Online Compendium of Federal and State Regulations for U.S. Nonprofit Organizations
This electronic copy of the Revised Model Nonprofit Corporation Act
was provided with the assistance of West Group, publisher
of Marilyn E.
Phelan's, Nonprofit
Enterprises: Law and Taxation. Toll-Free 1-800-344-5009.
Additional support was provided by Lynn Howell, Assistant Dean at the
Stetson University College of Law, and Chair of the American Bar Association's
Nonprofit Corporations Committee in
the Section of Business Law, and
Lizabeth Moody, Dean of the Stetson University College of Law.
IMPORTANT NOTE
Not all states' nonprofit corporation statutes were derived from this Model,
and those states that did adopt the Model invariably have altered it more or less.
Accordingly, each state's own statutes must specifically be examined to determine
the law in that state. The Model is presented here strictly for educational purposes.
This Act shall be known and may be cited as the "[name of state] Nonprofit Corporation Act."
Section 1.02. Reservation of Power To Amend or Repeal.
The [name of state 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.
Section 1.20. Filing Requirements.
(a) A document must satisfy the requirements of this section, and of any other section that adds to or varies these requirements, to be entitled to filing by the secretary of state.
(b) This Act must require or permit filing the document in the office of the secretary of state.
(c) The document must contain the information required by this Act. It may contain other information as well.
(d) The document must be typewritten or printed.
(e) The document must be in the English language. However, a corporate name need not be in English if written in English letters or Arabic or Roman numerals, and the certificate of existence required of foreign corporations need not be in English if accompanied by a reasonably authenticated English translation.
(f) The document must be executed:
(1) by the presiding officer of its board of directors of a domestic or foreign corporation, its president, or by another of its officers;
(2) if directors have not been selected or the corporation has not been formed, by an incorporator; or
(3) if the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
(g) The person executing a document shall sign it and state beneath or opposite the signature his or her name and the capacity in which he or she signs. The document may, but need not, contain:
(1) the corporate seal;
(2) an attestation by the secretary or an assistant secretary; or
(3) an acknowledgement, verification, or proof.
(h) If the secretary of state has prescribed a mandatory form for a document under section 1.21, the document must be in or on the prescribed form.
(i) The document must be delivered to the office of the secretary of state for filing and must be accompanied by one exact or conformed copy (except as provided in sections 5.03 and 15.09), the correct filing fee, and any franchise tax, license fee, or penalty required by this Act or other law.
(a) The secretary of state may prescribe and furnish on request, forms for: (1) an application for a certificate of existence; (2) a foreign corporation's application for a certificate of authority to transact business in this state; (3) a foreign corporation's application for a certificate of withdrawal; and (4) the annual report. If the secretary of state so requires, use of these forms is mandatory.
(b) The secretary of state may prescribe and furnish on request forms for other documents required or permitted to be filed by this Act but their use is not mandatory.
Section 1.22. Filing, Service, and Copying Fees.
(a) The secretary of state shall collect the following fees when the documents described in this subsection are delivered for filing:
Document Fee (1) Articles of incorporation $_____ (2) Application for use of indistinguishable name $_____ (3) Application for reserved name $_____ (4) Notice of transfer of reserved name $_____ (5) Application for registered name $_____ (6) Application for renewal of registered name $_____ (7) Corporation's statement of change of registered agent or
registered office or both$_____ (8) Agent's statement of change of registered office for each affected
corporation not to exceed a total of$_____ (9) Agent's statement of resignation no fee (10) Amendment of articles of incorporation $_____ (11) Restatement of articles of incorporation with amendments $_____ (12) Articles of merger $_____ (13) Articles of dissolution $_____ (14) Articles of revocation of dissolution $_____ (15) Certificate of administrative dissolution $_____ (16) Application for reinstatement following administrative dissolution $_____ (17) Certificate of reinstatement no fee (18) Certificate of judicial dissolution no fee (19) Application for certificate of authority $_____ (20) Application for amended certificate of authority $_____ (21) Application for certificate of withdrawal $_____ (22) Certificate of revocation of authority to transact business no fee (23) Annual report $_____ (24) Articles of correction $_____ (25) Application for certificate of existence or authorization $_____ (26) Any other document required or permitted to be filed by this act. $_____ (b) The secretary of state shall collect a fee of $_____ upon being served with process under this Act. The party to a proceeding causing service of process is entitled to recover the fee paid the secretary of state as costs if the party prevails in the proceeding.
(c) The secretary of state shall collect the following fees for copying and certifying the copy of any filed document relating to a domestic or foreign corporation:
(1) $_____ a page for copying; and
(2) $_____ for the certificate.
Section 1.23. Effective Date of Document.
(a) Except as provided in subsection (b), a document is effective:
(1) at the time of filing on the date it is filed, as evidenced by the secretary of state's endorsement on the original document; 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 90th day after the date filed.
Section 1.24. Correcting Filed Document.
(a) A domestic or foreign corporation may correct a document filed by the secretary of state if the document: (1) contains an incorrect statement, or (2) was defectively executed, attested, sealed, verified, or acknowledged.
(b) A document is corrected:
(1) by preparing articles of correction that (i) describe the document (including its filing date) or attach a copy of it to the articles, (ii) specify the incorrect statement and the reason it is incorrect or the manner in which the execution was defective, and (iii) correct the incorrect statement or defective execution; and
(2) by delivering the articles of correction to the secretary of state.
(c) Articles of correction are effective on the effective date of the document they correct except as to persons relying on the uncorrected document and adversely affected by the correction. As to those persons, articles of correction are effective when filed.
Section 1.25. 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 1.20, the secretary of state shall file it.
(b) The secretary of state files a document by stamping or otherwise endorsing "Filed," together with the secretary of state's name and official title and the date and the time of receipt, on both the original and copy of the document and on the receipt for the filing fee. After filing a document, except as provided in sections 5.03 and 15.10, the secretary of state shall deliver the document copy, with the filing fee receipt (or acknowledgement of receipt if no fee is required) attached, to the domestic or foreign corporation or its representative.
(c) Upon refusing to file a document, the secretary of state shall return it to the domestic or foreign corporation or its representative within five days after the document was delivered, together with a brief, written explanation of the reason or reasons for the refusal.
(d) The secretary of state's duty to file documents under this section is ministerial. Filing or refusal to file a document does not:
(1) affect the validity or invalidity of the document in whole or in part;
(2) relate to the correctness or incorrectness of information contained in the document; or
(3) create a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect.
Section 1.26. Appeal from Secretary of State's Refusal To File Document.
(a) If the secretary of state refuses to file a document delivered for filing to the secretary of state's office, the domestic or foreign corporation may appeal the refusal to the [name or describe] court in the county where the corporation's principal office, or if there is none in this state, its registered office, is or will be located. The appeal is commenced by petitioning the court to compel filing the document and by attaching to the petition the document and the secretary of state's explanation of the refusal to file.
(b) The court may summarily order the secretary of state to file the document or take other action the court considers appropriate.
(c) The court's final decision may be appealed as in other civil proceedings.
Section 1.27. Evidentiary Effect of Copy of Filed Document.
A certificate attached to a copy of a document bearing the secretary of state's signature (which may be in facsimile) and the seal of this state, is conclusive evidence that the original document is on file with the secretary of state.
Section 1.28. Certificate of Existence.
(a) Any person may apply to the secretary of state to furnish a certificate of existence for a domestic or foreign corporation.
