Bill Text: IA SF398 | 2013-2014 | 85th General Assembly | Introduced

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Bill Title: A bill for an act relating to business corporations, including by providing for their organization and operation; providing for the relationship between shareholders, directors, and officers; and including effective date provisions. (Formerly SSB 1169.)

Spectrum: Committee Bill

Status: (Introduced - Dead) 2013-12-31 - END OF 2013 ACTIONS [SF398 Detail]

Download: Iowa-2013-SF398-Introduced.html

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Senate File 398 - Introduced
SENATE FILE 398
BY COMMITTEE ON JUDICIARY
(SUCCESSOR TO SSB 1169)
A BILL FOR
An Act relating to business corporations, including by
providing for their organization and operation; providing
for the relationship between shareholders, directors, and
officers; and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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DIVISION I
PRINCIPAL PROVISIONS
Section 1. Section 490.140, subsections 3, 6, 9, and 26,
Code 2013, are amended to read as follows:
3. “Conspicuous” means so written , displayed, or presented
that a reasonable person against whom the writing is to operate
should have noticed it. For example, printing text in italics ,
or boldface , or contrasting color, or typing in capitals , or
underlined , is conspicuous.
6. “Deliver” or “delivery” means any method of delivery
used in conventional commercial practice, including delivery in
person, by hand, mail, commercial delivery, and , if authorized
in accordance with section 490.141, by electronic transmission.
9. “Electronic transmission” or “electronically transmitted”
means any form or process of communication not directly
involving the physical transfer of paper that or another
tangible medium, which is suitable all of the following:
a. Suitable for the retention, retrieval, and reproduction
of information by the recipient.
b. Retrievable in paper form by the recipient through an
automated process used in conventional commercial practice,
unless otherwise authorized in accordance with section 490.141,
subsection 10.
26. “Sign” or “signature” means, with present intent to
authenticate or adopt a document, doing any of the following:
a. Executing or adopting a tangible symbol to a document,
and includes any manual, facsimile, or conformed , or electronic
signature.
b. Attaching to or logically associating with an electronic
transmission an electronic sound, symbol, or process, and
includes an electronic signature in an electronic transmission.
Sec. 2. Section 490.140, Code 2013, is amended by adding the
following new subsections:
NEW SUBSECTION . 7A. “Document” means any of the following:
a. A tangible medium on which information is inscribed, and
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includes any writing or written instrument.
b. An electronic record.
NEW SUBSECTION . 7B. “Domestic unincorporated entity” means
an unincorporated entity whose internal affairs are governed by
the laws of this state.
NEW SUBSECTION . 8A. “Electronic” means relating to
technology having electrical, digital, magnetic, wireless,
optical, electromagnetic, or similar capabilities.
NEW SUBSECTION . 8B. “Electronic record” means information
that is stored in an electronic or other medium and is
retrievable in paper form through an automated process used in
conventional commercial practice, unless otherwise authorized
in accordance with section 490.141, subsection 10.
NEW SUBSECTION . 11A. “Expenses” means reasonable expenses
of any kind that are incurred in connection with a matter.
NEW SUBSECTION . 21B. “Qualified director” means the same
as defined in section 490.143.
NEW SUBSECTION . 32. “Writing” or “written” means any
information in the form of a document.
Sec. 3. Section 490.141, Code 2013, is amended to read as
follows:
490.141 Notice or other communication .
1. Notice under this chapter must be in writing unless oral
notice is reasonable under in the circumstances. Notice by
electronic transmission is written notice. Unless otherwise
agreed between the sender and the recipient, words in a notice
or other communication under this chapter must be in English.
2. Notice A notice or other communication may be
communicated in person; by mail or other given or sent by
any method of delivery ; or by telephone, voice mail, or
other , except that electronic means transmissions must be in
accordance with this section . If these forms of personal
notice methods of delivery are impracticable, a notice or
other communication may be communicated by a newspaper of
general circulation in the area where published; or by radio,
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television, or other form of public broadcast communication.
3. Written notice by a domestic or foreign corporation to
its shareholder, if in a comprehensible form, is effective
according to one of the following:
a. 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.
b. When electronically transmitted to the shareholder in a
manner authorized by the shareholder.
4. Written notice Notice or other communication to a
domestic or foreign corporation authorized to transact business
in this state may be addressed delivered to its registered
agent at its registered office or to the secretary of the
corporation or its secretary at its principal office shown in
its most recent biennial report or, in the case of a foreign
corporation that has not yet delivered a biennial report, in
its application for a certificate of authority.
4. Notice or other communications may be delivered by
electronic transmission if consented to by the recipient or if
authorized by subsection 10.
5. Any consent under subsection 4 may be revoked by the
person who consented by written or electronic notice to the
person to whom the consent was delivered. Any such consent is
deemed revoked if all of the following apply:
a. The corporation is unable to deliver two consecutive
electronic transmissions given by the corporation in accordance
with such consent.
b. Such inability becomes known to the secretary or an
assistant secretary of the corporation or to the transfer
agent, or other person responsible for the giving of notice
or other communications; provided, however, the inadvertent
failure to treat such inability as a revocation shall not
invalidate any meeting or other action.
6. Unless otherwise agreed between the sender and the
recipient, an electronic transmission is received when all of
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the following apply:
a. The electronic transmission enters an information
processing system that the recipient has designated or uses
for the purposes of receiving electronic transmissions or
information of the type sent, and from which the recipient is
able to retrieve the electronic transmission.
b. The electronic transmission is in a form capable of being
processed by that system.
7. Receipt of an electronic acknowledgment from an
information processing system described in subsection 6,
paragraph “a” , establishes that an electronic transmission was
received but, by itself, does not establish that the content
sent corresponds to the content received.
8. An electronic transmission is received under this
section even if no individual is aware of its receipt.
5. 9. Except as provided in subsection 3 , written notice,
Notice or other communication if in a comprehensible form or
manner , is effective at the earliest of any of the following:
a. When received. If in physical form, the earliest of
when it is actually received or when it is left at any of the
following:
(1) A shareholder’s address shown on the corporation’s
record of shareholders maintained by the corporation under
section 490.1601, subsection 3.
(2) A director’s residence or usual place of business.
(3) The corporation’s principal place of business.
b. Five days after its deposit in the United States mail,
if If mailed postpaid by United States mail postage prepaid
and correctly addressed to a shareholder, upon deposit in the
United States mail .
c. On the date shown on the If mailed by United States
mail postage prepaid and correctly addressed to a recipient
other than a shareholder, the earliest of when it is actually
received or as follows:
(1) If sent by registered or certified mail, return receipt
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requested , if sent by registered or certified mail, return
receipt requested, and the date shown on the return receipt is
signed by or on behalf of the addressee.
6. Oral notice is effective when communicated if
communicated in a comprehensible manner.
(2) Five days after it is deposited in the United States
mail.
d. If an electronic transmission, when it is received as
provided in subsection 6.
e. If oral, when communicated.
10. A notice or other communication may be in the form of
an electronic transmission that cannot be directly reproduced
in paper form by the recipient through an automated process
used in conventional commercial practice only if all of the
following apply:
a. The electronic transmission is otherwise retrievable in
perceivable form.
b. The sender and the recipient have consented in writing to
the use of such form of electronic transmission.
7. 11. If this chapter prescribes notice requirements for
notices or other communications in particular circumstances,
those requirements govern. If articles of incorporation or
bylaws prescribe notice requirements for notices or other
communications, not inconsistent with this section or other
provisions of this chapter , those requirements govern. The
articles of incorporation or bylaws may authorize or require
delivery of notices of meetings of directors by electronic
transmission.
Sec. 4. NEW SECTION . 490.143 Qualified director.
1. For purposes of this chapter, a “qualified director”
is a director who takes action under any of the following
provisions, if at the time action is to be taken any of the
following applies:
a. Under section 490.744, the director does not have any of
the following:
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(1) A material interest in the outcome of the proceeding.
(2) A material relationship with a person who has such an
interest.
b. Under section 490.853 or 490.855, all of the following
apply:
(1) The director is not a party to the proceeding.
(2) The director is not a director as to whom a transaction
is a director’s conflicting interest transaction or who sought
a disclaimer of the corporation’s interest in a business
opportunity under section 490.870, which transaction or
disclaimer is challenged in the proceeding.
(3) The director does not have a material relationship with
a director described in either subparagraph (1) or (2).
c. Under section 490.862, the director is not any of the
following:
(1) A director as to whom the transaction is a director’s
conflicting interest transaction.
(2) A director who has a material relationship with another
director as to whom the transaction is a director’s conflicting
interest transaction.
d. Under section 490.870, the director would be a qualified
director under paragraph “c” , if the business opportunity was a
director’s conflicting interest transaction.
2. For purposes of this section, all of the following apply:
a. “Material interest” means an actual or potential
benefit or detriment, other than one which would devolve on
the corporation or the shareholders generally, that would
reasonably be expected to impair the objectivity of the
director’s judgment when participating in the action to be
taken.
b. “Material relationship” means a familial, financial,
professional, employment, or other relationship that would
reasonably be expected to impair the objectivity of the
director’s judgment when participating in the action to be
taken.
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3. The presence of one or more of the following
circumstances shall not automatically prevent a director from
being a qualified director:
a. Nomination or election of the director to the current
board by any director who is not a qualified director with
respect to the matter, or by any person that has a material
relationship with that director, acting alone or participating
with others.
b. Service as a director of another corporation of which a
director who is not a qualified director with respect to the
matter, or any individual who has a material relationship with
that director, is or was also a director.
c. With respect to action to be taken under section 490.744,
status as a named defendant, as a director against whom action
is demanded, or as a director who approved the conduct being
challenged.
Sec. 5. NEW SECTION . 490.144 Householding.
1. A corporation has delivered written notice or any
other report or statement under this chapter, the articles of
incorporation, or the bylaws to all shareholders who share a
common address if all of the following apply:
a. The corporation delivers one copy of the notice, report,
or statement to the common address.
b. The corporation addresses the notice, report, or
statement to those shareholders either as a group or to each
of those shareholders individually or to the shareholders in a
form to which each of those shareholders has consented.
c. Each of those shareholders consents to delivery of
a single copy of such notice, report, or statement to the
shareholders’ common address. Any such consent shall be
revocable by any of such shareholders who deliver written
notice of revocation to the corporation. If such written
notice of revocation is delivered, the corporation shall begin
providing individual notices, reports, or other statements
to the revoking shareholder no later than thirty days after
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delivery of the written notice of revocation.
2. Any shareholder who fails to object by written notice
to the corporation, within sixty days of written notice by the
corporation of its intention to send single copies of notices,
reports, or statements to shareholders who share a common
address as permitted by subsection 1, shall be deemed to have
consented to receiving such single copy at the common address.
Sec. 6. Section 490.502, subsection 2, Code 2013, is amended
to read as follows:
2. If a registered agent changes the street address of the
a registered agent’s business office changes , the registered
agent may change the street address of the registered office of
any corporation for which the person is the registered agent by
notifying delivering a signed written notice of the change to
the corporation in writing of the change and signing, either
manually or in facsimile, and delivering to the secretary of
state for filing a signed statement that complies with the
requirements of subsection 1 and recites that the corporation
has been notified of the change.
Sec. 7. Section 490.620, subsection 4, Code 2013, is amended
to read as follows:
4. If a subscriber defaults in payment of money or
property under a subscription agreement entered into before
incorporation, the corporation may collect the amount owed
as any other debt. Alternatively, unless the subscription
agreement provides otherwise, the corporation may rescind the
agreement and may sell the shares if the debt remains unpaid
more than twenty days after the corporation sends a written
demand for payment to the subscriber.
Sec. 8. Section 490.624, Code 2013, is amended by adding the
following new subsection:
NEW SUBSECTION . 3. The board of directors may authorize one
or more officers to do all of the following:
a. Designate the recipients of rights, options, warrants,
or other equity compensation awards that involve the issuance
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of shares.
b. Determine, within an amount and subject to any other
limitations established by the board and, if applicable, the
stockholders, the number of such rights, options, warrants,
or other equity compensation awards and the terms thereof to
be received by the recipients, provided that an officer shall
not use such authority to designate the officer or any other
persons the board of directors may specify as a recipient of
such rights, options, warrants, or other equity compensation
awards.
