transact any lawful activity that will aid governmental policy;
(15) To impose or levy fines, penalties, dues, assessments, admission and transfer fees upon its members;
(16) To establish conditions for admission of members, admit members and issue memberships and certificates evidencing membership;
(17) To carry on one or more businesses;
(18) To make payments or donations, or do any other act, not inconsistent with law, that furthers the affairs of the corporation.
§31E-3-303. Emergency powers.
(a) In anticipation of or during an emergency defined in subsection (d), the board of directors of a corporation may:
(1) Modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and
(2) Relocate the principal office, designate alternative principal offices or regional offices, or authorize the officers to do so.
(b) During an emergency defined in subsection (d), unless emergency bylaws provide otherwise:
(1) Notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practicable manner, including by publication and radio; and
(2) One or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.
(c) Corporate action taken in good faith during an emergency under this section to further the ordinary affairs of the corporation:
(1) Binds the corporation; and
(2) May not be used to impose liability on a corporate director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.
§31E-3-304. Ultra vires.
(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
(b) A corporation's power to act may be challenged:
(1) In a proceeding by a member or director against the corporation to enjoin the act;
(2) In a proceeding by the corporation, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the corporation; or
(3) In a proceeding by the attorney general to dissolve the corporation or to enjoin the corporation from the conduct of unauthorized affairs.
(c) In a member's or director's proceeding under subsection (b)(1) to enjoin an unauthorized corporate act, the circuit court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the corporation or another party because of enjoining the unauthorized act.
(d) The attorney general may, upon his own information or upon complaint of an interested party, bring an action in the name of the state to restrain any person from purporting to have, or exercising, corporate powers not granted.
ARTICLE 4. NAME.
§31E-4-401. Corporate name.
(a) A corporate name:
(1) Must contain the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," or words or abbreviations of like import in another language; and
(2) May not contain language stating or implying that the corporation is organized for a purpose other than that permitted by section 301 and its articles of incorporation.
(b) Except as authorized by subsections (c) and (d), a corporate name must be distinguishable upon the records of the secretary of state from:
(1) The corporate name of a corporation or business corporation incorporated or authorized to transact business in this state;
(2) A corporate name reserved or registered under section 402 or 403;
(3) The fictitious name adopted by a foreign corporation authorized to transact business in this state because its real name is unavailable;
(4) The corporate name of any foreign corporation authorized to transact business or conduct affairs in this state; or
(5) The name of any other entity whose name is carried upon the records of the secretary of state.
(c) A corporation may apply to the secretary of state for authorization to use a name that is not distinguishable upon his records from one or more of the names described in subsection (b). The secretary of state shall authorize use of the name applied for if:
(1) The other corporation consents to the use in writing.
(2) The applicant delivers to the secretary of state a certified copy of the final judgment of a circuit court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
(d) A corporation may use the name (including the fictitious name) of another domestic or foreign corporation that is used in this state if the other corporation is incorporated or authorized to transact business in this state and the proposed user corporation:
(1) Has merged with the other corporation;
(2) Has been formed by reorganization of the other corporation; or
(3) Has acquired all or substantially all of the assets, including the corporate name, of the other corporation.
(e) This chapter does not control the use of fictitious names.
§31E-4-402. Reserved name.
(a) A person may reserve the exclusive use of a corporate name, including a fictitious name for a foreign corporation whose corporate name is not available, by delivering an application to the secretary of state for filing. The application must set forth the name and address of the applicant and the name proposed to be reserved. If the secretary of state finds that the corporate name applied for is available, he shall reserve the name for the applicant's exclusive use for a nonrenewable one hundred twenty-day period.
(b) The owner of a reserved corporate name may transfer the reservation to another person by delivering to the secretary of state a signed notice of the transfer that states the name and address of the transferee.
§31E-4-403. Registered name.
(a) A foreign corporation may register its corporate name, or its corporate name with any addition required by section 1506, if the name is distinguishable upon the records of the secretary of state from the corporate names that are not available under section 401(b).
(b) A foreign corporation registers its corporate name, or its corporate name with any addition required by section 1506, by delivering to the secretary of state for filing an application:
(1) Setting forth its corporate name, or its corporate name with any addition required by section 1506, the state or country and date of its incorporation, and a brief description of the nature of the business in which it is engaged; and
(2) Accompanied by a certificate of existence (or a document of similar import) from the state or country of incorporation.
(c) The name is registered for the applicant's exclusive use upon the effective date of the application.
(d) A foreign corporation whose registration is effective may renew it for successive years by delivering to the secretary of state for filing a renewal application, which complies with the requirements of subsection (b), between the first day of October and the thirty-first day of December of the preceding year. The renewal application when filed renews the registration for the following calendar year.
(e) A foreign corporation whose registration is effective may thereafter qualify as a foreign corporation under the registered name or consent in writing to the use of that name by a corporation thereafter incorporated under this chapter or by another foreign corporation thereafter authorized to transact business in this state. The registration terminates when the domestic corporation is incorporated or the foreign corporation qualifies or consents to the qualification of another foreign corporation under the registered name.
ARTICLE 5. OFFICE AND AGENT.
§31E-5-501. Registered office and registered agent.
Each corporation must continuously maintain in this state:
(1) A registered office that may be the same as any of its places of business; and
(2) A registered agent, who may be:
(i) An individual who resides in this state and whose business office is identical with the registered office;
(ii) A domestic corporation or business corporation whose business office is identical with the registered office;
(iii) A foreign corporation or business foreign corporation authorized to transact business in this state whose business office is identical with the registered office; or
(iv) A foreign limited liability company or domestic limited liability company authorized to transact business in this state whose business office is identical with the registered office.
§31E-5-502. Change of registered office or registered agent.
(a) A corporation may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:
(1) The name of the corporation;
(2) The street address of its current registered office;
(3) If the current registered office is to be changed, the street address of the new registered office;
(4) The name of its current registered agent;
(5) If the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent (either on the statement or attached to it) to the appointment; and
(6) That after the change or changes are made, the street addresses of its registered office and the business office of its registered agent will be identical.
(b) If a registered agent changes the street address of his business office, he may change the street address of the registered office of any corporation for which he is the registered agent by notifying the corporation in writing of the change and signing (either manually or in facsimile) and delivering to the secretary of state for filing a statement that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.
§31E-5-503. Resignation of registered agent.
(a) A registered agent may resign his agency appointment by signing and delivering to the secretary of state for filing the signed original and two exact or conformed copies of a statement of resignation. The statement may include a statement that the registered office is also discontinued.
(b) After filing the statement the secretary of state shall mail one copy to the registered office (if not discontinued) and the other copy to the corporation at its principal office.
(c) The agency appointment is terminated, and the registered office discontinued if so provided, on the thirty-first day after the date on which the statement was filed.
§31E-5-504. Service on corporation.
(a) A corporation's registered agent is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the corporation.
(b) If a corporation has no registered agent, or the agent cannot with reasonable diligence be served, the corporation may be served by registered or certified mail, return receipt requested, addressed to the secretary of the corporation at its principal office. Service is perfected under this subsection at the earliest of:
(1) The date the corporation receives the mail;
(2) The date shown on the return receipt, if signed on behalf of the corporation; or
(3) Five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed.
(c) The secretary of state is constituted attorney-in-fact for each corporation with authority to accept service of notice and process on behalf of each corporation and upon whom service of notice and process may be made in this state upon each corporation. Immediately after being served with or accepting any process or notice, the secretary of state shall file in his office a copy of the process or notice, endorsed of the time of service, or acceptance, and transmit one copy of the process or notice by registered or certified mail, return receipt requested, to the corporation's registered agent or if there is no registered agent, to the principal office of the corporation at the address last furnished to the secretary of state's office. No process or notice shall be served on the secretary of state or accepted by him less than ten days before the return day thereof.
(d) This section does not prescribe the only means, or necessarily the required means of serving a corporation.
ARTICLE 6. MEMBERS - MEMBERSHIP RIGHTS AND LIABILITIES.
§31E-6-601. Classes of members.
A corporation may have one or more classes of members or may have no members. If the corporation has one or more classes of members, the designation of such class or classes shall be set forth in the articles of incorporation and the manner of election or appointment and the qualifications and rights of the members of each class shall be set forth in the articles of incorporation or bylaws. If the corporation has no members, or only members not entitled to vote, that fact shall be set forth in the articles of incorporation and the corporation shall operate under the management of its board of directors. A corporation may issue articles evidencing membership therein.
§31E-6-602. Rules for membership.
(a) Membership shall be governed by such rules of admission, retention, withdrawal and expulsion as the bylaws shall prescribe, provided all such bylaws shall be reasonable, germane to the purposes of the corporation, and equally enforced as to all members.
(b) Unless otherwise provided in the articles of incorporation or the bylaws, another entity, foreign or domestic, may become a member of a corporation.
(c) Membership may be limited to persons who are members in good standing of another corporation, organization or association, if so provided in the articles of incorporation. If membership is so limited, the articles of incorporation may provide that failure on the part of any such member to keep in such good standing in such other corporation, organization or association shall be sufficient cause for expulsion.
(d) Unless otherwise provided in the articles of incorporation or bylaws, a member may not voluntarily or involuntarily transfer his membership or any rights arising therefrom.
(e) Unless otherwise provided in the articles of incorporation or bylaws, membership shall be terminated by death, voluntary withdrawal or expulsion, and thereafter all rights and privileges of the member in the corporation and its property shall cease.

§31E-6-603. Imposition of fines and penalties; levy of dues and assessments.

