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House File 2509

Partial Bill History

Bill Text

PAG LIN
  1  1                                           HOUSE FILE 2509 
  1  2 
  1  3                             AN ACT
  1  4 REGARDING BUSINESS CORPORATIONS, AND PROVIDING AN EFFECTIVE DATE. 
  1  5 
  1  6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1  7 
  1  8    Section 1.  Section 490.120, subsections 4, 7, 9, and 10,
  1  9 Code 2001, are amended to read as follows:
  1 10    4.  The document must be typewritten or printed.  If the
  1 11 document is electronically transmitted, it must be in a format
  1 12 that can be retrieved or reproduced in typewritten or printed
  1 13 form.
  1 14    7.  The person executing the document shall sign it and
  1 15 state beneath or opposite the person's signature, the person's
  1 16 name and the capacity in which the person signs.  The document
  1 17 may, but need not, contain:
  1 18    a.  The a corporate seals. seal,
  1 19    b.  An attestation by the secretary or an assistant
  1 20 secretary.
  1 21    c.  An attestation, acknowledgment, or verification, or
  1 22 proof.
  1 23    The secretary of state may accept for filing a document
  1 24 containing a copy of a signature, however made.
  1 25    9.  The document must be delivered to the office of the
  1 26 secretary of state for filing and must be accompanied by the
  1 27 correct filing fee.  Delivery may be made by electronic
  1 28 transmission if and to the extent permitted by the secretary
  1 29 of state.  If it is filed in typewritten or printed form and
  1 30 not transmitted electronically, the secretary of state may
  1 31 require one exact or conformed copy to be delivered with the
  1 32 document, except as provided in sections 490.503 and 490.1509.
  1 33    10.  The secretary of state may adopt rules for the
  1 34 electronic filing of documents and the certification of
  1 35 electronically filed documents.  When the document is
  2  1 delivered to the office of the secretary of state for filing,
  2  2 the correct filing fee, and any franchise tax, license fee, or
  2  3 penalty, shall be paid in a manner permitted by the secretary
  2  4 of state.
  2  5    Sec. 2.  Section 490.120, Code 2001, is amended by adding
  2  6 the following new subsection:
  2  7    NEW SUBSECTION.  11.  The secretary of state may adopt
  2  8 rules for the electronic filing of documents and the
  2  9 certification of electronically filed documents.
  2 10    Sec. 3.  Section 490.123, subsection 1, Code 2001, is
  2 11 amended to read as follows:
  2 12    1.  Except as provided in subsection 2 and section 490.124,
  2 13 subsection 3, a document accepted for filing is effective at
  2 14 the later of the following times:
  2 15    a.  At the date and time of filing on the date it is filed,
  2 16 as evidenced by such means as the secretary of state's date
  2 17 and time endorsement on the original document state may use
  2 18 for the purpose of recording the date and time of filing.
  2 19    b.  At the time specified in the document as its effective
  2 20 time on the date it is filed.
  2 21    Sec. 4.  Section 490.124, subsections 1 and 2, Code 2001,
  2 22 are amended to read as follows:
  2 23    1.  A domestic or foreign corporation may correct a
  2 24 document filed by the secretary of state if the document
  2 25 satisfies one or both of the following requirements:
  2 26    a.  Contains The document contains an incorrect statement
  2 27 inaccuracy.
  2 28    b.  Was The document was defectively executed, attested,
  2 29 sealed, verified, or acknowledged.
  2 30    c.  The electronic transmission was defective.
  2 31    2.  A document is corrected by complying with both of the
  2 32 following:
  2 33    a.  By preparing articles of correction that satisfy all of
  2 34 the following requirements:
  2 35    (1)  Describe the document, including its filing date, or
  3  1 attach a copy of it to the articles.
  3  2    (2)  Specify the incorrect statement and the reason it is
  3  3 incorrect or the manner in which the execution was defective
  3  4 inaccuracy or defect to be corrected.
  3  5    (3)  Correct the incorrect statement or defective execution
  3  6 inaccuracy or defect.
  3  7    b.  By delivering the articles to the secretary of state
  3  8 for filing.