Sec. 9. Section 490.701, subsection 1, Code 2013, is amended
to read as follows:
1. A Unless directors are elected by written consent in
lieu of an annual meeting as permitted by section 490.704, a
corporation shall hold annually, at a time stated in or fixed
in accordance with the bylaws, a meeting of shareholders ;
provided, however, that if a corporation’s articles of
incorporation authorize shareholders to cumulate their votes
when electing directors pursuant to section 490.728, directors
shall not be elected by less than unanimous consent .
Sec. 10. Section 490.703, Code 2013, is amended to read as
follows:
490.703 Court-ordered meeting.
1. The district 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
either: pursuant to any of the following:
a. On application of any shareholder of the corporation
entitled to participate in an annual meeting if an annual
meeting was not held or action by written consent in lieu
thereof did not become effective within the earlier of six
months after the end of the corporation’s fiscal year or
fifteen months after its last annual meeting.
b. On application of a shareholder who signed a demand for
a special meeting valid under section 490.702 if either any of
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the following applies :
(1) Notice of the special meeting was not given within
thirty days after the date the demand was delivered to the
corporation’s secretary.
(2) The special meeting was not held in accordance with the
notice.
2. The court may fix the time and place of the meeting,
ascertain the shares entitled to participate in the meeting,
specify a record date or dates for ascertaining 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.
Sec. 11. Section 490.704, Code 2013, is amended to read as
follows:
490.704 Action without meeting.
1. Unless otherwise provided in the articles of
incorporation, any action required or permitted by this chapter
to be taken at a shareholders’ meeting may be taken without
a meeting or vote, and, except as provided in subsection
5 , without prior notice, if one or more written consents
describing the action taken are signed by the holders of
outstanding shares having not less than ninety percent of the
votes entitled to be cast at a meeting at which all shares
entitled to vote on the action were present and voted, and are
delivered to the corporation for inclusion in the minutes or
filing with the corporate records.
2. A written consent shall bear the date of signature of
each shareholder who signs the consent and no written consent
is effective to take the corporate action referred to in
the consent unless, within sixty days of the earliest dated
consent delivered in the manner required by this section to the
corporation, written consents signed by a sufficient number
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of holders to take action are delivered to the corporation.
A written consent may be revoked by a writing to that effect
received by the corporation prior to the receipt by the
corporation of unrevoked written consents sufficient in number
to take corporate action. Except in the case of a public
corporation, the articles of incorporation may provide that
any action required or permitted by this chapter to be taken
at a shareholders’ meeting may be taken without a meeting, and
without prior notice, if consents in writing setting forth the
action so taken are signed by the holders of outstanding shares
having not less than the minimum number of votes that would be
required to authorize or take the action at a meeting at which
all shares entitled to vote on the action were present and
voted. The written consent shall bear the date of signature
of the shareholder who signs the consent and be delivered to
the corporation for inclusion in the minutes or filing with the
corporate records.
3. If not otherwise fixed under section 490.703 or 490.707 ,
the record date for determining shareholders entitled to take
action without a meeting is the date the first shareholder
signs the consent under subsection 1 . If not otherwise fixed
under section 490.707 and if prior board action is not required
respecting the action to be taken without a meeting, the
record date for determining the shareholders entitled to take
action without a meeting shall be the first date on which a
signed written consent is delivered to the corporation. If
not otherwise fixed under section 490.707 and if prior board
action is required respecting the action to be taken without
a meeting, the record date shall be the close of business on
the day the resolution of the board taking such prior action
is adopted. No written consent shall be effective to take
the corporate action referred to therein unless, within sixty
days of the earliest date on which a consent delivered to the
corporation as required by this section was signed, written
consents signed by sufficient shareholders to take the action
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have been delivered to the corporation. A written consent
may be revoked by a writing to that effect delivered to the
corporation before unrevoked written consents sufficient in
number to take the corporate action are delivered to the
corporation.
4. A consent signed under pursuant to the provisions of this
section has the effect of a meeting vote and may be described
as such in any document. Unless the articles of incorporation,
bylaws, or a resolution of the board of directors provides for
a reasonable delay to permit tabulation of written consents,
the action taken by written consent shall be effective when
written consents signed by sufficient shareholders to take the
action are delivered to the corporation.
5. If this chapter requires that notice of proposed action
be given to shareholders not entitled to vote and the action
is to be taken by consent of the voting shareholders, the
corporation must give all 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 shareholders not entitled to vote in a notice of meeting
at which the proposed action would have been submitted to the
shareholders for action.
6. Prompt notice of the taking of corporate action without
a meeting by less than unanimous written consent shall be given
to those shareholders who have not consented in writing. If
the taking of that corporate action requires the giving of
notice under section 490.1320, subsection 2 , the notice of
the action shall set forth the matters described in section
490.1322 .
5. a. If this chapter requires that notice of a proposed
action be given to nonvoting shareholders and the action is
to be taken by written consent of the voting shareholders,
the corporation must give its nonvoting shareholders written
notice of the action not more than ten days after any of the
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following:
(1) Written consents sufficient to take the action have been
delivered to the corporation.
(2) Such later date that tabulation of consents is completed
pursuant to an authorization under subsection 4.
b. The notice must reasonably describe the action taken and
contain or be accompanied by the same material that, under any
provision of this chapter, would have been required to be sent
to nonvoting shareholders in a notice of a meeting at which the
proposed action would have been submitted to the shareholders
for action.
6. a. If action is taken by less than unanimous written
consent of the voting shareholders, the corporation must give
its nonconsenting voting shareholders written notice of the
action not more than ten days after any of the following:
(1) Written consents sufficient to take the action have been
delivered to the corporation.
(2) Such later date that tabulation of consents is completed
pursuant to an authorization under subsection 4.
b. The notice must reasonably describe the action taken
and contain or be accompanied by the same material that, under
any provision of this chapter, would have been required to be
sent to voting shareholders in a notice of a meeting at which
the action would have been submitted to the shareholders for
action.
7. The notice requirements in subsections 5 and 6 shall not
delay the effectiveness of actions taken by written consent,
and a failure to comply with such notice requirements shall
not invalidate actions taken by written consent, provided that
this subsection shall not be deemed to limit judicial power
to fashion any appropriate remedy in favor of a shareholder
adversely affected by a failure to give such notice within the
required time period.
Sec. 12. Section 490.705, subsections 1 and 5, Code 2013,
are amended to read as follows:
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1. A corporation shall 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. The notice shall include the record date
for determining the shareholders entitled to vote at the
meeting, if such date is different than the record date for
determining shareholders entitled to notice of the meeting. If
the board of directors has authorized participation by means
of remote communication pursuant to section 490.709 for any
class or series of shareholders, the notice to such class or
series of shareholders shall describe the means of remote
communication to be used. 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 as of the record date for determining the shareholders
entitled to notice of the meeting .
5. 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 490.707 ,
however, notice of the adjourned meeting must be given under
this section to persons who are shareholders as of the new
record date entitled to vote at such adjourned meeting as of
the record date fixed for notice of such adjourned meeting .
Sec. 13. Section 490.707, Code 2013, is amended to read as
follows:
490.707 Record date.
1. The bylaws may fix or provide the manner of fixing
the record date or dates 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
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corporation may fix a future date as the record date.
2. A record date fixed under this section shall not be more
than seventy days before the meeting or action requiring a
determination of shareholders.
3. 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 or dates , 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.
4. 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 or dates .
5. The record date for a shareholders’ meeting fixed by
or in the manner provided in the bylaws or by the board of
directors shall be the record date for determining shareholders
entitled both to notice of and to vote at the shareholders’
meeting unless, in the case of a record date fixed by the
board of directors and to the extent not prohibited by the
bylaws, the board, at the time it fixes the record date for
shareholders entitled to notice of the meeting, fixes a later
record date on or before the date of the meeting to determine
the shareholders entitled to vote at the meeting.
Sec. 14. NEW SECTION . 490.709 Remote participation in
annual and special meetings.
1. Shareholders of any class or series may participate in
any meeting of shareholders by means of remote communication to
the extent the board of directors authorizes such participation
for such class or series. Participation by means of remote
communication shall be subject to such guidelines and
procedures as the board of directors adopts, and shall be in
conformity with subsection 2.
2. Shareholders participating in a shareholders’ meeting
by means of remote communication shall be deemed present and
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may vote at such a meeting if the corporation has implemented
reasonable measures to do all of the following:
a. Verify that each person participating remotely is a
shareholder.
b. Provide such shareholders a reasonable opportunity to
participate in the meeting and to vote on matters submitted to
the shareholders, including an opportunity to communicate, and
to read or hear the proceedings of the meeting, substantially
concurrently with such proceedings.
Sec. 15. Section 490.720, Code 2013, is amended to read as
follows:
490.720 Shareholders’ list for meeting.
1. After fixing a record date for a meeting, a corporation
shall prepare an alphabetical list of the names of all its
shareholders who are entitled to notice of a shareholders’
meeting. The If the board of directors fixes a different
record date under section 490.707, subsection 5, to determine
the shareholders entitled to vote at the meeting, a corporation
also shall prepare an alphabetical list of the names of all
its shareholders who are entitled to vote at the meeting. A
list must be arranged by voting group and within each voting
group by class or series of shares, and show the address of and
number of shares held by each shareholder.
2. The shareholders’ list for notice must be available for
inspection by any shareholder beginning two business days after
notice of the meeting is given for which the list was prepared
and continuing through the meeting, at the corporation’s
principal office or at a place identified in the meeting notice
in the city where the meeting will be held. A shareholders’
list for voting must be similarly available for inspection
promptly after the record date for voting. A shareholder,
or a shareholder’s agent or attorney, is entitled on written
demand to inspect and, subject to the requirements of section
490.1602, subsection 3 4 , to copy the a list, during regular
business hours and at the person’s expense, during the period
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it is available for inspection.
3. The corporation shall make the shareholders’ list of
shareholders entitled to vote available at the meeting, and any
shareholder, or a shareholder’s agent or attorney, is entitled
to inspect the list at any time during the meeting or any
adjournment.
4. If the corporation refuses to allow a shareholder, or a
shareholder’s agent or attorney, to inspect the a shareholders’
list before or at the meeting, or copy the a list as permitted
by subsection 2 , the district 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
shareholder, 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.
5. Refusal or failure to prepare or make available the a
shareholders’ list does not affect the validity of action taken
at the meeting.
Sec. 16. Section 490.722, subsection 2, Code 2013, is
amended by striking the subsection.
Sec. 17. Section 490.724, subsection 4, Code 2013, is
amended to read as follows:
4. The corporation and its officer or agent who accepts
or rejects a vote, consent, waiver, or proxy appointment in
good faith and in accordance with the standards of this section
or section 490.722, subsection 2 , are not liable in damages
to the shareholder for the consequences of the acceptance or
rejection.
Sec. 18. Section 490.728, Code 2013, is amended by adding
the following new subsection:
NEW SUBSECTION . 4. Shares otherwise entitled to vote
cumulatively shall not be voted cumulatively at a particular
meeting unless any of the following applies:
a. The meeting notice or proxy statement accompanying
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the notice states conspicuously that cumulative voting is
authorized.
b. A shareholder who has the right to cumulate the
shareholder’s votes gives notice to the corporation not less
than forty-eight hours before the time set for the meeting of
the shareholder’s intent to cumulate votes during the meeting,
and if one shareholder gives this notice all other shareholders
in the same voting group participating in the election are
entitled to cumulate their votes without giving further notice.
Sec. 19. Section 490.742, subsection 2, Code 2013, is
amended to read as follows:
2. Ninety days have expired from the date delivery of
the demand was made, unless the shareholder has earlier been
notified that the demand has been rejected by the corporation
or unless irreparable injury to the corporation would result by
waiting for the expiration of the ninety-day period.
Sec. 20. Section 490.744, Code 2013, is amended to read as
follows:
490.744 Dismissal.
1. A derivative proceeding shall be dismissed by the court
on motion by the corporation if one of the groups specified
in subsection 2 or 6 5 has determined in good faith after
conducting a reasonable inquiry upon which its conclusions are
based that the maintenance of the derivative proceeding is
not in the best interests of the corporation. A corporation
moving to dismiss on this basis shall submit in support of the
motion a short and concise statement of the reasons for its
determination.