(a) A corporation may impose fines or penalties on members if provided in bylaws duly adopted by a two-thirds vote of members entitled to vote and, if the fine or penalty applies to members not entitled to vote, by a two-thirds vote as a class of such members not otherwise entitled to vote. Such fine or penalty shall not exceed the higher of the: (1) Annual dues or assessment; or (2) initiation fee, if any.
(b) A corporation may levy dues or assessments against members if provided in a bylaw provision duly adopted: (1) By the affirmative vote of at least two-thirds of the members of each class of members, voting as a class, to which the levy applies, even though any such class of members is not otherwise entitled to vote; or (2) by the directors if the directors are authorized to do so by a bylaw provision adopted by the affirmative vote of at least two-thirds of the members of each class of members, voting as a class, to which a levy may apply, even though any such class of members is not otherwise entitled to vote.
(c) For purposes of this section, the corporation's initial bylaws adopted by: (1) The incorporators; or (2) the board of directors shall be deemed to have been adopted by all the members entitled to vote thereon, if any.
(d) Notwithstanding any limitation on the amount of a fine or penalty set forth in subsection (a) of this section, a corporation organized under this chapter, or any predecessor statutes, that is a trade association or other professional organization exempt from taxation under Section 501(c)(6) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, may impose a fine on a member, not to exceed the amount set forth in the bylaws, for the violation of a code of ethics or other code of conduct upon majority vote of its board of directors in accordance with its bylaws, provided the articles of association or bylaws of the corporation contain a written provision whereby members agree to be bound by such code of ethics or code of conduct as a condition of membership.
§31E-6-604. Liability of members.
(a) A member of a corporation shall not be liable to the corporation or its creditors with respect to such membership except for the obligation to pay in full any fines or penalties duly imposed against him and any dues and assessments levied against him to which he has assented, or imposed or levied against him in accordance with the provisions of section 603.
(b) Any member who receives any distribution of income or assets from a corporation in violation of this chapter, inclusive, or of the articles of incorporation, whether by dividend, in liquidation or otherwise, and who accepted or received such distribution knowing it to be improper, shall be liable for the amount so received: (1) To any creditors existing at the time of such distribution who shall obtain a judgment against such corporation on which execution shall be returned unsatisfied; and (2) to the corporation.
ARTICLE 7. MEMBERS - MEETINGS AND VOTING.
PART 1. MEETINGS.
§31E-7-701. Annual meeting; regular meeting.
(a) A corporation that has members entitled to vote for the election of directors shall hold a meeting of such members annually at a time stated in or fixed in accordance with the bylaws.
(b) Annual meetings of members may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual meetings shall be held at the corporation's principal office.
(c) A corporation that has members entitled to vote may hold regular meetings of such members in or out of this state at the places and times stated in or fixed in accordance with the bylaws.
(d) The failure to hold an annual or regular meeting at the time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporate action.
§31E-7-702. Special meeting.
(a) A corporation that has members entitled to vote shall hold a special meeting of members entitled to vote at the meeting: (1) On call of its board of directors or the person or persons authorized to do so by the articles of incorporation or the bylaws; or (2) if the members holding at least five per cent, or such other number or proportion as shall be provided in the bylaws, of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the corporation one or more written demands for the meeting describing the purpose or purposes for which it is to be held. If a call for such a special meeting is not issued within fifteen days after receipt of such members' request, such members may call the meeting.
(b) If not otherwise fixed under section 703 or 707 the record date for determining members entitled to demand a special meeting is the date the first member signs the demand.
(c) Special meetings of members may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings shall be held at the corporation's principal office.
(d) Only business within the purpose or purposes described in the meeting notice required by subsection (c) of section 705 may be conducted at a special meeting of members.
§31E-7-703. Court-ordered meeting.
(a) The superior court for the judicial district where a corporation's principal office or, if none in this state, its registered office is located may summarily order a meeting to be held: (1) On application of any member entitled to vote at an annual meeting if an annual meeting was not held within the earlier of six months after the end of the corporation's fiscal year or fifteen months after its last annual meeting; or (2) on application of a member who signed a demand for a special meeting valid under section 702 if: (A) Notice of the special meeting was not given within thirty days after the date the demand was delivered to the corporation's secretary; or (B) the special meeting was not held in accordance with the notice.
(b) The court may fix the time and place of the meeting, determine the members entitled to vote at the meeting, specify a record date for determining members entitled to notice of and to vote at the meeting, prescribe the form and content of the meeting notice, fix the quorum required for specific matters to be considered at the meeting, or direct that the votes represented at the meeting constitute a quorum for action on those matters, and enter other orders necessary to accomplish the purpose or purposes of the meeting.

§31E-7-704. Action without meeting; validity of actions at meetings not properly called.

(a) Any action which, under any provision of this chapter, inclusive, may be taken at a meeting of members may be taken without a meeting by one or more consents in writing, setting forth the action so taken or to be taken, signed by all of the persons who would be entitled to vote upon such action at a meeting, or by their duly authorized attorneys which action for purposes of this subsection shall be referred to as "unanimous written consent". The secretary shall file such consent or consents, or certify the tabulation of such consents and file such articles, with the minutes of the meetings of the members. A unanimous written consent shall have the same force and effect as a vote of the members at a meeting duly held, and may be stated as such in any articles or document filed under this chapter, inclusive.
(b) Where directors or officers are to be elected by members or any other action is to be voted upon by members, the articles of incorporation or bylaws may provide that such elections may be conducted and such actions voted upon by mail or electronic means in such manner as shall be stated therein. The vote of members, or of the members of any particular class, shall be determined from the total number of members who actually vote by mail, rather than from the total number of members entitled so to vote, unless the articles of incorporation otherwise provides. A ballot signed under this section shall have the same force and effect as a vote of the member who signed it at a meeting duly held, and may be stated as such in any certificate or document filed under this chapter, inclusive.
(c) If not otherwise fixed under section 703 or 707, the record date for determining members entitled to take action without a meeting is the date the first member signs the consent or ballot under subsection (a) or (b) of this section.
(d) The absence from the minutes of any indication that a member objected to holding the meeting shall prima facie establish that no such objection was made.
§31E-7-705. Notice of meeting.
(a) A corporation shall notify members entitled to vote of the date, time and place of each annual, regular and special meeting no fewer than ten nor more than sixty days before the meeting date. Unless this chapter, inclusive, or the articles of incorporation requires otherwise, the corporation is required to give notice only to members entitled to vote at the meeting.
(b) Unless this chapter, inclusive, the articles of incorporation or bylaws require otherwise, notice of an annual or regular meeting need not include a description of the purpose or purposes for which the meeting is called, except that, unless stated in a written notice of the meeting: (1) No bylaw may be brought up for adoption, amendment or repeal; and (2) no matter, other than the election of directors at an annual meeting, may be brought up which expressly requires the vote of members pursuant to said sections.
(c) Notice of a special meeting of members shall include a description of the purpose or purposes for which the meeting is called.
(d) If not otherwise fixed under section 703 or 707, the record date for determining members entitled to notice of and to vote at an annual, regular or special meeting is the day before the first notice is delivered to members.
(e) Unless the bylaws require otherwise, if an annual, regular or special meeting of members is adjourned to a different date, time or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under section 707, however, notice of the adjourned meeting must be given under this section to persons who are members entitled to vote as of the new record date.
§31E-7-706. Waiver of notice.
(a) A member may waive any notice required by this chapter, inclusive, 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 member entitled to the notice and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) A member's attendance at a meeting: (1) Waives objection to lack of notice or defective notice of the meeting, unless the member at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; (2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the member objects to considering the matter when it is presented.
§31E-7-707. Record date.
(a) The bylaws may fix or provide the manner of fixing the record date for one or more classes of members in order to determine the members entitled to notice of a meeting of members, to demand a special meeting, to vote or to take any other action. If the bylaws do not fix or provide for fixing a record date, the board of directors of the corporation may fix a future date as the record date.
(b) A record date fixed under this section may not be more than seventy days before the meeting or action requiring a determination of members.
(c) A determination of members entitled to notice of or to vote at a meeting of members is effective for any adjournment of the meeting unless the board of directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting.
(d) If a court orders a meeting adjourned to a date more than one hundred twenty days after the date fixed for the original meeting, it may provide that the original record date continues in effect or it may fix a new record date.
§31E-7-708. Conduct of the meeting.
(a) At each meeting of members, a chairperson shall preside. The chairperson shall be appointed as provided in the bylaws or, in the absence of such provision, by the board of directors.
(b) The chairperson, unless the articles of incorporation or bylaws provide otherwise, shall determine the order of business and shall have the authority to establish rules for the conduct of the meeting.
(c) Any rules adopted for, and the conduct of, the meeting shall be fair to members.
(d) The chairperson of the meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls shall be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes, nor any revocations or changes thereto, may be accepted.

(e) If the articles of incorporation or bylaws authorize the use of electronic communication for shareholders' meetings, any or all of the shareholders may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all shareholders may simultaneously hear each other during the meeting.

