USA Statutes : nevada
Title : Title 07 - BUSINESS ASSOCIATIONS; SECURITIES; COMMODITIES
Chapter : CHAPTER 78A - CLOSE CORPORATIONS
As used in this chapter, unless the
context otherwise requires, the words and terms defined in NRS 78A.004
, 78A.006 and 78A.008 have the meaning ascribed to them in those
sections.
(Added to NRS by 2003, 3108 )
“Record” means information that is
inscribed on a tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.
(Added to NRS by 2003, 3108 )
“Sign” means to affix a signature to
a record.
(Added to NRS by 2003, 3108 )
“Signature” means a name, word,
symbol or mark executed or otherwise adopted, or a record encrypted or
similarly processed in whole or in part, by a person with the present
intent to identify himself and adopt or accept a record. The term
includes, without limitation, an electronic signature as defined in NRS
719.100 .
(Added to NRS by 2003, 3108 )
The provisions of this
chapter apply to all close corporations formed pursuant to NRS 78A.020
. Unless otherwise provided by this
chapter, the provisions of chapter 78 of NRS
are applicable to all close corporations.
(Added to NRS by 1989, 940)
1. Each record filed with the Secretary of State pursuant to this
chapter must be on or accompanied by a form prescribed by the Secretary
of State.
2. The Secretary of State may refuse to file a record which does
not comply with subsection 1 or which does not contain all the
information required by statute for filing the record.
3. If the provisions of the form prescribed by the Secretary of
State conflict with the provisions of any record that is submitted for
filing with the form:
(a) The provisions of the form control for all purposes with
respect to the information that is required by statute to appear in the
record in order for the record to be filed; and
(b) Unless otherwise provided in the record, the provisions of the
record control in every other situation.
4. The Secretary of State may by regulation provide for the
electronic filing of records with the Office of the Secretary of State.
(Added to NRS by 2003, 20th Special Session, 40 )
No record which is written in a language other than English may
be filed or submitted for filing in the Office of the Secretary of State
pursuant to the provisions of this chapter unless it is accompanied by a
verified translation of that record into the English language.
(Added to NRS by 1995, 1117; A 2003, 3108 )
FORMATION
1. A close corporation must be formed in accordance with NRS
78.030 to 78.055 , inclusive, subject to the following
requirements:
(a) All of the issued stock of the corporation of all classes,
exclusive of treasury shares, must be represented by certificates and
must be held of record by a specified number of persons, not to exceed 30.
(b) All of the issued stock of all classes must be subject to one
or more of the restrictions on transfer pursuant to NRS 78A.050 .
(c) The corporation shall not offer any of its stock of any class
that would constitute a public offering within the meaning of the
Securities Act of 1933, 15 U.S.C. §§ 77 et seq.
2. The articles of incorporation of a close corporation must:
(a) Set forth the matters required by NRS 78.035 except that the articles must state that there
will be no board of directors if so agreed pursuant to NRS 78A.070 .
(b) Contain a heading stating the name of the corporation and that
it is a close corporation.
3. The articles of incorporation of a close corporation may set
forth the qualifications of stockholders by specifying the classes of
persons who are entitled to be holders of record of stock of any class,
the classes of persons who are not entitled to be holders of record of
stock of any class, or both.
4. To determine the number of holders of record of the stock of a
close corporation, stock that is held in joint or common tenancy or by
community property must be treated as held by one stockholder.
(Added to NRS by 1989, 941; A 1993, 980)
1. Any corporation organized under chapter 78 of NRS may become a close corporation pursuant to
this chapter by signing, filing and recording, in accordance with NRS
78.390 , a certificate of amendment of
the certificate of incorporation which must:
(a) Contain a statement that the corporation elects to become a
close corporation; and
(b) Meet the requirements of paragraph (a) of subsection 2 of NRS
78A.020 .
2. Except as otherwise provided in subsection 3, the amendment
must be adopted in accordance with the requirements of NRS 78.380 or 78.390 .