2. Unless a panel is appointed pursuant to subsection 6 5 ,
the determination in subsection 1 shall be made by one any of
the following:
a. A majority vote of independent qualified directors
present at a meeting of the board of directors if the
independent qualified directors constitute a quorum.
b. A majority vote of a committee consisting of two or more
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independent qualified directors appointed by majority vote of
independent qualified directors present at a meeting of the
board of directors, whether or not such independent qualified
directors constitute a quorum.
3. None of the following shall by itself cause a director to
be considered not independent for purposes of this section :
a. The nomination or election of the director by persons
who are defendants in the derivative proceeding or against whom
action is demanded.
b. The naming of the director as a defendant in the
derivative proceeding or as a person against whom action is
demanded.
c. The approval by the director of the act being challenged
in the derivative proceeding or demand if the act resulted in
no personal benefit to the director.
4. 3. a. If a derivative proceeding is commenced
after a determination has been made rejecting a demand by a
shareholder, the complaint shall allege with particularity
facts establishing one any of the following:
(1) That a majority of the board of directors did not
consist of independent qualified directors at the time the
determination was made.
(2) That the requirements of subsection 1 have not been met.
b. All discovery and other proceedings shall be stayed
during the pendency of any motion to dismiss unless the
court finds upon the motion of any party that particularized
discovery is necessary to preserve evidence or prevent undue
prejudice to that party.
5. 4. If a majority of the board of directors does not
consist consisted of independent qualified directors at the
time the determination is was made, the corporation plaintiff
shall have the burden of proving that the requirements of
subsection 1 have not been met ; if not, the corporation shall
have the burden of proving that the requirements of subsection
1 have been met . If a majority of the board of directors
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consists of independent directors at the time the determination
is made, the plaintiff shall have the burden of proving that
the requirements of subsection 1 have not been met.
6. 5. The court may appoint a panel of one or more
independent persons upon motion by the corporation to make
a determination whether the maintenance of the derivative
proceeding is in the best interests of the corporation. In
such case, the plaintiff shall have the burden of proving that
the requirements of subsection 1 have not been met.
Sec. 21. Section 490.746, Code 2013, is amended to read as
follows:
490.746 Payment of expenses.
On termination of the derivative proceeding, the court may
do either any of the following:
1. Order the corporation to pay the plaintiff’s reasonable
expenses , including attorney fees incurred in the proceeding,
if it finds that the proceeding has resulted in a substantial
benefit to the corporation.
2. Order the plaintiff to pay any defendant’s reasonable
expenses , including attorney fees incurred in defending the
proceeding, if it finds that the proceeding was commenced or
maintained without reasonable cause or for an improper purpose.
Sec. 22. NEW SECTION . 490.748 Shareholder action to appoint
custodian or receiver.
1. The district court may appoint one or more persons
to be custodians, or, if the corporation is insolvent, to
be receivers, of and for a corporation in a proceeding by a
shareholder where it is established that any of the following
applies:
a. The directors are deadlocked in the management of
the corporate affairs, the shareholders are unable to break
the deadlock, and irreparable injury to the corporation is
threatened or being suffered.
b. The directors or those in control of the corporation are
acting fraudulently and irreparable injury to the corporation
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is threatened or being suffered.
2. a. The district court may issue injunctions, appoint a
temporary custodian or temporary receiver with all the powers
and duties the court directs, take other action to preserve the
corporate assets wherever located, and carry on the business of
the corporation until a full hearing is held.
b. The district court shall hold a full hearing, after
notifying all parties to the proceeding and any interested
persons designated by the court, before appointing a custodian
or receiver.
c. The district court has jurisdiction over the corporation
and all of its property, wherever located.
3. The district court may appoint an individual or domestic
or foreign corporation, authorized to transact business in this
state, as a custodian or receiver and may require the custodian
or receiver to post bond, with or without sureties, in an
amount the court directs.
4. The district court shall describe the powers and duties
of the custodian or receiver in its appointing order, which may
be amended from time to time. Among other powers, all of the
following apply:
a. A custodian may exercise all of the powers of the
corporation, through or in place of its board of directors, to
the extent necessary to manage the business and affairs of the
corporation.
b. A receiver may do any of the following:
(1) Dispose of all or any part of the assets of the
corporation wherever located, at a public or private sale, if
authorized by the district court.
(2) Sue and defend in the receiver’s own name as receiver in
all courts of this state.
5. The district court during a custodianship may
redesignate the custodian as a receiver, and during a
receivership may redesignate the receiver as a custodian, if
doing so is in the best interests of the corporation.
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6. The district court from time to time during the
custodianship or receivership may order compensation paid and
expense disbursements or reimbursements made to the custodian
or receiver from the assets of the corporation or proceeds from
the sale of its assets.
Sec. 23. Section 490.801, Code 2013, is amended to read as
follows:
490.801 Requirement for and duties functions of board of
directors.
1. Except as provided in section 490.732 , each corporation
must have a board of directors.
2. All corporate powers shall be exercised by or under the
authority of the board of directors of the corporation , and
the business and affairs of the corporation shall be managed
by or under the direction , and subject to the oversight, of ,
its board of directors, subject to any limitation set forth in
the articles of incorporation, or in an agreement authorized
under section 490.732 .
Sec. 24. Section 490.807, Code 2013, is amended to read as
follows:
490.807 Resignation of directors.
1. A director may resign at any time by delivering a
written notice resignation to the board of directors , or its
chairperson chair , or to the secretary of the corporation.
2. A resignation is effective when the notice resignation
is delivered unless the notice resignation specifies a
later effective date or an effective date determined upon
the happening of an event or events . A resignation that is
conditioned upon failing to receive a specified vote for
election as a director may provide that it is irrevocable.
Sec. 25. Section 490.810, subsection 2, Code 2013, is
amended to read as follows:
2. If the vacant office was held by a director elected by
a voting group of shareholders, only the holders of shares of
that voting group are entitled to vote to fill the vacancy
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if it is filled by the shareholders , and only the directors
elected by that voting group are entitled to fill the vacancy
if it is filled by the directors .
Sec. 26. NEW SECTION . 490.826 Submission of matters for
shareholder vote.
A corporation may agree to submit a matter to a vote of its
shareholders even if, after approving the matter, the board of
directors determines it no longer recommends the matter.
Sec. 27. Section 490.830, Code 2013, is amended by adding
the following new subsection:
NEW SUBSECTION . 2A. In discharging board or committee
duties a director shall disclose, or cause to be disclosed,
to the other board or committee members information which
the director knows is not already known by them but is known
by the director to be material to the discharge of their
decision-making or oversight functions, except that disclosure
is not required to the extent that the director reasonably
believes that doing so would violate a duty imposed under law,
a legally enforceable obligation of confidentiality, or a
professional ethics rule.
Sec. 28. Section 490.831, subsection 1, paragraph a,
subparagraph (1), Code 2013, is amended to read as follows:
(1) No defense interposed by the director based on any of
the following precludes liability:
(a) A provision in the articles of incorporation authorized
by section 490.202, subsection 2 , paragraph “d” , or the .
(b) The protection afforded by section 490.832 if
interposed as a bar to the proceeding by the director, does not
preclude liability 490.861 for action taken in compliance with
section 490.862 or 490.863 .
(c) The protection afforded by section 490.870.
Sec. 29. Section 490.831, subsection 3, paragraphs a and b,
Code 2013, are amended to read as follows:
a. In any instance where fairness is at issue, such
as consideration of the fairness of a transaction to the
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corporation under section 490.832 490.861, subsection 2,
paragraph “c” , alter the burden of proving the fact or lack of
fairness otherwise applicable.
b. Alter the fact or lack of liability of a director
under another section of this chapter , such as the provisions
governing the consequences of an unlawful distribution under
section 490.833 or a transactional interest under section
490.832 490.861 .
Sec. 30. Section 490.841, Code 2013, is amended to read as
follows:
490.841 Duties Functions of officers.
Each officer has the authority and shall perform the duties
functions set forth in the bylaws or, to the extent consistent
with the bylaws, the duties functions prescribed by the board
of directors or by direction of an officer authorized by the
board of directors to prescribe the duties functions of other
officers.
Sec. 31. Section 490.842, subsection 1, unnumbered
paragraph 1, Code 2013, is amended to read as follows:
An officer when performing in such capacity shall has the
duty to act in conformity with all of the following:
Sec. 32. Section 490.850, subsection 2, Code 2013, is
amended to read as follows:
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 the director’s individual’s duties to
the corporation also impose duties on, or otherwise involve
services by, that director the individual to the plan or to
participants in or beneficiaries of the plan. “Director” or
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“officer” includes, unless the context requires otherwise, the
estate or personal representative of a director or officer.
Sec. 33. Section 490.850, subsections 3 and 4, Code 2013,
are amended by striking the subsections.
Sec. 34. Section 490.850, subsection 5, Code 2013, is
amended to read as follows:
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.
Sec. 35. Section 490.853, Code 2013, is amended to read as
follows:
490.853 Advance for expenses.
1. A corporation may, before final disposition of
a proceeding, advance funds to pay for or reimburse the
reasonable expenses incurred in connection with the proceeding
by a director an individual who is a party to a the proceeding
because the person is a director if the person that individual
is a member of the board of directors if the director delivers
all of the following to the corporation:
a. A signed written affirmation of the director’s good
faith belief that the director has met the relevant standard
of conduct described in section 490.851 has been met by the
director or that the proceeding involved conduct for which
liability has been eliminated under a provision of the articles
of incorporation as authorized by section 490.202, subsection
2 , paragraph “d” .
b. The director’s A signed written undertaking of the
director to repay any funds advanced if the director is not
entitled to mandatory indemnification under section 490.852 and
it is ultimately determined under section 490.854 or section
490.855 that the director has not met the relevant standard of
conduct described in section 490.851 .
2. The undertaking required by subsection 1 , paragraph “b” ,
must be an unlimited general obligation of the director but
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need not be secured and may be accepted without reference to
the financial ability of the director to make repayment.
3. Authorizations under this section shall be made
according to one any of the following:
a. By the board of directors as follows :
(1) If there are two or more disinterested qualified
directors, by a majority vote of all the disinterested
qualified directors, a majority of whom shall for such purpose
constitute a quorum, or by a majority of the members of a
committee of two or more disinterested qualified directors
appointed by such a vote.
(2) If there are fewer than two disinterested qualified
directors, by the vote necessary for action by the board
in accordance with section 490.824, subsection 3 , in which
authorization directors who do are not qualify as disinterested
qualified directors may participate.
b. By the shareholders, but shares owned by or voted under
the control of a director who at the time does not qualify as is
not a disinterested qualified director may shall not be voted
on the authorization.
Sec. 36. Section 490.855, Code 2013, is amended to read as
follows:
490.855 Determination and authorization of indemnification.
1. A corporation shall not indemnify a director under
section 490.851 unless authorized for a specific proceeding
after a determination has been made that indemnification of
the director is permissible because the director has met the
relevant standard of conduct set forth in section 490.851 .
2. The determination shall be made by any of the following:
a. If there are two or more disinterested qualified
directors, by the board of directors by a majority vote of all
the disinterested qualified directors, a majority of whom shall
for such purpose constitute a quorum, or by a majority of the
members of a committee of two or more disinterested qualified
directors appointed by such a vote.
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b. By special legal counsel selected in one of the following
manners :
(1) Selected in the manner prescribed in paragraph “a” .
(2) If there are fewer than two disinterested qualified
directors, selected by the board of directors, in which
selection directors who do not qualify as disinterested are not
qualified directors may participate.
c. 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 is not a qualified director shall not be voted on
the determination.
3. Authorization of indemnification shall be made in
the same manner as the determination that indemnification
is permissible, except that if there are fewer than two
disinterested qualified directors or if the determination is
made by special legal counsel, authorization of indemnification
shall be made by those entitled under subsection 2 , paragraph
“b” , to select special legal counsel under subsection 2,
paragraph “b” , subparagraph (2) .
Sec. 37. Section 490.858, Code 2013, is amended by adding
the following new subsection:
NEW SUBSECTION . 1A. A right of indemnification or to
advances for expenses created by this division or under
subsection 1 and in effect at the time of an act or omission
shall not be eliminated or impaired with respect to such act
or omission by an amendment of the articles of incorporation
or bylaws or a resolution of the directors or shareholders,
adopted after the occurrence of such act or omission, unless,
in the case of a right created under subsection 1, the
provision creating such right and in effect at the time of
such act or omission explicitly authorizes such elimination or
impairment after such act or omission has occurred.
