A BILL to repeal article one, chapter thirty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to amend said code by adding thereto a new chapter, designated chapter thirty-one-d, all relating to revising, arranging, consolidating, and recodifying the laws of the state of West Virginia relating to business corporations.

Be it enacted by the Legislature of West Virginia:
That article one, chapter thirty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be repealed; and that said code be amended by adding thereto a new chapter, designated chapter thirty-one-d, all to read as follows:
CHAPTER 31D. WEST VIRGINIA BUSINESS CORPORATION ACT.
ARTICLE 1. GENERAL PROVISIONS.
PART 1. SHORT TITLE, RESERVATION OF POWERS AND CONSTRUCTION OF CHAPTER.
§31D-1-101. Short title.
This chapter is and may be cited as the "West Virginia Business Corporation Act."
§31D-1-101a. Legislative acknowledgment.

The Legislature acknowledges the work and contribution to the

drafting of this chapter of the late Ann Maxey, Professor of Law at the West Virginia University College of Law.
§31D-1-102. Reservation of powers.
The West Virginia Legislature has power to amend or repeal all or part of this act at any time and all domestic and foreign corporations subject to this act are governed by the amendment or repeal.
§31D-1-103. Construction of chapter.
In the event of any inconsistency between any of the provisions of this chapter and the provisions made for particular classes of corporations by chapters thirty-one, thirty-one-a or thirty-three of this code, the provisions contained in chapter thirty-one, thirty-one-a or thirty-three prevail to the extent of the inconsistency.
PART 2.
FILING DOCUMENTS.
§31D-1-120. Filing requirements.
(a) A document must satisfy the requirements of this section and any other provision of this code that adds to or varies these requirements to be entitled to filing by the secretary of state.
(b) The document to be filed must be typewritten or printed or, if electronically transmitted, it must be in a format that can be retrieved or reproduced in typewritten or printed form.
(c) The document to be filed must be in the English language: Provided, That a corporate name may not be in the English language if it is written in English letters or Arabic or Roman numerals: Provided, however, That the certificate of existence required of foreign corporations may not be in the English language if it is accompanied by a reasonably authenticated English translation.
(d) The document to be filed must be executed:
(1) By the chairman of the board of directors of a domestic or foreign corporation, by its president, or by another of its officers;
(2) If directors have not been selected or the corporation has not been formed, by an incorporator; or
(3) If the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
(e) The person executing the document to be filed shall sign it and state beneath or opposite his or her signature his or her name and the capacity in which he or she signs. The document may contain a corporate seal, attestation, acknowledgment or verification.
(f) The document to be filed must be delivered to the office of the secretary of state for filing. Delivery may be made by electronic transmission as permitted by the secretary of state. The secretary of state may require one exact or conformed copy to be delivered with the document to be filed if the document is filed in typewritten or printed form and not transmitted electronically: Provided, That a document filed pursuant to section five-hundred three, article five of this chapter and section one thousand fifteen hundred and nine, article fifteen of this chapter concerning the resignation of a registered agent must be accompanied by two exact or conformed copies as required by those sections.
(g) When a document is delivered to the office of the secretary of state for filing, the correct filing fee, and any franchise tax, license fee, or penalty required by this chapter or any other provision of this code must be paid or provision for payment made in a manner permitted by the secretary of state.
(h) In the case of service of notice and process as permitted by subsection (c), section five hundred four, article five and subsections (d) and (e), section one thousand five hundred ten, article fifteen of this chapter, the notice and process must be filed with the secretary of state as one original, plus two copies for each person to be served or noticed.
§31D-1-121. Forms.
(a) The secretary of state may prescribe and, upon request, furnish forms for documents required or permitted to be filed by this chapter. Use of these forms is not mandatory.
(b) The secretary of state may adopt regulations in accordance with the provisions of this article governing the form for filing with and delivery of documents to the office of the secretary of state under this chapter by electronic means, including facsimile and computer transmission.
§31D-1-122. Filing, service and copying fees.
The secretary of state shall collect all fees required to be charged and collected in accordance with the provisions of section two, article one, chapter fifty-nine, and section one, article twelve-c, chapter eleven of this code.
§31D-1-123. Effective time and date of document.
(a) Except as provided in subsection (b) of this section and subsection (c), section one hundred twenty-four of this article, a document accepted for filing is effective:
(1) At the date and time of filing, as evidenced by means as the secretary of state may use for the purpose of recording the date and time of filing; or
(2) At the time specified in the document as its effective time on the date it is filed.
(b) A document may specify a delayed effective time and date, and if it does so the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document is effective at the close of business on that date. A delayed effective date for a document may not be later than the ninetieth day after the date it is filed.
§31D-1-124. Correcting filed document.
(a) A domestic or foreign corporation may correct a document filed by the secretary of state if:
(1) The document contains an inaccuracy;
(2) The document was defectively executed, attested, sealed, verified or acknowledged; or
(3) The electronic transmission was defective.
(b) A document is corrected:
(1) By preparing articles of correction that:
(A) Describe the document, including its filing date, or attach a copy of the document to the articles;
(B) Specify the inaccuracy or defect to be corrected; and (C) Correct the inaccuracy or defect; and
(2) By delivering the articles to the secretary of state for filing.
(c) Articles of correction are effective on the effective date of the document they correct: Provided, That articles of correction are effective when filed as to persons who have relied on the uncorrected document and have been adversely affected by the correction.
§31D-1-125. Filing duty of secretary of state.
(a) If a document delivered to the office of the secretary of state for filing satisfies the requirements of section one hundred twenty of this article, the secretary of state shall file it.
(b) The secretary of state files a document by recording it as filed on the date and time of receipt, unless a delayed effective time is specified in the document. After filing a document, except as provided in section five hundred three, article five of this chapter and section one thousand five hundred nine, article fifteen of this chapter, the secretary of state shall deliver to the domestic or foreign corporation or its representative a receipt for the record and the fees. Upon request and payment of a fee, the secretary of state shall send to the requester a certified copy of the requested record.
(c) If the secretary of state refuses to file a document, he or she shall return it to the domestic or foreign corporation or its representative within five days after the document was delivered, together with a brief, written explanation of the reason for his or her refusal.
(d) The secretary of state's duty to file documents under this section is ministerial. His or her filing or refusing to file a document does not:
(1) Affect the validity or invalidity of the document in whole or part;
(2) Relate to the correctness or incorrectness of information contained in the document; or
(3) Create a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect.

