 |
 |
|
|
|
|
| search a lawyer |
|
|
| ACTS, STATUTES |
|
|
|
|
|
|
|
|
|
|
|
|
| Home > Statutes > Usa-Arizona |
|
USA Statutes : arizona
Title : Corporations and Associations
Chapter : SHAREHOLDERS
|
|
10-701 Annual meeting
A. A corporation shall hold a meeting of shareholders annually at a time stated in
or fixed in accordance with the bylaws.
B. Annual shareholders' meetings may be held in or out of this state at the place
stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in
accordance with the bylaws, annual meetings shall be held at the corporation's known
place of business.
C. The failure to hold an annual meeting at the time stated in or fixed in
accordance with a corporation's bylaws does not affect the validity of any corporate
action.
D. Any water users' association may provide in its articles of incorporation or
bylaws for any method of electing its governing body or bodies on a biannual or more
frequent basis, in which event the water users' association has no obligation to hold an
annual meeting notwithstanding subsection A of this section and section 10-803. Whenever
a meeting of shareholders is required or permitted under this chapter, a water users'
association, without conducting such a meeting, may accomplish the purpose of such
meeting through an election by its shareholders pursuant to its articles of
incorporation.
10-702 Special meeting
A. Except as provided in section 10-2703, a corporation shall hold a special
meeting of shareholders either:
1. On the call of its board of directors or the person or persons authorized to do
so by the articles of incorporation or bylaws.
2. As provided in section 10-810, subsection D.
B. If not otherwise fixed under section 10-703 or 10-707, the record date for
determining shareholders entitled to demand a special meeting is the date the first
shareholder signs the demand.
C. Special shareholders' meetings may be held in or out of this state at the place
stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in
accordance with the bylaws, special meetings shall be held at the corporation's principal
office.
D. Only business within the purpose or purposes described in the meeting notice
required by section 10-705, subsection C may be conducted at a special shareholders'
meeting.
10-703 Court ordered meeting
A. The court in the county where a corporation's known place of business is located
may summarily order either:
1. An annual meeting to be held on application of any shareholder of the
corporation entitled to participate in an annual meeting if an annual meeting was not
held within the earlier of three months after the date specified for the annual meeting
in the bylaws or fifteen months after its last annual meeting.
2. A special meeting to be held on application of a shareholder who signed a demand
for a special meeting valid under section 10-702, if either:
(a) Notice of the special meeting was not given within thirty days after the date
the demand was delivered to the corporation's secretary.
(b) The special meeting was not held in accordance with the notice.
B. The court may fix the time and place of the meeting, determine the shares
entitled to participate in the meeting, specify a record date for determining
shareholders entitled to notice of and to vote at the meeting, prescribe the form and
content of the meeting notice, fix the quorum required for specific matters to be
considered at the meeting or direct that the votes represented at the meeting constitute
a quorum for action on those matters and enter other orders necessary to accomplish the
purpose or purposes of the meeting.
10-704 Action by shareholders without meeting
A. Action required or permitted by chapters 1 through 17 of this title to be taken
at a shareholders' meeting may be taken without a meeting if the action is taken by all
of the shareholders entitled to vote on the action. The action must be evidenced by one
or more written consents describing the action taken, signed by all of the shareholders
entitled to vote on the action and delivered to the corporation for inclusion in the
minutes or filing with the corporate records.
B. If not otherwise fixed under section 10-703 or 10-707, the record date for
determining shareholders entitled to take action without a meeting is the date the first
shareholder signs the consent under subsection A of this section.
C. A consent signed under this section has the effect of a meeting vote and may be
described as such in any document.
D. Unless otherwise specified in the consent or consents, the action is effective
on the date that the last shareholder signs the consent or consents, except that if
chapters 1 through 17 of this title require that notice of proposed actions be given to
shareholders not entitled to vote and the action is to be taken by unanimous consent of
the shareholders entitled to vote, the effective date is not before ten days after the
corporation gives its shareholders not entitled to vote written notice of the proposed
action. The notice must contain or be accompanied by the same material that under
chapters 1 through 17 of this title 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.