Sec. 38. Section 490.858, subsection 3, Code 2013, is
amended to read as follows:
3. A Subject to subsection 1A, a corporation may, by a
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provision in its articles of incorporation, limit any of the
rights to indemnification or advance for expenses created by or
pursuant to this part.
Sec. 39. NEW SECTION . 490.860 Part definitions.
As used in this part, unless the context otherwise requires:
1. “Control” , including the term “controlled by” , means any
of the following:
a. Having the power, directly or indirectly, to elect or
remove a majority of the members of the board of directors
or other governing body of an entity, whether through the
ownership of voting shares or interests, by contract, or
otherwise.
b. Being subject to a majority of the risk of loss from the
entity’s activities or entitled to receive a majority of the
entity’s residual returns.
2. “Director’s conflicting interest transaction” means
a transaction effected or proposed to be effected by the
corporation, or by an entity controlled by the corporation to
which, or respecting which, any of the following applies:
a. To which, at the relevant time, the director is a party.
b. Respecting which, at the relevant time, the director
had knowledge and a material financial interest known to the
director.
c. Respecting which, at the relevant time, the director knew
that a related person was a party or had a material financial
interest.
3. “Fair to the corporation” means, for purposes of section
490.861, subsection 2, paragraph “c” , that the transaction
as a whole was beneficial to the corporation, taking into
appropriate account whether it was all of the following:
a. Fair in terms of the director’s dealings with the
corporation.
b. Comparable to what might have been obtainable in an arm’s
length transaction, given the consideration paid or received
by the corporation.
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4. “Material financial interest” means a financial interest
in a transaction that would reasonably be expected to impair
the objectivity of the director’s judgment when participating
in action on the authorization of the transaction.
5. “Related person” means any of the following:
a. The director’s spouse.
b. A child, stepchild, grandchild, parent, stepparent,
grandparent, sibling, step sibling, half sibling, aunt, uncle,
niece, or nephew, or spouse of any thereof, of the director or
of the director’s spouse.
c. An individual living in the same home as the director.
d. An entity, other than the corporation or an entity
controlled by the corporation, controlled by the director or
any person specified in this subsection.
e. A domestic or foreign person who is any of the following:
(1) A business or nonprofit corporation, other than the
corporation or an entity controlled by the corporation, of
which the director is a director.
(2) An unincorporated entity of which the director is a
general partner or a member of the governing body.
(3) An individual, trust, or estate for whom or of which the
director is a trustee, guardian, personal representative, or
like fiduciary.
f. A person that is, or an entity that is controlled by, an
employer of the director.
6. “Relevant time” means any of the following:
a. The time at which directors’ action respecting the
transaction is taken in compliance with section 490.862.
b. If the transaction is not brought before the board of
directors of the corporation, or its committee, for action
under section 490.862, at the time the corporation, or an
entity controlled by the corporation, becomes legally obligated
to consummate the transaction.
7. “Required disclosure” means disclosure of all of the
following:
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a. The existence and nature of the director’s conflicting
interest.
b. All facts known to the director respecting the subject
matter of the transaction that a director free of such
conflicting interest would reasonably believe to be material in
deciding whether to proceed with the transaction.
Sec. 40. NEW SECTION . 490.861 Judicial action.
1. A transaction effected or proposed to be effected by the
corporation, or by an entity controlled by the corporation,
shall not be the subject of equitable relief, or give rise to
an award of damages or other sanctions against a director of
the corporation, in a proceeding by a shareholder or by or in
the right of the corporation, on the ground that the director
has an interest respecting the transaction, if it is not a
director’s conflicting interest transaction.
2. A director’s conflicting interest transaction may
not be the subject of equitable relief, or give rise to an
award of damages or other sanctions against a director of the
corporation, in a proceeding by a shareholder or by or in the
right of the corporation, on the ground that the director has
an interest respecting the transaction, if any of the following
apply:
a. Directors’ action respecting the transaction was taken in
compliance with section 490.862 at any time.
b. Shareholders’ action respecting the transaction was taken
in compliance with section 490.863 at any time.
c. The transaction, judged according to the circumstances
at the relevant time, is established to have been fair to the
corporation.
Sec. 41. NEW SECTION . 490.862 Directors’ action.
1. Directors’ action respecting a director’s conflicting
interest transaction is effective for purposes of section
490.861, subsection 2, paragraph “a” , if the transaction has
been authorized by the affirmative vote of a majority, but
no fewer than two, of the qualified directors who voted on
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the transaction, after required disclosure by the conflicted
director of information not already known by such qualified
directors, or after modified disclosure in compliance with
subsection 2, provided that all of the following apply:
a. The qualified directors have deliberated and voted
outside the presence of and without the participation by any
other director.
b. Where the action has been taken by a committee, all
members of the committee were qualified directors, and any of
the following apply:
(1) The committee was composed of all the qualified
directors on the board of directors.
(2) The members of the committee were appointed by the
affirmative vote of a majority of the qualified directors on
the board.
2. Notwithstanding subsection 1, when a transaction is
a director’s conflicting interest transaction only because a
related person described in section 490.860, subsection 5,
paragraph “e” or “f” , is a party to or has a material financial
interest in the transaction, the conflicted director is not
obligated to make required disclosure to the extent that the
director reasonably believes that doing so would violate a
duty imposed under law, a legally enforceable obligation of
confidentiality, or a professional ethics rule, provided that
the conflicted director discloses to the qualified directors
voting on the transaction all of the following:
a. All information required to be disclosed that is not so
violative.
b. The existence and nature of the director’s conflicting
interest.
c. The nature of the conflicted director’s duty not to
disclose the confidential information.
3. A majority, but no fewer than two, of all the qualified
directors on the board of directors, or on the committee,
constitutes a quorum for purposes of action that complies with
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this section.
4. Where directors’ action under this section does not
satisfy a quorum or voting requirement applicable to the
authorization of the transaction by reason of the articles of
incorporation, the bylaws, or a provision of law, independent
action to satisfy those authorization requirements must be
taken by the board of directors or a committee, in which action
directors who are not qualified directors may participate.
Sec. 42. NEW SECTION . 490.863 Shareholders’ action.
1. a. Shareholders’ action respecting a director’s
conflicting interest transaction is effective for purposes of
section 490.861, subsection 2, paragraph “b” , if a majority of
the votes cast by the holders of all qualified shares are in
favor of the transaction after all of the following occur:
(1) Notice to shareholders describing the action to be taken
respecting the transaction.
(2) Provision to the corporation of the information
referred to in subsection 2.
(3) Communication to the shareholders entitled to vote
on the transaction of the information that is the subject of
required disclosure, to the extent the information is not known
by them.
b. In the case of shareholders’ action at a meeting, the
shareholders entitled to vote shall be determined as of the
record date for notice of the meeting.
2. A director who has a conflicting interest respecting
the transaction shall, before the shareholders’ vote, inform
the secretary or other officer or agent of the corporation
authorized to tabulate votes, in writing, of the number of
shares that the director knows are not qualified shares under
subsection 3, and the identity of the holders of those shares.
3. For purposes of this section, all of the following apply:
a. “Holder” means and “held by” refers to shares held by
both a record shareholder, as defined in section 490.1301,
subsection 7, and a beneficial shareholder, as defined in
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490.1301, subsection 2.
b. “Qualified shares” means all shares entitled to be
voted with respect to the transaction except for shares that
the secretary or other officer or agent of the corporation
authorized to tabulate votes either knows, or under subsection
2 is notified, are held by any of the following:
(1) A director who has a conflicting interest respecting the
transaction.
(2) A related person of the director, excluding a person
described in section 490.860, subsection 5, paragraph “f” .
4. A majority of the votes entitled to be cast by the
holders of all qualified shares constitutes a quorum for
purposes of compliance with this section. Subject to the
provisions of subsection 5, shareholders’ action that otherwise
complies with this section is not affected by the presence of
holders, or by the voting, of shares that are not qualified
shares.
5. If a shareholders’ vote does not comply with subsection
1 solely because of a director’s failure to comply with
subsection 2, and if the director establishes that the failure
was not intended to influence and did not in fact determine the
outcome of the vote, the court may take such action respecting
the transaction and the director, and may give such effect,
if any, to the shareholders’ vote, as the court considers
appropriate in the circumstances.
6. Where shareholders’ action under this section does
not satisfy a quorum or voting requirement applicable to the
authorization of the transaction by reason of the articles of
incorporation, the bylaws, or a provision of law, independent
action to satisfy those authorization requirements must be
taken by the shareholders, in which action shares that are not
qualified shares may participate.
Sec. 43. Section 490.870, subsection 1, paragraphs a and b,
Code 2013, are amended to read as follows:
a. Action by qualified directors disclaiming the
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corporation’s interest in the opportunity is taken in
compliance with the procedures set forth in section 490.832
490.862 , as if the decision being made concerned a director’s
conflicting interest transaction.
b. Shareholders’ action disclaiming the corporation’s
interest in the opportunity is taken in compliance with the
procedure set forth in section 490.832 490.863 , as if the
decision being made concerned a director’s conflicting interest
transaction; except that, rather than making the disclosure
“required disclosure” as required defined in section 490.832
490.860 , in each case the director shall have made prior
disclosure to those acting on behalf of the corporation of all
material facts concerning the business opportunity that are
then known to the director.
Sec. 44. Section 490.1003, subsection 2, Code 2013, is
amended to read as follows:
2. a. Except as provided in sections 490.1005 , 490.1007 ,
and 490.1008 , after adopting the proposed amendment, the board
of directors must submit the amendment to the shareholders for
their approval. The board of directors must also transmit to
the shareholders a recommendation that the shareholders approve
the amendment, unless any of the following apply:
(1) The board of directors makes a determination that
because of conflicts of interest or other special circumstances
it should not make such a recommendation , in which case the .
(2) Section 490.826 applies.
b. If paragraph “a” , subparagraph (1) or (2), applies, the
board of directors must transmit to the shareholders the basis
for the determination so proceeding .
Sec. 45. Section 490.1104, subsection 2, Code 2013, is
amended to read as follows:
2. a. Except as provided in subsection 7 and in section
490.1105 , after adopting the plan of merger or share exchange
the board of directors must submit the plan to the shareholders
for their approval. The board of directors must also transmit
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to the shareholders a recommendation that the shareholders
approve the plan, unless the any of the following apply:
(1) The board of directors makes a determination that
because of conflicts of interest or other special circumstances
it should not make such a recommendation , in which case .
(2) Section 490.826 applies.
b. If paragraph “a” , subparagraph (1) or (2), applies, the
board of directors must transmit to the shareholders the basis
for that determination so proceeding .
Sec. 46. Section 490.1106, subsection 1, unnumbered
paragraph 1, Code 2013, is amended to read as follows:
After a plan of merger or share exchange has been adopted
and approved as required by this chapter , articles of merger
or share exchange shall be executed signed on behalf of each
party to the merger or share exchange by any officer or other
duly authorized representative. The articles shall set forth
the following:
Sec. 47. Section 490.1108, subsection 2, Code 2013, is
amended to read as follows:
2. If a merger or share exchange is abandoned under
subsection 1 after articles of merger or share exchange have
been filed with the secretary of state but before the merger
or share exchange has become effective, a statement that the
merger or share exchange has been abandoned in accordance with
this section , executed signed on behalf of a party to the
merger or share exchange by an officer or other duly authorized
representative, shall be delivered to the secretary of state
for filing prior to the effective date of the merger or share
exchange. Upon filing, the statement shall take effect and the
merger or share exchange shall be deemed abandoned and shall
not become effective.
Sec. 48. Section 490.1202, subsection 2, Code 2013, is
amended to read as follows:
2. a. A disposition that requires approval of the
shareholders under subsection 1 shall be initiated by
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a resolution by the board of directors authorizing the
disposition. After adoption of such a resolution, the board
of directors shall submit the proposed disposition to the
shareholders for their approval. The board of directors shall
also transmit to the shareholders a recommendation that the
shareholders approve the proposed disposition, unless the any
of the following apply:
(1) The board of directors makes a determination that
because of conflicts of interest or other special circumstances
it should not make such a recommendation , in which case .
(2) Section 490.826 applies.
b. If paragraph “a” , subparagraph (1) or (2), applies, the
board of directors shall transmit to the shareholders the basis
for that determination so proceeding .