PART 2. VOTING.
§31E-7-720. Members' list for meeting.
(a) After fixing a record date for a meeting, a corporation shall prepare an alphabetical list of the names of all its members who are entitled to notice of the meeting. The list shall be arranged by classes of members, if any, and show the address of and number of votes to which each such member is entitled.
(b) The members' list shall be available for inspection by any members entitled to vote at the meeting, beginning two business days after notice of the meeting is given for which the list was prepared and continuing through the meeting, at the corporation's principal office or at a place identified in the meeting notice in the city where the meeting will be held. A member entitled to vote at the meeting or his agent or attorney is entitled on written demand to inspect and, subject to the requirements of section 1502, to copy the list, during regular business hours and at his expense, during the period it is available for inspection.
(c) The corporation shall make the members' list available at the meeting, and any member entitled to vote at the meeting or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment.
(d) If the corporation refuses to allow a member entitled to vote at the meeting or his agent or attorney to inspect the members' list before or at the meeting, or copy the list as permitted by subsection (b) of this section, the superior court for the judicial district where a corporation's principal office or, if none in this state, its registered office, is located, on application of the member, may summarily order the inspection or copying at the corporation's expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete.
(e) Refusal or failure to prepare or make available the members' list does not affect the validity of action taken at the meeting.
§31E-7-721. Members' voting rights.
(a) Unless the articles of incorporation provides otherwise, each member, regardless of class, is entitled to one vote on each matter voted on at a meeting of members. Voting rights of members of any class may be increased, limited or denied by the articles of incorporation.
(b) Members otherwise entitled to vote, but disqualified from voting for any reason, shall not be considered for the purpose of quorum or of computing the voting power of the corporation or of members of any class.
(c) A corporate member's vote may be cast by the president of the member corporation or by any other officer of such corporation in the absence of express notice of the designation of some other person by the board of directors or bylaws of the member corporation.
§31E-7-722. Proxies.
(a) Unless the articles of incorporation or bylaws provide otherwise, a member entitled to vote may vote in person or by proxy.
(b) A member entitled to vote by proxy or his agent or attorney-in-fact may appoint a proxy to vote or otherwise act for the member by signing an appointment form or by an electronic transmission of the appointment. An electronic transmission must contain or be accompanied by information from which one can determine that the member, the member's agent or the member's attorney-in-fact authorized the electronic transmission.
(c) An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the corporation authorized to tabulate votes. A photographic or similar reproduction of an appointment, or a telegram, cablegram, facsimile transmission, wireless or similar transmission of an appointment received by such person shall be sufficient to effect such appointment. An appointment is valid for eleven months unless a longer period is expressly provided in the appointment.
(d) An appointment of a proxy is revocable by the member.
(e) The death or incapacity of the member appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment.
(f) Subject to section 723 and to any express limitation on the proxy's authority stated in the appointment form or electronic transmission of the appointment, a corporation is entitled to accept the proxy's vote or other action as that of the member making the appointment.
§31E-7-723. Corporation's acceptance or rejection of votes.
(a) If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a member, the corporation if acting in good faith is entitled to accept the vote, consent, waiver or proxy appointment and give it effect as the act of the member.
(b) If the name signed on a vote, consent, waiver or proxy appointment does not correspond to the name of a member, the corporation if acting in good faith is nevertheless entitled to accept the vote, consent, waiver or proxy appointment and give it effect as the act of the member if:
(1) The member is an entity and the name signed purports to be that of an officer or agent of the entity;
(2) The name signed purports to be that of an attorney-in- fact, administrator, executor, guardian or conservator representing the member and, if the corporation requests, evidence of such status acceptable to the corporation has been presented with respect to the vote, consent, waiver or proxy appointment;
(3) The name signed purports to be that of a receiver or trustee in bankruptcy of the member and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver or proxy appointment;
(4) Two or more persons are co-members or fiduciaries and the name signed purports to be the name of at least one of such persons and the person signing appears to be acting on behalf of all of such persons.
(c) The corporation is entitled to reject a vote, consent, waiver or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the member.
(d) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver or proxy appointment in good faith and in accordance with the standards of this section or subsection (b) of section 722 are not liable in damages to the member for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote, consent, waiver or proxy appointment under this section or subsection (b) of section 722 is valid unless a court of competent jurisdiction determines otherwise.
§31E-7-724. Quorum and voting requirements.
(a) Members entitled to vote on a matter may take action on the matter at a meeting only if a quorum of those members exists with respect to that matter. If there are no members entitled to vote as a separate class, unless this chapter, inclusive, the articles of incorporation or bylaws provide otherwise, the members entitled to vote on the matter who are present at the meeting, either in person or by proxy, if voting by proxy is permitted pursuant to section 722, constitute a quorum for action on the matter. If there are members entitled to vote on a matter as a separate class, the members entitled to vote as a separate class may take action on the matter at a meeting only if a quorum of that class exists with respect to that matter. Unless this chapter, inclusive, the articles of incorporation or bylaws provide otherwise, the members of a class entitled to vote on the matter who are present at the meeting, either in person or by proxy, if voting by proxy is permitted pursuant to section 722 constitute a quorum of that class for action on that matter.
(b) Once a member is represented for any purpose at a meeting, the member is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.
(c) Where any of this chapter, inclusive, requires for any purpose the vote of a designated proportion of the voting power of members entitled to vote on a matter, or of the members of any particular class entitled to vote thereon as a class, if a quorum exists, action on the matter, other than the election of directors, by such members or by the members of such a class, is approved if the votes cast favoring the action by the members voting or by the members of such a class voting, are in such designated proportion of the total votes cast by such members or by the members of such a class, unless the articles of incorporation requires a greater vote.
(d) Where subsection (c) is not applicable, if a quorum exists, action on a matter, other than the election of directors, by the members entitled to vote thereon, or by the members of any particular class entitled to vote thereon as a class, is approved if the votes cast by such members voting, or by the members of such class voting, favoring the action exceed the votes cast by such members, or by the members of such a class, opposing the action, unless the articles of incorporation requires a greater vote.
(e) An amendment of a articles of incorporation adding, changing or deleting a voting requirement is governed by section 726. An amendment of a articles of incorporation or bylaws adding, changing or deleting a quorum requirement is governed by section 726.
(f) The election of directors is governed by section 727.
§31E-7-725. Action by single and multiple classes of members.
(a) If the articles of incorporation or this chapter, inclusive, provide for voting by a single class on a matter, action on that matter is taken when voted upon by that class as provided in section 724.
(b) If the articles of incorporation or this chapter, inclusive, provide for voting by two or more classes on a matter, action on that matter is taken only when voted upon by each of those classes counted separately as provided in section 724. Action may be taken by one class on a matter even though no action is taken by another class entitled to vote on the matter.
§31E-7-726. Other quorum or voting requirement.
(a) The articles of incorporation may provide for a greater voting requirement for members, or classes of members, than is provided for this chapter, inclusive. The articles of incorporation or the bylaws may provide for a greater quorum requirement for members, or classes of members, than is provided by this chapter, inclusive.
(b) The articles of incorporation may, except where expressly prohibited by this chapter, inclusive, or where such action is required by said sections to be unanimous, provide for a lesser voting requirement, but unless expressly permitted by a particular section of said sections, not less than a majority of the votes cast by the members, or by the members of a particular class, entitled to vote on the matter.
(c) An amendment to the articles of incorporation that adds, changes or deletes a greater quorum or voting requirement must meet the same quorum requirement and be adopted by the same vote and classes required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever is greater.
§31E-7-727. Voting for directors; cumulative voting.
(a) Unless otherwise provided in the articles of incorporation, directors are elected by a plurality of the votes cast by the members entitled to vote in the election at a meeting at which a quorum is present, or if voting by mail is permitted pursuant to section 704 in an election in which the total number of members who vote is not less than the number required for a quorum. (b) Members do not have a right to cumulate their votes for directors unless the articles of incorporation so provides.
(c) A statement included in the articles of incorporation that "all or a designated class of members are entitled to cumulate their votes for directors", or words of similar import, means that the members designated are entitled to multiply the number of votes they are entitled to cast by the number of directors for whom they are entitled to vote and cast the product for a single candidate or distribute the product among two or more candidates.
(d) Members otherwise entitled to vote cumulatively may not vote cumulatively at a particular meeting unless: (1) The meeting notice states conspicuously that cumulative voting is authorized; (2) a member who has the right to cumulate his votes gives notice to the corporation not less than forty-eight hours before the time set for the meeting of his intent to cumulate his votes during the meeting, and if one member gives this notice all other members in the same class participating in the election are entitled to cumulate their votes without giving further notice; or (3) if voting is to be by mail or electronic means pursuant to section 704: (A) The bylaws specify how election of directors shall be conducted if members vote cumulatively by mail; (B) the notice of the meeting states conspicuously that cumulative voting is authorized and how the election is to be conducted; and (C) the mail ballot provides for cumulative voting.
§31E-7-728. Inspectors of election.
(a) A corporation may appoint one or more inspectors to act at a meeting of members and make a written report of the inspectors' determinations. Each inspector shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector's ability.
(b) The inspectors shall: (1) Ascertain the number of members entitled to vote and the voting power of each; (2) determine the members represented at a meeting; (3) determine the validity of proxies and ballots; (4) count all votes; and (5) determine the result.
(c) An inspector may be an officer or employee of the corporation.
ARTICLE 8.

§31E-8-801. Requirement for and duties of board of directors.
(a) Each corporation must have a board of directors.
(b) All corporate powers shall be exercised by or under the authority of, and the activities, property and affairs of the corporation managed under the direction of, its board of directors, subject to any limitation set forth in the articles of incorporation.
§31E-8-802. Qualifications of directors.
(a) The articles of incorporation or bylaws may prescribe qualifications for directors. A director need not be a resident of this state or a member of the corporation unless the articles of incorporation or bylaws so prescribe.
(b) The directors and board of directors may be designated by such other names as may be provided in the articles of incorporation or bylaws.
§31E-8-803. Number and election of directors.
(a) A board of directors must consist of three or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws.
(b) 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 bylaws.
(c) The initial board of directors shall be designated in the articles of incorporation or elected at the organizational meeting of the corporation. Thereafter, if the corporation has member entitled to vote for directors, directors shall be elected at the first meeting of the members held for that purpose and at each subsequent annual meeting, except as provided in section 804.
§31E-8-804. Special provisions regarding directors.
(a) The articles of incorporation may provide that the entire membership, or a certain class of members, shall constitute the board of directors.
(b) The articles of incorporation may provide that persons occupying certain positions within or without the corporation shall be ex-officio directors, but, unless otherwise provided in the articles of incorporation or bylaws, such ex-officio directors shall not be counted in determining a quorum nor shall they be entitled to a vote. An ex-officio director shall continue to be a director so long as he continues to hold the office from which his ex-officio status derives, and shall cease to be an ex-officio director immediately and automatically upon ceasing to hold such office, without the need for any action by the corporation, its directors or its members. The provisions of sections 806 and 808 shall not apply to ex-officio directors.
(c) In the cases of: (1) Corporations without members; and (2) corporations without members entitled to vote for directors, the articles of incorporation may provide for a self-perpetuating board of directors.
§31E-8-805. Election of directors by certain classes of members.
If the articles of incorporation authorizes classes of members, the articles may also authorize the election of all or a specified number of directors by members in one or more authorized classes of members.
§31E-8-806. Terms of directors generally.
(a) The terms of the initial directors of a corporation expire at the first members' meeting at which directors are elected or, in the case of a corporation without members entitled to vote for directors, at the first annual meeting of the board of directors, unless their terms are staggered pursuant to section 807.
(b) The terms of all other directors expire at the next annual meeting of members or directors, as the case may be, following their election unless their terms are staggered under section 807.
(c) A decrease in the number of directors does not shorten an incumbent director's term.
(d) The term of a director elected to fill a vacancy expires at the next meeting at which directors are elected.
(e) Despite the expiration of a director's term, he continues to serve until his successor is elected and qualifies or until there is a decrease in the number of directors.
§31E-8-807. Staggered terms for directors.
(a) The articles of incorporation may provide for staggering the terms of directors, other than ex-officio directors, by dividing the total number of directors, other than ex-officio directors, into up to five groups, with each group containing approximately the same percentage of the total, as near as may be. In that event, the terms of directors in the first group expire at the first annual meeting of members or, in the case of a corporation without members entitled to vote for directors, at the first annual meeting of the board of directors, after their election, the terms of the second group expire at the second such annual meeting of members or directors after their election, the terms of the third group, if any, expire at the third such annual meeting of members or directors after their election, the terms of the fourth group, if any, expire at the fourth such annual meeting of members or directors after their election, and the terms of the fifth group, if any, expire at the fifth such annual meeting of members or directors after their election. At each such annual meeting thereafter, directors shall be chosen for a term of two years, three years, four years or five years, as the case may be, to succeed those whose terms expire.
(b) If a corporation has cumulative voting pursuant to section 727, this section shall apply only if there are at least three directors in each group.
§31E-8-808. Resignation of directors.
(a) A director may resign at any time by delivering written notice to the board of directors, the chairman of the board of directors or the corporation.
(b) A resignation is effective when the notice is delivered unless the board of directors agree to a later effective date.
§31E-8-809. Removal of directors by members or directors.
(a) The members entitled to vote for the election of directors or, if there are no such members, the directors, may remove one or more directors with or without cause unless the articles of incorporation provides that directors may be removed only for cause.
(b) If a director is elected by a class of members only the members of that class may participate in the vote to remove him.
(c) If cumulative voting is authorized, a director may not be removed if the number of votes sufficient to elect him under cumulative voting is voted against his removal. If cumulative voting is not authorized, a director may be removed only if the number of votes cast to remove him exceeds the number of votes cast not to remove him.
(d) A director may be removed by the members entitled to vote for directors or, if there are no such members, the directors, only at a meeting called for the purpose of removing him and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.
§31E-8-810. Removal of directors by judicial proceeding.
(a) The circuit court of the county where a corporation's principal office or, if none in this state, its registered office is located may remove a director of the corporation from office in a proceeding commenced either by the corporation or by its members holding at least ten percent of the voting power of any class if the court finds that: (1) The director engaged in fraudulent or dishonest conduct or gross abuse of authority or discretion, with respect to the corporation; and (2) removal is in the best interest of the corporation.
(b) The court that removes a director may bar the director from serving on the board for a period prescribed by the court.
(c) If members commence a proceeding under subsection (a) of this section, they shall make the corporation a party defendant.
§31E-8-811. Vacancy on board.
(a) Unless the articles of incorporation provides otherwise, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors: (1) The members entitled to vote for directors may fill the vacancy; (2) the board of directors may fill the vacancy; or (3) if the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
(b) If the vacant office was held by a director elected by a class of members, only the members of that class are entitled to vote to fill the vacancy if it is filled by members entitled to vote for directors.
(c) A vacancy that will occur at a specific later date, by reason of a resignation effective at a later date under section 808(b) or otherwise, may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.
(d) If the board of directors ceases to exist and there are no members having the right to vote for the election of directors, members without such vote shall thereupon be entitled to elect a new board of directors.
§31E-8-812. Compensation of directors.
Unless the articles of incorporation or bylaws provide otherwise, the board of directors may fix the compensation of directors, including reasonable allowance for expenses actually incurred in connection with their duties.
PART 2.