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

(a) If the secretary of state refuses to file a document delivered to his or her office for filing, the domestic or foreign corporation may appeal the refusal to the circuit court within thirty days after the return of the document to the corporation. The appeal is commenced by petitioning the court to compel filing the document and by attaching to the petition the document and the secretary of state's explanation of his or her refusal to file.
(b) The circuit court may summarily order the secretary of state to file the document or take other action the court considers appropriate.
(c) The circuit court's final decision may be appealed to the West Virginia supreme court of appeals as in other civil proceedings.
§31D-1-127. Evidentiary effect of copy of filed document.
All courts, public offices and official bodies shall take and receive copies of documents filed in the office of the secretary of state and certified by him or her, in accordance with the provisions of this article, as conclusive evidence that the original document is on file with the secretary of state.
§31D-1-128. Certificate of existence.
(a) Any person may request a certificate of existence for a domestic corporation or a certificate of authorization for a foreign corporation from the secretary of state.
(b) A certificate of existence or authorization provides the following information:
(1) The domestic corporation's corporate name or the foreign corporation's corporate name used in this state; and
(2) If the corporation is a domestic corporation, that the corporation is duly incorporated under the laws of this state, the date of its incorporation, and the period of its duration if it is less than perpetual;
(3) If the corporation is a foreign corporation, that the corporation is authorized to transact business in this state; and
(4) If payment is reflected in the records of the secretary of state and if nonpayment affects the existence or authorization of the domestic or foreign corporation, whether all fees, taxes, and penalties owed to this state have been paid.
(c) Subject to any qualification stated in the certificate, a certificate of existence or authorization issued by the secretary of state may be relied upon as conclusive evidence that the domestic or foreign corporation is in existence or is authorized to transact business in this state.
§31D-1-129. Penalty for signing false document.
Any person who signs a document he or she knows is false in any material respect and knows that the document is to be delivered to the secretary of state for filing is guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than one thousand dollars, or confined in the county or regional jail not more than one year, or both.
PART 3. SECRETARY OF STATE.
§31D-1-130. Powers.
The secretary of state has the power reasonably necessary to perform the duties required of him or her by this chapter. The secretary of state has the power and authority to propose legislative rules for promulgation in accordance with the provisions of chapter twenty-nine-a of this code in order to carry out and implement the provisions of this chapter.
PART 4. VENUE.
§31D-1-140. Venue.
Unless otherwise provided by any provision of this code, any civil action or other proceeding brought pursuant to this chapter may be initiated in the circuit court of any county of this state as provided in section one, article one, chapter fifty-six of this code.
PART 5.
DEFINITIONS.
§31D-1-150. Definitions.
As used in this chapter, unless the context otherwise requires a different meaning, the term:
(1) "Articles of incorporation" includes, but is not limited to, amended and restated articles of incorporation and articles of merger.
(2) "Authorized shares" means the shares of all classes a domestic or foreign corporation is authorized to issue.
(3) "Conspicuous" means written so that a reasonable person against whom the writing is to operate should have noticed including, but not limited to, printing in italics or boldface or contrasting color, or typing in capitals or underlined.
(4) "Corporation" or "domestic corporation" means a corporation for profit, which is not a foreign corporation, incorporated under or subject to the provisions of this chapter.
(5) "Deliver" or "delivery" means any method of delivery used in conventional commercial practice, including, but not limited to, delivery by hand, mail, commercial delivery, and electronic transmission.
(6) "Distribution" means a direct or indirect transfer of money or other property or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares: Provided, That "distribution" does not include a direct or indirect transfer of a corporation's own shares. A distribution may be in the form of a declaration or payment of a dividend; a purchase, redemption, or other acquisition of shares; a distribution of indebtedness.
(7) "Effective date of notice" means the date as determined pursuant to section one hundred fifty-one of this article
(8) "Electronic transmission" or "electronically transmitted" means any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval, and reproduction of information by the recipient.
(9) "Employee" includes an officer and may include a director: Provided, That the director has accepted duties that make him or her also an employee.
(10) "Entity" includes corporations and foreign corporations; nonprofit corporations; profit and nonprofit unincorporated associations; limited liability companies and foreign limited liability companies; business trusts, estates, partnerships, trusts, and two or more persons having a joint or common economic interest; and state, United States, and foreign government.
(11) "Foreign corporation" means a corporation for profit incorporated under a law other than the laws of this state.
(12) "Governmental subdivision" includes, but is not limited to, authorities, counties, districts, and municipalities.
(13) "Individual" includes, but is not limited to, the estate of an incompetent or deceased individual.
(14) "Person" includes, but is not limited to, individual and entity.
(15) "Principal office" means the office so designated in the return required pursuant to section three, article twelve-c, chapter eleven of this code where the principal executive offices of a domestic or foreign corporation are located.
(16) "Proceeding" includes, but is not limited to, civil suits and criminal, administrative, and investigatory actions.
(17) "Record date" means the date established under article six or seven of this chapter on which a corporation determines the identity of its shareholders and their shareholdings. The determinations are to be made as of the close of business on the record date unless another time for doing so is specified when the record date is fixed.
(18) "Registered Agent" means the agent identified by the corporation pursuant to section five hundred one, article five of this chapter.
(19) "Registered Office" means the address of the registered agent for the corporation, as provided in section five hundred one, article five of this chapter.
(20) "Secretary" means the corporate officer to whom the board of directors has delegated responsibility under subsection (c), section eight hundred forty, article eight of this chapter for custody of the minutes of the meetings of the board of directors and the meetings of the shareholders and for authenticating records of the corporation.
(21) "Shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.
(22) "Shares" means the units into which the proprietary interests in a corporation are divided.
(23) "Sign" or "signature" includes, but is not limited to, any manual, facsimile, conformed or electronic signature.
(24) "State," when referring to a part of the United States, includes a state and commonwealth and a territory and insular possession of the United States and their agencies and governmental subdivisions.
(25) "Subscriber" means a person who subscribes for shares in a corporation, whether before or after incorporation.
(26) "United States" includes, but is not limited to, districts, authorities, bureaus, commissions, departments, and any other agency of the United States.
(27) "Voting group" means all shares of one or more classes or series that pursuant to the articles of incorporation or this chapter are entitled to vote and be counted together collectively on a matter at a meeting of shareholders. All shares entitled by the articles of incorporation or this chapter to vote generally on the matter are for that purpose a single voting group.
(28) "Voting power" means the current power to vote in the election of directors.
§31D-1-151. Notice.
(a) Notice under this chapter must be in writing unless oral notice is reasonable under the circumstances. Notice by electronic transmission is to be considered written notice.
(b) Notice may be communicated in person; by mail or other method of delivery; or by telephone, voice mail or other electronic means. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published, or by radio, television, or other form of public broadcast communication.
(c) Written notice by a domestic or foreign corporation to its shareholder, if in a comprehensible form, is effective: (1) Upon deposit in the United States mail, if mailed postpaid and correctly addressed to the shareholder's address shown in the corporation's current record of shareholders; or (2) when electronically transmitted to the shareholder in a manner authorized by the shareholder.
(d) Written notice to a domestic or foreign corporation authorized to transact business in this state may be addressed to its registered agent at its registered office or to the corporation or its secretary at its principal office shown in its most recent return required pursuant to section three, article twelve-c, chapter eleven of this code or, in the case of a foreign corporation that has not yet delivered a return, in its application for a certificate of authority.
(e) Except as provided in subsection (c) of this section, written notice, if in a comprehensible form, is effective at the earliest of the following:
(1) When received;
(2) Five days after its deposit in the United States mail, if mailed postpaid and correctly addressed; or
(3) On the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee.
(f) Oral notice is effective when communicated, if communicated in a comprehensible manner.
(g) If other provisions of this chapter prescribe notice requirements for particular circumstances, those requirements govern. If articles of incorporation or bylaws prescribe notice requirements, not inconsistent with this section or other provisions of this chapter, those requirements govern.
§31D-1-152. Number of shareholders.
(a) For purposes of this chapter, the following, identified as a shareholder in a corporation's current record of shareholders, constitutes one shareholder:
(1) Three or fewer co-owners;
(2) A corporation, partnership, trust, estate, or other entity; or
(3) The trustees, guardians, custodians, or other fiduciaries of a single trust, estate, or account.
(b) For purposes of this chapter, shareholdings registered in substantially similar names constitute one shareholder if it is reasonable to believe that the names represent the same person.
ARTICLE 2. INCORPORATION.
§31D-2-201. Incorporators.
One or more persons may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the secretary of state for filing.
§31D-2-202. Articles of incorporation.
(a) The articles of incorporation must set forth:
(1) A corporate name for the corporation that satisfies the requirements of section four hundred one, article four of this chapter;
(2) The number of shares the corporation is authorized to issue; the par value of each of the shares or a statement that all shares are without par value;
(3) The street address of the corporation's initial registered office, if any, and the name of its initial registered agent at that office, if any;
(4) The name and address of each incorporator; and
(5) The purpose or purposes for which the corporation is organized.
(b) The articles of incorporation may set forth:
(1) The names and addresses of the individuals who are to serve as the initial directors;
(2) Provisions not inconsistent with law regarding:
(A) Managing the business and regulating the affairs of the corporation;
(B) Defining, limiting, and regulating the powers of the corporation, its board of directors, and shareholders; or
(C) The imposition of personal liability on shareholders for the debts of the corporation to a specified extent and upon specified conditions;
(3) Any provision that under this chapter is required or permitted to be set forth in the bylaws;
(4) A provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director: Provided, That a provision may not eliminate or limit the liability of a director: (A) For any breach of the director's duty of loyalty to the corporation or its stockholders; (B) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (C) under section eight hundred thirty-three, article eight of this chapter for unlawful distributions; or (D) for any transaction from which the director derived an improper personal benefit. No provision may eliminate or limit the liability of a director for any act or omission occurring prior to the date when that provision becomes effective; and
(5) A provision permitting or making obligatory indemnification of a director for liability as that term is defined in section eight hundred fifty, article eight of this chapter, to any person for any action taken, or any failure to take any action, as a director, except liability for: (A) Receipt of a financial benefit to which he or she is not entitled; (B) an intentional infliction of harm on the corporation or its shareholders; (C) a violation of section eight hundred thirty-three, article eight of this chapter for unlawful distributions; or (D) an intentional violation of criminal law.
(c) The articles of incorporation need not set forth any of the corporate powers enumerated in this chapter.
§31D-2-203. Incorporation.
(a) Unless a delayed effective date is specified, the corporate existence begins when the articles of incorporation are filed.
(b) The secretary of state's filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the state to cancel or revoke the incorporation or involuntarily dissolve the corporation.
§31D-2-204.