(b) The certificate of existence sets forth:
(1) the domestic corporation's corporate name or the foreign corporation's corporate name used in this state;
(2) that (i) the domestic corporation is duly incorporated under the law of this state, the date of its incorporation, and the period of its duration if less than perpetual; or (ii) that the foreign corporation is authorized to transact business in this state;
(3) that all fees, taxes, and penalties owed to this state have been paid, if (i) payment is reflected in the records of the secretary of state and (ii) nonpayment affects the good standing of the domestic or foreign corporation;
(4) that its most recent annual report required by section 16.22 has been delivered to the secretary of state.
(5) that articles of dissolution have not been filed; and
(6) other facts of record in the office of the secretary of state that may be requested by the applicant.
(c) Subject to any qualification stated in the certificate, a certificate of existence issued by the secretary of state may be relied upon as conclusive evidence that the domestic or foreign corporation is in good standing in this state.
Section 1.29. Penalty for Signing False Document.
(a) A person commits an offense by signing a document such person knows is false in any material respect with intent that the document be delivered to the secretary of state for filing.
(b) An offense under this section is a [ _____ ] misdemeanor [punishable by a fine of not to exceed $_____ ].
The secretary of state has the power reasonably necessary to perform the duties required of the secretary of state's office by this Act.
Section 1.40. Act Definitions.
Unless the context otherwise requires in this Act:
(1) "Approved by (or approval by) the members" means approved or ratified by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present (which affirmative votes also constitute a majority of the required quorum) or by a written ballot or written consent in conformity with this Act or by the affirmative vote, written ballot or written consent of such greater proportion, including the votes of all the members of any class, unit or grouping as may be provided in the articles, bylaws or this Act for any specified member action.
(2) "Articles of incorporation" or "articles" include amended and restated articles of incorporation and articles of merger.
(3) "Board" or "board of directors" means the board of directors except that no person or group of persons are the board of directors because of powers delegated to that person or group pursuant to section 8.01.
(4) "Bylaws" means the code or codes of rules (other than the articles) adopted pursuant to this Act for the regulation or management of the affairs of the corporation irrespective of the name or names by which such rules are designated.
(5) "Class" refers to a group of memberships which have the same rights with respect to voting, dissolution, redemption and transfer. For the purpose of this section, rights shall be considered the same if they are determined by a formula applied uniformly.
(6) "Corporation" means public benefit, mutual benefit and religious corporation.
(7) "Delegates" means those persons elected or appointed to vote in a representative assembly for the election of a director or directors or on other matters.
(8) "Deliver" includes mail.
(9) "Directors" means individuals, designated in the articles or bylaws or elected by the incorporators, and their successors and individuals elected or appointed by any other name or title to act as members of the board.
(10) "Distribution" means the payment of a dividend or any part of the income or profit of a corporation to its members, directors or officers.
(11) "Domestic corporation" means a corporation.
(12) "Effective Date of Notice" is defined in section 1.41.
(13) "Employee" does not include an officer or director who is not otherwise employed by the corporation.
(14) "Entity" includes corporation and foreign corporation; business corporation and foreign business corporation; profit and nonprofit unincorporated association; corporation sole; business trust, estate, partnership, trust, and two or more persons having a joint or common economic interest; and state, United States; and foreign government.
(15) "File," "filed," or "filing" means filed in the office of the secretary of state.
(16) "Foreign corporation" means a corporation organized under a law other than the law of this state which would be a nonprofit corporation if formed under the laws of this state.
(17) "Governmental subdivision" includes authority, county, district, and municipality.
(18) "Includes" denotes a partial definition.
(19) "Individual" includes the estate of an incompetent individual.
(20) "Means" denotes a complete definition.
(21) "Member" means (without regard to what a person is called in the articles or bylaws) any person or persons who on more than one occasion, pursuant to a provision of a corporation's articles or bylaws, have the right to vote for the election of a director or directors.
A person is not a member by virtue of any of the following:
(i) any rights such person has as a delegate;
(ii) any rights such person has to designate a director or directors; or
(iii) any rights such person has as a director.
(22) "Membership" refers to the rights and obligations a member or members have pursuant to a corporation's articles, bylaws and this Act.
(23) "Mutual benefit corporation" means a domestic corporation which is formed as a mutual benefit corporation pursuant to chapter 2 or is required to be a mutual benefit corporation pursuant to section 17.07.
(24) "Notice" is defined in section 1.41.
(25) "Person" includes any individual or entity.
(26) "Principal Office" means the office (in or out of this state) so designated in the annual report filed pursuant to section 16.22 where the principal offices of a domestic or foreign corporation is located.
(27) "Proceeding" includes civil suit and criminal, administrative, and investigatory action.
(28) "Public Benefit Corporation" means a domestic corporation which is formed as a public benefit corporation pursuant to chapter 2 or is required to be a public benefit corporation pursuant to section 17.07.
(29) "Record Date" means the date established under chapters 6 or 7 on which a corporation determines the identity of its members for the purposes of this Act.
(30) "Religious Corporation" means a domestic corporation which is formed as a religious corporation pursuant to chapter 2 or is required to be a religious corporation pursuant to section 17.07.
(31) "Secretary" means the corporate officer to whom the board of directors has delegated responsibility under section 8.40(b) for custody of the minutes of the directors' and members' meetings and for authenticating the records of the corporation.
(32) "State," when referring to a part of the United States, includes a state and commonwealth (and their agencies and governmental subdivisions) and a territory, and insular possession (and their agencies and governmental subdivisions) of the United States.
(33) "United States" includes district, authority, bureau, commission, department, and any other agency of the United States.
(34) "Vote" includes authorization by written ballot and written consent.
(35) "Voting power" means the total number of votes entitled to be cast for the election of directors at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event that has not occurred at the time. Where a class is entitled to vote as a class for directors, the determination of voting power of the class shall be based on the percentage of the number of directors the class is entitled to elect out of the total number of authorized directors.
(a) Notice may be oral or written.
(b) Notice may be communicated in person; by telephone, telegraph, teletype, or other form of wire or wireless communication; or by mail or private carrier; 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) Oral notice is effective when communicated if communicated in a comprehensible manner.
(d) Written notice, if in a comprehensible form, is effective at the earliest or the following:
(1) when received;
(2) five days after its deposit in the United States Mail, as evidenced by the postmark, if mailed correctly addressed and with first class postage affixed;
(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;
(4) thirty days after its deposit in the United States Mail, as evidenced by the postmark, if mailed correctly addressed and with other than first class, registered or certified postage affixed.
(e) Written notice is correctly addressed to a member of a domestic or foreign corporation if addressed to the member's address shown in the corporation's current list of members.
(f) A written notice or report delivered as part of a newsletter, magazine or other publication regularly sent to members shall constitute a written notice or report if addressed or delivered to the member's address shown in the corporation's current list of members, or in the case of members who are residents of the same household and who have the same address in the corporation's current list of members, if addressed or delivered to one of such members, at the address appearing on the current list of members.
(g) Written notice is correctly addressed to a domestic or foreign corporation (authorized to transact business in this state), other than in its capacity as a member, if addressed to its registered agent or to its secretary at its principal office shown in its most recent annual report or, in the case of a foreign corporation that has not yet delivered an annual report, in its application for a certificate of authority.
(h) If Subdivision 7.05(b) or any other provision of this Act prescribes notice requirements for particular circumstances, those requirements govern. If articles or bylaws prescribe notice requirements, not inconsistent with this section or other provisions of this Act, those requirements govern.