3. If an amendment is adopted in accordance with the requirements
of NRS 78.390 , it must be approved by a
vote of the holders of record of at least two-thirds of the shares of
each class of stock of the corporation that are outstanding and entitled
to vote, unless the articles of incorporation or bylaws require approval
by a greater proportion.
(Added to NRS by 1989, 941; A 1999, 1593 ; 2001, 1380 , 3199 ; 2003, 3108 )
SHARES OF STOCK
1. The following statement must appear conspicuously on each share
certificate issued by a close corporation:
The rights of stockholders in a close corporation may differ materially
from the rights of shareholders in other corporations. Copies of the
certificate of incorporation, bylaws, shareholders’ agreements and other
records, any of which may restrict transfers of stock and affect voting
and other rights, may be obtained by a shareholder on written request to
the corporation.
2. A person claiming an interest in the shares of a close
corporation that has complied with the requirement of subsection 1 is
bound by the records referred to in the notice. A person claiming an
interest in the shares of a close corporation that has not complied with
the requirement of subsection 1 is bound by any record that he or a
person through whom he claims has knowledge or notice.
3. A close corporation shall provide to any shareholder upon his
written request and without charge, copies of the provisions that
restrict transfer or affect voting or other rights of shareholders
appearing in the articles of incorporation, bylaws, shareholders’
agreements or voting trust agreements filed with the corporations.
4. Except as otherwise provided in subsection 5, the close
corporation may refuse to register the transfer of stock into the name of
a person to whom the stock of a close corporation has been transferred if
the person has, or is presumed to have, notice that the transfer of the
stock is in violation of a restriction on the transfer of stock. If the
close corporation refuses to register the transfer of stock into the name
of the transferee, the close corporation must notify the transferee of
its refusal and state the reasons therefor.
5. Subsection 4 does not apply if:
(a) The transfer of stock, even if contrary to the restrictions on
transfer of stock, has been consented to by all the stockholders of the
close corporation; or
(b) The close corporation has amended its certificate of
incorporation in accordance with NRS 78A.180 .
6. The provisions of this section do not impair any rights of a
transferee to:
(a) Rescind the transaction by which he acquired the stock; or
(b) Recover under any applicable warranty.
7. As used in this section, “transfer” is not limited to a
transfer for value.
(Added to NRS by 1989, 941; A 2003, 3109 )
1. An interest in the shares of a close corporation may not be
transferred, except to the extent permitted by the certificate of
incorporation, the bylaws, a shareholders’ agreement or a voting trust
agreement.
2. Except as otherwise provided by the certificate of
incorporation, the provisions of this section do not apply to a transfer:
(a) To the corporation or to any other shareholder of the same
class or series of shares.
(b) To heirs at law.
(c) That has been approved in writing by all of the holders of the
shares of the corporation having voting rights.
(d) To an executor or administrator upon the death of a shareholder
or to a trustee or receiver as a result of a bankruptcy, insolvency,
dissolution or similar proceeding brought by or against a shareholder.
(e) By merger or share exchange or an exchange of existing shares
for other shares of a different class or series in the corporation.
(f) By a pledge as collateral for a loan that does not grant the
pledgee any voting rights possessed by the pledgor.
(g) Made after the termination of the status of the corporation as
a close corporation.
(Added to NRS by 1989, 942)
1. An attempt to transfer shares in a close corporation in
violation of a prohibition against such a transfer is ineffective.
2. An attempt to transfer shares in a close corporation in
violation of a prohibition against transfer that is not binding on the
transferee because:
(a) The notice required by NRS 78A.040 was not given; or
(b) The prohibition is held unenforceable by a court of competent
jurisdiction,
Ê gives the corporation an option to purchase the shares from the
transferee for the same price and on the same terms that he purchased
them. To exercise the option, the corporation must give the transferee
written notice within 30 days after they receive a share certificate for
registration in the name of the transferee.
(Added to NRS by 1989, 943)
POWERS AND DUTIES
1. All shareholders of a close corporation who are entitled to
vote may agree in writing to regulate the exercise of the corporate
powers and the management of the business and affairs of the corporation
or the relationship among the shareholders of the corporation.
2. An agreement authorized by this section is effective even if
the agreement:
(a) Eliminates a board of directors.