(4) Adopt, amend, or repeal bylaws;

(a) A corporation has the officers described in its bylaws or appointed by the board of directors in accordance with the bylaws.
(b) A duly appointed officer may appoint one or more officers or assistant officers if authorized by the bylaws or the board of directors.
(c) The bylaws or the board of directors shall delegate to one of the officers responsibility for preparing minutes of the directors' and members' meetings and for authenticating records of the corporation.
(d) The same individual may simultaneously hold more than one office in a corporation.
§31E-8-841. Duties of officers.
Each officer has the authority and shall perform the duties set forth in the bylaws or, to the extent consistent with the bylaws, the duties prescribed by the board of directors or by direction of an officer authorized by the board of directors to prescribe the duties of other officers.
§31E-8-842. Standards of conduct for officers.
(a) An officer, when performing in such capacity, shall act:
(1) In good faith;
(2) With the care that a person in a like position would reasonably exercise under similar circumstances; and
(3) In a manner the officer reasonably believes to be in the best interests of the corporation.
§31E-8-843. Resignation and removal of officers.
(a) An officer may resign at any time by delivering notice to the corporation. A resignation is effective when the notice is delivered unless the board of directors agree to a later effective date. If a resignation is made effective at a later date and the corporation accepts the future effective date, its board of directors may fill the pending vacancy before the effective date if the board of directors provides that the successor does not take office until the effective date.
(b) A board of directors may remove any officer at any time with or without cause.
§31E-8-844. Contract rights of officers.
(a) The appointment of an officer does not itself create contract rights.
(b) An officer's removal does not affect the officer's contract rights, if any, with the corporation. An officer's resignation does not affect the corporation's contract rights, if any, with the officer.
PART 5.

§31E-8-850. Part definitions.
In this part:
(1) "Corporation" includes any domestic or foreign predecessor entity of a corporation in a merger.
(2) "Director" or "officer" means an individual who is or was a director or officer, respectively, of a corporation or who, while a director or officer of the corporation, is or was serving at the corporation's request as a director, officer, partner, trustee, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, 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 duties to the corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. "Director" or "officer" includes, unless the context requires otherwise, the estate or personal representative of a director or officer.
(3) "Disinterested director" means a director who, at the time of a vote referred to in section 853(c) or a vote or selection referred to in section 855(b) or (c), is not: (i) A party to the proceeding; or (ii) an individual having a familial, financial, professional or employment relationship with the director whose indemnification or advance for expenses is the subject of the decision being made, which relationship would, in the circumstances, reasonably be expected to exert an influence on the director's judgment when voting on the decision being made.
(4) "Expenses" includes counsel fees.
(5) "Liability" means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding.
(6) "Official capacity" means:
(i) When used with respect to a director, the office of director in a corporation; and
(ii) When used with respect to an officer, as contemplated in section 856, the office in a corporation held by the officer. "Official capacity" does not include service for any other domestic or foreign corporation or any partnership, joint venture, trust, employee benefit plan, or other entity.
(7) "Party" means an individual who was, is, or is threatened to be made, a defendant or respondent in a proceeding.
(8) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative, or investigative and whether formal or informal.
§31E-8-851. Permissible indemnification.
(a) Except as otherwise provided in this section, a corporation may indemnify an individual who is a party to a proceeding because he is a director against liability incurred in the proceeding if:
(1) (i) He conducted himself in good faith; and
(ii) He reasonably believed: (A) In the case of conduct in his official capacity, that his conduct was in the best interests of the corporation; and (B) in all other cases, that his conduct was at least not opposed to the best interests of the corporation; and
(iii) In the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful; or
(2) He engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation (as authorized by section 202(b)(5)).
(b) A director's conduct with respect to an employee benefit plan for a purpose he reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is conduct that satisfies the requirement of subsection (a)(1)(ii)(B).
(c) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not, of itself, determinative that the director did not meet the relevant standard of conduct described in this section.
(d) Unless ordered by a circuit court under section 854(a)(3), a corporation may not indemnify a director:
(1) In connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct under subsection (a); or
(2) In connection with any proceeding with respect to conduct for which he was adjudged liable on the basis that he received a financial benefit to which he was not entitled, whether or not involving action in his official capacity.
§31E-8-852. Mandatory indemnification.
A corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he was a director of the corporation against reasonable expenses incurred by him in connection with the proceeding.
§31E-8-853. Advance for expenses.
(a) A corporation may, before final disposition of a proceeding, advance funds to pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding because he is a director if he delivers to the corporation:
(1) A written affirmation of his good faith belief that he has met the relevant standard of conduct described in section 851 or that the proceeding involves conduct for which liability has been eliminated under a provision of the articles of incorporation as authorized by section 202(b)(4); and
(2) His written undertaking to repay any funds advanced if he is not entitled to mandatory indemnification under section 852 and it is ultimately determined under section 854 or section 855 that he has not met the relevant standard of conduct described in section 851.
(b) The undertaking required by subsection (a)(2) must be an unlimited general obligation of the director but need not be secured and may be accepted without reference to the financial ability of the director to make repayment.
(c) Authorizations under this section shall be made:
(1) By the board of directors:
(i) If there are two or more disinterested directors, by a majority vote of all the disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote; or
(ii) If there are fewer than two disinterested directors, by the vote necessary for action by the board in accordance with section 824(c), in which authorization directors who do not qualify as disinterested directors may participate; or
(2) By special legal counsel:
(i) Selected in the manner prescribed in subdivision (1); or
(ii) If there are fewer than two disinterested directors, selected by the board of directors (in which selection directors who do not qualify as disinterested directors may participate); or
(3) By the members, if the members have a right to vote, but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the authorization.

§31E-8-854. Circuit court-ordered indemnification and advance for expenses.

(a) A director who is a party to a proceeding because he is a director may apply for indemnification or an advance for expenses to the circuit court conducting the proceeding or to another circuit court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the circuit court shall:
(1) Order indemnification if the circuit court determines that the director is entitled to mandatory indemnification under section 852;
(2) Order indemnification or advance for expenses if the circuit court determines that the director is entitled to indemnification or advance for expenses pursuant to a provision authorized by section 858(a); or
(3) Order indemnification or advance for expenses if the circuit court determines, in view of all the relevant circumstances, that it is fair and reasonable
(i) To indemnify the director, or
(ii) To advance expenses to the director, even if he has not met the relevant standard of conduct set forth in section 851(a), failed to comply with section 853 or was adjudged liable in a proceeding referred to in subsection 851(d)(1) or (d)(2), but if he was adjudged so liable his indemnification shall be limited to reasonable expenses incurred in connection with the proceeding.
(b) If the circuit court determines that the director is entitled to indemnification under subsection (a)(1) or to indemnification or advance for expenses under subsection (a)(2), it shall also order the corporation to pay the director's reasonable expenses incurred in connection with obtaining circuit court-ordered indemnification or advance for expenses. If the circuit court determines that the director is entitled to indemnification or advance for expenses under subsection (a)(3), it may also order the corporation to pay the director's reasonable expenses to obtain circuit court-ordered indemnification or advance for expenses.
§31E-8-855. Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under section 851 unless authorized for a specific proceeding after a determination has been made that indemnification of the director is permissible because he has met the relevant standard of conduct set forth in section 851.
(b) The determination shall be made:
(1) If there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors (a majority of whom shall for such purpose constitute a quorum), or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote;
(2) By special legal counsel:
(i) Selected in the manner prescribed in subdivision (1); or
(ii) If there are fewer than two disinterested directors, selected by the board of directors (in which selection directors who do not qualify as disinterested directors may participate); or
(3) By the members, if the members have a right to vote.
(c) Authorization of indemnification shall be made in the same manner as the determination that indemnification is permissible, except that if there are fewer than two disinterested directors or if the determination is made by special legal counsel, authorization of indemnification shall be made by those entitled under subsection (b)(2)(ii) to select special legal counsel.
§31E-8-856. Indemnification of officers.
(a) A corporation may indemnify and advance expenses under this part to an officer of the corporation who is a party to a proceeding because he is an officer of the corporation:
(1) To the same extent as a director; and
(2) If he is an officer but not a director, to such further extent as may be provided by the articles of incorporation, the bylaws, a resolution of the board of directors, or contract except for: (A) Liability in connection with a proceeding by or in the right of the corporation other than for reasonable expenses incurred in connection with the proceeding; or (B) liability arising out of conduct that constitutes:
(i) Receipt by him of a financial benefit to which he is not entitled;
(ii) An intentional infliction of harm on the corporation or the members; or
(iii) An intentional violation of criminal law.
(b) The provisions of subsection (a)(2) shall apply to an officer who is also a director if the basis on which he is made a party to the proceeding is an act or omission solely as an officer.
(c) An officer of a corporation who is not a director is entitled to mandatory indemnification under section 852, and may apply to a circuit court under section 854 for indemnification or an advance for expenses, in each case to the same extent to which a director may be entitled to indemnification or advance for expenses under those provisions.
§31E-8-857. Insurance.
A corporation may purchase and maintain insurance on behalf of an individual who is a director or officer of the corporation, or who, while a director or officer of the corporation, serves at the corporation's request as a director, officer, partner, trustee, employee, or agent of another domestic or foreign corporation, partnership, joint venture, trust, employee benefit plan, or other entity, against liability asserted against or incurred by him in that capacity or arising from his status as a director or officer, whether or not the corporation would have power to indemnify or advance expenses to him against the same liability under this part.

§31E-8-858. Variation by corporate action; application of part.

(a) A corporation may, by a provision in its articles of incorporation or bylaws or in a resolution adopted or a contract approved by its board of directors or members, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in accordance with section 851 or advance funds to pay for or reimburse expenses in accordance with section 853. Any such obligatory provision shall be deemed to satisfy the requirements for authorization referred to in section 853(c) and in section 855(c). Any such provision that obligates the corporation to provide indemnification to the fullest extent permitted by law shall be deemed to obligate the corporation to advance funds to pay for or reimburse expenses in accordance with section 853 to the fullest extent permitted by law, unless the provision specifically provides otherwise.
(b) Any provision pursuant to subsection (a) shall not obligate the corporation to indemnify or advance expenses to a director of a predecessor of the corporation, pertaining to conduct with respect to the predecessor, unless otherwise specifically provided. Any provision for indemnification or advance for expenses in the articles of incorporation, bylaws, or a resolution of the board of directors or members of a predecessor of the corporation in a merger or in a contract to which the predecessor is a party, existing at the time the merger takes effect, shall be governed by section 1103.
(c) A corporation may, by a provision in its articles of incorporation, limit any of the rights to indemnification or advance for expenses created by or pursuant to this part.
(d) This part does not limit a corporation's power to pay or reimburse expenses incurred by a director or an officer in connection with his appearance as a witness in a proceeding at a time when he is not a party.
(e) This part does not limit a corporation's power to indemnify, advance expenses to or provide or maintain insurance on behalf of an employee or agent.
§31E-8-859. Exclusivity of part.
A corporation may provide indemnification or advance expenses to a director or an officer only as permitted by this part.
§31E-8-860. Directors' conflicting interest transactions.
(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, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because any such director's or officer's votes are counted for such purpose, if:
(1) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors by less than a quorum; or
(2) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the members entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the members entitled to vote; or
(3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the members.
(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.
ARTICLE 9.