E. Any shareholder may revoke its consent by delivering a signed revocation of the
consent to the president or secretary before the date that the last shareholder signs the
consent or consents.
10-705 Notice of meeting
A. A corporation shall notify shareholders of the date, time and place of each
annual and special shareholders' meeting at least ten but not more than sixty days before
the meeting date. Unless chapters 1 through 17 of this title or the articles of
incorporation require otherwise, the corporation is required to give notice only to
shareholders entitled to vote at the meeting.
B. Unless chapters 1 through 17 of this title or the articles of incorporation
require otherwise, notice of an annual meeting need not include a description of the
purpose or purposes for which the meeting is called.
C. Notice of a special meeting shall include a description of the purpose or
purposes for which the meeting is called.
D. If not otherwise fixed under section 10-703 or 10-707, the record date for
determining shareholders entitled to notice of and to vote at an annual or special
shareholders' meeting is the day before the effective date of the first notice to
shareholders.
E. Unless the bylaws require otherwise, if an annual or special shareholders'
meeting is adjourned to a different date, time or place, notice need not be given of the
new date, time or place if the new date, time or place is announced at the meeting before
adjournment. However, if a new record date for the adjourned meeting is or must be fixed
under section 10-707, notice of the adjourned meeting shall be given under this section
to persons who are shareholders as of the new record date.
10-706 Waiver of notice
A. A shareholder may waive any notice required by chapters 1 through 17 of this
title, the articles of incorporation or the bylaws before or after the date and time
stated in the notice. The waiver shall be in writing, signed by the shareholder entitled
to the notice and delivered to the corporation for inclusion in the minutes or filing
with the corporate records.
B. A shareholder's attendance at a meeting:
1. Waives objection to lack of notice or defective notice of the meeting, unless
the shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting.
2. Waives objection to consideration of a particular matter at the meeting that is
not within the purpose or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented.
10-707 Record date
A. The bylaws may fix or provide the manner of fixing the record date for one or
more voting groups in order to determine the shareholders entitled to notice of a
shareholders' meeting, to demand a special meeting, to vote or to take any other
action. If the bylaws do not fix or provide for fixing a record date, the board of
directors of the corporation may fix a future date as the record date.
B. A record date fixed under this section may not be more than seventy days before
the meeting or action requiring a determination of shareholders.
C. A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the board of
directors fixes a new record date, which it shall do if the meeting is adjourned to a
date more than one hundred twenty days after the date fixed for the original meeting.
D. If a court orders a meeting adjournment 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.
10-708 Participation in shareholders' meeting
Unless the articles of incorporation or bylaws provide otherwise, the board of
directors may permit any or all shareholders to participate in an annual or special
shareholders' meeting by or conduct the meeting through use of any means of communication
by which all shareholders participating may simultaneously hear each other during the
meeting. If the board of directors in its sole discretion elects to permit participation
by such means of communication, the notice of the meeting shall specify how a shareholder
may participate in the meeting by such means of communication. The participation may be
limited by the board of directors in its sole discretion to specified locations or means
of communications. A shareholder participating in a meeting by this means is deemed to
be present in person at the meeting.
10-720 Shareholders' list for meeting
A. After fixing a record date for a meeting, a corporation shall prepare an
alphabetical list of the names of all of its shareholders who are entitled to notice of a
shareholders' meeting. The list shall be arranged by voting group, and within each
voting group by class or series of shares, and shall show the address of and number of
shares held by each shareholder.
B. The shareholders' list shall 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, the
office of the corporation's transfer agent if specified in the meeting notice or at
another place identified in the meeting notice in the city where the meeting will be
held. A shareholder, its agent or its attorney on written demand may inspect and,
subject to the requirements of section 10-1602, subsection C, may copy the list, during
regular business hours and at his expense, during the period it is available for
inspection.
C. The corporation shall make the shareholders' list available at the meeting, and
any shareholder, its agent or its attorney may inspect the list at any time during the
meeting or any adjournment.