  3  9    Sec. 5.  Section 490.125, subsection 2, Code 2001, is
  3 10 amended to read as follows:
  3 11    2.  The secretary of state files a document by stamping or
  3 12 otherwise endorsing "filed", together with the secretary's
  3 13 name and official title and recording it as filed on the date
  3 14 and time of receipt, on both the document and the receipt for
  3 15 the filing fee.  After filing a document, except the biennial
  3 16 report required by section 490.1622, and except as provided in
  3 17 sections 490.503 and 490.1509, the secretary of state shall
  3 18 deliver the document, with the filing fee receipt, or
  3 19 acknowledgment of receipt if no fee is required, attached, to
  3 20 the domestic or foreign corporation or its representative a
  3 21 copy of the document with an acknowledgement of the date and
  3 22 time of filing.
  3 23    Sec. 6.  Section 490.127, Code 2001, is amended to read as
  3 24 follows:
  3 25    490.127  EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT.
  3 26    A certificate attached to from the secretary of state
  3 27 delivered with a copy of a document filed by the secretary of
  3 28 state, bearing the secretary of state's signature, which may
  3 29 be in facsimile, and the seal of the secretary of state, is
  3 30 conclusive evidence that the original document is on file with
  3 31 the secretary of state.
  3 32    Sec. 7.  Section 490.140, subsection 6, Code Supplement
  3 33 2001, is amended to read as follows:
  3 34    6.  "Deliver" includes mail or "delivery" means any method
  3 35 of delivery used in conventional commercial practice,
  4  1 including delivery in person, by mail, commercial delivery,
  4  2 and electronic transmission.
  4  3    Sec. 8.  Section 490.140, Code Supplement 2001, is amended
  4  4 by adding the following new subsections:
  4  5    NEW SUBSECTION.  8A.  "Electronic transmission" or
  4  6 "electronically transmitted" means any process of
  4  7 communication not directly involving the physical transfer of
  4  8 paper that is suitable for the retention, retrieval, and
  4  9 reproduction of information by the recipient.
  4 10    NEW SUBSECTION.  23A.  "Sign" or "signature" includes any
  4 11 manual, facsimile, conformed, or electronic signature.
  4 12    NEW SUBSECTION.  28.  "Voting power" means the current
  4 13 power to vote in the election of directors.
  4 14    Sec. 9.  Section 490.141, subsections 1, 2, 3, and 5, Code
  4 15 2001, are amended to read as follows:
  4 16    1.  Notice under this chapter must be in writing unless
  4 17 oral notice is reasonable under the circumstances.  Notice by
  4 18 electronic transmission is written notice.
  4 19    2.  Notice may be communicated in person; by telephone,
  4 20 telegraph, teletype, or other form of wire or wireless
  4 21 communication; or by mail or private carrier mail or other
  4 22 method of delivery; or by telephone, voice mail, or other
  4 23 electronic means.  If these forms of personal notice are
  4 24 impracticable, notice may be communicated by a newspaper of
  4 25 general circulation in the area where published; or by radio,
  4 26 television, or other form of public broadcast communication.
  4 27    3.  Written notice by a domestic or foreign corporation to
  4 28 its shareholder, if in a comprehensible form, is effective
  4 29 when mailed, according to one of the following:
  4 30    a.  Upon deposit in the United States mail, if mailed
  4 31 postpaid and correctly addressed to the shareholder's address
  4 32 shown in the corporation's current record of shareholders.
  4 33    b.  When electronically transmitted to the shareholder in a
  4 34 manner authorized by the shareholder.
  4 35    5.  Except as provided in subsection 3, written notice, if
  5  1 in a comprehensible form, is effective at the earliest of the
  5  2 following:
  5  3    a.  When received.
  5  4    b.  Five days after its deposit in the United States mail,
  5  5 as evidenced by the postmark, if mailed postpaid and correctly
  5  6 addressed.
  5  7    c.  On the date shown on the return receipt, if sent by
  5  8 registered or certified mail, return receipt requested, and
  5  9 the receipt is signed by or on behalf of the addressee.
  5 10    Sec. 10.  Section 490.202, subsection 2, Code 2001, is
  5 11 amended to read as follows:
  5 12    2.  The articles of incorporation may set forth any or all
  5 13 of the following:
  5 14    a.  The names and addresses of the individuals who are to
  5 15 serve as the initial directors.
  5 16    b.  Provisions not inconsistent with law regarding:
  5 17    (1)  The purpose or purposes for which the corporation is
  5 18 organized.
  5 19    (2)  Managing the business and regulating the affairs of
  5 20 the corporation.
  5 21    (3)  Defining, limiting, and regulating the powers of the
  5 22 corporation, its board of directors, and shareholders.