§31E-10-1020. Amendment by board of directors or members.
(a) A corporation's members entitled to vote may amend or repeal the corporation's bylaws.
(b) A corporation's board of directors may amend or repeal the corporation's bylaws, unless:
(1) The articles of incorporation or section 1021 reserve that power exclusively to the members in whole or part; or
(2) The members in amending, repealing, or adopting a bylaw expressly provide that the board of directors may not amend, repeal, or reinstate that bylaw.

§31E-10-1021. Bylaw increasing quorum or voting requirement for directors.

(a) A bylaw that increases a quorum or voting requirement for the board of directors may be amended or repealed:
(1) If adopted by the members, only by the members, unless the bylaw otherwise provides;
(2) If adopted by the board of directors, either by the members or by the board of directors.
(b) A bylaw adopted or amended by the members that increases a quorum or voting requirement for the board of directors may provide that it can be amended or repealed only by a specified vote of either the members or the board of directors.
(c) Action by the board of directors under subsection (a) to amend or repeal a bylaw that changes the quorum or voting requirement for the board of directors must meet the same quorum requirement and be adopted by the same vote required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.

§31E-10-1022. Bylaw increasing quorum or voting requirement for members.

(a) If authorized by the articles of incorporation, the members may adopt or amend a bylaw that fixes a greater quorum or voting requirement for members or classes of members than is required by this chapter. The adoption or amendment of a bylaw that adds, changes or deletes a greater quorum requirement for members must meet the same quorum requirement and be adopted by the same vote and classes of members required to take action under the quorum and voting requirement then in effect or proposed to be adopted, whichever is greater.
(b) A bylaw that fixes a greater quorum or voting requirement for members under subsection (a) of this section may not be adopted, amended or repealed by the board of directors.
ARTICLE 11. MERGERS AND SHARE EXCHANGES.
§31E-11-1101. Merger.
(a) One or more domestic corporations may merge with a domestic or foreign corporation or other entity pursuant to a plan of merger.
(b) A foreign corporation, or a domestic or foreign other entity, may be a party to the merger, or may be created by the terms of the plan of merger, only if:
(1) The merger is permitted by the laws under which the corporation or other entity is organized or by which it is governed; and
(2) In effecting the merger, the corporation or other entity complies with such laws and with its articles of incorporation or organizational documents.
(c) The plan of merger must include:
(1) The name of each corporation or other entity that will merge and the name of the corporation or other entity that will be the survivor of the merger;
(2) The terms and conditions of the merger;
(3) The manner and basis of converting the memberships, if any, of each merging corporation and interests of each merging entity, interests, obligations, cash, other property, or any combination of the foregoing;
(4) The articles of incorporation of any corporation, or the organizational documents of any other entity, to be created by the merger, or if a new corporation or other entity is not to be created by the merger, any amendments to the survivor's articles of incorporation or organizational documents; and
(5) Any other provisions required by the laws under which any party to the merger is organized or by which it is governed, or by the articles of incorporation or organizational documents of any such party.
(d) The terms described in subsections (c)(2) and (c)(3) may be made dependent on facts ascertainable outside the plan of merger, provided that those facts are objectively ascertainable. The term "facts" includes, but is not limited to, the occurrence of any event, including a determination or action by any person or body, including the corporation.
(e) The plan of merger may also include a provision that the plan may be amended prior to filing the articles of merger with the secretary of state, provided that if the members of a domestic corporation that is a party to the merger are required or permitted to vote on the plan, the plan must provide that subsequent to approval of the plan by such members the plan may not be amended to:
(1) Change the manner and basis of converting the memberships, if any;
(2) Change the articles of incorporation of any corporation, or the organizational documents of any other entity, that will survive or be created as a result of the merger, except for changes permitted by section 1005 or by comparable provisions of the laws under which the foreign corporation or other entity is organized or governed; or
(3) change any of the other terms or conditions of the plan if the change would adversely affect such members in any material respect.
§31E-11-1102. Action on plan of merger.
(a) After adopting a plan of merger, the board of directors of each corporation party to the merger shall submit the plan of merger, except as provided in subsection (h) of this section, for approval by those members who are entitled to vote on such plan, if any.
(b) For a plan of merger to be approved: (1) The board of directors must approve the plan of merger; (2) the board of directors must recommend the plan of merger to the members entitled to vote on the plan of merger, if any, unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the members entitled to vote on the plan of merger with the submission of the plan; and (3) the members entitled to vote on the plan must approve the plan, either before or after the actions required in subdivisions (1) and (2) of this subsection, as provided in subsection (e) of this section.
(c) The board of directors may condition its submission of the proposed merger on any basis.
(d) The corporation shall notify each member, entitled to vote on the plan, if any, of the proposed members' meeting in accordance with section 705. The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider the plan of merger and contain or be accompanied by a copy or summary of the plan.
(e) Unless this chapter, the articles of incorporation or the board of directors acting pursuant to subsection (c) of this section requires a greater vote or a vote by class of members, the plan of merger to be adopted must be approved by: (1) If no class of members is entitled to vote separately on the plan as a class, at least two-thirds of the votes cast by the members entitled to vote thereon; and (2) if any class of members is entitled to vote on the plan separately as a class, at least two-thirds of the votes cast by the members of each such class.
(f) Separate voting by class of members is required on a plan of merger if the plan contains a provision that, if contained in a proposed amendment to a articles of incorporation, would require action by one or more separate classes of members on the proposed amendment under the articles of incorporation of the corporation.
(g) If: (1) In the case of the surviving corporation, a plan of merger contains any provision which, if contained in a proposed amendment to its articles of incorporation would require a greater vote than, or additional vote to, that otherwise required to approve the plan of merger; or if (2) in the case of any terminating corporation, a sale of all or substantially all assets, or dissolution, would under the circumstances require a greater vote than, or additional vote to, that otherwise required to approve the plan of merger, approval of the plan of merger by such corporation shall require such greater or additional vote.
(h) Action by the members of the surviving corporation on a plan of merger is not required if: (1) The articles of incorporation of the surviving corporation will not differ, except for amendments enumerated in section 1002 from its articles of incorporation before the merger; and (2) each member of the surviving corporation immediately before the effective date of the merger will be a member with identical designations, qualifications, privileges and rights immediately after.
(i) After a merger is authorized, and at any time before the articles of merger is filed, the planned merger may be abandoned, subject to any contractual rights, without further member action, in accordance with the procedure set forth in the plan of merger or, if none is set forth, in the manner determined by the board of directors.
(j) If any merging corporation has no members, or no members entitled to vote thereon, a plan of merger shall be adopted by the board of directors.
§31E-11-1103. Articles of merger.
(a) After a plan of merger is approved as required by section 1102, the surviving corporation shall deliver to the secretary of state for filing a articles of merger setting forth: (1) The plan of merger; (2) a statement to the effect that the plan of merger was adopted by the board of directors of each corporation party to the merger; (3) if member approval was not required, a statement to that effect; (4) if approval of members of one or more corporations party to the merger was required: (A) The designation of each class of members entitled to vote separately on the plan as to each corporation; and (B) the total number of votes cast for and against the plan by each class of members entitled to vote separately on the plan as to each corporation and a statement that the number cast for the plan by each class of members was sufficient for approval by that class.
(b) A merger takes effect upon the effective date of the articles of merger.
§31E-11-1104. Effect of merger.
When a merger takes effect:
(1) Every other corporation party to the merger merges into the surviving corporation and the separate existence of every corporation except the surviving corporation ceases;
(2) The title to all real estate and other property owned by each corporation party to the merger is vested in the surviving corporation without reversion or impairment;
(3) All real property located in the state owned by each corporation or other entity that merges into the survivor shall pass by operation of law and the transfer shall be evidenced by recording a confirmation deed in each county in which the real property is located. No transfer or excise taxes shall be assessed for the recording of the confirmation deeds.
(4) The surviving corporation has all liabilities of each corporation party to the merger;
(5) A proceeding pending against any corporation party to the merger may be continued as if the merger did not occur or the surviving corporation may be substituted in the proceeding for the corporation whose existence ceased;
(6) The articles of incorporation of the surviving corporation is amended to the extent provided in the plan of merger;
(7) The memberships, if any, of each corporation party to the merger that are to be converted into memberships of the surviving corporation are converted, and the former members in such membership classes are entitled only to the designation, qualifications, privileges and rights of the class of members to which they are converted, as provided in the articles of incorporation of the surviving corporation as the same may be amended by the plan of merger; and
(8) Any devise, bequest, gift or grant, contained in any will or in any other instrument, made before or after the merger, to or for the benefit of any of the merging corporations shall inure to the benefit of the surviving corporation, and so far as is necessary for that purpose, the existence of each merging corporation shall be deemed to continue in and through the surviving or new corporation.
ARTICLE 12. DISPOSITION OF ASSETS.
§31E-12-1201. Disposition of assets not requiring member approval.
No approval of the members of a corporation is required, unless the articles of incorporation otherwise provide:
(1) To sell, lease, exchange, or otherwise dispose of any or all of the corporation's assets in the usual and regular course of business;
(2) To mortgage, pledge, dedicate to the repayment of indebtedness (whether with or without recourse), or otherwise encumber any or all of the corporation's assets, whether or not in the usual and regular course of business; or
(3) To transfer any or all of the corporation's assets to one or more corporations or other entities all of the shares or interests of which are owned by the corporation.
§31E-12-1202. Member approval of certain dispositions.
(a) If the corporation has members entitled to vote on the transaction, a sale, lease, exchange, or other disposition of assets, other than a disposition described in section 1201, requires approval of the corporation's members if the disposition would leave the corporation without a significant continuing business activity. If a corporation retains an activity that represented at least twenty-five percent of total assets at the end of the most recently completed fiscal year, and twenty-five percent of either income from continuing operations before taxes or revenues from continuing operations for that fiscal year, in each case of the corporation and its subsidiaries on a consolidated basis, the corporation will conclusively be deemed to have retained a significant continuing activity.
(b) A disposition that requires approval of the members under subsection (a) shall be initiated by a resolution by the board of directors authorizing the disposition. After adoption of such a resolution, the board of directors shall submit the proposed disposition to the members for their approval. The board of directors shall also transmit to the members a recommendation that the members approve the proposed disposition, unless the board of directors makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation, in which case the board of directors shall transmit to the members the basis for that determination.
(c) The board of directors may condition its submission of a disposition to the members under subsection (b) on any basis.
(d) If a disposition is required to be approved by the members under subsection (a), and if the approval is to be given at a meeting, the corporation shall notify each member entitled to vote of the meeting of members at which the disposition is to be submitted for approval. The notice shall state that the purpose, or one of the purposes, of the meeting is to consider the disposition and shall contain a description of the disposition, including the terms and conditions thereof and the consideration to be received by the corporation.
(e) Unless this chapter or the articles of incorporation or the board of directors acting pursuant to subsection (c) requires a greater vote, or a greater number of votes to be present, the approval of a disposition by the members shall require the approval of the members at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast on the disposition exists.
(f) After a disposition has been approved by the members under subsection (b), and at any time before the disposition has been consummated, it may be abandoned by the corporation without action by the members, subject to any contractual rights of other parties to the disposition.
(g) A disposition of assets in the course of dissolution under article 14 is not governed by this section.
(h) The assets of a direct or indirect consolidated subsidiary shall be deemed the assets of the parent corporation for the purposes of this section.
ARTICLE 13. DISSOLUTION.
PART 1. VOLUNTARY DISSOLUTION.
§31E-13-1301. Dissolution by incorporators or initial directors.
A majority of the incorporators or initial directors of a corporation that has not commenced activities may dissolve the corporation by delivering to the secretary of state of state for filing articles of dissolution that set forth:
(1) The name of the corporation;
(2) The date of its incorporation;
(3) That the corporation has no member entitled to vote;
(4) That the corporation has not commenced the activities for which it was incorporated;
(5) That no debt of the corporation remains unpaid;
(6) That the net assets of the corporation remaining after winding up have been distributed as required by this chapter; and
(7) That a majority of the incorporators or initial directors authorized the dissolution.
§31E-13-1302. Dissolution by board of directors and members.
(a) A corporation's board of directors may propose dissolution for submission to those members entitled to vote thereon.
(b) For a proposal to dissolve to be adopted:
(1) The board of directors must recommend dissolution to the members unless the board of directors determines that because of conflict of interest or other special circumstances it should make no recommendation and communicates the basis for its determination to the members; and
(2) The members entitled to vote must approve the proposal to dissolve as provided in subsection (e).
(c) The board of directors may condition its submission of the proposal for dissolution on any basis.
(d) The corporation shall notify each member entitled to vote of the proposed members' meeting. The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation.
(e) Unless the articles of incorporation or the board of directors acting pursuant to subsection (c) require a greater vote, adoption of the proposal to dissolve shall require the approval of the members at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast exists.
(f) If the corporation has no members, or no members entitled to vote upon dissolution, dissolution shall be authorized by resolution of the board of directors.
§31E-13-1303. Articles of dissolution.
(a) At any time after dissolution is authorized, the corporation may dissolve by delivering to the secretary of state for filing articles of dissolution setting forth:
(1) The name of the corporation;
(2) The date dissolution was authorized; and
(3) If dissolution was approved by the members, a statement that the proposal to dissolve was duly approved by the members in the manner required by this chapter and by the articles of incorporation.
(b) A corporation is dissolved upon the effective date of its articles of dissolution.
§31E-13-1304. Revocation of dissolution.
(a) A corporation may revoke its dissolution within 120 days of its effective date.
(b) Revocation of dissolution must be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation by action of the board of directors alone, in which event the board of directors may revoke the dissolution without member action.
(c) After the revocation of dissolution is authorized, the corporation may revoke the dissolution by delivering to the secretary of state for filing articles of revocation of dissolution, together with a copy of its articles of dissolution, that set forth:
(1) The name of the corporation;
(2) The effective date of the dissolution that was revoked;
(3) The date that the revocation of dissolution was authorized;
(4) If the corporation's board of directors (or incorporators) revoked the dissolution, a statement to that effect;
(5) If the corporation's board of directors revoked a dissolution authorized by the members, a statement that revocation was permitted by action by the board of directors alone pursuant to that authorization; and
(6) If member action was required to revoke the dissolution, the information required by section 1303(a)(3).
(d) Revocation of dissolution is effective upon the effective date of the articles of revocation of dissolution.
(e) When the revocation of dissolution is effective, it relates back to and takes effect as of the effective date of the dissolution and the corporation resumes carrying on its activities as if dissolution had never occurred.
§31E-13-1305. Effect of dissolution.
(a) A dissolved corporation continues its corporate existence but may not carry on any activities except those appropriate to wind up and liquidate its activities and affairs, including:
(1) Adopting a plan providing for the distribution of assets under section 1308.
(2) Collecting its assets;
(3) Disposing of its properties that will not be distributed in kind pursuant to the plan of distribution consistent with the requirements of section 1308.
(4) Discharging or making provision for discharging its liabilities;
(5) Distributing its remaining assets in accordance with sections 1308 and 1309; and
(6) Doing every other act necessary to wind up and liquidate its activities and affairs.
(b) Dissolution of a corporation does not:
(1) Transfer title to the corporation's property;
(2) Prevent transfer of its transferable membership interests, if any, although the authorization to dissolve may provide for closing the corporation's membership records.
(3) Subject its directors or officers to standards of conduct different from those prescribed in article 8;
(4) Change quorum or voting requirements for its board of directors or members; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws;
(5) Prevent commencement of a proceeding by or against the corporation in its corporate name;
(6) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution;
(7) Terminate the authority of the registered agent of the corporation; or
(8) Of itself, render the members liable for any liability or other obligations of the corporation or vest title to the property of the corporation in the members.
§31E-13-1306. Known claims against dissolved corporation.
(a) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section.
(b) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date. The written notice must:
(1) Describe information that must be included in a claim;
(2) Provide a mailing address where a claim may be sent;
(3) State the deadline, which may not be fewer than one hundred twenty days from the effective date of the written notice, by which the dissolved corporation must receive the claim; and
(4) State that the claim will be barred if not received by the deadline.
(c) A claim against the dissolved corporation is barred:
(1) If a claimant who was given written notice under subsection (b) does not deliver the claim to the dissolved corporation by the deadline;
(2) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice.
(d) For purposes of this section, "claim" does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.
§31E-13-1307. Unknown claims against dissolved corporation.
(a) A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice.
(b) The notice must:
(1) Be published one time in a newspaper of general circulation in the county where the dissolved corporation's principal office (or, if none in this state, its registered office) is or was last located;
(2) Describe the information that must be included in a claim and provide a mailing address where the claim may be sent; and
(3) State that a claim against the corporation will be barred unless a proceeding to enforce the claim is commenced within five years after the publication of the notice.
(c) If the dissolved corporation publishes a newspaper notice in accordance with subsection (b), the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within five years after the publication date of the newspaper notice:
(1) A claimant who did not receive written notice under section 1306;
(2) A claimant whose claim was timely sent to the dissolved corporation but not acted on;
(3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.
(d) A claim may be enforced under this section:
(1) Against the dissolved corporation, to the extent of its undistributed assets; or
(2) If the assets have been distributed in liquidation, against a member of the dissolved corporation to the extent of his pro rata share of the claim or the corporate assets distributed to him in liquidation, whichever is less, but a member's total liability for all claims under this section may not exceed the total amount of assets distributed to him.
§31E-13-1308. Adoption of plan for distribution of assets.
A plan providing for the distribution of assets, not inconsistent with the provisions of this chapter shall be adopted by a corporation for the purpose of authorizing any transfer or conveyance of assets for which section 1309 requires a plan of distribution, in the following manner:
(1) Where there are members of any class entitled to vote on dissolution, the board of directors shall adopt a resolution recommending a plan of distribution and directing the submission thereof to a vote of each class of such members. Written notice setting forth the proposed plan of distribution or a summary thereof shall be given to each such member in accordance with section 705. Such plan of distribution shall be adopted upon receiving the approval of a majority of the votes cast by each class of such members voting as a class.
(2) Where there are no members entitled to vote on dissolution, a plan of distribution shall be adopted by resolution of the board of directors, or, if directors have not yet been appointed, by resolution approved by a majority of the incorporators.
§31E-13-1309. Liquidating distribution of assets.
(a) The assets of a corporation in the process of dissolution shall be applied and distributed as follows: (1) All liabilities and other obligations of the corporation shall be paid, satisfied and discharged, or adequate provision shall be made therefor; (2) assets held by the corporation upon condition requiring return, transfer or conveyance, which condition occurs by reason of the dissolution, shall be returned, transferred or conveyed in accordance with such requirements; (3) assets received and held by the corporation subject to limitations permitting their use only for charitable, religious, eleemosynary, benevolent, educational or similar purposes, but not held upon a condition requiring return, transfer or conveyance by reason of the dissolution, shall be transferred or conveyed to one or more domestic or foreign corporations, societies or organizations engaged in activities substantially similar to those of the dissolving corporation, pursuant to a plan of distribution adopted as provided in section 1308; (4) other assets, if any, shall be distributed pro rata among the members of the corporation except to the extent that the articles of incorporation determines the distributive rights of members, or any class or classes of members, or provides for distribution to others; and (5) any remaining assets may be distributed to such persons, societies, organizations or domestic or foreign corporations, whether for profit or nonprofit, as may be specified in a plan of distribution adopted as provided in section 1308.
(b) No final liquidating distribution of assets shall be made by a dissolved corporation until the corporation has obtained a current statement or statements from the __________________ and administrator of the unemployment compensation law, acting in their respective capacities, showing, to the best of their knowledge and belief, as of the date of such respective statements, either that such corporation has paid all its taxes and contributions or that it was not liable for any taxes or contributions, or that it has made adequate provisions, with such surety as shall be satisfactory to said commissioner and said administrator, for the future payment of any of its unpaid taxes and unpaid contributions as of the date of such respective statements. As used in this subsection, the word "tax" means the whole, or any instalment or part, of any tax, excise, fee or license and any interest, penalty and other legal accumulation thereon, payable to the ________________, for which the corporation is liable and the word "contribution" means any and all moneys payable under any provision of the unemployment compensation law, for which the particular corporation is liable. PART 2. ADMINISTRATIVE DISSOLUTION.
§31E-13-1320. Grounds for administrative dissolution.
The secretary of state may commence a proceeding under section 1321 to administratively dissolve a corporation if:
(1) The corporation does not pay within sixty days after they are due any franchise taxes or penalties imposed by this chapter or other law;
(2) The corporation does not deliver its annual report to _________________ within sixty days after it is due;
(3) The corporation is without a registered agent or registered office in this state for sixty days or more;
(4) The corporation does not notify the secretary of state within sixty days that its registered agent or registered office has been changed, that its registered agent has resigned, or that its registered office has been discontinued; or
(5) The corporation's period of duration stated in its articles of incorporation expires.