Section 1.50. Private Foundations.
Except where otherwise determined by a court of competent jurisdiction, a corporation that is a private foundation as defined in section 509(a) of the Internal Revenue Code of 1954:
(a) Shall distribute such amounts for each taxable year at such time and in such manner as not to subject the corporation to tax under section 4942 of the Code.
(b) Shall not engage in any act of self-dealing as defined in section 4941(d) of the Code.
(c) Shall not retain any excess business holdings as defined in section 4943(c) of the Code.
(d) Shall not make any taxable expenditures as defined in section 4944 of the Code.
(e) Shall not make any taxable expenditures as defined in section 4945(d) of the Code.
All references in this section to sections of the Code shall be to such sections of the Internal Revenue Code of 1954 as amended from time to time, or to corresponding provisions of subsequent internal revenue laws of the United States.
Section 1.60. Judicial Relief.
(a) If for any reason it is impractical or impossible for any corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, in the manner prescribed by its articles, bylaws, or this Act, then upon petition of a director, officer, delegate, member or the attorney general, the [insert name of court] may order that such a meeting be called or that a written ballot or other form of obtaining the vote of members, delegates, or directors be authorized, in such a manner as the court finds fair and equitable under the circumstances.
(b) The court shall, in an order issued pursuant to this section, provide for a method of notice reasonably designed to give actual notice to all persons who would be entitled to notice of a meeting held pursuant to the articles, bylaws and this Act, whether or not the method results in actual notice to all such persons or conforms to the notice requirements that would otherwise apply. In a proceeding under this section the court may determine who the members or directors are.
(c) The order issued pursuant to this section may dispense with any requirement relating to the holding of or voting at meetings or obtaining votes, including any requirement as to quorums or as to the number or percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or this Act.
(d) Whenever practical any order issued pursuant to this section shall limit the subject matter of meetings or other forms of consent authorized to items, including amendments to the articles or bylaws, the resolution of which will or may enable the corporation to continue managing its affairs without further resort to this section; provided, however, that an order under this section may also authorize the obtaining of whatever votes and approvals are necessary for the dissolution, merger or sale of assets.
(e) Any meeting or other method of obtaining the vote of members, delegates, or directors conducted pursuant to an order issued under this section, and that complies with all the provisions of such order, is for all purposes a valid meeting or vote, as the case may be, and shall have the same force and effect as if it complied with every requirement imposed by the articles, bylaws and this Act.
Section 1.70. Attorney General.
(a) The attorney general shall be given notice of the commencement of any proceeding that this Act authorizes the attorney general to bring but that has been commenced by another person.
(b) Whenever any provision of this Act requires that notice be given to the attorney general before or after commencing a proceeding or permits the attorney general to commence a proceeding:
(1) if no proceeding has been commenced, the attorney general may take appropriate action including, but not limited to, seeking injunctive relief.
(2) if a proceeding has been commenced by a person other than the attorney general, the attorney general, as of right, may intervene in such proceeding.
Section 1.80. Religious Corporations -- Constitutional Protections.
If religious doctrine governing the affairs of a religious corporation is inconsistent with the provisions of this Act on the same subject, the religious doctrine shall control to the extent required by the Constitution of the United States or the constitution of this state or both.
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.
Section 2.02. Articles of Incorporation.
(a) The articles of incorporation must set forth:
(1) a corporate name for the corporation that satisfies the requirements of section 4.01;
(2) one of the following statements:
(i) This corporation is a public benefit corporation.
(ii) This corporation is a mutual benefit corporation.
(iii) This corporation is a religious corporation;
(3) the street address of the corporation's initial registered office and the name of its initial registered agent at that office;
(4) the name and address of each incorporator;
(5) whether or not the corporation will have members; and
(6) provisions not inconsistent with law regarding the distribution of assets on dissolution.
(b) The articles of incorporation may set forth:
(1) the purpose or purposes for which the corporation is organized, which may be, either alone or in combination with other purposes, the transaction of any lawful activity;
(2) the names and addresses of the individuals who are to serve as the initial directors;
(3) provisions not inconsistent with law regarding:
(i) managing and regulating the affairs of the corporation;
(ii) defining, limiting, and regulating the powers of the corporation, its board of directors, and members (or any class of members); and
(iii) the characteristics, qualifications, rights, limitations and obligations attaching to each or any class of members.
(4) any provision that under this Act is required or permitted to be set forth in the bylaws.
(c) Each incorporator and director named in the articles must sign the articles.
(d) The articles of incorporation need not set forth any of the corporate powers enumerated in this Act.
(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.
Section 2.04. Liability for Preincorporation Transactions.
All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this Act, are jointly and severally liable for all liabilities created while so acting.
Section 2.05. Organization of Corporation.
(a) After incorporation:
(1) if initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws, and carrying on any other business brought before the meeting;
(2) if initial directors are not named in the articles, the incorporator or incorporators shall hold an organizational meeting at the call of a majority of the incorporators:
(i) to elect directors and complete the organization of the corporation; or
(ii) to elect a board of directors who shall complete the organization of the corporation.
(b) Action required or permitted by this Act to be taken by incorporators at an organizational meeting may be taken without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator.
(c) An organizational meeting may be held in or out of this state in accordance with section 8.21.
(a) The incorporators or board of directors of a corporation shall adopt bylaws for the corporation.
(b) The bylaws may contain any provision for regulating and managing the affairs of the corporation that is not inconsistent with law or the articles of incorporation.
Section 2.07. Emergency Bylaws and Powers.
(a) Unless the articles provide otherwise the directors of a corporation may adopt, amend or repeal bylaws to be effective only in an emergency defined in subsection (d). The emergency bylaws, which are subject to amendment or repeal by the members, may provide special procedures necessary for managing the corporation during the emergency, including:
(1) how to call a meeting of the board;
(2) quorum requirements for the meeting; and
(3) designation of additional or substitute directors.
(b) All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.
(c) Corporate action taken in good faith in accordance with the emergency bylaws:
(1) binds the corporation; and
(2) may not be used to impose liability on a corporate director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.
(a) Every corporation incorporated under this Act has the purpose of engaging in any lawful activity unless a more limited purpose is set forth in the articles of incorporation.
(b) A corporation engaging in an activity that is subject to regulation under another statute of this state may incorporate under this Act only if incorporation under this Act is not prohibited by the other statute. The corporation shall be subject to all limitations of the other statute.
Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its affairs including, without limitation, power:
(1) to sue and be sued, complain and defend in its corporate name;
(2) to have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing or in any other manner reproducing it;
(3) to make and amend bylaws not inconsistent with its articles of incorporation or with the laws of this state, for regulating and managing the affairs of the corporation;
(4) to purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property, or any legal or equitable interest in property, wherever located;
(5) to sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property;
(6) to purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of, and deal in and with, shares or other interests in, or obligations of any entity;
(7) to make contracts and guaranties, incur liabilities, borrow money, issue notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income;
(8) to lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment, except as limited by section 8.32;
(9) to be a promoter, partner, member, associate or manager of any partnership, joint venture, trust or other entity;
(10) to conduct its activities, locate offices, and exercise the powers granted by this Act within or without this state;
(11) to elect or appoint directors, officers, employees, and agents of the corporation, define their duties, and fix their compensation;
(12) to pay pensions and establish pension plans, pension trusts, and other benefit and incentive plans for any or all of its current or former directors, officers, employees, and agents;
(13) to make donations not inconsistent with law for the public welfare or for charitable, religious, scientific, or educational purposes and for other purposes that further the corporate interest;
(14) to impose dues, assessments, admission and transfer fees upon its members;
(15) to establish conditions for admission of members, admit members and issue memberships;
(16) to carry on a business;
(17) to do all things necessary or convenient, not inconsistent with law, to further the activities and affairs of the corporation.