§31D-6-602. Terms of class or series determined by board of directors.

§31D-6-624. Share options.

A corporation may issue rights, options, or warrants for the purchase of shares of the corporation. The board of directors shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued.

§31D-6-625. Form and content of certificates.
(a) Shares may but need not be represented by certificates. Unless this chapter or another provision of this code expressly provides otherwise, the rights and obligations of shareholders are identical whether or not their shares are represented by certificates.
(b) At a minimum each share certificate must state on its face:
(1) The name of the issuing corporation and that it is organized under the law of this state;
(2) The name of the person to whom issued; and
(3) The number and class of shares and the designation of the series, if any, the certificate represents.
(c) If the issuing corporation is authorized to issue different classes of shares or different series within a class, the designations, relative rights, preferences, and limitations applicable to each class and the variations in rights, preferences, and limitations determined for each series and the authority of the board of directors to determine variations for future series must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge.
(d) Each share certificate: (1) Must be signed, either manually or in facsimile, by two officers designated in the bylaws or by the board of directors; and (2) may bear the corporate seal or its facsimile.
(e) If the person who signed, either manually or in facsimile, a share certificate no longer holds office when the certificate is issued, the certificate remains valid.
§31D-6-626. Shares without certificates.
(a) Unless the articles of incorporation or bylaws provide otherwise, the board of directors of a corporation may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation.
(b) Within a reasonable time after the issue or transfer of shares without certificates, the corporation shall send the shareholder a written statement of the information required on certificates by subsections (b) and (c), section six hundred twenty five of this article, and, if applicable, section six hundred twenty-seven of this article.

§31D-6-627. Restriction on transfer of shares and other securities.

(a) The articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.
(b) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by subsection (b), section six hundred twenty- six of this article. Unless a restriction is noted as required by this subsection, a restriction is not enforceable against a person without knowledge of the restriction.
(c) A restriction on the transfer or registration of transfer of shares is authorized:
(1) To maintain the corporation's status when it is dependent on the number or identity of its shareholders;
(2) To preserve exemptions under federal or state securities law; or
(3) For any other reasonable purpose.
(d) A restriction on the transfer or registration of transfer of shares may:
(1) Obligate the shareholder first to offer the corporation or other persons an opportunity to acquire the restricted shares;
(2) Obligate the corporation or other persons to acquire the restricted shares;
(3) Require the corporation, the holders of any class of its shares, or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable; or
(4) Prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable.
(e) For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.
§31D-6-628. Expense of issue.
A corporation may pay the expenses of selling or underwriting its shares, and of organizing or reorganizing the corporation, from the consideration received for shares.

SUBSEQUENT ACQUISITION OF SHARES
BY SHAREHOLDERS
AND CORPORATION.
§31D-6-630. Shareholders' preemptive rights.
(a) The shareholders of a corporation do not have a preemptive right to acquire the corporation's unissued shares except to the extent the articles of incorporation provide.
(b) A statement included in the articles of incorporation that "the corporation elects to have preemptive rights," or words of similar import, means that the following principles apply, except to the extent the articles of incorporation expressly provide otherwise:
(1) The shareholders of the corporation have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation's unissued shares upon the decision of the board of directors to issue them.
(2) A shareholder may waive his or her preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
(3) There is no preemptive right with respect to:
(A) Shares issued as compensation to directors, officers, agents, or employees of the corporation, its subsidiaries or affiliates;
(B) Shares issued to satisfy conversion or option rights created to provide compensation to directors, officers, agents, or employees of the corporation, its subsidiaries or affiliates;
(C) Shares authorized in articles of incorporation that are issued within six months from the effective date of incorporation; or
(D) Shares sold otherwise than for money.
(4) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.
(5) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.
(6) Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person for a period of one year after being offered to shareholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the shareholders' preemptive rights.
(c) For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.
§31D-6-631. Corporation's acquisition of its own shares.
(a) Subject to the provisions of chapter thirty-one-a of this code and unless otherwise prohibited by law, a corporation may acquire its own shares, and shares so acquired constitute authorized but unissued shares.
(b) If the articles of incorporation prohibit the reissue of the acquired shares, the number of authorized shares is reduced by the number of shares acquired.

DISTRIBUTIONS.
§31D-6-640. Distributions to shareholders.
(a) A board of directors may authorize and the corporation may make distributions to its shareholders subject to restriction by the articles of incorporation and the limitation in subsection (c) of this section.
(b) If the board of directors does not fix the record date for determining shareholders entitled to a distribution, it is the date the board of directors authorizes the distribution: Provided, That this subsection does not apply to a distribution involving a purchase, redemption, or other acquisition of the corporation's shares.
(c) No distribution may be made if, after giving it effect:
(1) The corporation would not be able to pay its debts as they become due in the usual course of business; or
(2) The corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution, unless the articles of incorporation permit otherwise.
(d) The board of directors may base a determination that a distribution is not prohibited under subsection (c) of this section either on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair valuation or other method that is reasonable in the circumstances.
(e) Except as provided in subsection (g) of this section, the effect of a distribution under subsection (c) of this section is measured:
(1) In the case of distribution by purchase, redemption, or other acquisition of the corporation's shares, as of the earlier of: (A) The date money or other property is transferred or debt incurred by the corporation; or (B) the date the shareholder ceases to be a shareholder with respect to the acquired shares;
(2) In the case of any other distribution of indebtedness, as of the date the indebtedness is distributed; and
(3) In all other cases, as of: (A) The date the distribution is authorized if the payment occurs within one hundred twenty days after the date of authorization; or (B) the date the payment is made if it occurs more than one hundred twenty days after the date of authorization.
(f) A corporation's indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section is at parity with the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement.
(g) Indebtedness of a corporation, including indebtedness issued as a distribution, is not considered a liability for purposes of determinations under subsection (c) of this section if its terms provide that payment of principal and interest are made only if and to the extent that payment of a distribution to shareholders could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is actually made.
ARTICLE 7. SHAREHOLDERS.
PART 1. MEETINGS.
§31D-7-701. Annual meeting.
(a) A corporation must hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws.
(b) Annual shareholders' meetings 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 are to be held at the corporation's principal office.
(c) The failure to hold an annual meeting at the time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporate action.
§31D-7-702. Special meeting.
(a) A corporation must hold a special meeting of shareholders:
(1) On call of its board of directors or the person or persons authorized by the articles of incorporation or bylaws; or
(2) If the holders of at least ten percent of all the votes entitled to be cast on an 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: Provided, That the articles of incorporation may fix a lower percentage or a higher percentage not exceeding twenty-five percent of all the votes entitled to be cast on any issue proposed to be considered. Unless otherwise provided in the articles of incorporation, a written demand for a special meeting may be revoked by a writing to that effect received by the corporation prior to the receipt by the corporation of demands sufficient in number to require the holding of a special meeting.
(b) If not otherwise fixed under section seven hundred three or seven hundred seven of this article, the record date for determining shareholders entitled to demand a special meeting is the date the first shareholder signs the demand.
(c) Special shareholders' meetings 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 are to 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), section seven hundred five of this article may be conducted at a special shareholders' meeting.
§31D-7-703. Court-ordered meeting.
(a) The circuit court may summarily order a meeting to be held:
(1) On application of any shareholder of the corporation entitled to participate in 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 shareholder who signed a demand for a special meeting valid under section seven hundred two of this article, 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 shares entitled to participate in the meeting; specify a record date for determining shareholders 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.
§31D-7-704. Action without meeting.
(a) Action required or permitted by this chapter to be taken at a shareholders' meeting may be taken without a meeting if the action is taken by all the shareholders entitled to vote on the action. The action must be evidenced by one or more written consents bearing the date of signature and describing the action taken, signed by all the shareholders entitled to vote on the action, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) If not otherwise fixed under section seven hundred three or seven hundred seven of this article, the record date for determining shareholders entitled to take action without a meeting is the date the first shareholder signs the consent under subsection (a) of this section. No written consent may be effective to take the corporate action referred to in the consent unless, within sixty days of the earliest date appearing on a consent delivered to the corporation in the manner required by this section, written consents signed by all shareholders entitled to vote on the action are received by the corporation. A written consent may be revoked by a writing to that effect received by the corporation prior to receipt by the corporation of unrevoked written consents sufficient in number to take corporate action.
(c) A consent signed under this section has the effect of a meeting vote and may be described as a meeting vote in any document.
(d) If this chapter requires that notice of proposed action be given to nonvoting shareholders and the action is to be taken by unanimous consent of the voting shareholders, the corporation must give its nonvoting shareholders written notice of the proposed action at least ten days before the action is taken. The notice must contain or be accompanied by the same material that, under this chapter, would have been required to be sent to nonvoting shareholders in a notice of meeting at which the proposed action would have been submitted to the shareholders for action.
§31D-7-705. Notice of meeting.
(a) A corporation is to notify shareholders of the date, time, and place of each annual and special shareholders' meeting no fewer than ten nor more than sixty days before the meeting date. Unless this chapter or the articles of incorporation require otherwise, the corporation is required to give notice only to shareholders entitled to vote at the meeting.
(b) Unless this chapter, the articles of incorporation or bylaws require otherwise, notice of an annual meeting need not include a description of the purpose or purposes for which the meeting is called.
(c) Notice of a special meeting must include a description of the purpose or purposes for which the meeting is called.
(d) If not otherwise fixed under section seven hundred three or seven hundred seven of this article, the record date for determining shareholders entitled to notice of and to vote at an annual or special shareholders' meeting is the day before the first notice is delivered to shareholders.
(e) Unless the bylaws require otherwise, if an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under section seven hundred seven of this article, notice of the adjourned meeting must be given under this section to persons who are shareholders as of the new record date.
(f) Unless the articles of incorporation or bylaws provide otherwise, any shareholder may participate in a regular or special meeting by any means of communication by which all shareholders participating may simultaneously hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting.
§31D-7-706. Waiver of notice.
(a) A shareholder may waive any notice required by this chapter, the articles of incorporation, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the shareholder entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) A shareholder's attendance at a meeting:
(1) Waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and
(2) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.
§31D-7-707. Record date.
(a) The bylaws may fix or provide the manner of fixing the record date for one or more voting groups in order to determine the shareholders entitled to notice of a shareholders' meeting, 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 shareholders.
(c) A determination of shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the board of directors fixes a new record date, 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.
§31D-7-708. Conduct of the meeting.
(a) At each meeting of shareholders, a chair shall preside. The chair is to be appointed as provided in the bylaws or, in the absence of a provision in the bylaws, by the board of directors.
(b) The chair, unless the articles of incorporation or bylaws provide otherwise, shall determine the order of business and has the authority to establish rules for the conduct of the meeting.
(c) Any rules adopted for, and the conduct of, the meeting are to be fair to shareholders.
(d) The chair of the meeting shall announce at the meeting when the polls close for each matter voted upon. If no announcement is made, the polls are to be deemed to have closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes nor any revocations or changes to a ballot, proxy or vote 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.