§31E-13-1321. Procedure for and effect of administrative dissolution.

(a) If the secretary of state determines that one or more grounds exist under section 1320 for dissolving a corporation, he shall serve the corporation with written notice of his determination under section 504.
(b) If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the secretary of state that each ground determined by the secretary of state does not exist within sixty days after service of the notice is perfected under section 504, the secretary of state shall administratively dissolve the corporation by signing a certificate of dissolution that recites the ground or grounds for dissolution and its effective date. The secretary of state shall file the original of the certificate and serve a copy on the corporation under section 504.
(c) A corporation administratively dissolved continues its corporate existence but may not carry on any activities except that necessary to wind up and liquidate its business and affairs under section 1305 and notify claimants under sections 1306 and 1307.
(d) The administrative dissolution of a corporation does not terminate the authority of its registered agent.
§31E-13-1322. Reinstatement following administrative dissolution.
(a) A corporation administratively dissolved under section 1321 may apply to the secretary of state for reinstatement within two years after the effective date of dissolution. The application must:
(1) Recite the name of the corporation and the effective date of its administrative dissolution;
(2) State that the ground or grounds for dissolution either did not exist or have been eliminated;
(3) State that the corporation's name satisfies the requirements of section 401; and
(4) Contain a certificate from the ________________ [taxing authority] reciting that all taxes owed by the corporation have been paid.
(b) If the secretary of state determines that the application contains the information required by subsection (a) and that the information is correct, he shall cancel the certificate of dissolution and prepare a certificate of reinstatement that recites his determination and the effective date of reinstatement, file the original of the certificate, and serve a copy on the corporation under section 504.
(c) When the reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the corporation resumes carrying on its activities as if the administrative dissolution had never occurred.
§31E-13-1323. Appeal from denial or reinstatement.
(a) If the secretary of state denies a corporation's application for reinstatement following administrative dissolution, he shall serve the corporation under section 504 with a written notice that explains the reason or reasons for denial.
(b) The corporation may appeal the denial of reinstatement to the circuit court within thirty days after service of the notice of denial is perfected. The corporation appeals by petitioning the circuit court to set aside the dissolution and attaching to the petition copies of the secretary of state's certificate of dissolution, the corporation's application for reinstatement, and the secretary of state's notice of denial.
(c) The circuit court may summarily order the secretary of state to reinstate the dissolved corporation or may take other action the circuit court considers appropriate.
(d) The circuit court's final decision may be appealed as in other civil proceedings.