Section 3.03. Emergency Powers.
(a) In anticipation of or during an emergency defined in subsection (d), the board of directors of a corporation may:
(1) modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and
(2) relocate the principal office, designate alternative principal offices or regional offices, or authorize the officer to do so.
(b) During an emergency defined in subsection (d), unless emergency bylaws provide otherwise:
(1) notice of a meeting of the board of directors need be given only to those directors it is practicable to reach and may be given in any practicable manner, including by publication and radio; and
(2) one or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.
(c) Corporate action taken in good faith during an emergency under this section to further the ordinary affairs of the corporation:
(1) binds the corporation; and
(2) may not be used to impose liability on a corporate director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.
(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
(b) A corporation's power to act may be challenged in a proceeding against the corporation to enjoin an act where a third party has not acquired rights. The proceeding may be brought by the attorney general, a director, or by a member or members in a derivative proceeding.
(c) A corporation's power to act may be challenged in a proceeding against an incumbent or former director, officer, employee or agent of the corporation. The proceeding may be brought by a director, the corporation, directly, derivatively, or through a receiver, a trustee or other legal representative, or in the case of a public benefit corporation, by the attorney general.
(a) A corporate name may not contain language stating or implying that the corporation is organized for a purpose other than that permitted by section 3.01 and its articles of incorporation.
(b) Except as authorized by subsections (c) and (d), a corporate name must be distinguishable upon the records of the secretary of state from:
(1) the corporate name of a nonprofit or business corporation incorporated or authorized to do business in this state;
(2) a corporate name reserved or registered under section 4.02 or 4.03 of this Act or [appropriate sections of the state's business corporation act]; or
(3) the fictitious name of a foreign business or nonprofit corporation authorized to transact business in this state because its real name is unavailable;
(c) A corporation may apply to the secretary of state for authorization to use a name that is not distinguishable upon the secretary of state's records from one or more of the names described in subsection (b). The secretary of state shall authorize use of the name applied for if:
(1) the other corporation consents to the use in writing and submits an undertaking in form satisfactory to the secretary of state to change its name to a name that is distinguishable upon the records of the secretary of state from the name of the applying corporation; or
(2) the applicant delivers to the secretary of state a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this state.
(d) A corporation may use the name (including the fictitious name) of another domestic or foreign business or nonprofit corporation that is used in this state if the other corporation is incorporated or authorized to do business in this state and the proposed user corporation:
(1) has merged with the other corporation;
(2) has been formed by reorganization of the other corporation; or
(3) has acquired all or substantially all of the assets, including the corporate name, of the other corporation.
(e) This Act does not control the use of fictitious names.
(a) A person may reserve the exclusive use of a corporate name, including a fictitious name for a foreign corporation whose corporate name is not available by delivering an application to the secretary of state for filing. Upon finding that the corporate name applied for is available, the secretary of state shall reserve the name for the applicant's exclusive use for a nonrenewable 120-day period.
(b) The owner of a reserved corporate name may transfer the reservation to another person by delivering to the secretary of state a signed notice of the transfer that states the name and address of the transferee.
Section 4.03. Registered Name.
(a) A foreign corporation may register its corporate name, or its corporate name with any change required by section 15.06, if the name is distinguishable upon the records of the secretary of state from:
(1) the corporate name of a nonprofit or business corporation incorporated or authorized to do business in this state; and
(2) a corporate name reserved under section 4.02 or [appropriate sections of the Model Business Corporation Act] or registered under this section.
(b) A foreign corporation registers its corporate name, or its corporate name with any change required by section 15.06, by delivering to the secretary of state an application:
(1) setting forth its corporate name, or its corporate name with any change required by section 15.06, the state or country and date of its incorporation, and a brief description of the nature of the activities in which it is engaged; and
(2) accompanied by a certificate of existence (or a document of similar import) from the state or country of incorporation.
(c) The name is registered for the applicant's exclusive use upon the effective date of the application.
(d) A foreign corporation whose registration is effective may renew it for successive years by delivering to the secretary of state for filing a renewal application, which complies with the requirements of subsection (b), between October 1 and December 31 of the preceding year. The renewal application renews the registration for the following calendar year.
(e) A foreign corporation whose registration is effective may thereafter qualify as a foreign corporation under that name or consent in writing to the use of that name by a corporation thereafter incorporated under this Act or by another foreign corporation thereafter authorized to transact business in this state. The registration terminates when the domestic corporation is incorporated or the foreign corporation qualifies or consents to the qualification of another foreign corporation under the registered name.
Section 5.01. Registered Name and Registered Agent.
Each corporation must continuously maintain in this state:
(1) a registered office with the same address as that of the registered agent; and
(2) a registered agent, who may be:
(i) an individual who resides in this state and whose office is identical with the registered office;
(ii) a domestic business or nonprofit corporation whose office is identical with the registered office; or
(iii) a foreign business or nonprofit corporation authorized to transact business in this state whose office is identical with the registered office.
Section 5.02. Change of Registered Office or Registered Agent.
(a) A corporation may change its registered office or registered agent by delivering to the secretary of state for filing a statement of change that sets forth:
(1) the name of the corporation;
(2) the street address of its current registered office;
(3) if the current registered office is to be changed, the street address of the new registered office;
(4) the name of its current registered agent;
(5) if the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent (either on the statement or attached to it) to the appointment; and
(6) that after the change or changes are made, the street addresses of its registered office and the office of its registered agent will be identical.
(b) If the street address of a registered agent's office is changed, the registered agent may change the street address of the registered office of any corporation for which the registered agent is the registered agent by notifying the corporation in writing of the change and by signing (either manually or in facsimile) and delivering to the secretary of state for filing a statement that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.
Section 5.03. Resignation of Registered Agent.
(a) A registered agent may resign as registered agent by signing and delivering to the secretary of state the original and two exact or conformed copies of a statement of resignation. The statement may include a statement that the registered office is also discontinued.
(b) After filing the statement the secretary of state shall mail one copy to the registered office (if not discontinued) and the other copy to the corporation at its principal office as shown in the most recent annual report filed pursuant to section 16.22.
(c) The agency appointment is terminated, and the registered office discontinued if so provided, on the 31st day after the date on which the statement was filed.
Section 5.04. Service on Corporation.
(a) A corporation's registered agent is the corporation's agent for service of process, notice, or demand required or permitted by law to be served on the corporation.
(b) If a corporation has no registered agent, or the agent cannot with reasonable diligence be served, the corporation may be served by registered or certified mail, return receipt requested, addressed to the secretary of the corporation at its principal office shown in the most recent annual report filed pursuant to section 16.22. Service is perfected under this subsection on the earliest of:
(1) the date the corporation receives the mail;
(2) the date shown on the return receipt, if signed on behalf of the corporation; or
(3) five days after its deposit in the U.S. Mail, if mailed and correctly addressed with first class postage affixed.
(c) This section does not prescribe the only means, or necessarily the required means, of serving a corporation.
(a) The articles or bylaws may establish criteria or procedures for admission of members.
(b) No person shall be admitted as a member without his or her consent.
Except as provided in its articles or bylaws, a corporation may admit members for no consideration or for such consideration as is determined by the board.