§31D-8-801. Requirement for and duties of board of directors.
(a) Except as provided in section seven hundred thirty-two, article seven of this chapter, each corporation must have a board of directors.
(b) All corporate powers are to be exercised by or under the authority of, and the business 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 or in an agreement authorized under section seven hundred thirty-two, article seven of this chapter.
§31D-8-802. Qualifications of directors.
The articles of incorporation or bylaws may prescribe qualifications for directors. A director need not be a resident of this state or a shareholder of the corporation unless the articles of incorporation or bylaws require he or she to be a shareholder.
§31D-8-803. Number and election of directors.
(a) A board of directors must consist of one or more individuals, with the number specified in or fixed in accordance with the articles of incorporation or bylaws.
(b) If a board of directors has power to fix or change the number of directors, the board may increase or decrease by thirty percent or less the number of directors last approved by the shareholders, but only the shareholders may increase or decrease by more than thirty percent the number of directors last approved by the shareholders.
(c) The articles of incorporation or bylaws may establish a variable range for the size of the board of directors by fixing a minimum and maximum number of directors. If a variable range is established, the number of directors may be fixed or changed from time to time, within the minimum and maximum, by the shareholders or the board of directors. After shares are issued, only the shareholders may change the range for the size of the board or change from a fixed to a variable-range size board or change from a variable to a fixed range size board.
(d) Directors are elected at the first annual shareholders' meeting and at each annual meeting thereafter unless their terms are staggered under section eight hundred six of this article.

§31D-8-804. Election of directors by certain classes of shareholders.

If the articles of incorporation authorize dividing the shares into classes, the articles may also authorize the election of all or a specified number of directors by the holders of one or more authorized classes of shares. A class or classes of shares entitled to elect one or more directors is a separate voting group for purposes of the election of directors.
§31D-8-805. Terms of directors generally.
(a) The terms of the initial directors of a corporation expire at the first shareholders' meeting at which directors are elected.
(b) The terms of all other directors expire at the next annual shareholders' meeting following their election unless their terms are staggered under section eight hundred six of this article.
(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 shareholders' meeting at which directors are elected.
(e) Despite the expiration of a director's term, he or she continues to serve until his or her successor is elected and qualifies or until there is a decrease in the number of directors.
§31D-8-806. Staggered terms for directors.
If there are nine or more directors, the articles of incorporation may provide for staggering their terms by dividing the total number of directors into two or three groups, with each group containing as close to one half or one-third of the total number of directors as possible. In that event, the terms of directors in the first group expire at the first annual shareholders' meeting after their election, the terms of the second group expire at the second annual shareholders' meeting after their election, and the terms of the third group, if any, expire at the third annual shareholders' meeting after their election. At each annual shareholders' meeting held thereafter, directors are to be chosen for a term of two years or three years to succeed those whose terms expire.
§31D-8-807. Resignation of directors.
(a) A director may resign at any time by delivering written notice to the board of directors, the chair of the board of directors, or to the corporation.
(b) A resignation is effective when the notice is delivered unless the board of directors agree to a later effective date.
§31D-8-808. Removal of directors by shareholders.
(a) The shareholders may remove one or more directors with or without cause.
(b) If a director is elected by a voting group of shareholders, only the shareholders of that voting group may participate in the vote to remove him or her.
(c) A director may be removed only if the number of votes cast to remove him or her exceeds the number of votes cast not to remove him or her provided that a director may not be removed if the number of votes sufficient to elect him or her under cumulative voting is voted against his or her removal.
(d) A director may be removed by the shareholders only at a meeting called for the purpose of removing him or her and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.
§31D-8-809. Removal of directors by judicial proceeding.
(a) The circuit court may remove a director of the corporation from office in a proceeding commenced either by the corporation or by its shareholders holding at least ten percent of the outstanding shares 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 reelection for a period prescribed by the court.
(c) If shareholders commence a proceeding under subsection (a) of this section, they must make the corporation a party defendant.
§31D-8-810. Vacancy on board.
(a) Unless the articles of incorporation provide otherwise, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors:
(1) The shareholders 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 voting group of shareholders and if the vacancy is to be filled by the shareholders as provided in subdivision (1), subsection (a) of this section, only the holders of shares of that voting group are entitled to vote to fill the vacancy.
(c) A vacancy that will occur at a specific later date by reason of a resignation effective at a later date under subsection (b), section eight hundred seven of this article or otherwise may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.
§31D-8-811. 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. MEETINGS AND ACTION OF THE BOARD.

(5) Adopt, amend, or repeal bylaws;