Sec. 49. Section 490.1301, Code 2013, is amended by adding
the following new subsection:
NEW SUBSECTION . 5A. “Interested transaction” means a
corporate action described in section 490.1302, subsection 1,
other than a merger pursuant to section 490.1105, involving an
interested person in which any of the shares or assets of the
corporation are being acquired or converted. As used in this
definition, all of the following apply:
a. “Beneficial owner” means any person who, directly
or indirectly, through any contract, arrangement, or
understanding, other than a revocable proxy, has or shares the
power to vote, or to direct the voting of, shares; except that
a member of a national securities exchange is not deemed to be
a beneficial owner of securities held directly or indirectly
by it on behalf of another person solely because the member is
the record holder of the securities if the member is precluded
by the rules of the exchange from voting without instruction
on contested matters or matters that may affect substantially
the rights or privileges of the holders of the securities to
be voted. When two or more persons agree to act together for
the purpose of voting their shares of the corporation, each
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member of the group formed thereby is deemed to have acquired
beneficial ownership, as of the date of the agreement, of all
voting shares of the corporation beneficially owned by any
member of the group.
b. “Excluded shares” means shares acquired pursuant to an
offer for all shares having voting power if the offer was made
within one year prior to the corporate action for consideration
of the same kind and of a value equal to or less than that paid
in connection with the corporate action.
c. “Interested person” means a person, or an affiliate of a
person, who at any time during the one-year period immediately
preceding approval by the board of directors of the corporate
action was or had any of the following:
(1) Was the beneficial owner of twenty percent or more of
the voting power of the corporation, other than as owner of
excluded shares.
(2) Had the power, contractually or otherwise, other than as
owner of excluded shares, to cause the appointment or election
of twenty-five percent or more of the directors to the board of
directors of the corporation.
(3) Was a senior executive or director of the corporation
or a senior executive of any affiliate thereof, and that
senior executive or director will receive, as a result of the
corporate action, a financial benefit not generally available
to other shareholders as such, other than any of the following:
(a) Employment, consulting, retirement, or similar benefits
established separately and not as part of or in contemplation
of the corporate action.
(b) Employment, consulting, retirement, or similar benefits
established in contemplation of, or as part of, the corporate
action that are not more favorable than those existing before
the corporate action or, if more favorable, that have been
approved on behalf of the corporation in the same manner as is
provided in section 490.862.
(c) In the case of a director of the corporation who will,
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in the corporate action, become a director of the acquiring
entity in the corporate action or one of its affiliates, rights
and benefits as a director that are provided on the same basis
as those afforded by the acquiring entity generally to other
directors of such entity or such affiliate.
Sec. 50. Section 490.1302, subsection 2, paragraph a, Code
2013, is amended by striking the paragraph and inserting in
lieu thereof the following:
a. Appraisal rights shall not be available for the holders
of shares of any class or series of shares which is any of the
following:
(1) A covered security under section 18(b)(1)(A) or (B) of
the federal Securities Act of 1933, as amended.
(2) Traded in an organized market and has at least two
thousand shareholders and a market value of at least twenty
million dollars, exclusive of the value of such shares held by
the corporation’s subsidiaries, senior executives, directors,
and beneficial shareholders owning more than ten percent of
such shares.
(3) Issued by an open-end management investment company
registered with the United States securities and exchange
commission under the federal Investment Company Act of 1940 and
may be redeemed at the option of the holder at net asset value.
Sec. 51. Section 490.1302, subsection 2, paragraph b,
subparagraph (1), Code 2013, is amended to read as follows:
(1) The record date fixed to determine the shareholders
entitled to receive notice of , and to vote at, the meeting
of shareholders to act upon the corporate action requiring
appraisal rights.
Sec. 52. Section 490.1302, subsection 2, paragraph d, Code
2013, is amended by striking the paragraph and inserting in
lieu thereof the following:
d. Paragraph “a” , shall not be applicable and appraisal
rights shall be available pursuant to subsection 1 for the
holders of any class or series of shares where the corporate
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action is an interested transaction.
Sec. 53. Section 490.1302, subsection 2, paragraph e, Code
2013, is amended by striking the paragraph.
Sec. 54. Section 490.1302, subsection 4, Code 2013, is
amended by striking the subsection.
Sec. 55. Section 490.1320, Code 2013, is amended to read as
follows:
490.1320 Notice of appraisal rights.
1. If Where any proposed corporate action described
specified in section 490.1302, subsection 1 , is to be submitted
to a vote at a shareholders’ meeting, the meeting notice must
state that the corporation has concluded that the shareholders
are, are not, or may be entitled to assert appraisal rights
under this part. If the corporation concludes that appraisal
rights are or may be available, a copy of this part must
accompany the meeting notice sent to those record shareholders
entitled to exercise appraisal rights.
2. In a merger pursuant to section 490.1105 , the parent
corporation must notify in writing all record shareholders of
the subsidiary who are entitled to assert appraisal rights
that the corporate action became effective. Such notice must
be sent within ten days after the corporate action became
effective and include the materials described in section
490.1322 .
3. Where any corporate action specified in section
490.1302, subsection 1, is to be approved by written consent
of the shareholders pursuant to section 490.704, all of the
following apply:
a. Written notice that appraisal rights are, are not, or may
be available must be sent to each record shareholder from whom
a consent is solicited at the time consent of such shareholder
is first solicited and, if the corporation has concluded that
appraisal rights are or may be available, must be accompanied
by a copy of this chapter.
b. Written notice that appraisal rights are, are not, or
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may be available must be delivered together with the notice to
nonconsenting and nonvoting shareholders required by section
490.704, subsections 5 and 6, may include the materials
described in section 490.1322 and, if the corporation has
concluded that appraisal rights are or may be available, must
be accompanied by a copy of this chapter.
4. Where corporate action described in section 490.1302,
subsection 1, is proposed, or a merger pursuant to section
490.1105 is effected, the notice referred to in subsection 1
or 3, if the corporation concludes that appraisal rights are
or may be available, and in subsection 2 shall be accompanied
by all of the following:
a. The annual financial statements specified in section
490.1620, subsection 1, of the corporation that issued the
shares that may be subject to appraisal, which shall be as of
a date ending not more than sixteen months before the date of
the notice and shall comply with section 490.1620, subsection
2; provided that, if such annual financial statements are not
reasonably available, the corporation shall provide reasonably
equivalent financial information.
b. The latest available quarterly financial statements of
such corporation, if any.
5. The right to receive the information described in
subsection 4 may be waived in writing by a shareholder before
or after the corporate action.
Sec. 56. Section 490.1321, Code 2013, is amended to read as
follows:
490.1321 Notice of intent to demand payment.
1. If proposed a corporate action requiring appraisal
rights under specified in section 490.1302 , subsection 1, is
submitted to a vote at a shareholders’ meeting, a shareholder
who wishes to assert appraisal rights with respect to any class
or series of shares must do all of the following:
a. Deliver to the corporation before the vote is taken
written notice of the shareholder’s intent to demand payment if
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the proposed action is effectuated.
b. Not vote, or cause or permit to be voted, any shares of
such class or series in favor of the proposed action.
2. If a corporate action specified in section 490.1302,
subsection 1, is to be approved by less than unanimous written
consent, a shareholder who wishes to assert appraisal rights
with respect to any class or series of shares must not sign a
consent in favor of the proposed action with respect to that
class or series of shares.
3. A shareholder who does not fails to satisfy the
requirements of subsection 1 or 2, is not entitled to payment
under this part.
Sec. 57. Section 490.1322, subsection 1, Code 2013, is
amended to read as follows:
1. If proposed corporate action requiring appraisal rights
under section 490.1302, subsection 1 , becomes effective, the
corporation must deliver send a written appraisal notice
and the form required by subsection 2 , paragraph “a” , to
all shareholders who satisfied the requirements of section
490.1321 , subsection 1, or section 490.1321, subsection 2 . In
the case of a merger under section 490.1105 , the parent must
deliver a written an appraisal notice and form to all record
shareholders who may be entitled to assert appraisal rights.
Sec. 58. Section 490.1322, subsection 2, unnumbered
paragraph 1, Code 2013, is amended to read as follows:
The appraisal notice must be sent delivered no earlier than
the date the corporate action specified in section 490.1302,
subsection 1, became effective and no later than ten days after
such date and must do all of the following:
Sec. 59. Section 490.1322, subsection 2, paragraph a, Code
2013, is amended to read as follows:
a. Be accompanied by Supply a form that specifies does all
of the following:
(1) Specifies the first date of any announcement to
shareholders made prior to the date the corporate action became
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effective of the first announcement to shareholders of the
principal terms of the proposed corporate action and requires ,
if any.
(2) If such announcement was made, requires the shareholder
asserting appraisal rights to certify whether beneficial
ownership of those shares for which appraisal rights are
asserted was acquired before that date.
(3) Requires the shareholder asserting appraisal rights to
certify whether or not beneficial ownership of those shares for
which appraisal rights are asserted was acquired before that
date, and that the such shareholder did not vote for or consent
to the transaction.
Sec. 60. Section 490.1322, subsection 2, paragraph b,
subparagraph (2), Code 2013, is amended to read as follows:
(2) A date by which the corporation must receive the form,
which date shall not be fewer than forty nor more than sixty
days after the date the appraisal notice and form are is sent
under subsection 1 , and state that the shareholder shall have
waived the right to demand appraisal with respect to the
shares unless the form is received by the corporation by such
specified date.
Sec. 61. Section 490.1323, subsections 1 and 3, Code 2013,
are amended to read as follows:
1. A shareholder who receives notice pursuant to section
490.1322 and who wishes to exercise appraisal rights must
certify on sign and return the form sent by the corporation
and, in the case of certificated shares, deposit the
shareholder’s certificates in accordance with the terms of
the notice by the date referred to in the notice pursuant to
section 490.1322, subsection 2, paragraph “b” , subparagraph
(2). In addition, if applicable, the shareholder must certify
on the form whether the beneficial owner of such shares
acquired beneficial ownership of the shares before the date
required to be set forth in the notice pursuant to section
490.1322, subsection 2 , paragraph “a” . If a shareholder fails
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to make this certification, the corporation may elect to
treat the shareholder’s shares as after-acquired shares under
section 490.1325 . In addition, a shareholder who wishes to
exercise appraisal rights must execute and return the form and,
in a case of certificated shares, deposit the shareholder’s
certificates in accordance with the terms of the notice
by the date referred to in the notice pursuant to section
490.1322, subsection 2 , paragraph “b” , subparagraph (2). Once
a shareholder deposits that shareholder’s certificates or, in
the case of uncertificated shares, returns the executed signed
forms, that shareholder loses all rights as a shareholder,
unless the shareholder withdraws pursuant to subsection 2 .
3. A shareholder who does not execute sign and return the
form and, in the case of certificated shares, deposit the
shareholder’s share certificates where required, each by the
date set forth in the notice described in section 490.1322,
subsection 2 , shall not be entitled to payment under this
division .
Sec. 62. Section 490.1324, subsection 2, paragraph a, Code
2013, is amended to read as follows:
a. (1) Financial The annual financial statements specified
in section 490.1620, subsection 1, of the corporation that
issued the shares to be appraised, consisting of a balance
sheet as of the end of a fiscal year which shall be of a date
ending not more than sixteen months before the date of payment ,
an income statement for that year, a statement of changes
in shareholders’ equity for that year, and the shall comply
with section 490.1620, subsection 2; provided that, if such
annual financial statements are not reasonably available, the
corporation shall provide reasonably equivalent financial
information.
(2) The latest available interim quarterly financial
statements of such corporation , if any.
Sec. 63. Section 490.1325, subsection 1, Code 2013, is
amended to read as follows:
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1. A corporation may elect to withhold payment required
by section 490.1324 from any shareholder who was required to,
but did not certify that beneficial ownership of all of the
shareholder’s shares for which appraisal rights are asserted
was acquired before the date set forth in the appraisal notice
sent pursuant to section 490.1322, subsection 2 , paragraph “a” .
Sec. 64. Section 490.1331, Code 2013, is amended to read as
follows:
490.1331 Court costs and counsel fees expenses .
1. The court in an appraisal proceeding commenced under
section 490.1330 shall determine all court costs of the
proceeding, including the reasonable compensation and expenses
of appraisers appointed by the court. The court shall assess
the court costs against the corporation, except that the court
may assess court costs against all or some of the shareholders
demanding appraisal, in amounts the court finds equitable, to
the extent the court finds such shareholders acted arbitrarily,
vexatiously, or not in good faith with respect to the rights
provided by this division .