Section 6.03. No Requirement of Members.
A corporation is not required to have members.
Section 6.10. Differences in Rights and Obligations of Members.
All members shall have the same rights and obligations with respect to voting, dissolution, redemption and transfer, unless the articles or bylaws establish classes of membership with different rights or obligations. All members shall have the same rights and obligations with respect to any other matters, except as set forth in or authorized by the articles or bylaws.
(a) Except as set forth in or authorized by the articles or bylaws, no member of a mutual benefit corporation may transfer a membership or any right arising therefrom.
(b) No member of a public benefit or religious corporation may transfer a membership or any right arising therefrom.
(c) Where transfer rights have been provided, no restriction on them shall be binding with respect to a member holding a membership issued prior to the adoption of the restriction unless the restriction is approved by the members and the affected member.
Section 6.12. Member's Liability to Third Parties.
A member of a corporation is not, as such, personally liable for the acts, debts, liabilities, or obligations of the corporation.
Section 6.13. Member's Liability for Dues, Assessments and Fees.
A member may become liable to the corporation for dues, assessments or fees; provided, however, that an article or bylaw provision or a resolution adopted by the board authorizing or imposing dues, assessments or fees does not, of itself, create liability.
Section 6.14. Creditor's Action Against Member.
(a) No proceeding may be brought by a creditor to reach the liability, if any, of a member to the corporation unless final judgment has been rendered in favor of the creditor against the corporation and execution has been returned unsatisfied in whole or in part or unless such proceeding would be useless.
(b) All creditors of the corporation, with or without reducing their claims to judgment, may intervene in any creditor's proceeding brought under subdivision (a) to reach and apply unpaid amounts due the corporation. Any or all members who owe amounts to the corporation may be joined in such proceeding.
(a) A member may resign at any time.
(b) The resignation of a member does not relieve the member from any obligations the member may have to the corporation as a result of obligations incurred or commitments made prior to resignation.
Section 6.21. Termination, Expulsion and Suspension.
(a) No member of a public benefit or mutual benefit corporation may be expelled or suspended, and no membership or memberships in such corporations may be terminated or suspended except pursuant to a procedure that is fair and reasonable and is carried out in good faith.
(b) A procedure is fair and reasonable when either:
(1) The articles or bylaws set forth a procedure that provides:
(i) not less than fifteen days prior written notice of the expulsion, suspension or termination and the reasons therefore; and
(ii) an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension or termination by a person or persons authorized to decide that the proposed expulsion, termination or suspension not take place; or
(2) It is fair and reasonable taking into consideration all of the relevant facts and circumstances.
(c) Any written notice given by mail must be given by first-class or certified mail sent to the last address of the member shown on the corporation's records.
(d) Any proceeding challenging an expulsion, suspension or termination, including a proceeding in which defective notice is alleged, must be commenced within one year after the effective date of the expulsion, suspension or termination.
(e) A member who has been expelled or suspended may be liable to the corporation for dues, assessments or fees as a result of obligations incurred or commitments made prior to expulsion or suspension.
Section 6.22. Purchase of Memberships.
(a) A public benefit or religious corporation may not purchase any of its memberships or any right arising therefrom.
(b) A mutual benefit corporation may purchase the membership of a member who resigns or whose membership is terminated for the amount and pursuant to the conditions set forth in or authorized by its articles or bylaws. No payment shall be made in violation of chapter 13.
Section 6.30. Derivative Suits.
(a) A proceeding may be brought in the right of a domestic or foreign corporation to procure a judgment in its favor by:
(i) any member or members having five percent or more of the voting power or by fifty members, whichever is less; or,
(ii) any director.
(b) In any such proceeding, each complainant shall be a member or director at the time of bringing the proceeding.
(c) A complaint in a proceeding brought in the right of a corporation must be verified and allege with particularity the demand made, if any, to obtain action by the directors and either why the complainants could not obtain the action or why they did not make the demand. If a demand for action was made and the corporation's investigation of the demand is in progress when the proceeding is filed, the court may stay the suit until the investigation is completed.
(d) On termination of the proceeding the court may require the complainants to pay any defendant's reasonable expenses (including counsel fees) incurred in defending the suit if it finds that the proceeding was commenced frivolously or in bad faith.
(e) If the proceeding on behalf of the corporation results in the corporation taking some action requested by the complainants or otherwise was successful, in whole or in part, or if anything was received by the complainants as the result of a judgment, compromise or settlement of an action or claim, the court may award the complainants reasonable expenses (including counsel fees).
(f) The complainants shall notify the attorney general within ten days after commencing any proceeding under this section if the proceeding involves a public benefit corporation or assets held in charitable trust by a mutual benefit corporation.
(a) A corporation may provide in its articles or bylaws for delegates having some or all of the authority of members.
(b) The articles or bylaws may set forth provisions relating to:
(1) The characteristics, qualifications, rights, limitations and obligations of delegates including their selection and removal;
(2) Calling, noticing, holding and conducting meetings of delegates; and
(3) Carrying on corporate activities during and between meetings of delegates.
Section 7.01. Annual and Regular Meetings.
(a) A corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws.
(b) A corporation with members may hold regular membership meetings at the times stated in or fixed in accordance with the bylaws.
(c) Annual and regular membership 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 and regular meetings shall be held at the corporation's principal office.
(d) At the annual meeting:
(1) The president and chief financial officer shall report on the activities and financial condition of the corporation; and
(2) The members shall consider and act upon such other matters as may be raised consistent with the notice requirements of sections 7.05 and 7.23(b).
(e) At regular meetings the members shall consider and act upon such matters as may be raised consistent with the notice requirements of sections 7.05 and 7.23(b).
(f) The failure to hold an annual or regular meeting at a time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of any corporate action.
Section 7.02. Special Meeting.
(a) A corporation with members shall hold a special meeting of members:
(1) on call of its board or the person or persons authorized to do so by the articles or bylaws; or
(2) except as provided in the articles or bylaws of a religious corporation if the holders of at least five percent of the voting power of any corporation sign, date, and deliver to any corporate officer one or more written demands for the meeting describing the purpose or purposes for which it is to be held.
(b) The close of business on the thirtieth day before delivery of the demand or demands for a special meeting to any corporate officer is the record date for the purpose of determining whether the five percent requirement of subsection (a) has been met.
(c) If a notice for a special meeting demanded under subsection (a)(2) is not given pursuant to section 7.05 within thirty days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection (d), a person signing the demand or demands may set the time and place of the meeting and give notice pursuant to section 7.05.
(d) Special meetings of members may be held in or out of this state at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings shall be held at the corporation's principal office.
(e) Only those matters that are within the purpose or purposes described in the meeting notice required by section 7.05 may be conducted at a special meeting of members.
Section 7.03. Court-Ordered Meeting.
(a) The [name or describe] court of the county where a corporation's principal office (or, if none in this state, its registered office) is located may summarily order a meeting to be held:
(1) on application of any member or other person entitled to participate in an annual or regular meeting, and in the case of a public benefit corporation, the attorney general, if an annual meeting was not held within the earlier of 6 months after the end of the corporation's fiscal year or 15 months after its last annual meeting; or
(2) on application of any member or other person entitled to participate in a regular meeting, and in the case of a public benefit corporation, the attorney general, if a regular meeting is not held within 40 days after the date it was required to be held; or
(3) on application of a member who signed a demand for a special meeting valid under section 7.02, a person or persons entitled to call a special meeting and, in the case of a public benefit corporation, the attorney general, if:
(i) notice of the special meeting was not given within 30 days after the date the demand was delivered to a corporate officer; or
(ii) the special meeting was not held in accordance with the notice.