INDEMNIFICATION AND ADVANCE FOR EXPENSES.
§31D-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 or her duties to the corporation also impose duties on, or otherwise involve services by, him or her 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 subsection (c), section eight hundred fifty-three of this article or a vote or selection referred to in subsections (b) or (c), section eight hundred fifty-five of this article, is not: (A) A party to the proceeding; or (B) 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:
(A) When used with respect to a director, the office of director in a corporation; and
(B) When used with respect to an officer, as contemplated in section eight hundred fifty-six of this article, 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.
§31D-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 or she is a director against liability incurred in the proceeding if:
(1) (A) He or she conducted himself or herself in good faith; and
(B) He or she reasonably believed: (i) In the case of conduct in his or her official capacity, that his or her conduct was in the best interests of the corporation; and (ii) in all other cases, that his or her conduct was at least not opposed to the best interests of the corporation; and
(C) In the case of any criminal proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful; or
(2) He or she engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the articles of incorporation as authorized by subdivision (5), subsection (b), section two hundred two, article two of this chapter.
(b) A director's conduct with respect to an employee benefit plan for a purpose he or she reasonably believed to be in the interests of the participants in, and the beneficiaries of, the plan is conduct that satisfies the requirement of subparagraph (ii), paragraph (B), subdivision (1), subsection (a) of this section.
(c) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, is not determinative that the director did not meet the relevant standard of conduct described in this section.
(d) Unless ordered by a court under subdivision (3), subsection (a), section eight hundred fifty-four of this article, 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) of this section; or
(2) In connection with any proceeding with respect to conduct for which he or she was adjudged liable on the basis that he or she received a financial benefit to which he or she was not entitled, whether or not involving action in his or her official capacity.
§31D-8-852. Mandatory indemnification.
A corporation must indemnify a director who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which he or she was a party because he or she was a director of the corporation against reasonable expenses incurred by him or her in connection with the proceeding.
§31D-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 or she is a director if he or she delivers to the corporation:
(1) A written affirmation of his or her good faith belief that he or she has met the relevant standard of conduct described in section eight hundred fifty-one of this article or that the proceeding involves conduct for which liability has been eliminated under a provision of the articles of incorporation as authorized by subdivision (4), subsection (b), section two hundred two, article two of this chapter; and
(2) His or her written undertaking to repay any funds advanced if he or she is not entitled to mandatory indemnification under section eight hundred fifty-two of this article and it is ultimately determined under sections eight hundred fifty-four or eight hundred fifty-five of this article that he or she has not met the relevant standard of conduct described in section eight hundred fifty-one of this article.
(b) The undertaking required by subdivision (2), subsection (a) of this section 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 are to be made:
(1) By the board of directors:
(A) If there are two or more disinterested directors, by a majority vote of all the disinterested directors, a majority of whom constitute a quorum for this purpose, or by a majority of the members of a committee of two or more disinterested directors appointed by a vote; or
(B) If there are fewer than two disinterested directors, by the vote necessary for action by the board in accordance with subsection (c), section eight hundred twenty-four of this article, in which authorization directors who do not qualify as disinterested directors may participate; or
(2) By the shareholders, 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; or
(3) By special legal counsel selected in a manner in accordance with subdivision (2), subsection (b), section eight hundred fifty-five of this article.

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

(a) A director who is a party to a proceeding because he or she is a director may apply for indemnification or an advance for expenses to the 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 eight hundred fifty-two of this article;
(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 subsection (a), section eight hundred fifty-eight of this article; 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:
(A) To indemnify the director; or
(B) To advance expenses to the director, even if he or she has not met the relevant standard of conduct set forth in subsection (a), section eight hundred fifty-one of this article, failed to comply with section eight hundred fifty-three of this article or was adjudged liable in a proceeding referred to in subdivision (1) or (2), subsection (d), section eight hundred fifty-one of this article, but if he or she was adjudged so liable his or her indemnification is to 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 subdivision (1), subsection (a) of this section or to indemnification or advance for expenses under subdivision (2), subsection (a) of this section, 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 subdivision (3), subsection (a) of this section, it may also order the corporation to pay the director's reasonable expenses to obtain circuit court-ordered indemnification or advance for expenses.
§31D-8-855. Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under section eight hundred fifty-one of this article unless authorized for a specific proceeding after a determination has been made that indemnification of the director is permissible because he or she has met the relevant standard of conduct set forth in section eight hundred fifty-one of this article.
(b) The determination is to 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 constitute a quorum for this purpose, or by a majority of the members of a committee of two or more disinterested directors appointed by a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in subdivision (1) of this subsection; or
(B) 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 shareholders, 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 determination.
(c) Authorization of indemnification is to 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 is to be made by those entitled under paragraph (B), subdivision (2), subsection (b) of this section to select special legal counsel.
§31D-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 or she is an officer of the corporation:
(1) To the same extent as a director; and
(2) If he or she is an officer but not a director, to a 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 or her of a financial benefit to which he or she is not entitled;
(ii) An intentional infliction of harm on the corporation or the shareholders; or
(iii) An intentional violation of criminal law.
(b) The provisions of subdivision (2), subsection (a) of this section apply to an officer who is also a director if the basis on which he or she 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 eight hundred fifty-two of this article, and may apply to a court under section eight hundred fifty-four of this article 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.
§31D-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 or her in that capacity or arising from his or her status as a director or officer, whether or not the corporation would have power to indemnify or advance expenses to him or her against the same liability under this part.
§31D-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 shareholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification in accordance with section eight hundred fifty-one of this article or advance funds to pay for or reimburse expenses in accordance with section eight hundred fifty-three of this article. Any obligatory provision is deemed to satisfy the requirements for authorization referred to in subsection (c), section eight hundred fifty-three and in subsection (c), section eight hundred fifty-five of this article. Any provision that obligates the corporation to provide indemnification to the fullest extent permitted by law is deemed to obligate the corporation to advance funds to pay for or reimburse expenses in accordance with section eight hundred fifty-three of this article to the fullest extent permitted by law, unless the provision specifically provides otherwise.
(b) Any provision pursuant to subsection (a) of this section does 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 shareholders 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, is to be governed by subdivision (3), subsection (a), section one thousand one hundred six, article eleven of this chapter.
(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 or her appearance as a witness in a proceeding at a time when he or she 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.
§31D-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.
PART 6. DIRECTORS' CONFLICTING INTEREST TRANSACTIONS.
§31D-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, is 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 director's or officer's votes are counted for the 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 be less than a quorum; or
(2) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the members entitled to vote on the contract or transaction, 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 of the board of directors, 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.

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

§31D-11-1105. Merger between parent and subsidiary or between subsidiaries.

§31D-12-1201. Disposition of assets not requiring shareholder approval.

§31D-13-1303. Assertion of rights by nominees and beneficial owners.

§31D-13-1326. Procedure if shareholder dissatisfied with payment or offer.