2. 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, for either any
of the following:
a. 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 section 490.1320 , 490.1322 , 490.1324 , or 490.1325 .
b. 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 chapter .
3. If the court in an appraisal proceeding finds that the
services of counsel for expenses incurred by any shareholder
were of substantial benefit to other shareholders similarly
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situated, and that the fees for those services such expenses
should not be assessed against the corporation, the court may
award to such counsel reasonable fees to direct that such
expenses be paid out of the amounts awarded the shareholders
who were benefited.
4. To the extent the corporation fails to make a required
payment pursuant to section 490.1324 , 490.1325 , or 490.1326 ,
the shareholder may sue directly for the amount owed and, to
the extent successful, shall be entitled to recover from the
corporation all costs and expenses of the suit , including
counsel fees .
Sec. 65. NEW SECTION . 490.1340 Other remedies limited.
1. The legality of a proposed or completed corporate
action described in section 490.1302, subsection 1, shall not
be contested, nor may the corporate action be enjoined, set
aside, or rescinded, in a legal or equitable proceeding by a
shareholder after the shareholders have approved the corporate
action.
2. Subsection 1 does not apply to a corporate action that
meets any of the following conditions:
a. Was not authorized and approved in accordance with the
applicable provisions of any of the following:
(1) Division X, XI, or XII of this chapter.
(2) The articles of incorporation or bylaws.
(3) The resolution of the board of directors authorizing the
corporate action.
b. Was procured as a result of fraud, a material
misrepresentation, or an omission of a material fact necessary
to make statements made, in light of the circumstances in which
they were made, not misleading.
c. Is an interested transaction, unless it has been
recommended by the board of directors in the same manner as
is provided in section 490.862 and has been approved by the
shareholders in the same manner as is provided in section
490.863 as if the interested transaction were a director’s
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conflicting interest transaction.
d. Is approved by less than unanimous consent of the
voting shareholders pursuant to section 490.704, if all of the
following apply:
(1) The challenge to the corporate action is brought by a
shareholder who did not consent and as to whom notice of the
approval of the corporate action was not effective at least ten
days before the corporate action was effected.
(2) The proceeding challenging the corporate action is
commenced within ten days after notice of the approval of the
corporate action is effective as to the shareholder bringing
the proceeding.
Sec. 66. Section 490.1402, subsection 2, paragraph a, Code
2013, is amended to read as follows:
a. (1) The board of directors must recommend dissolution to
the shareholders unless the any of the following apply:
(a) The board of directors determines that because of
conflict of interest or other special circumstances it should
make no recommendation and communicates .
(b) Section 490.826 applies.
(2) If paragraph “a” , subparagraph (1) or (2), applies,
it must communicate the basis for its determination to the
shareholders so proceeding .
Sec. 67. Section 490.1430, Code 2013, is amended to read as
follows:
490.1430 Grounds for judicial dissolution.
1. The district court may dissolve a corporation in any of
the following ways:
1. a. A proceeding by the attorney general, if it is
established that either any of the following apply:
a. (1) The corporation obtained its articles of
incorporation through fraud.
b. (2) The corporation has continued to exceed or abuse the
authority conferred upon it by law.
2. b. A proceeding by a shareholder if it is established
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that any of the following conditions exist:
a. (1) The directors are deadlocked in the management of
the corporate affairs, the shareholders are unable to break the
deadlock, and either irreparable injury to the corporation is
threatened or being suffered, or the business and affairs of
the corporation can no longer be conducted to the advantage of
the shareholders generally, because of the deadlock.
b. (2) The directors or those in control of the corporation
have acted, are acting, or will act in a manner that is
illegal, oppressive, or fraudulent.
c. (3) The shareholders are deadlocked in voting power
and have failed, for a period that includes at least two
consecutive annual meeting dates, to elect successors to
directors whose terms have expired.
d. (4) The corporate assets are being misapplied or wasted.
3. c. A proceeding by a creditor if it is established that
either any of the following apply:
a. (1) The creditor’s claim has been reduced to judgment,
the execution on the judgment returned unsatisfied, and the
corporation is insolvent.
b. (2) The corporation has admitted in writing that the
creditor’s claim is due and owing and the corporation is
insolvent.
4. d. A proceeding by the corporation to have its voluntary
dissolution continued under court supervision.
e. A proceeding by a shareholder if the corporation has
abandoned its business and has failed within a reasonable time
to liquidate and distribute its assets and dissolve.
2. Subsection 1, paragraph “b” , shall not apply in the
case of a corporation that, on the date of the filing of the
proceeding, has shares which are any of the following:
a. Listed on the New York stock exchange, the American stock
exchange, or on any exchange owned or operated by the NASDAQ
stock market, l.l.c., or listed or quoted on a system owned or
operated by the national association of securities dealers,
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inc.
b. Not so listed or quoted, but are held by at least three
hundred shareholders and the shares outstanding have a market
value of at least twenty million dollars, exclusive of the
value of such shares held by the corporation’s subsidiaries,
senior executives, directors, and beneficial shareholders
owning more than ten percent of such shares.
3. As used in this section, “beneficial shareholder” has the
meaning specified in section 490.1301, subsection 2.
Sec. 68. Section 490.1431, subsection 4, Code 2013, is
amended to read as follows:
4. Within ten days of the commencement of a proceeding
under section 490.1430, subsection 2 , to dissolve a corporation
that has no shares listed on a national securities exchange or
regularly traded in a market maintained by one or more members
of a national securities exchange under section 490.1430,
subsection 1, paragraph “b” , the corporation must send to all
shareholders, other than the petitioner, a notice stating that
the shareholders are entitled to avoid the dissolution of the
corporation by electing to purchase the petitioner’s shares
under section 490.1434 , and a copy of section 490.1434 .
Sec. 69. Section 490.1432, subsections 1 and 5, Code 2013,
are amended to read as follows:
1. A Unless an election to purchase has been filed under
section 490.1434, a court in a judicial proceeding brought to
dissolve a corporation may appoint one or more receivers to
wind up and liquidate, or one or more custodians to manage,
the business and affairs of the corporation. The court shall
hold a hearing, after notifying all parties to the proceeding
and any interested persons designated by the court, before
appointing a receiver or custodian. The court appointing a
receiver or custodian has exclusive jurisdiction over the
corporation and all its property wherever located.
5. The court from time to time during the receivership
or custodianship may order compensation paid and expense
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disbursements or reimbursements made expenses paid or
reimbursed to the receiver or custodian and the receiver’s
or custodian’s counsel from the assets of the corporation or
proceeds from the sale of the assets.
Sec. 70. Section 490.1434, subsections 1, 2, 4, and 5, Code
2013, are amended to read as follows:
1. In a proceeding under section 490.1430, subsection 2 1,
paragraph “b” , to dissolve a corporation that has no shares
listed on a national securities exchange or regularly traded
in a market maintained by one or more members of a national or
affiliated securities association , the corporation may elect
or, if it fails to elect, one or more shareholders may elect to
purchase all shares owned by the petitioning shareholder at the
fair value of the shares. An election pursuant to this section
shall be irrevocable unless the court determines that it is
equitable to set aside or modify the election.
2. An election to purchase pursuant to this section may
be filed with the court at any time within ninety days after
the filing of the petition under section 490.1430, subsection
2 1, paragraph “b” , or at such later time as the court in its
discretion may allow. If the election to purchase is filed
by one or more shareholders, the corporation shall, within
ten days thereafter, give written notice to all shareholders,
other than the petitioner. The notice must state the name
and number of shares owned by the petitioner and the name and
number of shares owned by each electing shareholder and must
advise the recipients of their right to join the election to
purchase shares in accordance with this section . Shareholders
who wish to participate must file notice of their intention
to join in the purchase no later than thirty days after
the effective date of the notice to them. All shareholders
who have filed an election or notice of their intention to
participate in the election to purchase thereby become parties
to the proceeding and shall participate in the purchase in
proportion to their ownership of shares as of the date the
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first election was filed, unless they otherwise agree or the
court otherwise directs. After an election has been filed by
the corporation or one or more shareholders, the proceeding
under section 490.1430, subsection 2 1, paragraph “b” , shall
not be discontinued or settled, nor shall the petitioning
shareholder sell or otherwise dispose of the shareholder’s
shares, unless the court determines that it would be equitable
to the corporation and the shareholders, other than the
petitioner, to permit such discontinuance, settlement, sale, or
other disposition.
4. If the parties are unable to reach an agreement as
provided for in subsection 3 , the court, upon application of
any party, shall stay the section 490.1430, subsection 2 1,
paragraph “b” , proceedings and determine the fair value of the
petitioner’s shares as of the day before the date on which the
petition under section 490.1430, subsection 2 1, paragraph
“b” , was filed or as of such other date as the court deems
appropriate under the circumstances.
5. Upon determining the fair value of the shares, the
court shall enter an order directing the purchase upon such
terms and conditions as the court deems appropriate, which may
include payment of the purchase price in installments, where
necessary in the interests of equity, provision for security
to assure payment of the purchase price and any additional
costs, fees, and expenses as may have been awarded, and, if
the shares are to be purchased by shareholders, the allocation
of shares among them. In allocating petitioner’s shares among
holders of different classes of shares, the court shall attempt
to preserve the existing distribution of voting rights among
holders of different classes insofar as practicable and may
direct that holders of a specific class or classes shall not
participate in the purchase. Interest may be allowed at the
rate and from the date determined by the court to be equitable,
but if the court finds that the refusal of the petitioning
shareholder to accept an offer of payment was arbitrary or
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otherwise not in good faith, no interest shall be allowed. If
the court finds that the petitioning shareholder has probable
grounds for relief under section 490.1430, subsection 2 1 ,
paragraph “b” or “d” , subparagraph (2) or (4) , it may award to
the petitioning shareholder reasonable fees and expenses of
counsel and of any experts employed by the shareholder.
Sec. 71. Section 490.1508, subsection 2, Code 2013, is
amended to read as follows:
2. If a registered agent changes the street address of the
a registered agent’s business office changes , the registered
agent may change the street address of the registered office
of any foreign corporation for which the agent person 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 1 and
recites that the corporation has been notified of the change.
Sec. 72. NEW SECTION . 490.1523 Transfer of authority.
1. A foreign business corporation authorized to transact
business in this state that converts to a foreign nonprofit
corporation or to any form of foreign unincorporated entity
that is required to obtain a certificate of authority or make
a similar type of filing with the secretary of state if it
transacts business in this state shall file with the secretary
of state an application for transfer of authority signed by
any officer or other duly authorized representative. The
application shall set forth all of the following:
a. The name of the corporation.
b. The type of unincorporated entity to which it has been
converted and the jurisdiction whose laws govern its internal
affairs.
c. Any other information that would be required in a filing
under the laws of this state by an unincorporated entity of the
type the corporation has become seeking authority to transact
business in this state.
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2. The application for transfer of authority shall be
delivered to the secretary of state for filing and shall take
effect at the effective time provided in section 490.123.
3. Upon the effectiveness of the application for transfer of
authority, the authority of the corporation under this chapter
to transact business in this state shall be transferred without
interruption to the converted entity which shall thereafter
hold such authority subject to the provisions of the laws of
this state applicable to that type of unincorporated entity.
Sec. 73. Section 490.1601, subsection 4, Code 2013, is
amended to read as follows:
4. A corporation shall maintain its records in written
the form of a document, including an electronic record, or in
another form capable of conversion into written paper form
within a reasonable time.
Sec. 74. Section 490.1602, Code 2013, is amended to read as
follows:
490.1602 Inspection of records by shareholders.
1. A shareholder of a corporation is entitled to
inspect and copy, during regular business hours at the
corporation’s principal office, any of the records of the
corporation described in section 490.1601, subsection 5 , if the
shareholder gives the corporation signed written notice of the
shareholder’s demand at least five business days before the
date on which the shareholder wishes to inspect and copy.
2. For any meeting of shareholders for which the record date
for determining shareholders entitled to vote at the meeting
is different than the record date for notice of the meeting,
any person who becomes a shareholder subsequent to the record
date for notice of the meeting and is entitled to vote at
the meeting is entitled to obtain from the corporation upon
request the notice and any other information provided by the
corporation to shareholders in connection with the meeting,
unless the corporation has made such information generally
available to shareholders by posting it on its internet site or
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by other generally recognized means. Failure of a corporation
to provide such information does not affect the validity of
action taken at the meeting.
