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| Home > Statutes > Usa Arizona |
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USA Statutes : arizona
Title : Corporations and Associations
Chapter : MEMBERS AND MEMBERSHIP-NONPROFIT CORPORATIONS
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10-3601 Admission
A. The articles of incorporation or bylaws may establish criteria or procedures for
admission of members and continuation of membership.
B. No person shall be admitted as a member without that person's consent. Consent
may be express or implied.
10-3602 Consideration
Except as provided in its articles of incorporation or bylaws, a corporation may
admit members for no consideration or for such consideration as is determined by the
board.
10-3603 No requirement of members
A corporation is not required to have members.
10-3610 Difference in rights and obligations of members
All members have the same rights and obligations with respect to voting,
dissolution, redemption and transfer, unless the articles of incorporation or bylaws
establish classes of membership with different rights or obligations or otherwise
provide. All members have the same rights and obligations with respect to any other
matters, except as set forth in or authorized by the articles of incorporation or bylaws.
10-3611 Transfers
A. Except as set forth in or authorized by the articles of incorporation or bylaws,
no member of a corporation may transfer a membership or any right arising from that
membership.
B. If transfer rights are provided, no restriction on them is binding with respect
to a member holding a membership issued prior to the adoption of the restriction unless
the restriction is approved by the members and the affected member.
10-3612 Member's liability to third parties
A member of a corporation is not personally liable for the acts, debts, liabilities
or obligations of the corporation.
10-3613 Member's liability for dues, assessments and fees
A. A member may become liable to the corporation for dues, assessments and
fees. A provision of the articles of incorporation, a provision of the bylaws or a
resolution adopted by the board authorizing or imposing dues, assessments or fees does
not, of itself, create liability for dues, assessments or fees. An express or implied
agreement, consent or acquiescence by the member is necessary to create liability for
dues, assessments or fees. A member is deemed to have agreed to the liability if there
exists at the time the member becomes a member a provision of the articles of
incorporation, a provision of the bylaws, a provision of the declaration of a condominium
or a planned community or a resolution adopted by the board authorizing or imposing dues,
assessments or fees.
B. A home buyer may implicitly consent to liability for dues, assessments and fees.
C. Unless the provision authorizing dues expressly limits the amount of the dues,
the amount and the member's liability are subject to increase or decrease.
10-3614 Creditor's action against member
A. No creditor of the corporation may bring a proceeding to reach the liability of
a member to the corporation unless final judgment has been rendered in favor of the
creditor against the corporation, and execution has been returned unsatisfied in whole or
in part.
B. All creditors of the corporation, with or without reducing their claims to
judgment, may intervene in any creditor's proceeding brought under subsection A to reach
and apply unpaid amounts due the corporation. Any or all members who owe amounts to the
corporation may be joined in that proceeding.
C. In any proceeding by a creditor under this section, the member shall pay any
amount that is determined to be owed by the member to the corporation directly to the
corporation and not to any creditor. The member is not liable directly or indirectly for
any costs incurred by the creditor in the proceeding. If the member has paid the amount
to the corporation, the liability of the member to the corporation for that amount is
fully satisfied, the member is no longer a party to the proceeding and is immune from
further proceedings under this section for the amount.
10-3620 Resignation
A. A member may resign at any time, except as set forth in or authorized by the
articles of incorporation or bylaws.
B. The resignation of a member does not relieve the member from any obligations the
member may have to the corporation as a result of obligations incurred or commitments
made prior to resignation.
C. This section does not apply to corporations that are condominium associations or
planned community associations.
10-3621 Termination, expulsion and suspension
A. No member of a corporation may be expelled or suspended, and no membership or
memberships in such a corporation may be terminated or suspended, except pursuant to a
procedure that is set forth in the articles of incorporation, bylaws or an agreement
between the member and the corporation or a procedure that is otherwise appropriate.
B. For purposes of subsection A, a procedure is otherwise appropriate if either:
1. The following are provided:
(a) A written notice at least fifteen days before the expulsion, suspension or
termination and the reasons therefor.
(b) An opportunity for the member to be heard, orally or in writing, at least five
days before the effective date of the expulsion, suspension or termination by a person or
persons authorized to decide that the proposed expulsion, termination or suspension
should not take place.
2. It is fair and reasonable taking into consideration all of the relevant facts
and circumstances.
C. Any written notice that is mailed shall be sent to the last address of the
member shown on the corporation's records.
D. Any proceeding challenging an expulsion, suspension or termination, including a
proceeding in which defective notice is alleged, shall begin within six months after the
effective date of the expulsion, suspension or termination.
E. A member who has been expelled or suspended may be liable to the corporation for
dues, assessments or fees as a result of obligations incurred or commitments made prior
to expulsion or suspension.
F. This section does not apply to corporations organized primarily for religious
purposes.