PART 3.

§31E-13-1330. Grounds for judicial dissolution.
The circuit court for the judicial district where the corporation's principal office, or, if none in this state, its registered office, is located may dissolve a corporation:
(1) In a proceeding by the attorney general if it is established that:
(i) The corporation obtained its articles of incorporation through fraud; or
(ii) The corporation has continued to exceed or abuse the authority conferred upon it by law;
(2) In a proceeding by a member or director if it is established that:
(i) The directors are deadlocked in the management of the corporate affairs, the members are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the activities and affairs of the corporation can no longer be conducted in accordance with the corporation's purpose, because of the deadlock;
(ii) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent;
(iii) The corporate assets are being misapplied or wasted;
(3) In a proceeding by a creditor if it is established that:
(i) The creditor's claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or
(ii) The corporation has admitted in writing that the creditor's claim is due and owing and the corporation is insolvent; or
(4) In a proceeding by the corporation to have its voluntary dissolution continued under circuit court supervision.
§31E-13-1331. Procedure for judicial dissolution.
(a) Venue for a proceeding by the attorney general to dissolve a corporation and venue for a proceeding brought by any other party named in section 1330 lies in the county where a corporation's principal office (or, if none in this state, its registered office) is or was last located.
(b) It is not necessary to make members or directors parties to a proceeding to dissolve a corporation unless relief is sought against them individually.
(c) A circuit court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the circuit court directs, take other action required to preserve the corporate assets wherever located, and carry on the activities of the corporation until a full hearing can be held.
§31E-13-1332. Receivership or custodianship.
(a) A circuit court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the activities and affairs of the corporation. The circuit court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the circuit court, before appointing a receiver or custodian. The circuit court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all of its property wherever located.
(b) The circuit court may appoint an individual or a domestic or foreign corporation (authorized to transact business in this state) as a receiver or custodian. The circuit court may require the receiver or custodian to post bond, with or without sureties, in an amount the circuit court directs.
(c) The circuit court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:
(1) The receiver: (i) May dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the circuit court; and (ii) may sue and defend in his own name as receiver of the corporation in all circuit courts of this state;
(2) The custodian may exercise all of the powers of the corporation, through or in place of its board of directors, to the extent necessary to manage the affairs of the corporation in the best interests of its members and creditors.
(d) The circuit court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation, its members, if any, and creditors.
(e) The circuit court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and his counsel from the assets of the corporation or proceeds from the sale of the assets.
§31E-13-1333. Decree of dissolution.
(a) If after a hearing the circuit court determines that one or more grounds for judicial dissolution described in section 1330 exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the circuit court shall deliver a certified copy of the decree to the secretary of state, who shall file it.
(b) After entering the decree of dissolution, the circuit court shall direct the winding-up and liquidation of the corporation's activities and affairs in accordance with section 1305 and the notification of claimants in accordance with sections 1306 and 1307.
PART 4. MISCELLANEOUS.
§31E-13-1340. Deposit with state treasurer.
Assets of a dissolved corporation that should be transferred to a creditor, claimant, or member of the corporation who cannot be found or who is not competent to receive them shall be reduced to cash and deposited with the state treasurer or other appropriate state official for safekeeping. When the creditor, claimant, or member furnishes satisfactory proof of entitlement to the amount deposited, the state treasurer or other appropriate state official shall pay him or his representative that amount.
ARTICLE 14. FOREIGN CORPORATIONS.
PART 1. CERTIFICATE OF AUTHORITY.
§31E-14-1401. Authority to conduct affairs required.
(a) A foreign corporation may not conduct affairs in this state until it obtains a certificate of authority from the secretary of state.
(b) The following activities, among others, do not constitute conducting affairs within the meaning of subsection (a):
(1) Maintaining, defending, or settling any proceeding;
(2) Holding meetings of the board of directors or members or carrying on other activities concerning internal corporate affairs;
(3) Maintaining bank accounts;
(4) Selling through independent contractors;
(5) Soliciting or obtaining orders, whether by mail or through employees or agents or otherwise, if the orders require acceptance outside this state before they become contracts;
(6) Creating or acquiring indebtedness, mortgages, and security interests in real or personal property;
(7) Securing or collecting debts or enforcing mortgages and security interests in property securing the debts;
(8) Owning, without more, real or personal property;
(9) Conducting an isolated transaction that is completed within thirty days and that is not one in the course of repeated transactions of a like nature;
(10) Conducting affairs in interstate commerce.
(c) The list of activities in subsection (b) is not exhaustive.
(d) A foreign corporation shall be deemed to be conducting affairs in this state if:
(1) If the corporation makes a contract to be performed, in whole or in part, by any party thereto, in this state;
(2) If the corporation commits a tort in whole or in part in this state; or
(3) If the corporation manufactures, sells, offers for sale or supplies any product in a defective condition and that product causes injury to any person or property within this state notwithstanding the fact that the corporation had no agents, servants or employees or contacts within this state at the time of the injury.
(e) A foreign corporation's making of a contract, the committing of a manufacture or sale, offer of sale or supply of such defective product as described above in subsection (d) shall be deemed to be the agreement of that foreign corporation that any notice or process served upon, or accepted by, the secretary of state in a proceeding against that foreign corporation arising from, or growing out of, contract, tort, or manufacture or sale, offer of sale or supply of such defective product shall be of the same legal force and validity as process duly served on that corporation in this state.

§31E-14-1402. Consequences of conducting affairs without authority.

(a) A foreign corporation conducting affairs in this state without a certificate of authority may not maintain a proceeding in any circuit court in this state until it obtains a certificate of authority.
(b) The successor to a foreign corporation that conducted affairs in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding based on that cause of action in any circuit court in this state until the foreign corporation or its successor obtains a certificate of authority.
(c) A circuit court may stay a proceeding commenced by a foreign corporation, its successor, or assignee until it determines whether the foreign corporation or its successor requires a certificate of authority. If it so determines, the circuit court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.
(d) A foreign corporation is liable for a civil penalty of $______ for each day, but not to exceed a total of $______ for each year, it conducts affairs in this state without a certificate of authority. The secretary of state may collect all penalties due under this subsection.
(e) Notwithstanding subsections (a) and (b), the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.
(f) A foreign corporation conducting affairs in this state without a certificate of authority shall be conclusively presumed to have appointed the secretary of state as its attorney-in-fact to accept service of process and notice on behalf of the foreign corporation as provided in section 1410(d).
§31E-14-1403. Application for certificate of authority.
(a) A foreign corporation may apply for a certificate of authority to conduct affairs in this state by delivering an application to the secretary of state for filing. The application must set forth:
(1) The name of the foreign corporation or, if its name is unavailable for use in this state, a corporate name that satisfies the requirements of section 1406;
(2) The name of the state or country under whose law it is incorporated;
(3) Its date of incorporation and period of duration;
(4) The street address of its principal office;
(5) The address of its registered office in this state and the name of its registered agent at that office; and
(6) The names and usual addresses of its current directors and officers.
(b) The foreign corporation shall deliver with the completed application a certificate of existence (or a document of similar import) duly authenticated by the secretary of state or other official having custody of corporate records in the state or country under whose law it is incorporated.
§31E-14-1404. Amended certificate of authority.
(a) A foreign corporation authorized to conduct affairs in this state must obtain an amended certificate of authority from the secretary of state if it changes:
(1) Its corporate name;
(2) The period of its duration; or
(3) The state or country of its incorporation.
(b) The requirements of section 1403 for obtaining an original certificate of authority apply to obtaining an amended certificate under this section.
§31E-14-1405. Effect of certificate of authority.
(a) A certificate of authority authorizes the foreign corporation to which it is issued to conduct affairs in this state subject, however, to the right of the state to revoke the certificate as provided in this chapter.
(b) A foreign corporation with a valid certificate of authority has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by this chapter is subject to the same duties, restrictions, penalties, and liabilities now or later imposed on, a domestic corporation of like character.
(c) This chapter does not authorize this state to regulate the organization or internal affairs of a foreign corporation authorized to conduct affairs in this state.
§31E-14-1406. Corporate name of foreign corporation.
(a) If the corporate name of a foreign corporation does not satisfy the requirements of section 401, the foreign corporation to obtain or maintain a certificate of authority to conduct affairs in this state:
(1) May add the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," to its corporate name for use in this state; or
(2) May use a fictitious name to transact business in this state if its real name is unavailable and it delivers to the secretary of state for filing a copy of the resolution of its board of directors, certified by its secretary, adopting the fictitious name.
(b) Except as authorized by subsections (c) and (d), the corporate name (including a fictitious name) of a foreign corporation must be distinguishable upon the records of the secretary of state from:
(1) The corporate name of a corporation incorporated or authorized to conduct affairs in this state;
(2) A corporate name reserved or registered under section 402 or 403;
(3) The fictitious name of another foreign corporation authorized to transact business in this state; and
(4) The corporate name of a business corporation incorporated or authorized to transact business in this state.
(c) A foreign corporation may apply to the secretary of state for authorization to use in this state the name of another corporation (incorporated or authorized to transact business in this state) that is not distinguishable upon his records from the name applied for. The secretary of state shall authorize use of the name applied for if:
(1) The other corporation consents to the use in writing; or
(2) The applicant delivers to the secretary of state a certified copy of a final judgment of a circuit court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
(d) A foreign corporation may use in this state the name (including the fictitious name) of another domestic or foreign corporation that is used in this state if the other corporation is incorporated or authorized to conduct affairs in this state and the foreign corporation:
(1) Has merged with the other corporation;
(2) Has been formed by reorganization of the other corporation; or
(3) Has acquired all or substantially all of the assets, including the corporate name, of the other corporation.
(e) If a foreign corporation authorized to conduct affairs in this state changes its corporate name to one that does not satisfy the requirements of section 401, it may not conduct affairs in this state under the changed name until it adopts a name satisfying the requirements of section 401 and obtains an amended certificate of authority under section 1404.

§31E-14-1407. Registered office and registered agent of foreign corporation.

Each foreign corporation authorized to conduct affairs in this state must continuously maintain in this state:
(1) A registered office that may be the same as any of its places of business; and
(2) A registered agent, who may be:
(i) An individual who resides in this state and whose business office is identical with the registered office;
(ii) A domestic corporation or business domestic corporation whose business office is identical with the registered office; or
(iii) A foreign corporation or foreign business corporation authorized to transact business in this state whose business office is identical with the registered office.

§31E-14-1408. Change of registered office or registered agent of foreign corporation.

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

§31E-14-1409. Resignation of registered agent of foreign corporation.