D. If the corporation refuses to allow a shareholder, its agent or its attorney to
inspect the shareholders' list before or at the meeting or copy the list as permitted by
subsection B of this section, the court in 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.
E. Refusal or failure to prepare or make available the shareholders' list does not
affect the validity of action taken at the meeting.
10-721 Voting entitlement of shares
A. Except as provided in subsections B and C of this section or section 10-728 or
10-2725 or unless the articles of incorporation provide otherwise, each outstanding
share, regardless of class, is entitled to one vote on each matter voted on at a
shareholders' meeting. Only shares are entitled to vote.
B. Absent special circumstances, the shares of a corporation are not entitled to
vote if they are owned directly or indirectly by a second corporation, domestic or
foreign, and the first corporation owns directly or indirectly a majority of the shares
entitled to vote for directors of the second corporation.
C. Subsection B of this section does not limit the power of a corporation to vote
any shares, including its own shares, held by it in a fiduciary capacity.
D. Redeemable shares are not deemed to be outstanding and are not entitled to vote
after notice of redemption is mailed to the holders and an amount sufficient to redeem
the shares has been deposited with any bank, trust company or other financial institution
under an irrevocable obligation to pay the holders the redemption price on surrender of
the certificates representing the shares, in the case of certificated shares.
E. Notwithstanding the other provisions of this section, a water users' association
may provide in its articles of incorporation the qualifications of shareholders to vote,
eliminate the right to vote by proxy, specify the locations where votes may be cast and
limit voting to natural persons. A water users' association may adopt bylaws for the
registration of voters and the method of holding elections.
10-722 Proxies
A. A shareholder may vote its shares in person or by proxy.
B. Each shareholder who is entitled to vote at a meeting of shareholders or to
express consent or dissent to corporate action without a meeting may in writing authorize
another person or persons to act for the shareholder by proxy. The person or persons
shall not vote or act on the proxy twelve months or more after the date on the proxy
statement. A proxy is effective when the secretary or other officer or agent who is
authorized to tabulate votes receives the proxy.
C. A shareholder may authorize another person or persons to act for the shareholder
as a proxy pursuant to subsection B of this section in any manner, including the
following:
1. A shareholder may execute a written statement that authorizes another person or
persons to act for the shareholder as proxies. The shareholder, or the shareholder's
authorized officer, director, employee or agent may execute the statement by signing it
or causing the signature to be affixed to the statement by any reasonable means including
by telefacsimile signature.
2. A shareholder may authorize another person or persons to act for the shareholder
as a proxy by transmitting or authorizing the transmission of a telegram, cablegram or
other means of electronic transmission to the person who will be the holder of the proxy
or to a proxy solicitation firm, proxy support service organization or a similar agent
that is authorized by the person who will be the holder of the proxy to receive the
transmission. Any telegram, cablegram or other means of electronic transmission shall
include information that demonstrates that the shareholder authorized the telegram,
cablegram or other means of electronic transmission. The inspector or, if there is no
inspector, any other person who makes a determination that the telegram, cablegram or
other means of electronic transmission is valid shall specify the information on which
the inspector or other person relied to make the validity determination.
D. Any copy, telefacsimile, telecommunication or other reliable reproduction of the
written statement or transmission made pursuant to subsection C of this section may be
substituted for or used in lieu of the original written statement or transmission for any
purpose for which the original written statement or transmission could be used if the
copy, telefacsimile, telecommunication or other reliable reproduction of the written
statement or transmission is a complete reproduction of the entire original written
statement or transmission.
E. An executed proxy is revocable by the shareholder unless the proxy conspicuously
states that it is irrevocable and it is coupled with an interest. Proxies coupled with
an interest include the appointment of any of the following:
1. A pledgee.
2. A person who purchased, agreed to purchase, holds an option to purchase or holds
any other right to acquire the shares.
3. A creditor of the corporation who extended or continued credit to the
corporation under terms requiring the appointment.
4. An employee of the corporation whose employment contract requires the
appointment.