(b) Restricts the discretion or powers of the board of directors or
authorizes director proxies or weighted voting rights.
(c) Treats the corporation as a partnership.
(d) Creates a relationship among the shareholders or between the
shareholders and the corporation that would otherwise be appropriate
among partners.
3. If the corporation has a board of directors, an agreement
authorized by this section that restricts the discretion or powers of the
board of directors:
(a) Relieves directors of liability imposed by law; and
(b) Imposes that liability on each person in whom the discretion or
power of the board is vested,
Ê to the extent that the discretion or power of the board of directors is
governed by the agreement.
4. A provision eliminating a board of directors in an agreement
authorized by this section is not effective unless the articles of
incorporation contain a statement to that effect.
5. A provision entitling one or more shareholders to dissolve the
corporation under NRS 78A.160 is
effective if a statement of this right is contained in the articles of
incorporation.
6. To amend an agreement authorized by this section, all
shareholders entitled to vote must approve the amendment in writing,
unless the agreement provides otherwise.
7. Subscribers for shares may act as shareholders with respect to
an agreement authorized by this section if shares are not issued when the
agreement was made.
8. This section does not prohibit any other agreement between or
among shareholders in a close corporation.
(Added to NRS by 1989, 944)
A written
agreement among stockholders of a close corporation or any provision of
the certificate of incorporation or of the bylaws of the corporation that
relates to any phase of the affairs of the corporation, including, but
not limited to, the management of its business, the declaration and
payment of dividends or other division of profits, the election of
directors or officers, the employment of stockholders by the corporation
or the arbitration of disputes is not invalid on the ground that it is an
attempt by the parties to the agreement or by the stockholders of the
corporation to treat the corporation as if it were a partnership or to
arrange relations among the stockholders or between the stockholders and
the corporation in a manner that would be appropriate only among partners.
(Added to NRS by 1989, 947)
1. A close corporation may operate without a board of directors if
the certificate of incorporation contains a statement to that effect.
2. An amendment to the certificate of incorporation eliminating a
board of directors must be approved:
(a) By all the shareholders of the corporation, whether or not
otherwise entitled to vote on amendments; or
(b) If no shares have been issued, by all subscribers for shares,
if any, or if none, by the incorporators.
3. While a corporation is operating without a board of directors
as authorized by subsection 1:
(a) All corporate powers must be exercised by or under the
authority of, and the business and affairs of the corporation managed
under the direction of, the shareholders.
(b) Unless the articles of incorporation provide otherwise:
(1) Action requiring the approval of the board of directors
or of both the board of directors and the shareholders is authorized if
approved by the shareholders; and
(2) Action requiring a majority or greater percentage vote
of the board of directors is authorized if approved by the majority or
greater percentage of votes of the shareholders entitled to vote on the
action.
(c) A requirement by a state or the United States that a record
delivered for filing contain a statement that specified action has been
taken by the board of directors is satisfied by a statement that the
corporation is a close corporation without a board of directors and that
the action was approved by the shareholders.
(d) The shareholders by resolution may appoint one or more
shareholders to sign records as designated directors.
4. An amendment to the articles of incorporation that deletes the
provision which eliminates a board of directors must be approved by the
holders of at least two-thirds of the votes of each class or series of
shares of the corporation, voting as separate voting groups, whether or
not otherwise entitled to vote on amendments. The amendment must specify
the number, names and mailing addresses of the directors of the
corporation or describe who will perform the duties of the board of
directors.
(Added to NRS by 1989, 944; A 1999, 1593 ; 2001, 101 , 2723 ; 2003, 3109 )
A close corporation shall hold an
annual meeting if one or more shareholders delivers a written notice to
the corporation requesting a meeting. Upon receipt of a notice, the close
corporation must hold a meeting within 30 days.
(Added to NRS by 1989, 945)
Notwithstanding any law to the
contrary, a person who holds more than one office in a close corporation
may sign, acknowledge or verify in more than one capacity any record
required to be signed, acknowledged or verified by the holders of two or
more offices.