10-3622 Purchase of memberships
Except as provided in the articles of incorporation or bylaws, a corporation may
purchase the membership of a member who resigns or whose membership is terminated for the
amount and pursuant to the conditions set forth in or authorized by its articles of
incorporation or bylaws. A corporation shall not make a payment that violates section
10-11301 or 10-11302.
10-3630 Definitions
In this article, unless the context otherwise requires:
1. "Derivative proceeding" means a civil suit in the right of a domestic
corporation or, to the extent provided in section 10-3637, in the right of a foreign
corporation.
2. "Independent person" means a person with no personal interest in the transaction
and no personal or other relationship which influences the person.
10-3631 Standing
A. A proceeding may be brought in the right of a domestic corporation to procure a
judgment in its favor by either:
1. In the case of a corporation that has members, any member or members having
twenty-five per cent or more of the voting power or by fifty members, whichever is less.
2. In the case of a corporation that does not have members, any director or
twenty-five per cent of the directors, whichever is greater.
B. In any such proceeding, each complainant shall both:
1. Have been a member or director, as applicable, of the corporation at the time of
the act or omission complained of.
2. Fairly and adequately represent the interests of the corporation in enforcing
the right of the corporation.
10-3632 Demand
No complainant may commence a derivative proceeding until both:
1. A written demand has been made on the corporation to take suitable action.
2. Ninety days have expired from the date the demand was made unless the
complainant has earlier been notified that the demand has been rejected by the
corporation or unless the statute of limitations will expire within the ninety days or
unless irreparable injury to the corporation would result by waiting for the expiration
of the ninety day period.
10-3633 Stay of proceedings
If the corporation commences an inquiry into the allegations made in the demand or
complaint, the court may stay any derivative proceeding for such period as the court
deems appropriate.
10-3634 Dismissal
A. A derivative proceeding shall be dismissed by the court on motion by the
corporation on any legal grounds, including if one of the groups specified in subsections
B or F has determined in good faith after conducting a reasonable inquiry on which its
conclusions are based that the maintenance of the derivative proceeding is not in the
best interests of the corporation.
B. Unless a panel is appointed pursuant to subsection F, the determination in
subsection A shall be made by either:
1. A majority vote of independent directors present at a meeting of the board of
directors if the independent directors constitute a quorum.
2. A majority vote of a committee consisting of two or more independent directors
appointed by majority vote of independent directors present at a meeting of the board of
directors, whether or not such independent directors constitute a quorum.
C. None of the following shall by itself or collectively cause a director to be
considered not independent for purposes of this section:
1. The nomination or election of the director by persons who are defendants in the
derivative proceeding or against whom action is demanded.
2. The naming of the director as a defendant in the derivative proceeding or as a
person against whom action is demanded.
3. 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.
D. If a derivative proceeding is commenced after a determination has been made that
rejects a demand by the complainants, the complaint shall allege with particularity facts
that establish either:
1. That a majority of the board of directors did not consist of independent
directors at the time the determination was made.
2. That the requirements of subsection A have not been met.
E. If a majority of the board of directors does not consist of independent
directors at the time the determination is made, the corporation has the burden of
proving that the requirements of subsection A have been met. If a majority of the board
of directors consists of independent directors at the time the determination is made, the
plaintiff has the burden of proving by clear and convincing evidence that the
requirements of subsection A have not been met.
F. The court may appoint a panel of one or more independent persons on motion by
the corporation to determine whether the maintenance of the derivative proceeding is in
the best interests of the corporation. In that case, the plaintiff has the burden of
proving by clear and convincing evidence that the requirements of subsection A have not
been met. A person appointed by the court is not liable for a determination made
pursuant to this section.
10-3635 Discontinuance or settlement
No derivative proceeding may be discontinued or settled without the court's
approval. If the court determines that a proposed discontinuance or settlement will
substantially affect the interests of the corporation's members or a class of members,
the court shall direct that notice be given to the affected members.
10-3636 Payment of expenses
On termination of the derivative proceeding the court may either:
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.
3. Order a party to pay an opposing party's reasonable expenses, including attorney
fees, incurred because of the filing of any pleading, motion or other paper, if it finds
that the pleading, motion or other paper was not well grounded in fact, after reasonable
inquiry, or warranted by existing law or a good faith argument for the extension,
modification or reversal of existing law and was interposed for an improper purpose,
including to harass or to cause unnecessary delay or needless increase in the cost of
litigation.
10-3637 Applicability to foreign corporations
In any derivative proceeding in the right of a foreign corporation, the matters
covered by this article are governed by the laws of the jurisdiction of incorporation of
the foreign corporation except for sections 10-3633, 10-3635 and 10-3636.
10-3640 Delegates
A. A corporation may provide in its articles of incorporation or bylaws for
delegates that have some or all of the authority of members.
B. The articles of incorporation or bylaws may set forth provisions relating to:
1. The characteristics, qualifications, rights, limitations and obligations of
delegates including the delegates' selection and removal.
2. Calling, noticing, holding and conducting meetings of delegates.
3. Carrying on corporate activities during and between meetings of delegates.
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