5. A party to a voting agreement created under section 10-731.
F. The death or incapacity of the shareholder appointing a proxy does not affect
the right of the corporation to accept the proxy's authority unless written notice of the
death or incapacity is received by the secretary or other officer or agent authorized to
tabulate votes before the proxy exercises the proxy's authority under the appointment.
G. A proxy made irrevocable under subsection E of this section is revoked when the
interest with which it is coupled is extinguished.
H. A transferee for value of shares subject to an irrevocable proxy may revoke the
proxy if the transferee did not know of its existence when the transferee acquired the
shares and the existence of the irrevocable proxy was not noted conspicuously on the
certificate representing the shares or on the information statement for shares without
certificates.
I. Subject to section 10-724 and to any express limitation on the proxy's authority
appearing on the face of the proxy, a corporation is entitled to accept the proxy's vote
or other action as that of the shareholder executing the proxy.
J. Notwithstanding the other provisions of this section, a water users' association
may provide in its articles of incorporation the qualifications of shareholders to vote,
eliminate the right to vote by proxy, specify the locations where votes may be cast and
limit voting to natural persons. A water users' association may adopt bylaws for the
registration of voters and method of holding elections.
10-723 Shares held by nominees
A. A corporation may establish a procedure by which the beneficial owner of shares
that are registered in the name of a nominee is recognized by the corporation as the
shareholder. The extent of this recognition may be determined in the procedure.
B. The procedure may set forth:
1. The types of nominees to which it applies.
2. The rights or privileges that the corporation recognizes in a beneficial owner.
3. The manner in which the procedure is selected by the nominee.
4. The information that must be provided when the procedure is selected.
5. The period for which selection of the procedure is effective.
6. Other aspects of the rights and duties created.
10-724 Corporation's acceptance of votes
A. If the name signed on a vote, consent, waiver or proxy appointment corresponds
to the name of a shareholder, the corporation if acting in good faith is entitled to
accept the vote, consent, waiver or proxy appointment and give it effect as the act of
the shareholder.
B. If the name signed on a vote, consent, waiver or proxy appointment does not
correspond to the name of its shareholder, the corporation if acting in good faith is
nevertheless entitled to accept the vote, consent, waiver or proxy appointment and give
it effect as the act of the shareholder if:
1. The shareholder is an entity and the name signed purports to be that of an
officer or agent of the entity.
2. The name signed purports to be that of an administrator, executor, guardian or
conservator representing the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented with respect to the
vote, consent, waiver or proxy appointment.
3. The name signed purports to be that of a receiver or trustee in bankruptcy of
the shareholder and, if the corporation requests, evidence of this status acceptable to
the corporation has been presented with respect to the vote, consent, waiver or proxy
appointment.
4. The name signed purports to be that of a pledgee, beneficial owner or
attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable
to the corporation of the signatory's authority to sign for the shareholder has been
presented with respect to the vote, consent, waiver or proxy appointment.
5. Two or more persons are the shareholder as cotenants or fiduciaries and the name
signed purports to be the name of at least one of the co-owners and the person signing
appears to be acting on behalf of all of the co-owners.
C. The corporation is entitled to reject any vote, consent, waiver or proxy
appointment if the secretary or other officer or agent authorized to tabulate votes,
acting in good faith, has a reasonable basis for doubt about the validity of the
signature on it or about the signatory's authority to sign for the shareholder.
D. The corporation and its officer or its agent who accepts or rejects a vote,
consent, waiver or proxy appointment in good faith and in accordance with the standards
of this section are not liable in damages to the shareholder for the consequences of the
acceptance or rejection.
E. Corporate action based on the acceptance or rejection of a vote, consent, waiver
or proxy appointment under this section is valid unless a court of competent jurisdiction
determines otherwise.
10-725 Quorum and voting requirements for voting groups
A. Shares entitled to vote as a separate voting group may take action on a matter
at a meeting only if the quorum of those shares exists with respect to that
matter. Unless the articles of incorporation or chapters 1 through 17 of this title
provide otherwise, a majority of the votes entitled to be cast on the matter by the
voting group constitutes a quorum of that voting group for action on that matter.