(Added to NRS by 1989, 945; A 2003, 3110 )
Personal
liability may not be imposed upon shareholders of a close corporation
solely as a result of the failure of the close corporation to observe the
usual corporate formalities or requirements relating to the exercise of
corporate powers or management of its business and affairs, where such
failure results from the distinct nature and permissible functioning of a
close corporation.
(Added to NRS by 1989, 945)
1. A plan of merger or share exchange that if effected would:
(a) Terminate the close corporation status must be approved by the
holders of at least two-thirds of the votes of each class or series of
shares of the close corporation, voting as separate voting groups,
whether or not the holders are entitled to vote on the plan.
(b) Create the surviving corporation as a close corporation must be
approved by the holders of at least two-thirds of the votes of each class
or series of shares of the surviving corporation, voting as separate
voting groups, whether or not the holders are entitled to vote on the
plan.
2. If not made in the usual and regular course of business, a
sale, lease, exchange or other disposition of all or substantially all of
the property of a close corporation must be approved by the holders of at
least two-thirds of the votes of each class or series of shares of the
corporation, voting as separate voting groups, whether or not the holders
are entitled to vote on the transaction.
(Added to NRS by 1989, 945)
1. Upon application of a stockholder, the court may appoint one or
more persons to be custodians and, if the corporation is insolvent, to be
receivers of any close corporation when:
(a) The business and affairs of the close corporation are managed
by the stockholders who are so divided that the business of the
corporation is suffering or is threatened with irreparable injury and any
remedy with respect to such a deadlock provided in the certificate of
incorporation or bylaws or in any written agreement of the stockholders
has failed; or
(b) The petitioning stockholder has the right to the dissolution of
the corporation under a provision of the certificate of incorporation
permitted by NRS 78A.160 .
2. If the court determines that it would be in the best interest
of the corporation, the court may appoint a provisional director in lieu
of appointing a custodian or receiver for a close corporation. Such an
appointment does not preclude any subsequent order of the court
appointing a custodian or receiver for the corporation.
(Added to NRS by 1989, 946)
1. Notwithstanding any contrary provision of the certificate of
incorporation, the bylaws or an agreement of the stockholders, the court
may appoint a provisional director for a close corporation if the
shareholders or directors, if any, are so divided concerning the
management of the business and affairs of the corporation that the votes
required for action by the board of directors cannot be obtained, with
the consequence that the business and affairs of the corporation cannot
be conducted to the advantage of the stockholders generally.
2. An application for relief pursuant to this section must be
filed:
(a) By at least one-half of the number of directors then in office;
(b) By the holders of at least one-third of all stock then entitled
to elect directors; or
(c) If there is more than one class of stock then entitled to elect
one or more directors, by the holders of two-thirds of the stock of each
class.
Ê The certificate of incorporation of a close corporation may provide
that a lesser proportion of the directors, the stockholders or a class of
stockholders may apply for relief under this section.
3. A provisional director:
(a) Must be an impartial person who is not a stockholder or a
creditor of the corporation or of any subsidiary or affiliate of the
corporation and whose further qualifications, if any, may be determined
by the court.
(b) Is not a custodian or receiver of the corporation and does not
have the title and powers of a custodian or receiver appointed under NRS
78A.140 .
(c) Has the rights and powers of an elected director of the
corporation, including the right to notice of and to vote at meetings of
directors, until such time as he may be removed by order of the court.
4. The compensation of a provisional director must be determined
by agreement between the provisional director and the corporation subject
to the approval of the court, which may fix his compensation in the
absence of agreement or in the event of disagreement between the
provisional director and the corporation.
(Added to NRS by 1989, 946)
1. The certificate of incorporation of any close corporation may
include a provision granting to any stockholder or to the holder of any
specified number or percentage of shares of any class of stock an option
to have the corporation dissolved at will or upon the occurrence of any
specified event or contingency. Whenever any option to dissolve is
exercised, the stockholders who exercise the option shall give written
notice thereof to all other stockholders. Thirty days after the notice is
sent, the dissolution of the corporation must proceed as if the required
number of stockholders having voting power consented in writing to
dissolution of the corporation as provided by NRS 78.320 .