3. A shareholder of a corporation is entitled to inspect and
copy, during regular business hours at a reasonable location
specified by the corporation, any of the following records
of the corporation if the shareholder meets the requirements
of subsection 3 4 and gives the corporation a signed written
notice of the shareholder’s demand at least five business days
before the date on which the shareholder wishes to inspect and
copy any of the following:
a. Excerpts from minutes of any meeting of the board of
directors , records of any action of or 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 , or a committee of the board without
a meeting, to the extent not subject to inspection under
subsection 1 of this section .
b. Accounting records of the corporation.
c. The record of shareholders.
3. 4. A shareholder may inspect and copy the records
described in subsection 2 3 only if all of the following apply :
a. The shareholder’s demand is made in good faith and for
a proper purpose.
b. The shareholder describes with reasonable particularity
the shareholder’s purpose and the records the shareholder
desires to inspect.
c. The records are directly connected with the shareholder’s
purpose.
4. 5. The right of inspection granted by this section shall
not be abolished or limited by a corporation’s articles of
incorporation or bylaws.
5. 6. This section does not affect either any of the
following:
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a. The right of a shareholder to inspect records under
section 490.720 or, if the shareholder is in litigation with
the corporation, to the same extent as any other litigant.
b. The power of a court, independently of this chapter , to
compel the production of corporate records for examination.
7. For purposes of this section, “shareholder” includes a
beneficial owner whose shares are held in a voting trust or by
a nominee on the shareholder’s behalf.
Sec. 75. Section 490.1603, subsection 3, Code 2013, is
amended to read as follows:
3. The corporation may comply at its expense with a
shareholder’s demand to inspect the record of shareholders
under section 490.1602 , subsection 2 , paragraph “c” , by
providing the shareholder with a list of shareholders that was
compiled no earlier than the date of the shareholder’s demand.
Sec. 76. Section 490.1604, subsection 2, Code 2013, is
amended to read as follows:
2. If a corporation does not within a reasonable time
allow a shareholder to inspect and copy any other records, the
shareholder who complies with section 490.1602 , subsections 2
and 3 may apply to the district court in the county where the
corporation’s principal office or, if none in this state, its
registered office is located for an order to permit inspection
and copying of the records demanded. The court shall dispose
of an application under this subsection on an expedited basis.
Sec. 77. Section 490.1606, subsection 1, Code 2013, is
amended to read as follows:
1. Whenever notice is would otherwise be required to be
given under any provision of this chapter to any a shareholder,
such notice shall need not be required to be given if either
any of the following applies apply :
a. Notice Notices to the shareholders of two consecutive
annual meetings, and all notices of meetings during the period
between such two consecutive annual meetings, have been sent to
such shareholder at such shareholder’s address as shown on the
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records of the corporation and have been returned undeliverable
or could not be delivered .
b. 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 such shareholder at
such shareholder’s address as shown on the records of the
corporation and have been returned undeliverable or could not
be delivered .
Sec. 78. Section 490.1620, Code 2013, is amended by striking
the section and inserting in lieu thereof the following:
490.1620 Financial statements for shareholders.
1. A corporation shall deliver to 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.
2. If the annual financial statements are reported upon by a
public accountant, the 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 which does all of the following:
a. States such person’s reasonable belief whether the
statements were prepared on the basis of generally accepted
accounting principles and, if not, describing the basis of
preparation.
b. Describes any respects in which the statements were
not prepared on a basis of accounting consistent with the
statements prepared for the preceding year.
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3. Within one hundred twenty days after the close of each
fiscal year, the corporation shall send the annual financial
statements to each shareholder. Thereafter, on written
request from a shareholder to whom the statements were not
sent, the corporation shall send the shareholder the latest
financial statements. A public corporation may fulfill its
responsibilities under this section by delivering the specified
financial statements, or otherwise making them available, in
any manner permitted by the applicable rules and regulations of
the United States securities and exchange commission.
Sec. 79. Section 490.1703, Code 2013, is amended by adding
the following new subsection:
NEW SUBSECTION . 3. In the event that any provision of this
chapter is deemed to modify, limit, or supersede the federal
Electronic Signatures in Global and National Commerce Act, 15
U.S.C. § 7001 et seq., the provisions of this chapter shall
control to the maximum extent permitted by section 102(a)(2) of
that federal Act.
Sec. 80. REPEAL. Section 490.832, Code 2013, is repealed.
Sec. 81. EFFECTIVE DATE. This division of this Act takes
effect January 1, 2014.
DIVISION II
FUTURE PROVISIONS
Sec. 82. Section 490.140, subsection 21A, Code 2013, is
amended by striking the subsection and inserting in lieu
thereof the following:
21A. “Public corporation” means a corporation that
has a class of voting stock that is listed on a national
securities exchange or held of record by more than two thousand
shareholders.
Sec. 83. Section 490.732, subsection 4, Code 2013, is
amended by striking the subsection and inserting in lieu
thereof the following:
4. An agreement authorized by this section shall cease to be
effective when the corporation becomes a public corporation.
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If the agreement ceases to be effective for any reason, the
board of directors may, if the agreement is contained or
referred to in the corporation’s articles of incorporation or
bylaws, adopt an amendment to the articles of incorporation or
bylaws, without shareholder action, to delete the agreement and
any references to it.
Sec. 84. EFFECTIVE DATE. This division of this Act takes
effect upon the repeal of 2011 Iowa Acts, chapter 2, as
provided in section 9, subsection 1, of that Act.
EXPLANATION
BACKGROUND. The “Iowa Business Corporation Act” (Code
chapter 490), a model Act adopted by the American Bar
Association, governs the requirements for the creation,
organization, and operation of corporations and the
relationship between shareholders, directors, and officers of
the corporation. Generally, the Act’s provisions establish
default requirements and procedures which may be modified by a
corporation’s articles of incorporation or bylaws.
PUBLIC CORPORATIONS. A public corporation is a corporation
that has a class of voting stock that is listed on a national
securities exchange or held of record by more than 2,000
shareholders (Code section 490.140). The bill amends the
definition to eliminate the reference to a class of shares
or number of shareholders. It provides that a corporation
is public if traded in a market maintained by a member of
the national securities association. The bill also amends
a provision regulating shareholder agreements that govern a
corporation’s corporate affairs including by eliminating or
restricting the powers of its board of directors (Code section
490.732). Specifically, the bill provides that a shareholder
agreement is automatically terminated when the corporation
becomes public. These provisions take effect January 1, 2015.
NOTICES, DOCUMENTS, AND COMMUNICATION. A notice must be
in writing unless oral notice is reasonable (Code section
490.141). The bill requires that notices be in English.
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It provides for the electronic transmission and receipt
and acknowledgment of information. The bill replaces the
requirement that documents be executed with a requirement
that they be signed, including documents associated with
the adoption or abandonment of articles of merger or share
exchange (Code sections 490.1106 and 490.1108). The bill also
authorizes a corporation to keep its records in an electronic
form so long as it can be converted into a paper form (Code
section 490.1601). The corporation is required to deliver a
written notice, report, or statement to shareholders who share
a common address, complies with delivery requirements, by
delivering to that address, unless a shareholder makes a timely
objection (Code section 490.144).
QUALIFIED DIRECTORS. In a number of circumstances a
director must be considered “disinterested” when taking an
action affecting the welfare of the corporation. The bill
eliminates the term “disinterested” and replaces it with
“qualified” (Code section 490.143; see Code sections 490.853
and 490.855). The bill requires a director to be qualified
under different circumstances which may involve board action
or court proceedings. For purposes of dismissing a derivative
proceeding by a court based on a good-faith determination of
directors (Code section 490.744), directors are qualified if
they do not have a material interest in the outcome of the
proceeding or a material relationship with a person who has
such an interest. For purposes of advancing expenses to a
board member before the disposition of a case (Code section
490.853) or later indemnifying a director (Code section
490.855), the authorization must be made by directors who are
qualified because they are not parties to the proceeding, do
not have a conflicting interest in the related transaction,
and do not have a material relationship with a director
who is a party or has a conflicting interest. For purposes
of voting to excuse a director from a conflicting interest
transaction (Code section 490.862), the vote must be taken
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by directors who are qualified because they do not have a
conflict or have a material relationship with the director who
does have a conflict. For purposes of determining whether a
director may take advantage of a business opportunity because
other directors disclaimed the corporation’s interest in the
opportunity (Code section 490.870), the directors are qualified
if the business opportunity was a conflicting interest
transaction for those directors.
DIRECTORS AND OFFICERS —— FUNCTIONS AND DUTIES. Generally,
a corporation must have a board of directors, unless dispensed
with pursuant to a shareholder agreement (Code sections 490.801
and 490.732). The bill provides that the business affairs of a
corporation may be subject to the directors’ oversight rather
than direct management. It authorizes a corporate officer to
designate recipients of compensation awards (e.g., rights,
options, or warrants associated with shares) (Code section
490.624). The bill substitutes the term “functions” in lieu
of “duties” in some places when referring to an officer’s
obligations (Code section 490.841).
SHAREHOLDER MEETINGS —— WRITTEN CONSENT IN LIEU OF HOLDING
MEETINGS. Shareholders are allowed to act by written consent
without holding a meeting if the action is taken by unanimous
written consent (Code section 490.704). The bill provides that
except for a public corporation, a corporation’s articles of
incorporation may provide for shareholder action by less than
unanimous written consent, if a written consent is signed by
shareholders having the minimum number of votes that would
be required to authorize the action at a shareholder meeting
assuming that all shareholders entitled to vote were present.
It creates a corresponding exception to the requirement
that a corporation must hold at least one annual shareholder
meeting, presumably to elect directors (Code sections 490.701
and 490.803), by providing that the annual meeting is not
necessary when directors are elected by the written consent of
shareholders. The bill also provides a number of procedures
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for providing notice to shareholders and tabulating written
consents delivered to the corporation.
SHAREHOLDER MEETING —— RECORD DATE. A corporation
establishes procedures for providing notice to and voting by
shareholders at a meeting (or by written consent) according to
a record date. The record date determines both shareholders
who are entitled to notice of the meeting and to vote at
the meeting. The catch-all provision states that the record
date is the date before notice is mailed to a voting group or
shareholders (Code section 490.705), although a record date
may be established by court order (Code section 490.703) or
according to the corporation’s bylaws or board of directors
(Code section 490.707). The bill provides that there may be
more than one record date. According to the bill, the record
date for a shareholder meeting may be established by the
corporation’s bylaws or by the board unless the board provides
a different date to determine shareholders entitled to vote at
the meeting (Code section 490.707). The bill provides that
the corporation may be required to provide a list of names of
shareholders entitled to vote at the meeting, to be available
for inspection (Code section 490.720). The record date is
also used to determine when appraisal rights of shareholders
apply (Code section 490.1302). The bill requires shareholders’
appraisal rights to be triggered on the record date by tying
it only to when a shareholder is entitled to receive notice
and not when entitled to vote on the matter. The bill also
provides that the board may fix a record date for determining
when a shareholder is entitled to vote that is different than
the record date for determining when a shareholder is entitled
to notice of the meeting. A person who becomes a shareholder
after the record date for the notice, and is otherwise entitled
to vote at the meeting, may obtain the notice and other
information provided to the shareholders in preparation for the
meeting (Code sections 490.1602 and 490.1606).
SHAREHOLDER MEETINGS —— REMOTE PARTICIPATION. The bill
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authorizes shareholders to participate in a meeting of
shareholders by means of remote communication to the extent
approved by the board (Code section 490.709).
ELECTIONS AND VOTING —— CUMULATIVE VOTING. Generally,
directors are elected by a plurality of votes cast unless the
corporation’s articles of incorporation provide for cumulative
voting allowing shareholders to cast all their votes for a
single candidate (Code section 490.728). The bill provides
that shareholders otherwise entitled to vote cumulatively
cannot so vote unless the meeting notice authorizes it, or a
shareholder who has that right gives notice to the corporation
before the meeting.