B. Unless otherwise provided in the articles of incorporation or bylaws, once a
share is represented for any purpose at a meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that meeting unless
a new record date is or must be set for that adjourned meeting.
C. If a quorum exists, action on a matter, other than the election of directors, by
a voting group is approved if the votes cast within the voting group favoring the action
exceed the votes cast opposing the action, unless the articles of incorporation or
chapters 1 through 17 of this title require a greater number of affirmative votes.
D. An amendment of articles of incorporation adding, changing or deleting a quorum
or voting requirement for a voting group greater than specified in subsection A or C of
this section is governed by section 10-727.
E. The election of directors is governed by section 10-728.
10-726 Action by single and multiple voting groups
A. If the articles of incorporation or chapters 1 through 17 of this title provide
for voting by a single voting group on a matter, action on that matter is taken when
voted on by that voting group as provided in section 10-725.
B. If the articles of incorporation or chapters 1 through 17 of this title provide
for voting by two or more voting groups on a matter, action on that matter is taken when
voted on by each of those voting groups counted separately as provided in section
10-725. Voting by individual voting groups entitled to vote on a matter need not be
simultaneous.
10-727 Greater quorum or voting requirements
A. The articles of incorporation may provide for a greater quorum or voting
requirement for shareholders or voting groups of shareholders than is provided for by
chapters 1 through 17 of this title.
B. An amendment to the articles of incorporation that adds, changes or deletes a
greater quorum or voting requirement must meet the same quorum requirement and be adopted
by the same vote and voting groups required to take action under the quorum and voting
requirements then in effect or proposed to be adopted, whichever is greater.
10-728 Voting for directors; cumulative voting
A. Unless otherwise provided in the articles of incorporation, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the election
at a meeting at which a quorum is present.
B. At each election for directors, shareholders are entitled to cumulate their
votes by multiplying the number of votes they are entitled to cast by the number of
directors for whom they are entitled to vote and casting the product for a single
candidate or distributing the product among two or more candidates.
10-730 Voting trusts
One or more shareholders may create a voting trust, conferring on one or more
trustees the right to vote or otherwise act for them, by signing an agreement setting out
the provisions of the trust and transferring their shares to the trustee or
trustees. The agreement may contain any lawful provision not inconsistent with the
purposes of the trust.
10-731 Voting agreements
A. Two or more shareholders may provide for the manner in which they will vote
their shares by signing an agreement for that purpose.
B. Unless otherwise provided in the voting agreement, a voting agreement created
under this section is specifically enforceable.
10-732 Shareholder agreements
A. An agreement among the shareholders of a corporation that complies with this
section is effective among the shareholders and the corporation even though it is
inconsistent with one or more other provisions of chapters 1 through 17 of this title if
it meets any of the following conditions:
1. Restricts the discretion or powers of the board of directors.
2. Governs the authorization or making of distributions whether or not in
proportion to ownership of shares, subject to the limitations in section 10-640.
3. Establishes who shall be directors or officers of the corporation, their terms
and conditions of office or employment or their manner of selection or removal.
4. Governs, in general or in regard to specific matters, the exercise or division
of voting power by or between the shareholders and directors or by or among any of them,
including use of weighted voting rights or director proxies.
5. Establishes the terms and conditions of any agreement for the transfer or use of
property or the provision of services between the corporation and any shareholder,
director, officer or employee of the corporation or among any of them.
6. Transfers to one or more shareholders or other persons all or part of the
authority to exercise the corporate powers or to manage the business and affairs of the
corporation, including the resolution of any issue about which there exists a deadlock
among directors or shareholders.
7. Requires dissolution of the corporation at the request of one or more of the
shareholders or on the occurrence of a specified event or contingency.
8. Establishes the terms and conditions of employment of shareholders.
9. Addresses the use of arbitration or other forms of dispute resolution to resolve
disputes among shareholders.
10. Restricts the transfer of shares.
11. Otherwise governs the exercise of the corporate powers or the management of the
business and affairs of the corporation, its liquidation and dissolution or the
relationship among the shareholders, the directors and the corporation, or among any of
them.