  5 23    (4)  A par value for authorized shares or classes of
  5 24 shares.
  5 25    (5)  The imposition of personal liability on shareholders
  5 26 for the debts of the corporation to a specified extent and
  5 27 upon specified conditions.
  5 28    c.  Any provision that under this chapter is required or
  5 29 permitted to be set forth in the bylaws.
  5 30    d.  A provision consistent with section 490.832.  A
  5 31 provision eliminating or limiting the liability of a director
  5 32 to the corporation or its shareholders for money damages for
  5 33 any action taken, or any failure to take any action, as a
  5 34 director, except liability for any of the following:
  5 35    (1)  The amount of a financial benefit received by a
  6  1 director to which the director is not entitled.
  6  2    (2)  An intentional infliction of harm on the corporation
  6  3 or the shareholders.
  6  4    (3)  A violation of section 490.833.
  6  5    (4)  An intentional violation of criminal law.
  6  6    e.  A provision permitting or making obligatory
  6  7 indemnification of a director for liability, as defined in
  6  8 section 490.850, subsection 5, to any person for any action
  6  9 taken, or any failure to take any action, as a director,
  6 10 except liability for any of the following:
  6 11    (1)  Receipt of a financial benefit to which the person is
  6 12 not entitled.
  6 13    (2)  An intentional infliction of harm on the corporation
  6 14 or its shareholders.
  6 15    (3)  A violation of section 490.833.
  6 16    (4)  An intentional violation of criminal law.
  6 17    f.  A provision eliminating or limiting the liability of a
  6 18 director to the corporation or its shareholders for money
  6 19 damages for any action taken, or any failure to take any
  6 20 action, as a director, except liability for any of the
  6 21 following:
  6 22    (1)  The amount of a financial benefit received by a
  6 23 director to which the director is not entitled.
  6 24    (2)  An intentional infliction of harm on the corporation
  6 25 or the shareholders.
  6 26    (3)  A violation of section 490.833.
  6 27    (4)  An intentional violation of criminal law.
  6 28    A provision shall not eliminate or limit the liability of a
  6 29 director for an act or omission occurring prior to the date
  6 30 when the provision in the articles of incorporation becomes
  6 31 effective.
  6 32    Sec. 11.  Section 490.621, Code 2001, is amended by adding
  6 33 the following new subsection:
  6 34    NEW SUBSECTION.  6.  a.  An issuance of shares or other
  6 35 securities convertible into or rights exercisable for shares,
  7  1 in a transaction or a series of integrated transactions,
  7  2 requires approval of the shareholders, at a meeting at which a
  7  3 quorum exists consisting of at least a majority of the votes
  7  4 entitled to be cast on the matter, if both of the following
  7  5 conditions are satisfied:
  7  6    (1)  The shares, other securities, or rights are issued for
  7  7 consideration other than cash or cash equivalents.
  7  8    (2)  The voting power of shares that are issued and
  7  9 issuable as a result of the transaction or series of
  7 10 integrated transactions will comprise more than twenty percent
  7 11 of the voting power of the shares of the corporation that were
  7 12 outstanding immediately before the transaction.
  7 13    b.  For purposes of this subsection, the following shall
  7 14 apply:
  7 15    (1)  For purposes of determining the voting power of shares
  7 16 issued and issuable as a result of a transaction or series of
  7 17 integrated transactions, the voting power of shares shall be
  7 18 the greater of the following:
  7 19    (a)  The voting power of the shares to be issued.
  7 20    (b)  The voting power of the shares that would be
  7 21 outstanding after giving effect to the conversion of
  7 22 convertible shares and other securities and the exercise of
  7 23 rights to be issued.
  7 24    (2)  A series of transactions is integrated if consummation
  7 25 of one transaction is made contingent on consummation of one
  7 26 or more of the other transactions.
  7 27    Sec. 12.  Section 490.631, subsections 2 and 3, Code 2001,
  7 28 are amended to read as follows:
  7 29    2.  If the articles of incorporation prohibit the reissue
  7 30 of the acquired shares, the number of authorized shares is
  7 31 reduced by the number of shares acquired, effective upon
  7 32 amendment of the articles of incorporation.
  7 33    3.  The board of directors may adopt articles of amendment
  7 34 under this section without shareholder action, and deliver
  7 35 them to the secretary of state for filing.  The articles must
  8  1 set forth all of the following:
  8  2    a.  The name of the corporation.