LEGAL PROCEEDING —— DERIVATIVE ACTIONS. As a result of a
derivative action, the court may order a corporation to pay
the plaintiff’s expenses (defined in Code section 490.140)
if the court determines that the proceeding has resulted in
substantial benefit to the corporation and alternatively may
order the plaintiff to pay the defendant’s expenses if it
finds the proceeding was commenced without reasonable cause
or for an improper purpose (Code section 490.746). The bill
eliminates the court’s statutory authority to order the payment
of attorney fees.
PROCEEDINGS —— COURT APPOINTMENT OF A CUSTODIAN OR RECEIVER.
The bill provides that a shareholder may obtain relief from a
court, due to an injury suffered by the corporation due to the
action or inaction of the board (through deadlock or fraud) or
because the corporation is insolvent (Code section 490.748).
The custodian or receiver appointed by the court has all
authority to manage the corporation as provided by court order.
DIRECTOR RESIGNATION. The bill provides for when a
director’s resignation takes effect, including upon the
happening of a specific event (Code section 490.807). It also
provides that a director’s resignation may be made irrevocable,
if it is conditioned upon the failure to receive a specified
vote as a director.
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ELECTIONS AND VOTING. The bill also provides that in the
case of a director’s vacancy, where a director was elected
by a voting group of shareholders, and the vacancy is to be
filled by the remaining directors, only directors elected by
that voting group may vote to fill the vacancy (Code section
490.810).
RIGHT OF SHAREHOLDERS TO VOTE. The bill provides that a
corporation may agree to submit a matter to a vote of its
shareholders even if the board determines not to recommend
the matter (Code section 490.826). It expressly authorizes
such vote on an amendment to the corporation’s articles of
incorporation (Code section 490.1003), an action on a plan of
merger or share exchange (Code section 490.1104), the approval
of a plan of merger or share exchange (Code section 490.1106),
and the dissolution of the corporation (Code section 490.1402).
PROCEEDINGS —— ADVANCING FUNDS TO A DIRECTOR OR INDEMNIFYING
A DIRECTOR FOR EXPENSES. A corporation may advance funds to a
director or indemnify the director for legal expenses incurred
in the course of a director’s defense of an act or omission
(Code sections 490.850, 490.853, 490.855, and 490.858). The
bill provides that in the case of advances, writings required
to be submitted to the board (e.g., an affirmation that the
director acted in compliance with applicable standards of
conduct or a promise to repay advanced funds) must be in
writing (Code section 490.853). It also provides that when
the board authorizes an advance or indemnification, the voting
directors must be qualified rather than disinterested (Code
sections 490.853 and 490.854). Finally, the bill provides that
the defending director’s right to an advance or indemnification
in effect prior to the director’s act or omission cannot be
eliminated or impaired after the conduct occurred, unless that
right was expressly qualified in the authorization (i.e., in
the articles of incorporation, bylaws, or board’s resolution)
(Code section 490.858).
DIRECTOR’S CONFLICT OF INTEREST —— GENERAL. Generally, a
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director is prohibited from taking action on a matter which
would be detrimental to the interests of the corporation. The
bill replaces the current provision addressing a director’s
conflict of interest (Code section 490.832) with four
provisions (Code sections 490.860 through 490.863) that
govern conflicting interest transactions. In order to be so
classified, a transaction must be effectuated or proposed to
be effectuated by the corporation or an entity controlled
by the corporation. In addition, the director must be in a
special position to take personal advantage of the transaction,
as a party to the transaction or by virtue of the fact that
the director, or a related person, has a material financial
interest in the transaction. The bill provides that a director
is related to a person if the person is a close family member,
an individual who lives in the same home, or another entity
controlled by the director. The bill provides that in order
for a court to invalidate a transaction or otherwise provide a
legal or equitable remedy, such conduct must fall within the
statutory parameters (Code section 490.861). The definition
of “director’s conflicting interest transaction” requires
knowledge of the transaction, except where the director is a
party. In addition, the transaction must occur at a relevant
time, meaning the time at the which the director’s action is
required (e.g., a board vote) or when the director’s action
somehow consummates the transaction (Code section 490.862).
DIRECTOR’S CONFLICT OF INTEREST —— EXCUSED TRANSACTIONS
(SAFE HARBOR EXCEPTION). The bill excuses a director’s
conduct, and consequently validates the transaction, even if
there exists a conflicting interest transaction (Code section
490.861), sometimes referred to as “safe harbor”, in certain
circumstances. First, it may be excused if a majority of
qualified directors (but not less than two) vote to approve
the transaction or the action is approved by an authorized
committee in which all members are qualified directors (Code
section 490.862). The director who has the conflict must
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disclose information regarding the conflict to the extent that
the information is not required to be protected under law or
some ethical rule of confidentiality (Code section 490.862).
The transaction is excused if the shareholders later ratify
the transaction according to specific procedural requirements
(Code section 490.863) after disclosure (but no provision for
limited disclosure). Finally, the transaction is excused if
the transaction is fair to the corporation, although neither
directors’ nor shareholders’ action was taken. The bill
provides that in any legal action attacking a director, the
plaintiff has the burden of proof (Code section 490.831).
DIRECTOR’S BUSINESS OPPORTUNITY (SAFE HARBOR EXCEPTION).
An analogous situation to a conflicting interest transaction
is when a director seeks a corporation’s permission prior to
the director’s action. The bill allows qualified directors
or shareholders to disclaim the corporation’s interest before
the director proceeds in taking advantage of the business
opportunity (see Code section 490.870). Instead of making a
“required disclosure” as provided for conflicts (Code sections
490.860 and 490.862), the director must provide the corporation
material facts concerning the business opportunity then
known. The qualified directors or shareholders disclaiming
the corporation’s interest must be done in the same manner
as if the matter concerned a director’s conflicting interest
transaction (Code sections 490.862 and 490.863). However, a
director’s decision not to use the procedures for disclaimer
does not create a negative inference or alter a burden of
proof in a subsequent action alleging an improper taking of a
corporate opportunity.
SHAREHOLDER APPRAISAL RIGHTS —— GENERAL RULE. A number of
corporate actions may trigger the right of a shareholder to
obtain an appraisal of the corporation and obtain fair payment
of shares, including mergers, share exchanges, disposition
of assets, amendments to the articles of incorporation, and
conversion of the corporation to another entity (Code section
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490.1302). A corporation must pay shareholders the amount the
corporation estimates to be the fair value of the shares plus
interest (Code section 490.1324).
SHAREHOLDER APPRAISAL RIGHTS —— LIMITATION ON THE GENERAL
RULE (MARKET-OUT EXCEPTION). The general rule is limited in
the case where there are at least 2,000 shareholders and the
market value of the shares equals at least $20 million (the
so-called “market-out” exception), presumably because the true
value for the shares can be obtained on the market. However,
the amount does not include shares held by the corporation’s
subsidiaries, senior executives, directors, and beneficial
shareholders owning more than 10 percent of the shares.
“Beneficial ownership” refers to the control of shares by a
person who does not own them including the power to vote, or to
direct the voting of the shares (Code section 490.1302).
SHAREHOLDER APPRAISAL RIGHTS —— NEW MARKET-OUT EXCEPTIONS.
The bill provides two new categories under the market-out
exception: (1) when the shares are classified as a covered
security regulated by the United States securities exchange
commission under the federal Securities Act of 1933, and (2)
when the shares are issued by an open-end management investment
company registered by the securities and exchange commission
under the federal Investment Company Act of 1940 (Code section
490.1302).
SHAREHOLDER APPRAISAL RIGHTS —— LIMITATIONS ON THE
MARKET-OUT EXCEPTIONS. The bill eliminates a provision
which allows shareholder appraisal rights notwithstanding
the market-out exception in cases where the corporation’s
shares or assets are being acquired or converted, whether by
merger, share exchange, or otherwise (Code section 490.1302).
Instead, the bill allows such rights in cases where the
corporate action involves an interested transaction, which is a
corporate action, other than a merger, involving an interested
person in which the shares or assets of the corporation are
being acquired or converted. A person is “interested” if
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the person is a beneficial owner of 20 percent or more of
the corporation’s voting shares, controlled the appointment
or election of 25 percent or more of the directors, or was a
senior executive or director of the corporation entitled to
receive certain financial benefits (Code section 490.1301).
SHAREHOLDER APPRAISAL RIGHTS —— NOTICE. A corporation must
notify shareholders of their appraisal rights when a corporate
action is submitted to a vote at a shareholder meeting (Code
section 490.1320). The bill provides for notice when approval
is performed by written consent in lieu of a meeting (Code
section 490.704). A shareholder must provide notice of an
intent to exercise appraisal rights before the corporate action
(vote) is taken (Code section 490.1321). In order to remain
eligible to exercise those rights, the shareholder must not
vote on the matter. A shareholder who plans on asserting
appraisal rights cannot likewise exercise rights after signing
a consent in favor of the proposal (Code section 490.1321).
If a corporate action requiring appraisal rights becomes
effective, the corporation must deliver a written appraisal
notice and form (Code section 490.1322). The bill provides for
the contents of the notice, including information regarding
an announcement to shareholders made prior to the date the
corporate action became effective and requires a shareholder
asserting appraisal rights to certify beneficial ownership.
The bill provides for perfecting shareholder appraisal rights
by signing and returning the form (Code section 490.1323). The
bill provides an estimated (prepaid) payment to shareholders
exercising their appraisal rights after the form’s due date
(Code section 490.1324). The bill provides for a financial
statement required to accompany the payment (Code section
490.1620), and allows the corporation to substitute another
document in lieu of a financial statement if it is unavailable.
SHAREHOLDER APPRAISAL RIGHTS —— COURT COSTS. As part of
a shareholder appraisal rights proceeding, the court must
determine the court costs of the proceeding, and may assess
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such costs against the corporation or shareholders demanding
appraisal (Code section 490.1331). The bill amends the
provision to eliminate a court’s discretion to assess fees
associated with attorneys and experts.
SHAREHOLDER RIGHTS —— LIMITATION ON OTHER REMEDIES. The
bill provides that a corporate action triggering a right to
appraisal (Code section 490.1302) cannot be enjoined, set
aside, or rescinded by a shareholder after the shareholder
has approved the corporate action (Code section 490.1340).
However, this limitation does not apply to four situations:
(1) where the process of approving the corporate action was
flawed (e.g., unauthorized in the corporation’s articles of
incorporation), (2) the corporate action was procured by fraud,
(3) the corporate action was an interested transaction in the
same manner as a director’s conflicting interest transaction
(Code section 490.860), or (4) the transaction was approved,
but without a meeting (Code section 490.704) and by less
than unanimous consent and the challenge is brought by a
nonconsenting director.
JUDICIAL DISSOLUTION —— LIMITATION ON ACTIONS. A court may
dissolve a corporation in a proceeding brought by shareholders
on a number of grounds, including the directors are deadlocked,
the directors are acting fraudulently, the shareholders
are deadlocked, or there is waste of corporate assets (Code
section 490.1430). The bill adds a new ground, that the
corporation has abandoned its business and failed to liquidate
and distribute its assets and dissolve. The bill also
provides that the right of a shareholder to bring the action
does not apply to a corporation listed on the New York stock
exchange, the American stock exchange, an exchange owned or
controlled by NASDAQ, or listed on a system owned or controlled
by the national association of security dealers (NASD).
Alternatively, it does not apply to a corporation having 300
or more shareholders holding shares valued at $20 million
or more, again excluding shares held by the corporation’s
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subsidiaries, senior executives, directors, and beneficial
shareholders owning more than 10 percent of the shares (Code
section 490.1302).
FOREIGN CORPORATIONS —— TRANSFER OF AUTHORITY. The bill
provides for the conversion of a foreign business corporation
authorized to do business in this state into a domestic
corporation by applying to the secretary of state (Code section
490.1523).
REPLACEMENT OF FUTURE REPEALED PROVISIONS. In 2011, the
general assembly enacted SF 325 (2011 Iowa Acts, chapter
2), carving out a special provision which provided for the
staggered terms of directors of public corporations and
providing for the repeal of the Act on December 31, 2014.
The Act took effect on March 23, 2011. The effect of the
repeal is to restore the provisions to their March 22, 2011
effective date. This bill amends two provisions affected by SF
325. First, it reenacts a definition of “public corporation”
which is repealed on December 31, 2014 (Code section 490.140).
Second, it rewrites a provision which provides that a
shareholder agreement is nullified when a corporation becomes a
public corporation (Code section 490.732).
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