(a) The registered agent of a foreign corporation may resign his agency appointment by signing and delivering to the secretary of state for filing the original and two exact or conformed copies of a statement of resignation. The statement of resignation may include a statement that the registered office is also discontinued.
(b) After filing the statement, the secretary of state shall attach the filing receipt to one copy and mail the copy and receipt to the registered office if not discontinued. The secretary of state shall mail the other copy to the foreign corporation at its principal office address shown in its most recent annual report.
(c) The agency appointment is terminated, and the registered office discontinued if so provided, on the thirty-first day after the date on which the statement was filed.
§31E-14-1410. Service on foreign corporation.
(a) The registered agent of a foreign corporation authorized to conduct activities in this state is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the foreign corporation.
(b) A foreign corporation may be served by registered or certified mail, return receipt requested, addressed to the secretary of the foreign corporation at its principal office shown in its application for a certificate of authority or in its most recent annual report if the foreign corporation:
(1) Has no registered agent or its registered agent cannot with reasonable diligence be served;
(2) Has withdrawn from conducting activities in this state under section 1420; or
(3) Has had its certificate of authority revoked under section 1431.
(c) Service is perfected under subsection (b) at the earliest of:
(1) The date the foreign corporation receives the mail;
(2) The date shown on the return receipt, if signed on behalf of the foreign corporation; or
(3) Five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed.
(d) The secretary of state is hereby constituted the attorney- in-fact for and on behalf of each corporation with authority to accept service of notice and process on behalf of each corporation and upon whom service of notice and process may be made in this state for and upon each corporation. Immediately after being served with or accepting any process or notice, the secretary of state shall file in his office a copy of the process or notice, endorsed as of the time of service, or acceptance, and transmit one copy of the process or notice by registered or certified mail, return receipt requested, to the foreign corporation's registered agent or if there is no registered agent, to the principal office of the foreign corporation. No process or notice shall be served on the secretary of state or accepted by him less than ten days before the return day thereof.
(e) This section does not prescribe the only means, or necessarily the required means, of serving a foreign corporation.
PART 2.

§31E-15-1501. Corporate records.
(a) A corporation shall keep as permanent records minutes of all meetings of its members and board of directors, a record of all actions taken by the members or board of directors without a meeting, and a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the corporation.
(b) A corporation shall maintain appropriate accounting records.
(c) A corporation or its agent shall maintain a record of its members, if any, in a form that permits preparation of a list of the names and addresses of all members, in alphabetical order.
(d) A corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.
(e) A corporation shall keep a copy of the following records at its principal office:
(1) Its articles or restated articles of incorporation and all amendments to them currently in effect;
(2) Its bylaws or restated bylaws and all amendments to them currently in effect;
(3) Resolutions adopted by its board of directors;
(4) The minutes of all members' meetings, and records of all action taken by members without a meeting, for the past three years;
(5) All written communications to members generally within the past three years, including the financial statements furnished for the past three years under section 1520;
(6) A list of the names and business addresses of its current directors and officers; and
(7) Its most recent annual report delivered to the secretary of state under section 1522.
§31E-15-1502. Inspection of records by members.
(a) A member of a corporation is entitled to inspect and copy, during regular business hours at the corporation's principal office, any of the records of the corporation described in section 1501(e) if he gives the corporation written notice of his demand at least five business days before the date on which he wishes to inspect and copy.
(b) A member of a corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if the member meets the requirements of subsection (c) and gives the corporation written notice of his demand at least five business days before the date on which he wishes to inspect and copy:
(1) Excerpts from minutes of any meeting of the board of directors, records of any action of a committee of the board of directors while acting in place of the board of directors on behalf of the corporation, minutes of any meeting of the members, and records of action taken by the members or board of directors without a meeting, to the extent not subject to inspection under section 1502(a);
(2) Accounting records of the corporation; and
(3) The record of members.
(c) A member may inspect and copy the records described in subsection (b) only if:
(1) His demand is made in good faith and for a proper purpose;
(2) He describes with reasonable particularity his purpose and the records he desires to inspect; and
(3) The records are directly connected with his purpose.
(d) The right of inspection granted by this section may not be abolished or limited by a corporation's articles of incorporation or bylaws.
(e) This section does not affect:
(1) The right of a member to inspect records under section 720 or, if the member is in litigation with the corporation, to the same extent as any other litigant;
(2) The power of a circuit court, independently of this chapter, to compel the production of corporate records for examination.
§31E-15-1503. Scope of inspection right.
(a) A member's agent or attorney has the same inspection and copying rights as the member represented.
(b) The right to copy records under section 1502 includes, if reasonable, the right to receive copies by xerographic or other means, including copies through an electronic transmission if available and so requested by the member.
(c) The corporation may comply at its expense with a member's demand to inspect the record of members under section 1502(b)(3) by providing the member with a list of members that was compiled no earlier than the date of the member's demand.
(d) The corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the member. The charge may not exceed the estimated cost of production, reproduction or transmission of the records.
§31E-15-1504. Circuit court-ordered inspection.
(a) If a corporation does not allow a member who complies with section 1502(a) to inspect and copy any records required by that subsection to be available for inspection, the circuit court of the county where the corporation's principal office (or, if none in this state, its registered office) is located may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the member.
(b) If a corporation does not within a reasonable time allow a member to inspect and copy any other record, the member who complies with sections 1502(b) and (c) may apply to the [name or describe circuit court] in the county where the corporation's principal office (or, if none in this state, its registered office) is located for an order to permit inspection and copying of the records demanded. The circuit court shall dispose of an application under this subsection on an expedited basis.
(c) If the circuit court orders inspection and copying of the records demanded, it shall also order the corporation to pay the member's costs (including reasonable counsel fees) incurred to obtain the order unless the corporation proves that it refused inspection in good faith because it had a reasonable basis for doubt about the right of the member to inspect the records demanded.
(d) If the circuit court orders inspection and copying of the records demanded, it may impose reasonable restrictions on the use or distribution of the records by the demanding member.
§31E-15-1505. Inspection of records by directors.
(a) A director of a corporation is entitled to inspect and copy the books, records and documents of the corporation at any reasonable time to the extent reasonably related to the performance of the director's duties as a director, including duties as a member of a committee, but not for any other purpose or in any manner that would violate any duty to the corporation.
(b) The circuit court of the county where the corporation's principal office (or if none in this state, its registered office) is located may order inspection and copying of the books, records and documents at the corporation's expense, upon application of a director who has been refused such inspection rights, unless the corporation establishes that the director is not entitled to such inspection rights. The circuit court shall dispose of an application under this subsection on an expedited basis.
(c) If an order is issued, the circuit court may include provisions protecting the corporation from undue burden or expense, and prohibiting the director from using information obtained upon exercise of the inspection rights in a manner that would violate a duty to the corporation, and may also order the corporation to reimburse the director for the director's costs (including reasonable counsel fees) incurred in connection with the application.
§31E-15-1506. Exception to notice requirement.
(a) Whenever notice is required to be given under any provision of this chapter to any member, notice shall not be required to be given if:
(i) Notice of two consecutive annual meetings, and all notices of meetings during the period between such two consecutive annual meetings, have been sent to such member at such member's address as shown on the records of the corporation and have been returned undeliverable.
(b) After notice is terminated pursuant to section 1519(b), if a member shall deliver to the corporation a written notice setting forth the member's then-current address, the requirement that notice be given to the member shall be reinstated.
PART 2.
CORPORATE RECORDS.
§31E-15-1520.

Financial statements for members.

(a) A corporation shall furnish its members annual financial statements, which may be consolidated or combined statements of the corporation and one or more of its subsidiaries, as appropriate, that include a balance sheet as of the end of the fiscal year, and an income statement for that year. If financial statements are prepared for the corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis.
(b) If the annual financial statements are reported upon by a public accountant, his report must accompany them. If not, the statements must be accompanied by a statement of the president or the person responsible for the corporation's accounting records:
(1) Stating his reasonable belief whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation; and
(2) Describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.
(c) A corporation shall mail the annual financial statements to each member within one hundred twenty days after the close of each fiscal year. Thereafter, on written request from a member who was not mailed the statements, the corporation shall mail him the latest financial statements.
§31E-15-1521. Annual report for secretary of state.
(a) Each domestic corporation, and each foreign corporation authorized to transact business in this state, shall deliver to the secretary of state for filing an annual report that sets forth:
(1) The name of the corporation and the state or country under whose law it is incorporated;
(2) The address of its registered office and the name of its registered agent at that office in this state;
(3) The address of its principal office;
(4) The names and business addresses of its directors and principal officers; and
(5) A brief description of the nature of its activities.
(b) Information in the annual report must be current as of the date the annual report is executed on behalf of the corporation.
(c) The first annual report must be delivered to the secretary of state between first day of January and the first day of April of the year following the calendar year in which a domestic corporation was incorporated or a foreign corporation was authorized to transact business. Subsequent annual reports must be delivered to the secretary of state between first day of January and first day of April of the following calendar years.
(d) If an annual report does not contain the information required by this section, the secretary of state shall promptly notify the reporting domestic or foreign corporation in writing and return the report to it for correction. If the report is corrected to contain the information required by this section and delivered to the secretary of state within thirty days after the effective date of notice, it is deemed to be timely filed.
ARTICLE 16. TRANSITION PROVISIONS.
§31E-16-1601. Application to existing domestic corporations.
This chapter applies to all domestic corporations in existence on its effective date that were incorporated under any general statute of this state providing for incorporation of corporations for profit if power to amend or repeal the statute under which the corporation was incorporated was reserved.
§31E-16-1602. Application to qualified foreign corporations.
A foreign corporation authorized to transact business in this state on the effective date of this chapter is subject to this chapter but is not required to obtain a new certificate of authority to transact business under this chapter.
§31E-16-1603. Saving provisions.
(a) Except as provided in subsection (b), the repeal of a statute by this chapter does not affect:
(1) The operation of the statute or any action taken under it before its repeal;
(2) Any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or incurred under the statute before its repeal;
(3) Any violation of the statute, or any penalty, forfeiture, or punishment incurred because of the violation, before its repeal;
(4) Any proceeding, reorganization, or dissolution commenced under the statute before its repeal, and the proceeding, reorganization, or dissolution may be completed in accordance with the statute as if it had not been repealed.
(b) If a penalty or punishment imposed for violation of a statute repealed by this chapter is reduced by this chapter, the penalty or punishment if not already imposed shall be imposed in accordance with this chapter.
§31E-16-1604. Severability.
If any provision of this chapter or its application to any person or circumstance is held invalid by a circuit 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.
§31E-16-1605. Effective date.
This chapter takes effect on the first day of July, two thousand one.
NOTE: The purpose of this bill is to enact the West Virginia Nonprofit Corporation Act. Under present law, business and nonprofit corporations are governed by the state statute. The West Virginia Law Institute has undertaken the revision of the West Virginia Corporation Act, as authorized by the Joint Committee on Government and Finance. The recommendation of the Law Institute was to create separates articles of law to govern business corporations and nonprofit corporations, respectively. This bill, approved by the Council for the Law Institute for submission to the Legislature, addresses nonprofit corporations. A companion bill will be introduced to address business corporations. This proposal is based on the 1999 Model Business Act which is designed to, among other things, simplify and modernize statutory financial provisions, standardize filing requirements, authorize electronic forms of communications and provide for a registered agent for service of process.

This bill has been recommended for introduction this legislative session without recommendation for passage by the Joint Standing Committee on the Judiciary.

Chapter 31E is new; therefore, strike-throughs and underscoring have been omitted.