  8  3    b.  The reduction in the number of authorized shares,
  8  4 itemized by class and series.
  8  5    c.  The total number of authorized shares, itemized by
  8  6 class and series, remaining after reduction of the shares.
  8  7    Sec. 13.  Section 490.640, Code 2001, is amended by adding
  8  8 the following new subsection:
  8  9    NEW SUBSECTION.  7.  This section shall not apply to
  8 10 distributions in liquidation under division XIV.
  8 11    Sec. 14.  Section 490.702, subsection 1, Code 2001, is
  8 12 amended to read as follows:
  8 13    1.  Except as provided in subsection 5, a corporation shall
  8 14 hold a special meeting of shareholders upon the occurrence of
  8 15 either of the following:
  8 16    a.  On call of its board of directors or the person or
  8 17 persons authorized to call a special meeting by the articles
  8 18 of incorporation or bylaws.
  8 19    b.  If the holders shareholders of at least ten percent of
  8 20 all the votes entitled to be cast on any issue proposed to be
  8 21 considered at the proposed special meeting sign, date, and
  8 22 deliver to the corporation's secretary corporation one or more
  8 23 written demands for the meeting describing the purpose or
  8 24 purposes for which it is to be held, provided that the
  8 25 articles of incorporation may fix a lower percentage or a
  8 26 higher percentage not exceeding twenty-five percent of all the
  8 27 votes entitled to be cast on any issue proposed to be
  8 28 considered.  Unless otherwise provided in the articles of
  8 29 incorporation, a written demand for a special meeting may be
  8 30 revoked by a writing to that effect received by the
  8 31 corporation prior to the receipt by the corporation of demands
  8 32 sufficient in number to require the holding of a special
  8 33 meeting.
  8 34    Sec. 15.  Section 490.704, subsection 2, Code 2001, is
  8 35 amended to read as follows:
  9  1    2.  A written consent shall bear the date of signature of
  9  2 each shareholder who signs the consent and no written consent
  9  3 is effective to take the corporate action referred to in the
  9  4 consent unless, within sixty days of the earliest dated
  9  5 consent delivered in the manner required by this section to
  9  6 the corporation, written consents signed by a sufficient
  9  7 number of holders to take action are delivered to the
  9  8 corporation.  A written consent may be revoked by a writing to
  9  9 that effect received by the corporation prior to the receipt
  9 10 by the corporation of unrevoked written consents sufficient in
  9 11 number to take corporate action.
  9 12    Sec. 16.  NEW SECTION.  490.708  CONDUCT OF THE MEETING.
  9 13    1.  At each meeting of shareholders, a chairperson shall
  9 14 preside.  The chairperson shall be appointed as provided in
  9 15 the bylaws or, in the absence of such provisions, by the
  9 16 board.
  9 17    2.  The chairperson, unless the articles of incorporation
  9 18 or bylaws provide otherwise, shall determine the order of
  9 19 business and shall have the authority to establish rules for
  9 20 the conduct of the meeting.
  9 21    3.  Any rules adopted for, and the conduct of, the meeting
  9 22 shall be fair to shareholders.
  9 23    4.  The chairperson of the meeting shall announce at the
  9 24 meeting when the polls close for each matter voted upon.  If
  9 25 no announcement is made, the polls shall be deemed to have
  9 26 closed upon the final adjournment of the meeting.  After the
  9 27 polls close, no ballots, proxies, or votes nor any revocations
  9 28 or changes to any ballots, proxies, or votes may be accepted.
  9 29    Sec. 17.  Section 490.722, subsections 2, 3, 4, and 8, Code
  9 30 2001, are amended to read as follows:
  9 31    2.  A shareholder or the shareholder's agent or attorney-
  9 32 in-fact may appoint a proxy to vote or otherwise act for the
  9 33 shareholder by signing an appointment form, either personally
  9 34 or by the shareholder's attorney-in-fact or by an electronic
  9 35 transmission.  An electronic transmission must contain or be
 10  1 accompanied by information from which one can determine that
 10  2 the shareholder, the shareholder's agent, or the shareholder's
 10  3 attorney-in-fact authorized the electronic transmission.
 10  4    3.  An appointment of a proxy is effective when a signed
 10  5 appointment form or an electronic transmission of the
 10  6 appointment is received by the secretary or other officer or
 10  7 agent inspector of election or the officer or agent of the
 10  8 corporation authorized to tabulate votes.  An appointment is
 10  9 valid for eleven months unless a longer period is expressly
 10 10 provided in the appointment form.