§31D-13-1330. Court action.
(a) If a shareholder makes demand for payment under section one thousand three hundred twenty-six of this article which remains unsettled, the corporation shall commence a proceeding within sixty days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the sixty-day period, it shall pay in cash to each shareholder the amount the shareholder demanded pursuant to section one thousand three hundred twenty-six of this article plus interest.
(b) The corporation shall make all shareholders, whether or not residents of this state, whose demands remain unsettled parties to the proceeding as in an action against their shares, and all parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law.
(c) The jurisdiction of the court in which the proceeding is commenced is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it. The shareholders demanding appraisal rights are entitled to the same discovery rights as parties in other civil proceedings. There is no right to a jury trial.
(d) Each shareholder made a party to the proceeding is entitled to judgment: (1) For the amount, if any, by which the court finds the fair value of the shareholder's shares, plus interest, exceeds the amount paid by the corporation to the shareholder for the shares; or (2) for the fair value, plus interest, of the shareholder's shares for which the corporation elected to withhold payment under section one thousand three hundred twenty-five of this article.
§31D-13-1331. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under section one thousand three hundred thirty of this article shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the shareholders demanding appraisal, in amounts the court finds equitable, to the extent the court finds the shareholders acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this article.
(b) The court in an appraisal proceeding may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all shareholders demanding appraisal if the court finds the corporation did not substantially comply with the requirements of sections one thousand three hundred twenty, one thousand three hundred twenty- two, one thousand three hundred twenty-four or one thousand three hundred twenty-five of this article; or
(2) Against either the corporation or a shareholder demanding appraisal, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this article.
(c) If the court in an appraisal proceeding finds that the services of counsel for any shareholder were of substantial benefit to other shareholders similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to counsel reasonable fees to be paid out of the amounts awarded the shareholders who were benefitted.
(d) To the extent the corporation fails to make a required payment pursuant to sections one thousand three hundred twenty- four, one thousand three hundred twenty-five, or one thousand three hundred twenty-six of this article, the shareholder may sue directly for the amount owed and, to the extent successful, are to be entitled to recover from the corporation all costs and expenses of the suit, including counsel fees.
ARTICLE 14. DISSOLUTION.
PART 1. VOLUNTARY DISSOLUTION.
§31D-14-1401. Dissolution by incorporators or initial directors.
A majority of the incorporators or initial directors of a corporation that has not issued shares or has not commenced business may dissolve the corporation by delivering to the secretary of state for filing articles of dissolution that set forth:
(1) The name of the corporation;
(2) The date of its incorporation;
(3) Either: (A) That none of the corporation's shares has been issued; or (B) that the corporation has not commenced business;
(4) That no debt of the corporation remains unpaid;
(5) That the net assets of the corporation remaining after winding up have been distributed to the shareholders, if shares were issued; and
(6) That a majority of the incorporators or initial directors authorized the dissolution.
§31D-14-1402. Dissolution by board of directors and shareholders.
(a) A corporation's board of directors may propose dissolution for submission to the shareholders.
(b) For a proposal to dissolve to be adopted:
(1) The board of directors must recommend dissolution to the shareholders 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 shareholders; and
(2) The shareholders entitled to vote must approve the proposal to dissolve as provided in subsection (e) of this section.
(c) The board of directors may condition its submission of the proposal for dissolution on any basis.
(d) The corporation shall notify each shareholder, whether or not entitled to vote, of the proposed shareholders' 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) of this section require a greater vote, a greater number of shares to be present, or a vote by voting groups, adoption of the proposal to dissolve requires the approval of the shareholders at a meeting at which a quorum consisting of at least a majority of the votes entitled to be cast exists.
§31D-14-1403. 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 shareholders, a statement that the proposal to dissolve was duly approved by the shareholders in the manner required by this chapter and by the articles of incorporation.
(b) A corporation is dissolved upon the receipt by the corporation of a certificate of dissolution from the secretary of state.
(c) The secretary of state shall issue a certificate of dissolution to the corporation delivering articles of dissolution upon receipt by the secretary of state of a notice from the tax commissioner and bureau of employment programs to the effect that all taxes due from the corporation under the provisions of chapter eleven of this code, including, but not limited to, taxes withheld under the provisions of section seventy-one, article twenty-one of chapter eleven of this code, all business and occupation taxes, motor carrier and transportation privilege taxes, gasoline taxes, consumer sales taxes and any and all license franchise or other excise taxes and corporate net income taxes, and employment security payments levied or assessed against the corporation seeking to dissolve have been paid or that the payment has been provided for, or until the secretary of state received a notice from the tax commissioner or bureau of employment programs, as the case may be, stating that the corporation in question is not subject to payment of any taxes or to the making of any employment security payments or assessments.
§31D-14-1404. Revocation of dissolution.
(a) A corporation may revoke its dissolution within one hundred twenty 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 shareholder 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 shareholders, a statement that revocation was permitted by action by the board of directors alone pursuant to that authorization; and
(6) If shareholder action was required to revoke the dissolution, the information required by subdivision (3), subsection (a), section one thousand four hundred three of this article.
(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 business as if dissolution had never occurred.
§31D-14-1405. Effect of dissolution.
(a) A dissolved corporation continues its corporate existence but may not carry on any business except those appropriate to wind up and liquidate its business and affairs, including:
(1) Collecting its assets;
(2) Disposing of its properties that will not be distributed in kind to its shareholders;
(3) Discharging or making provision for discharging its liabilities;
(4) Distributing its remaining property among its shareholders according to their interests; and
(5) Doing every other act necessary to wind up and liquidate its business and affairs.
(b) Dissolution of a corporation does not:
(1) Transfer title to the corporation's property;
(2) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation's share transfer records;
(3) Subject its directors or officers to standards of conduct different from those prescribed in article eight of this chapter;
(4) Change quorum or voting requirements for its board of directors or shareholders; 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; or
(7) Terminate the authority of the registered agent of the corporation, if any.
§31D-14-1406. 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) of this section does not deliver the claim to the dissolved corporation by the deadline; or
(2) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within 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.
§31D-14-1407. 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 the corporation had no principal office in this state, in any county where it transacts its business;
(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) of this section, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within five years after the publication date of the newspaper notice:
(1) A claimant who did not receive written notice under section one thousand four hundred six of this article;
(2) A claimant whose claim was timely sent to the dissolved corporation but not acted on; and
(3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.
(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 shareholder of the dissolved corporation to the extent of his or her pro rata share of the claim or the corporate assets distributed to him or her in liquidation, whichever is less, but a shareholder's total liability for all claims under this section may not exceed the total amount of assets distributed to him or her.

PART 2.
ADMINISTRATIVE DISSOLUTION.
§31D-14-1420. Grounds for administrative dissolution.
The secretary of state may commence a proceeding under section one thousand four hundred twenty-one of this article 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 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
(3) The corporation's period of duration stated in its articles of incorporation expires.

§31D-14-1421. Procedure for and effect of administrative dissolution.

(a) If the secretary of state determines that one or more grounds exist under section one thousand four hundred twenty of this article for dissolving a corporation, he or she shall serve the corporation with written notice of his or her determination pursuant to section five hundred four, article five of this article.
(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 five hundred four, article five of this chapter, 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 pursuant to section five hundred four, article five of this chapter.
(c) A corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs under section one thousand four hundred five of this article and notify claimants pursuant to sections one thousand four hundred six and one thousand four hundred seven of this article.
(d) The administrative dissolution of a corporation does not terminate the authority of its registered agent.
§31D-14-1422. Reinstatement following administrative dissolution.
(a) A corporation administratively dissolved under section one thousand four hundred twenty-one of this article 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 four hundred one, article four of this chapter; and
(4) Contain a certificate from the tax commissioner 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) of this section and that the information is correct, he or she shall cancel the certificate of dissolution and prepare a certificate of reinstatement that recites his or her determination and the effective date of reinstatement, file the original of the certificate, and serve a copy on the corporation pursuant to section five hundred four, article five of this article.
(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 business as if the administrative dissolution had never occurred.
§31D-14-1423. Appeal from denial of reinstatement.
(a) If the secretary of state denies a corporation's application for reinstatement following administrative dissolution, he or she shall serve the corporation pursuant to section five hundred four, article four of this chapter 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. JUDICIAL DISSOLUTION.

MISCELLANEOUS.
§31D-14-1440. Deposit with state treasurer.
Assets of a dissolved corporation that should be transferred to a creditor, claimant, or shareholder of the corporation who cannot be found or who is not competent to receive them are to be reduced to cash and deposited with the state treasurer or other appropriate state official for safekeeping. When the creditor, claimant, or shareholder furnishes satisfactory proof of entitlement to the amount deposited, the state treasurer or other appropriate state official shall pay him or her or his or her representative that amount.
ARTICLE 15. FOREIGN CORPORATIONS.
PART 1. CERTIFICATE OF AUTHORITY.

§31D-15-1501. Authority to transact business and jurisdiction over foreign corporations.

(a) A foreign corporation may not transact business 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) of this section:
(1) Maintaining, defending, or settling any proceeding;
(2) Holding meetings of the board of directors or shareholders 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;
(11) Granting funds or other gifts;
(12) Distributing information to its shareholders or members;
(13) Effecting sales through independent contractors;
(14) The acquisition by purchase of lands secured by mortgage or deeds;
(15) Physical inspection and appraisal of property in West Virginia as security for deeds of trust, or mortgages and negotiations for the purchase of loans secured by property in West Virginia; and
(16) The management, rental, maintenance and sale; or the operating, maintaining, renting or otherwise, dealing with selling or disposing of property acquired under foreclosure sale or by agreement in lieu of foreclosure sale.
(c) The list of activities in subsection (b) of this section is not exhaustive.
(d) A foreign corporation is deemed to be transacting business in this state if:
(1) The corporation makes a contract to be performed, in whole or in part, by any party thereto, in this state;
(2) The corporation commits a tort in whole or in part in this state; or
(3) 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 defective product as described in subsection (d) of this section is 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 the defective product has the same legal force and validity as process duly served on that corporation in this state.

§31D-15-1502. Consequences of transacting business without authority.