(b) The court may fix the time and place of the meeting, specify a record date for determining members entitled to notice of and to vote at the meeting, prescribe the form and content of the meeting notice, fix the quorum required for specific matters to be considered at the meeting (or direct that the votes represented at the meeting constitute a quorum for action on those matters), and enter other orders necessary to accomplish the purpose or purposes of the meeting.
(c) If the court orders a meeting, it may also order the corporation to pay the member's costs (including reasonable counsel fees) incurred to obtain the order.
Section 7.04. Action by Written Consent.
(a) Unless limited or prohibited by the articles or bylaws, action required or permitted by this Act to be approved by the members may be approved without a meeting of members if the action is approved by members holding at least eighty
percent of the voting power. The action must be evidenced by one or more written consents describing the action taken, signed by those members representing at least eighty percent of the voting power, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) If not otherwise determined under section 7.03 or 7.07, the record date for determining members entitled to take action without a meeting is the date the first member signs the consent under subsection (a).
(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document filed with the secretary of state.
(d) Written notice of member approval pursuant to this section shall be given to all members who have not signed the written consent. If written notice is required, member approval pursuant to this section shall be effective ten days after such written notice is given.
Section 7.05. Notice of Meeting.
(a) A corporation shall give notice consistent with its bylaws of meetings of members in a fair and reasonable manner.
(b) Any notice that conforms to the requirements of subsection (c) is fair and reasonable, but other means of giving notice may also be fair and reasonable when all the circumstances are considered; provided, however, that notice of matters referred to in subsection (c)(2) must be given as provided in subsection (c).
(c) Notice is fair and reasonable if:
(1) the corporation notifies its members of the place, date, and time of each annual, regular and special meeting of members no fewer than 10 (or if notice is mailed by other than first class or registered mail, 30) nor more than 60 days before the meeting date;
(2) notice of an annual or regular meeting includes a description of any matter or matters that must be approved by the members under sections 8.31, 8.56, 10.03, 10.21, 11.04, 12.02, 14.01, or 14.02; and
(3) notice of a special meeting includes a description of the matter or matters for which the meeting is called.
(d) Unless the bylaws require otherwise, if an annual, regular or special meeting of members is adjourned to a different date, time or place, notice need not be given of the new date, time or place, if the new date, time or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under section 7.07, however, notice of the adjourned meeting must be given under this section to the members of record as of the new record date.
(e) When giving notice of an annual, regular or special meeting of members, a corporation shall give notice of a matter a member intends to raise at the meeting if: (1) requested in writing to do so by a person entitled to call a special meeting; and (2) the request is received by the secretary or president of the corporation at least ten days before the corporation gives notice of the meeting.
Section 7.06. Waiver of Notice.
(a) A member may waive any notice required by this Act, the articles, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the member entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) A member's attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the meeting, unless the member at the beginning of the meeting objects to holding the meeting or transacting business at the meeting;
(2) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the member objects to considering the matter when it is presented.
Section 7.07. Record Date -- Determining Members Entitled to Notice and Vote.
(a) The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to notice of a members' meeting. If the bylaws do not fix or provide for fixing such a record date, the board may fix a future date as such a record date. If no such record date is fixed, members at the close of business on the business day preceding the day on which notice is given, or if notice is waived, at the close of business on the business day preceding the day on which the meeting is held, are entitled to notice of the meeting.
(b) The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to vote at a members' meeting. If the bylaws do not fix or provide for fixing such a record date, the board may fix a future date as such a record date. If no such record date is fixed, members on the date of the meeting who are otherwise eligible to vote are entitled to vote at the meeting.
(c) The bylaws may fix or provide the manner for determining a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. If the bylaws do not fix or provide for fixing such a record date, the board may fix in advance such a record date. If no such record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later, are entitled to exercise such rights.
(d) A record date fixed under this section may not be more than 70 days before the meeting or action requiring a determination of members occurs.
(e) A determination of members entitled to notice of or to vote at a membership meeting is effective for any adjournment of the meeting unless the board fixes a new date for determining the right to notice or the right to vote, which it must do if the meeting is adjourned to a date more than 70 days after the record date for determining members entitled to notice of the original meeting.
(f) If a court orders a meeting adjourned to a date more than 120 days after the date fixed for the original meeting, it may provide that the original record date for notice or voting continues in effect or it may fix a new record date for notice or voting.
Section 7.08. Action by Written Ballot.
(a) Unless prohibited or limited by the articles or bylaws, any action that may be taken at any annual, regular or special meeting of members may be taken without a meeting if the corporation delivers a written ballot to every member entitled to vote on the matter.
(b) A written ballot shall:
(1) set forth each proposed action; and
(2) provide an opportunity to vote for or against each proposed action.
(c) Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.
(d) All solicitations for votes by written ballot shall:
(1) indicate the number of responses needed to meet the quorum requirements;
(2) state the percentage of approvals necessary to approve each matter other than election of directors; and
(3) specify the time by which a ballot must be received by the corporation in order to be counted.
(e) Except as otherwise provided in the articles or bylaws, a written ballot may not be revoked.
Section 7.20. Members' List for Meeting.
(a) After fixing a record date for a notice of a meeting, a corporation shall prepare an alphabetical list of the names of all its members who are entitled to notice of the meeting. The list must show the address and number of votes each member is entitled to vote at the meeting. The corporation shall prepare on a current basis through the time of the membership meeting a list of members, if any, who are entitled to vote at the meeting, but not entitled to notice of the meeting. This list shall be prepared on the same basis and be part of the list of members.
(b) The list of members must be available for inspection by any member for the purpose of communication with other members concerning the meeting, beginning two business days after notice is given of the meeting for which the list was prepared and continuing through the meeting, at the corporation's principal office or at a reasonable place identified in the meeting notice in the city where the meeting will be held. A member, a member's agent, or attorney is entitled on written demand to inspect and, subject to the limitations of sections 16.02(c) and 16.05, to copy the list, at a reasonable time and at the member's expense, during the period it is available for inspection.
(c) The corporation shall make the list of members available at the meeting, and any member, a member's agent, or attorney is entitled to inspect the list at any time during the meeting or any adjournment.
(d) If the corporation refuses to allow a member, a member's agent, or attorney to inspect the list of members before or at the meeting (or copy the list as permitted by subsection (b)); the [name or describe] court of the county where a corporation's principal office (or if none in this state, its registered office) is located, on application of the member, may summarily order the inspection or copying at the corporation's expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete and may order the corporation to pay the member's costs (including reasonable counsel fees) incurred to obtain the order.
(e) Unless a written demand to inspect and copy a membership list has been made under subsection (b) prior to the membership meeting and a corporation improperly refuses to comply with the demand, refusal or failure to comply with this section does not affect the validity of action taken at the meeting.
(f) The articles or bylaws of a religious corporation may limit or abolish the rights of a member under this section to inspect and copy any corporate record.
Section 7.21. Voting Entitlement Generally.
(a) Unless the articles or bylaws provide otherwise, each member is entitled to one vote on each matter voted on by the members.
(b) Unless the articles or bylaws provide otherwise, if a membership stands of record in the names of two or more persons, their acts with respect to voting shall have the following effect:
(1) If only one votes, such act binds all; and
(2) If more than one votes, the vote shall be divided on a pro rata basis.