2. If the certificate of incorporation as originally filed does
not contain a provision authorized by subsection 1, the certificate may
be amended to include such a provision if adopted by the affirmative vote
of the holders of all the outstanding stock, whether or not otherwise
entitled to vote, unless the certificate of incorporation specifically
authorizes such an amendment by a vote which is not less than two-thirds
of all the outstanding stock, whether or not otherwise entitled to vote.
3. Each stock certificate in any corporation whose certificate of
incorporation authorizes dissolution as permitted by this section must
conspicuously note on the face of the certificate the existence of the
provision or the provision is ineffective.
(Added to NRS by 1989, 947)
TERMINATION OF STATUS AS CLOSE CORPORATION
A close corporation is
subject to the provisions of this chapter until:
1. The corporation files with the Secretary of State a certificate
of amendment deleting from the certificate of incorporation the
provisions required or permitted by NRS 78A.020 , to be stated in the certificate of
incorporation; or
2. A provision or condition required or permitted by NRS 78A.020
to be stated in a certificate of
incorporation has been breached and the corporation or any stockholder
has not acted pursuant to NRS 78A.190
to prevent the loss of status or remedy the breach.
(Added to NRS by 1989, 941)
1. A corporation may voluntarily terminate its status as a close
corporation, and cease to be subject to the provisions of this chapter,
by amending the certificate of incorporation to delete therefrom the
additional provisions required or permitted by NRS 78A.020 to be stated in the certificate of
incorporation of a close corporation. An amendment must be adopted and
become effective in accordance with NRS 78.390 , except that it must be approved by a vote of
the holders of record of at least two-thirds of the voting shares of each
class of stock of the corporation that are outstanding.
2. The certificate of incorporation of a close corporation may
provide that on any amendment to terminate the status as a close
corporation, a vote greater than two-thirds or a vote of all shares of
any class may be required. If the certificate of incorporation contains
such a provision, that provision may not be amended, repealed or modified
by any vote less than that required to terminate the status of the
corporation as a close corporation.
3. A certificate filed pursuant to this section is effective upon
filing the certificate with the Secretary of State or upon a later date
specified in the certificate, which must not be more than 90 days after
the certificate is filed.
(Added to NRS by 1989, 943; A 2005, 2186 )
1. The status of a corporation as a close corporation terminates
if one or more of the provisions or conditions of this chapter cease to
exist or be fulfilled unless:
(a) Within 30 days after the occurrence of the event, or within 30
days after the event has been discovered by the corporation, whichever is
later, the corporation files with the Secretary of State a signed
certificate stating that a specified provision or condition included in
the certificate of incorporation to qualify the corporation as a close
corporation has ceased to be applicable and furnishes a copy of the
certificate to each stockholder; and
(b) The corporation, concurrently with the filing of a certificate,
takes such steps as are necessary to correct the situation that threatens
the status as a close corporation, including the refusal to register the
transfer of stock which has been wrongfully transferred as provided by
NRS 78A.050 or commencing a
proceeding under subsection 2.
2. Upon the suit of the close corporation or any stockholder, the
court has jurisdiction to:
(a) Issue all orders necessary to prevent the corporation from
losing its status as a close corporation.
(b) Restore the status of the corporation as a close corporation by
enjoining or setting aside any act or threatened act on the part of the
corporation or a stockholder that would be inconsistent with any of the
provisions or conditions required or permitted by this chapter to be
stated in the certificate of incorporation of a close corporation, unless
it is an act approved in accordance with NRS 78A.050 .
(c) Enjoin or set aside any transfer or threatened transfer of
stock of a close corporation that is contrary to the terms of the
certificate of incorporation or of any permitted restriction on transfer.
(d) Enjoin any public offering or threatened public offering of
stock of the close corporation.
(Added to NRS by 1989, 943; A 1999, 1594 ; 2003, 3110 )
1. A corporation that terminates its status as a close corporation
is subject to the provisions of chapter 78 of
NRS.
2. Termination of the status of a close corporation does not
affect any right of a shareholder or of the corporation under an
agreement or the articles of incorporation unless invalidated by law.
(Added to NRS by 1989, 946)