 10 11    4.  An appointment of a proxy is revocable by the
 10 12 shareholder unless the appointment form conspicuously or
 10 13 electronic transmission states that it is irrevocable and the
 10 14 appointment is coupled with an interest.  Appointments coupled
 10 15 with an interest include, but are not limited to, the
 10 16 appointment of:
 10 17    a.  A pledgee.
 10 18    b.  A person who purchased or agreed to purchase the
 10 19 shares.
 10 20    c.  A creditor of the corporation who extended it credit
 10 21 under terms requiring the appointment.
 10 22    d.  An employee of the corporation whose employment
 10 23 contract requires the appointment.
 10 24    e.  A party to a voting agreement created under section
 10 25 490.731.
 10 26    8.  Subject to section 490.724 and to any express
 10 27 limitation on the proxy's authority appearing on the face of
 10 28 stated in the appointment form or electronic transmission, a
 10 29 corporation is entitled to accept the proxy's vote or other
 10 30 action as that of the shareholder making the appointment.
 10 31    Sec. 18.  Section 490.724, subsections 4 and 5, Code 2001,
 10 32 are amended to read as follows:
 10 33    4.  The corporation and its officer or agent who accepts or
 10 34 rejects a vote, consent, waiver, or proxy appointment in good
 10 35 faith and in accordance with the standards of this section or
 11  1 section 490.722, subsection 2, are not liable in damages to
 11  2 the shareholder for the consequences of the acceptance or
 11  3 rejection.
 11  4    5.  Corporate action based on the acceptance or rejection
 11  5 of a vote, consent, waiver, or proxy appointment under this
 11  6 section or section 490.722, subsection 2, is valid unless a
 11  7 court of competent jurisdiction determines otherwise.
 11  8    Sec. 19.  Section 490.727, subsection 1, Code 2001, is
 11  9 amended to read as follows:
 11 10    1.  The articles of incorporation or bylaws may provide for
 11 11 a greater quorum or voting requirement for shareholders or
 11 12 voting groups of shareholders than is provided for by this
 11 13 chapter.
 11 14    Sec. 20.  Section 490.728, subsection 1, Code 2001, is
 11 15 amended to read as follows:
 11 16    1.  Unless otherwise provided in the articles of
 11 17 incorporation, directors are elected by a majority plurality
 11 18 of the votes cast by the shares entitled to vote in the
 11 19 election at a meeting at which a quorum is present.
 11 20    Sec. 21.  NEW SECTION.  490.729  INSPECTORS OF ELECTION.
 11 21    1.  A corporation having any shares listed on a national
 11 22 securities exchange or regularly traded in a market maintained
 11 23 by one or more members of a national or affiliated securities
 11 24 association shall, and any other corporation may, appoint one
 11 25 or more inspectors to act at a meeting of shareholders and
 11 26 make a written report of the inspectors' determinations.  Each
 11 27 inspector shall take and sign an oath faithfully to execute
 11 28 the duties of inspector with strict impartiality and according
 11 29 to the best of the inspector's ability.
 11 30    2.  The inspectors shall do all of the following:
 11 31    a.  Ascertain the number of shares outstanding and the
 11 32 voting power of each.
 11 33    b.  Determine the shares represented at a meeting.
 11 34    c.  Determine the validity of proxies and ballots.
 11 35    d.  Count all votes.
 12  1    e.  Determine the result.
 12  2    3.  An inspector may be an officer or employee of the
 12  3 corporation.
 12  4    Sec. 22.  NEW SECTION.  490.732  SHAREHOLDER AGREEMENTS.
 12  5    1.  An agreement among the shareholders of a corporation
 12  6 that complies with this section is effective among the
 12  7 shareholders and the corporation even though it is
 12  8 inconsistent with one or more other provisions of this chapter
 12  9 in that it does one of the following:
 12 10    a.  Eliminates the board of directors or restricts the
 12 11 discretion or powers of the board of directors.
 12 12    b.  Governs the authorization or making of distributions
 12 13 whether or not in proportion to ownership of shares, subject
 12 14 to the limitations in section 490.640.
 12 15    c.  Establishes who shall be directors or officers of the
 12 16 corporation, or their terms of office or manner of selection
 12 17 or removal.