B. An agreement authorized by this section shall be:
1. Set forth either:
(a) In the articles of incorporation or bylaws and approved by all persons who are
shareholders at the time of the agreement.
(b) In a written agreement that is signed by all persons who are shareholders at
the time of the agreement and that is filed with the corporation.
2. Subject to amendment or termination only by all persons who are shareholders at
the time of the amendment, unless the agreement provides otherwise.
3. Valid for ten years, unless the agreement provides otherwise.
C. An agreement authorized by this section is enforceable by any party to the
agreement against any other party to the agreement. The existence of an agreement
authorized by this section shall be noted conspicuously on the front or back of each
certificate for outstanding shares or on the information statement required by section
10-626, subsection B. The failure to note the existence of the agreement on the
certificate or information statement does not affect the validity of the agreement or any
action taken pursuant to it. Any purchaser of shares who at the time of purchase did not
have knowledge of the existence of the agreement is entitled to rescission of the
purchase. A purchaser shall be deemed to have knowledge of the existence of the
agreement if its existence is noted on the certificate or information statement for the
shares in compliance with this subsection and, if the shares are not represented by a
certificate, the information statement is delivered to the purchaser at or before the
time of purchase of the shares or the purchaser has actual notice of the existence of the
agreement at the time of purchase. An action to enforce the right of rescission
authorized by this subsection must be commenced within the earlier of ninety days after
discovery of the existence of the agreement or two years after the time of the purchase
of the shares.
D. An agreement authorized by this section ceases to be effective when shares of
the corporation are listed on a national securities exchange or are regularly traded in a
market maintained by one or more members of a national or affiliated securities
association. If the agreement ceases to be effective for any reason, the board of
directors, if the agreement is contained or referred to in the corporation's articles of
incorporation or bylaws, may adopt an amendment to the articles of incorporation or
bylaws, without shareholder action, to delete the agreement and any references to it.
E. An agreement that is authorized by this section and that limits the discretion
or powers of the board of directors relieves the directors of and imposes on the person
or persons in whom such discretion or powers are vested liability for acts or omissions
imposed by law on directors to the extent that the discretion or powers of the directors
are limited by the agreement.
F. The existence or performance of an agreement authorized by this section is not a
ground for imposing personal liability on any shareholder for the acts or debts of the
corporation even if the agreement or its performance treats the corporation as if it were
a partnership or results in failure to observe the corporate formalities otherwise
applicable to the matters governed by the agreement.
G. Incorporators or subscribers for shares may act as shareholders with respect to
an agreement authorized by this section if no shares have been issued when the agreement
is made.
H. This section does not apply to, limit or invalidate agreements that are
otherwise valid or authorized without regard to this section, including without
limitation shareholder agreements between or among some or all of the shareholders or
agreements between or among the corporation and one or more shareholders. The procedure
set forth in this section is not the exclusive method of agreement among shareholders or
among shareholders and the corporation with respect to any of the matters described in
this section.
10-740 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 10-747, 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.
3. "Shareholder" includes a beneficial owner whose shares are held in a voting
trust or are held by a nominee on the beneficial owner's behalf.
10-741 Standing
A shareholder may not commence or maintain a derivative proceeding unless the
shareholder both:
1. Was a shareholder of the corporation at the time of the act or omission
complained of or became a shareholder through transfer by operation of law from one who
was a shareholder at that time.
2. Fairly and adequately represents the interests of the corporation in enforcing
the right of the corporation.
10-742 Demand
No shareholder 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
shareholder 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.
10-743 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.
10-744 Dismissal
A. A derivative proceeding may be dismissed by the court on motion by the
corporation on any legal grounds including the group specified in subsection B 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. 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 such 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 whatsoever for a determination
made pursuant to this section.
10-745 Discontinuance or settlement
A derivative proceeding may not 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 shareholders or a class of
shareholders, the court shall direct that notice be given to the shareholders affected.
10-746 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, such
as to harass or to cause unnecessary delay or needless increase in the cost of
litigation.
10-747 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 10-743, 10-745 and 10-746.
|
| |
|
|
|