(a) A foreign corporation transacting business 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 transacted business in this state without a certificate of authority and the assignee of a cause of action arising out of that business may not maintain a proceeding 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 which conducts affairs or does or transacts business in this State without a certificate of authority is liable to this state, for the years or parts of years during which it conducted affairs or did or transacted business in this State without a certificate of authority in an amount equal to all fees and taxes which would have been imposed by this chapter, or by any other provision of this code, upon the corporation had it duly applied for and received a certificate of authority to conduct affairs or do or transact business in this State as required by this article and had filed all reports, statements or returns required by this chapter or by any other chapter of this code, plus all penalties imposed for failure to pay any fees and taxes.
(e) Notwithstanding subsections (a) and (b) of this section, the failure of a foreign corporation to obtain a certificate of authority does not impair the validity of its corporate acts or prevent it from defending any proceeding in this state.
§31D-15-1503. Application for certificate of authority.
(a) A foreign corporation may apply for a certificate of authority to transact business in this state by delivering an application to the secretary of state 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 one thousand five hundred six of this article;
(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 mailing address of its principal office;
(5) The address of its registered office in this state, if any, and the name of its registered agent at that office, if any;
(6) The names and usual business addresses of its current directors and officers; and
(7) Purpose or purposes for transaction of business in West Virginia.
(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.
§31D-15-1504. Amended certificate of authority.
(a) A foreign corporation authorized to transact business in this state must obtain an amended certificate of authority from the secretary of state if it changes:
(1) Its corporate name;
(2) The period of its duration; or
(3) The state or country of its incorporation.
(b) The requirements of section one thousand five hundred three of this article for obtaining an original certificate of authority apply to obtaining an amended certificate under this section.
§31D-15-1505. Effect of certificate of authority.
(a) A certificate of authority authorizes the foreign corporation to which it is issued to transact business in this state subject 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 rights and has the same privileges as, and except as otherwise provided by this chapter is subject to the same duties, restrictions, penalties, and liabilities as, 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 transact business in this state.
§31D-15-1506. Corporate name of foreign corporation.
(a) If the corporate name of a foreign corporation does not satisfy the requirements of section four hundred one, article four of this chapter, the foreign corporation to obtain or maintain a certificate of authority to transact business in this state:
(1) May add the word "corporation," "incorporated," "company," or "limited," or the abbreviation "corp.," "inc.," "co.," or "ltd.," to its corporate name for use in this state; or
(2) May use 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) of this section, 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 transact business in this state;
(2) A corporate name reserved or registered under sections four hundred three or four hundred four, article four of this chapter;
(3) The fictitious name of another foreign corporation authorized to transact business in this state;
(4) The corporate name of a nonprofit corporation incorporated or authorized to transact business in this state; and
(5) The name of any other entity whose name is carried in the records of the secretary of 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 or her 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 and submits an undertaking in form satisfactory to the secretary of state to change the name so that it is distinguishable upon the records of the secretary of state from the name applied for; 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 transact business in this state and the foreign corporation:
(1) Has merged with the other corporation;
(2) Has been formed by reorganization of the other corporation; or
(3) Has acquired all or substantially all of the assets, including the corporate name, of the other corporation.
(e) If a foreign corporation authorized to transact business in this state changes its corporate name to one that does not satisfy the requirements of section four hundred one, article four of this chapter, it may not transact business in this state under the changed name until it adopts a name satisfying the requirements of section four hundred one, article four of this chapter and obtains an amended certificate of authority under section one thousand five hundred four of this article.

§31D-15-1507. Registered office and registered agent of foreign corporation.

Each foreign corporation authorized to transact business in this state may 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:
(A) An individual who resides in this state and whose business office is identical with the registered office;
(B) A domestic corporation or domestic nonprofit corporation whose business office is identical with the registered office; or
(C) A foreign corporation or foreign nonprofit corporation authorized to transact business in this state whose business office is identical with the registered office.

§31D-15-1508. Change of registered office or registered agent of foreign corporation.

(a) A foreign corporation authorized to transact business in this state may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:
(1) Its name;
(2) The mailing address of its current registered office;
(3) If the current registered office is to be changed, the mailing 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 mailing addresses of its registered office and the business office of its registered agent will be identical.
(b) If a registered agent changes the mailing address of his or her business office, he or she may change the mailing address of the registered office of any foreign corporation for which he or she is the registered agent by notifying the corporation in writing of the change and signing, either manually or in facsimile, and delivering to the secretary of state for filing a statement of change that complies with the requirements of subsection (a) of this section and recites that the corporation has been notified of the change.

§31D-15-1509. Resignation of registered agent of foreign corporation.

(a) The registered agent of a foreign corporation may resign his or her 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 return required pursuant to section three, article twelve-c, chapter eleven of this code.
(c) The agency appointment is terminated, and the registered office discontinued if provided in the statement of registration, on the thirty-first day after the date on which the statement was filed.
§31D-15-1510. Service on foreign corporation.
(a) The registered agent of a foreign corporation authorized to transact business in this state is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the foreign corporation.
(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 return required pursuant to section three, article twelve-c, chapter eleven of this code if the foreign corporation:
(1) Has no registered agent or its registered agent cannot with reasonable diligence be served;
(2) Has withdrawn from transacting business in this state under section one thousand five hundred twenty of this article; or
(3) Has had its certificate of authority revoked under section one thousand five hundred thirty-one of this article.
(c) Service is perfected under subsection (b) of this section at the earliest of:
(1) The date the foreign corporation receives the mail;
(2) The date shown on the return receipt, if signed on behalf of the foreign corporation; or
(3) Five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed.
(d) In addition to the methods of service on a foreign corporation provided in subsections (a) and (b) of this section, the secretary of state is hereby constituted the attorney-in-fact for and on behalf of each foreign corporation authorized to do or transact business in this state pursuant to the provisions of this chapter. The Secretary of State has the authority to accept service of notice and process on behalf of each corporation and is an agent of the corporation upon whom service of notice and process may be made in this state for and upon each corporation. No act of a corporation appointing the secretary of state as attorney-in-fact is necessary. Service of any process, notice or demand on the secretary of state may be made by delivering to and leaving with the secretary of state the original process, notice or demand and two copies of the process, notice or demand for each defendant, along with the fee required by section two, article one, chapter fifty-nine of this code. Immediately after being served with or accepting any process or notice, the secretary of state shall: (1) file in his or her office a copy of the process or notice, endorsed as of the time of service, or acceptance, and (2) transmit one copy of the process or notice by registered or certified mail, return receipt requested, to (A) the foreign corporation's registered agent; or (B) if there is no registered agent, to the individual whose name and address was last given to the secretary of state's office as the person to whom notice and process are to be sent, and if no person has been named, to the principal office of the foreign corporation as that address was last given to the secretary of state's office. Service or acceptance of process or notice is sufficient if return receipt is signed by an agent or employee of the corporation, or the registered or certified mail sent by the secretary of state is refused by the addressee and the registered or certified mail is returned to the secretary of state, or to his or her office, showing the stamp of the United States postal service that delivery has been refused, and the return receipt or registered or certified mail is appended to the original process or notice and filed in the clerk's office of the court from which the process or notice was issued. No process or notice may be served on the secretary of state or accepted by him or her less than ten days before the return day of the process or notice. The court may order continuances as may be reasonable to afford each defendant opportunity to defend the action or proceedings.
(e) Any foreign corporation doing or transacting business in this state without having been authorized to do so pursuant to the provisions of this chapter is conclusively presumed to have appointed the secretary of state as its attorney-in-fact with authority to accept service of notice and process on behalf of the corporation and upon whom service of notice and process may be made in this state for and upon the corporation in any action or proceeding arising from activities described in section one thousand five hundred one of this article. No act of a corporation appointing the secretary of state as its attorney-in-fact is necessary. Immediately after being served with or accepting any process or notice, of which process or notice two copies for each defendant are to be furnished to the secretary of state with the original notice or process, together with the fee required by section two, article one, chapter fifty-nine of this code, the secretary of state shall file in his or her office a copy of the process or notice, with a note 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 at the address of its principal office, which address shall be stated in the process or notice. The service or acceptance of process or notice is sufficient if the return receipt is signed by an agent or employee of the corporation, or the registered or certified mail sent by the secretary of state is refused by the addressee and the registered or certified mail is returned to the secretary of state, or to his or her office, showing thereon the stamp of the United States postal service that delivery thereof has been refused, and the return receipt or registered or certified mail is appended to the original process or notice and filed therewith in the clerk's office of the court from which the process or notice was issued. No process or notice may be served on the secretary of state or accepted by him or her less than ten days before the return date thereof. The court may order continuances as may be reasonable to afford each defendant opportunity to defend the action or proceedings.
(f) This section does not prescribe the only means, or necessarily the required means, of serving a foreign corporation.