Section 7.22. Quorum Requirements.
(a) Unless this Act, the articles, or bylaws provide for a higher or lower quorum, ten percent of the votes entitled to be cast on a matter must be represented at a meeting of members to constitute a quorum on that matter.
(b) A bylaw amendment to decrease the quorum for any member action may be approved by the members or, unless prohibited by the bylaws, by the board.
(c) A bylaw amendment to increase the quorum required for any member action must be approved by the members.
(d) Unless one-third or more of the voting power is present in person or by proxy, the only matters that may be voted upon at an annual or regular meeting of members are those matters that are described in the meeting notice.
Section 7.23. Voting Requirements.
(a) Unless this Act, the articles, or the bylaws require a greater vote or voting by class, if a quorum is present, the affirmative vote of the votes represented and voting (which affirmative votes also constitute a majority of the required quorum) is the act of the members.
(b) A bylaw amendment to increase or decrease the vote required for any member action must be approved by the members.
(a) Unless the articles or bylaws prohibit or limit proxy voting, a member may appoint a proxy to vote or otherwise act for the member by signing an appointment form either personally or by an attorney-in-fact.
(b) An appointment of a proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment is valid for 11 months unless a different period is expressly provided in the appointment form; provided however that no proxy shall be valid for more than three years from its date of execution.
(c) An appointment of a proxy is revocable by the member.
(d) The death or incapacity of the member appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises authority under the appointment.
(e) Appointment of a proxy is revoked by the person appointing the proxy:
(1) attending any meeting and voting in person; or
(2) signing and delivering to the secretary or other officer or agent authorized to tabulate proxy votes either a writing stating that the appointment of the proxy is revoked or a subsequent appointment form.
(f) Subject to section 7.27 and any express limitation on the proxy's authority appearing on the face of the appointment form, a corporation is entitled to accept the proxy's vote or other action as that of the member making the appointment.
Section 7.25. Cumulative Voting for Directors.
(a) If the articles or bylaws provide for cumulative voting by members, members may so vote, by multiplying the number of votes the members are entitled to cast by the number of directors for whom they are entitled to vote, and cast the product for a single candidate or distribute the product among two or more candidates.
(b) Cumulative voting is not authorized at a particular meeting unless:
(1) The meeting notice or statement accompanying the notice states that cumulative voting will take place; or
(2) a member gives notice during the meeting and before the vote is taken of the member's intent to cumulate votes, and if one member gives this notice all other members participating in the election are entitled to cumulate their votes without giving further notice.
(c) A director elected by cumulative voting may be removed by the members without cause if the requirements of section 8.08 are met unless the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written ballot, all memberships entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected.
(d) Members may not cumulatively vote if the directors and members are identical.
Section 7.26. Other Methods of Electing Directors.
A corporation may provide in its articles or bylaws for election of directors by members or delegates: (1) on the basis of chapter or other organizational unit; (2) by region or other geographic unit; (3) by preferential voting; or (4) by any other reasonable method.
Section 7.27. Corporation's Acceptance of Votes.
(a) If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a member, the corporation if acting in good faith is entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the member.
(b) If the name signed on a vote, consent, waiver, or proxy appointment does not correspond to the record name of a member, the corporation if acting in good faith is nevertheless entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the member if:
(1) the member is an entity and the name signed purports to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an attorney-in-fact of the member and if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the member has been presented with respect to the vote, consent, waiver, or proxy appointment;
(3) two or more persons hold the membership as cotenants or fiduciaries and the name signed purports to be the name of at least one of the coholders and the person signing appears to be acting on behalf of all the coholders; and
(4) in the case of a mutual benefit corporation:
(i) the name signed purports to be that of an administrator, executor, guardian, or conservator representing the member and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment;
(ii) the name signed purports to be that of a receiver or trustee in bankruptcy of the member, and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment.
(c) The corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the member.
(d) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section are not liable in damages to the member for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.
Section 7.30. Voting Agreements.
(a) Two or more members may provide for the manner in which they will vote by signing an agreement for that purpose. Such agreements may be valid for a period of up to ten years. For public benefit corporations such agreements must have a reasonable purpose not inconsistent with the corporation's public or charitable purposes.
(b) A voting agreement created under this section is specifically enforceable.
Section 8.01. Requirement for and Duties of Board.
(a) Each corporation must have a board of directors.
(b) Except as provided in this Act or subsection (c), all corporate powers shall be exercised by or under the authority of, and the affairs of the corporation managed under the direction of, its board.
(c) The articles may authorize a person or persons to exercise some or all of the powers which would otherwise be exercised by a board. To the extent so authorized any such person or persons shall have the duties and responsibilities of the directors, and the directors shall be relieved to that extent from such duties and responsibilities.
Section 8.02. Qualifications of Directors.
All directors must be individuals. The articles or bylaws may prescribe other qualifications for directors.
Section 8.03. Number of Directors.
(a) A board of directors must consist of three or more individuals, with the number specified in or fixed in accordance with the articles or bylaws.
(b) The number of directors may be increased or decreased (but to no fewer than three) from time to time by amendment to or in the manner prescribed in the articles or bylaws.
Section 8.04. Election, Designation and Appointment of Directors.
(a) If the corporation has members, all the directors (except the initial directors) shall be elected at the first annual meeting of members, and at each annual meeting thereafter, unless the articles or bylaws provide some other time or method of election, or provide that some of the directors are appointed by some other person or designated.
(b) If the corporation does not have members, all the directors (except the initial directors) shall be elected, appointed or designated as provided in the articles or bylaws. If no method of designation or appointment is set forth in the articles or bylaws, the directors (other than the initial directors) shall be elected by the board.
Section 8.05. Terms of Directors Generally.
(a) The articles or bylaws must specify the terms of directors. Except for designated or appointed directors, the terms of directors may not exceed five years. In the absence of any term specified in the articles or bylaws, the term of each director shall be one year. Directors may be elected for successive terms.
(b) A decrease in the number of directors or term of office does not shorten an incumbent director's term.
(c) Except as provided in the articles or bylaws:
(1) the term of a director filling a vacancy in the office of a director elected by members expires at the next election of directors by members; and
(2) the term of a director filling any other vacancy expires at the end of the unexpired term that such director is filling.
(d) Despite the expiration of a director's term, the director continues to serve until the director's successor is elected, designated or appointed and qualifies, or until there is a decrease in the number of directors.
Section 8.06. Staggered Terms for Directors.
The articles or bylaws may provide for staggering the terms of directors by dividing the total number of directors into groups. The terms of office of the several groups need not be uniform.
Section 8.07. Resignation of Directors.
(a) A director may resign at any time by delivering written notice to the board of directors, its presiding officer or to the president or secretary.
(b) A resignation is effective when the notice is effective unless the notice specifies a later effective date. If a resignation is made effective at a later date, the board may fill the pending vacancy before the effective date if the board provides that the successor does not take office until the effective date.
Section 8.08. Removal of Directors Elected by Members or Directors.
(a) The members may remove one or more directors elected by them without cause.
(b) If a director is elected by a class, chapter or other organizational unit or by region or other geographic grouping, the director may be removed only by the members of that class, chapter, unit or grouping.
(c) Except as provided in subsection (i), a director may be removed under subsection (a) or (b) only if the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors.
(d) If cumulative voting is authorized, a director may not be removed if the number of votes, or if the director was elected by a class, chapter, unit or grouping of members, the number of votes of that class, chapter, unit or grouping, sufficient to elect the director under cumulative voting is voted against the director's removal.