WITHDRAWAL.
§31D-15-1520. Withdrawal of foreign corporation.
(a) A foreign corporation authorized to transact business in this state may not withdraw from this state until it obtains a certificate of withdrawal from the secretary of state.
(b) A foreign corporation authorized to transact business in this state may apply for a certificate of withdrawal by delivering an application to the secretary of state for filing. The application must set forth:
(1) The name of the foreign corporation and the name of the state or country under whose law it is incorporated;
(2) That it is not transacting business in this state and that it surrenders its authority to transact business in this state;
(3) That it revokes the authority of its registered agent to accept service on its behalf and appoints the secretary of state as its agent for service of process in any proceeding based on a cause of action arising during the time it was authorized to transact business in this state;
(4) A mailing address to which the secretary of state may mail a copy of any process served on him or her under subdivision (3) of this subsection; and
(5) A commitment to notify the secretary of state in the future of any change in its mailing address.
(c) After the withdrawal of the corporation is effective, service of process on the secretary of state under this section is service on the foreign corporation. Upon receipt of process, the secretary of state shall mail a copy of the process to the foreign corporation at the mailing address set forth under subsection (b) of this section.
(d)The secretary of state shall withhold the issuance of any certificate of withdrawal until the receipt by the secretary of state of a notice from the tax commissioner and bureau of employment programs to the effect that all taxes due from the corporation under the provisions of chapter eleven of this code, including, but not limited to, taxes withheld under the provisions of section seventy-one, article twenty-one, chapter eleven of this code, all business and occupation taxes, motor carrier and transportation privilege taxes, gasoline taxes, consumer sales taxes and any and all license franchise or other excise taxes and corporate net income taxes, and employment security payments levied or assessed against the corporation seeking to dissolve have been paid or that payment has been provided for, or until the secretary of state received a notice from the tax commissioner or bureau of employment programs, as the case may be, stating that the corporation in question is not subject to payment of any taxes or to the making of any employment security payment, security payments or assessments.
PART 3.
REVOCATION OF CERTIFICATE OF AUTHORITY.
§31D-15-1530. Grounds for revocation.
The secretary of state may commence a proceeding under section one thousand five hundred thirty-one of this article to revoke the certificate of authority of a foreign corporation authorized to transact business in this state if:
(1) The foreign 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 foreign corporation does not inform the secretary of state under sections one thousand five hundred eight or one thousand five hundred nine of this article that its registered agent or registered office has changed, that its registered agent has resigned, or that its registered office has been discontinued within sixty days of the change, resignation, or discontinuance;
(3) An incorporator, director, officer, or agent of the foreign corporation signed a document he or she knew was false in any material respect with intent that the document be delivered to the secretary of state for filing; or
(4) The secretary of state receives a duly authenticated certificate from the secretary of state or other official having custody of corporate records in the state or country under whose law the foreign corporation is incorporated stating that it has been dissolved or disappeared as the result of a merger.
§31D-15-1531. Procedure for and effect of revocation.
(a) If the secretary of state determines that one or more grounds exist under section one thousand five hundred thirty of this article for revocation of a certificate of authority, he or she shall serve the foreign corporation with written notice of his or her determination pursuant to section one thousand five hundred ten of this article.
(b) If the foreign corporation does not correct each ground for revocation 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 pursuant to section one thousand five hundred ten of this article, the secretary of state may revoke the foreign corporation's certificate of authority by signing a certificate of revocation that recites the ground or grounds for revocation and its effective date. The secretary of state shall file the original of the certificate and serve a copy on the foreign corporation pursuant to section one thousand five hundred ten of this article.
(c) The authority of a foreign corporation to transact business in this state ceases on the date shown on the certificate revoking its certificate of authority.
(d) The secretary of state's revocation of a foreign corporation's certificate of authority appoints the secretary of state the foreign corporation's agent for service of process in any proceeding based on a cause of action which arose during the time the foreign corporation was authorized to transact business in this state. Service of process on the secretary of state under this subsection is service on the foreign corporation. Upon receipt of process, the secretary of state shall mail a copy of the process to the secretary of the foreign corporation at its principal office shown in its most recent return required pursuant to section three, article twelve-c, chapter eleven of this code or in any subsequent communication received from the corporation stating the current mailing address of its principal office, or, if none are on file, in its application for a certificate of authority.
(e) Revocation of a foreign corporation's certificate of authority does not terminate the authority of the registered agent of the corporation.
§31D-15-1532. Appeal from revocation.
(a) A foreign corporation may appeal the secretary of state's revocation of its certificate of authority to the circuit court within thirty days after service of the certificate of revocation is perfected pursuant to section one thousand five hundred ten of this article. The foreign corporation appeals by petitioning the circuit court to set aside the revocation and attaching to the petition copies of its certificate of authority and the secretary of state's certificate of revocation.
(b) The circuit court may summarily order the secretary of state to reinstate the certificate of authority or may take any other action the circuit court considers appropriate.
(c) The circuit court's final decision may be appealed as in other civil proceedings.
ARTICLE 16. RECORDS AND REPORTS.
PART 1. RECORDS.
§31D-16-1601. Corporate records.
(a) A corporation shall keep as permanent records minutes of all meetings of its shareholders and board of directors, a record of all actions taken by the shareholders 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 shareholders, in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order by class of shares showing the number and class of shares held by each.
(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 creating one or more classes or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding;
(4) The minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years;
(5) All written communications to shareholders generally within the past three years, including the financial statements furnished for the past three years under section one thousand six hundred twenty of this article; and
(6) A list of the names and business addresses of its current directors and officers.
§31D-16-1602. Inspection of records by shareholders.
(a) A shareholder of a corporation is entitled to inspect, during regular business hours at the corporation's principal office, any of the records of the corporation described in subsection (e), section one thousand six hundred one of this article if he or she gives the corporation written notice of his or her demand at least five business days before the date on which he or she wishes to inspect.
(b) A shareholder of a corporation is entitled to inspect, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if the shareholder meets the requirements of subsection (c) of this section and gives the corporation written notice of his or her demand at least five business days before the date on which he or she 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 shareholders, and records of action taken by the shareholders or board of directors without a meeting, to the extent not subject to inspection under subsection (a), section one thousand six hundred two of this article;
(2) Accounting records of the corporation; and
(3) The record of shareholders.
(c) A shareholder may inspect and copy the records described in subsection (b) of this section only if:
(1) His or her demand is made in good faith and for a proper purpose;
(2) He or she describes with reasonable particularity his or her purpose and the records he or she desires to inspect; and
(3) The records are directly connected with his or her 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 shareholder to inspect records under section seven hundred twenty, article seven of this chapter or, if the shareholder is in litigation with the corporation, to the same extent as any other litigant; or
(2) The power of a circuit court, independently of this chapter, to compel the production of corporate records for examination.
(f) For purposes of this section, "shareholder" includes a beneficial owner whose shares are held in a voting trust or by a nominee on his or her behalf.
§31D-16-1603. Scope of inspection right.
(a) A shareholder's agent or attorney has the same inspection and copying rights as the shareholder represented.
(b) The right to copy records under section one thousand six hundred two of this article includes, if reasonable, the right to receive copies by xerographic or other means, including copies through an electronic transmission if available and requested by the shareholder.
(c) The corporation may comply at its expense with a shareholder's demand to inspect the record of shareholders under subdivision (3), subsection (b), section one thousand six hundred two of this article by providing the shareholder with a list of shareholders that was compiled no earlier than the date of the shareholder'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 shareholder. The charge may not exceed the estimated cost of production, reproduction or transmission of the records.
§31D-16-1604. Court-ordered inspection.
(a) If a corporation does not allow a shareholder who complies with subsection (a), section one thousand six hundred two of this article to inspect and copy any records required by that subsection to be available for inspection, the circuit court may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the shareholder.
(b) If a corporation does not within a reasonable time allow a shareholder to inspect and copy any other record, the shareholder who complies with subsections (b) and (c), section one thousand six hundred two of this article may apply to the circuit court 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 shareholder'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 shareholder 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 shareholder.
§31D-16-1605. 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 may order inspection and copying of the books, records and documents at the corporation's expense, upon application of a director who has been refused inspection rights, unless the corporation establishes that the director is not entitled to inspection rights. The 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.
§31D-16-1606. Exception to notice requirement.
(a) Whenever notice is required to be given under any provision of this chapter to any shareholder, notice may not be required to be given if:
(1) Notice of two consecutive annual meetings, and all notices of meetings during the period between two consecutive annual meetings, have been sent to the shareholder at the shareholder's address as shown on the records of the corporation and have been returned undeliverable; or
(2) All, but not less than two, payments of dividends on securities during a twelve-month period, or two consecutive payments of dividends on securities during a period of more than twelve months, have been sent to the shareholder at the shareholder's address as shown on the records of the corporation and have been returned undeliverable.
(b) If any shareholder delivers to the corporation a written notice setting forth the shareholder's then-current address, the requirement that notice be given to the shareholder is to be reinstated.
PART 2.
REPORTS.
§31D-16-1620. Financial statements for shareholders.
(a) Unless unanimously waived by the shareholders, a corporation shall furnish its shareholders 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, an income statement for that year, and a statement of changes in shareholders' equity for the year unless that information appears elsewhere in the financial statements. 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 or her 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 or her 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 shareholder within one hundred twenty days after the close of each fiscal year. On written request from a shareholder who was not mailed the statements, the corporation shall mail him or her the latest financial statements.
ARTICLE 17. TRANSITION PROVISIONS.
§31D-17-1701. 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.
§31D-17-1702. 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.
§31D-17-1703. Effective date.
This chapter takes effect the first day of October, two thousand two.