(e) A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.
(f) In computing whether a director is protected from removal under subsections (b) - (d), it should be assumed that the votes against removal are cast in an election for the number of directors of the class to which the director to be removed belonged on the date of that director's election.
(g) An entire board of directors may be removed under subsections (a) - (e).
(h) A director elected by the board may be removed without cause by the vote of two-thirds of the directors then in office or such greater number as is set forth in the articles or bylaws; provided, however, that a director elected by the board to fill the vacancy of a director elected by the members may be removed without cause by the members, but not the board.
(i) If, at the beginning of a director's term on the board, the articles or bylaws provide that the director may be removed for missing a specified number of board meetings, the board may remove the director for failing to attend the specified number of meetings. The director may be removed only if a majority of the directors then in office vote for the removal.
(j) The articles or bylaws of a religious corporation may:
(1) limit the application of this section; and
(2) set forth the vote and procedures by which the board or any person may remove with or without cause a director elected by the members or the board.
Section 8.09. Removal of Designated or Appointed Directors.
(a) A designated director may be removed by an amendment to the articles or bylaws deleting or changing the designation.
(b) Appointed Directors:
(1) Except as otherwise provided in the articles or bylaws, an appointed director may be removed without cause by the person appointing the director;
(2) The person removing the director shall do so by giving written notice of the removal to the director and either the presiding officer of the board or the corporation's president or secretary; and
(3) A removal is effective when the notice is effective unless the notice specifies a future effective date.
Section 8.10. Removal of Directors by Judicial Proceeding.
(a) The [name or describe] court of the county where a corporation's principal office is located may remove any director of the corporation from office in a proceeding commenced either by the corporation, its members holding at least 10 percent of the voting power of any class, or the attorney general in the case of a public benefit corporation, if the court finds that
(1) the director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation, [if section 8.13 is adopted, that the provisions of section 8.13 have been violated,] or a final judgment has been entered finding that the director has violated a duty set forth in sections 8.30 - 8.33, and
(2) removal is in the best interest of the corporation.
(b) The court that removes a director may bar the director from serving on the board for a period prescribed by the court.
(c) If members or the attorney general commence a proceeding under subsection (a), the corporation shall be made a party defendant.
(d) If a public benefit corporation or its members commence a proceeding under subsection (a), they shall give the attorney general written notice of the proceeding.
(e) The articles or bylaws of a religious corporation may limit or prohibit the application of this section.
Section 8.11. Vacancy on Board.
(a) Unless the articles or bylaws provide otherwise, and except as provided in subsections (b) and (c), if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors:
(1) the members, if any, may fill the vacancy; if the vacant office was held by a director elected by a class, chapter or other organizational unit or by region or other geographic grouping, only members of the class, chapter, unit or
grouping are entitled to vote to fill the vacancy if it is filled by the members;
(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) Unless the articles or bylaws provide otherwise, if a vacant office was held by an appointed director, only the person who appointed the director may fill the vacancy.
(c) If a vacant office was held by a designated director, the vacancy shall be filled as provided in the articles or bylaws. In the absence of an applicable article or bylaw provision, the vacancy may not be filled by the board.
(d) A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date under section 8.07(b) or otherwise) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.
Section 8.12. Compensation of Directors.
Unless the articles or bylaws provide otherwise, a board of directors may fix the compensation of directors.
Section 8.13. Financially Disinterested Majority -- Public Benefit Corporations. Optional section.
(a) No more than 49 percent of the individuals serving on the board of any public benefit corporation may be financially interested persons.
(b) For the purposes of this section "financially interested persons" means:
(1) Individuals who have received or are entitled to receive compensation, directly or indirectly, from the corporation for services rendered to it within the previous 12 months, whether as full- or part-time employees, independent contractors, consultants or otherwise, excluding any reasonable payments made to directors for serving as directors; or
(2) Any spouse, brother, sister, parent or child of any such individual.
(c) The failure to comply with the provisions of this section shall not affect the validity or enforceability of any transactions entered into by a corporation.
Section 8.20. Regular and Special Meetings.
(a) If the time and place of a directors' meeting is fixed by the bylaws or the board, the meeting is a regular meeting. All other meetings are special meetings.
(b) A board of directors may hold regular or special meetings in or out of this state.
(c) Unless the articles or bylaws provide otherwise, a board may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
Section 8.21. Action Without Meeting.
(a) Unless the articles or bylaws provide otherwise, action required or permitted by this Act to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes filed with the corporate records reflecting the action taken.
(b) Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.
(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document.
Section 8.22. Call and Notice of Meetings.
(a) Unless the articles, bylaws or subsection (c) provide otherwise, regular meetings of the board may be held without notice.
(b) Unless the articles, bylaws or subsection (c) provide otherwise, special meetings of the board must be preceded by at least two days' notice to each director of the date, time, and place, but not the purpose, of the meeting.
(c) In corporations without members any board action to remove a director or to approve a matter that would require approval by the members if the corporation had members, shall not be valid unless each director is given at least seven days' written notice that the matter will be voted upon at a directors' meeting or unless notice is waived pursuant to section 8.23.
(d) Unless the articles or bylaws provide otherwise, the presiding officer of the board, the president or twenty percent of the directors then in office may call and give notice of a meeting of the board.
Section 8.23. Waiver of Notice.
(a) A director may at any time waive any notice required by this Act, the articles or bylaws. Except as provided in subsection (b), the waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or the corporate records.
(b) A director's attendance at or participation in a meeting waives any required notice of the meeting unless the director upon arriving at the meeting or prior to the vote on a matter not noticed in conformity with this Act, the articles or bylaws objects to lack of notice and does not thereafter vote for or assent to the objected to action.
Section 8.24. Quorum and Voting.
(a) Except as otherwise provided in this Act, the articles or bylaws, a quorum of a board of directors consists of a majority of the directors in office immediately before a meeting begins. In no event may the articles or bylaws authorize a quorum of fewer than the greater of one-third of the number of directors in office or two directors.
(b) If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board unless this Act, the articles or bylaws require the vote of a greater number of directors.
Section 8.25. Committees of the Board.
(a) Unless prohibited or limited by the articles or bylaws, a board of directors may create one or more committees of the board and appoint members of the board to serve on them. Each committee shall have two or more directors, who serve at the pleasure of the board.
(b) The creation of a committee and appointment of members to it must be approved by the greater of:
(1) a majority of all the directors in office when the action is taken; or
(2) the number of directors required by the articles or bylaws to take action under section 8.24.
(c) Sections 8.20 through 8.24, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the board, apply to committees of the board and their members as well.
(d) To the extent specified by the board of directors or in the articles or bylaws, each committee of the board may exercise the board's authority under section 8.01.
(e) A committee of the board may not, however:
(1) authorize distributions;
(2) approve or recommend to members dissolution, merger or the sale, pledge or transfer of all or substantially all of the corporation's assets;
(3) elect, appoint or remove directors or fill vacancies on the board or on any of its committees; or
(4) adopt, amend or repeal the articles or bylaws.
(f) The creation of, delegation of authority to, or action by a committee does not alone constitute compliance by a director with the standards of conduct described in section 8.30.
Section 8.30. General Standards for Directors.
(a) A director shall discharge his or her duties as a director, including his or her duties as a member of a committee:
(1) in good faith;
(2) with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
(3) in a manner the director reasonably believes to be in the best interests of the corporation.
(b) In discharging his or her duties,