 12 18    d.  Governs, in general or in regard to specific matters,
 12 19 the exercise or division of voting power by or between the
 12 20 shareholders and directors or by or among any of them,
 12 21 including use of weighted voting rights or director proxies.
 12 22    e.  Establishes the terms and conditions of any agreement
 12 23 for the transfer or use of property or the provision of
 12 24 services between the corporation and any shareholder,
 12 25 director, officer, or employee of the corporation, or among
 12 26 any of them.
 12 27    f.  Transfers to one or more shareholders or other persons
 12 28 all or part of the authority to exercise the corporate powers
 12 29 or to manage the business and affairs of the corporation,
 12 30 including the resolution of any issue about which there exists
 12 31 a deadlock among directors or shareholders.
 12 32    g.  Requires dissolution of the corporation at the request
 12 33 of one or more of the shareholders or upon the occurrence of a
 12 34 specified event or contingency.
 12 35    h.  Otherwise governs the exercise of the corporate powers
 13  1 or the management of the business and affairs of the
 13  2 corporation or the relationship among the shareholders, the
 13  3 directors, and the corporation, or among any of them, and is
 13  4 not contrary to public policy.
 13  5    2.  An agreement authorized by this section must satisfy
 13  6 all of the following requirements:
 13  7    a.  Be set forth in one of the following places and
 13  8 manners:
 13  9    (1)  The articles of incorporation or bylaws and approved
 13 10 by all persons who are shareholders at the time of the
 13 11 agreement.
 13 12    (2)  In a written agreement that is signed by all persons
 13 13 who are shareholders at the time of the agreement and is made
 13 14 known to the corporation.
 13 15    b.  Be subject to amendment only by all persons who are
 13 16 shareholders at the time of the amendment, unless the
 13 17 agreement provides otherwise.
 13 18    c.  Be valid for ten years, unless the agreement provides
 13 19 otherwise.
 13 20    3.  The existence of an agreement authorized by this
 13 21 section shall be noted conspicuously on the front or back of
 13 22 each certificate for outstanding shares or on the information
 13 23 statement required by section 490.626, subsection 2.  If at
 13 24 the time of the agreement the corporation has shares
 13 25 outstanding represented by certificates, the corporation shall
 13 26 recall the outstanding certificates and issue substitute
 13 27 certificates that comply with this subsection.  The failure to
 13 28 note the existence of the agreement on the certificate or
 13 29 information statement shall not affect the validity of the
 13 30 agreement or any action taken pursuant to it.  Any purchaser
 13 31 of shares who, at the time of purchase, did not have knowledge
 13 32 of the existence of the agreement shall be entitled to
 13 33 recision of the purchase.  A purchaser shall be deemed to have
 13 34 knowledge of the existence of the agreement if its existence
 13 35 is noted on the certificate or information statement for the
 14  1 shares in compliance with this subsection and, if the shares
 14  2 are not represented by a certificate, the information
 14  3 statement is delivered to the purchaser at or prior to the
 14  4 time of purchase of the shares.  An action to enforce the
 14  5 right of recision authorized by this subsection must be
 14  6 commenced within the earlier of ninety days after discovery of
 14  7 the existence of the agreement or two years after the time of
 14  8 purchase of the shares.
 14  9    4.  An agreement authorized by this section shall cease to
 14 10 be effective when shares of the corporation are listed on a
 14 11 national securities exchange or regularly traced in a market
 14 12 maintained by one or more members of a national or affiliated
 14 13 securities association.  If the agreement ceases to be
 14 14 effective for any reason, the board of directors may, if the
 14 15 agreement is contained or referred to in the corporation's
 14 16 articles of incorporation or bylaws, adopt an amendment to the
 14 17 articles of incorporation or bylaws, without shareholder
 14 18 action, to delete the agreement and any references to it.
 14 19    5.  An agreement authorized by this section that limits the
 14 20 discretion or powers of the board of directors shall relieve
 14 21 the directors of, and impose upon the person or persons in
 14 22 whom such discretion or powers are vested, liability for acts
 14 23 or omissions imposed by law on directors to the extent that
 14 24 the discretion or powers of the directors are limited by the
 14 25 agreement.
 14 26    6.  The existence or performance of an agreement authorized
 14 27 by this section shall not be a ground for imposing personal
 14 28 liability on any shareholder for the acts or debts of the
 14 29 corporation even if the agreement or its performance treats
 14 30 the corporation as if it were a partnership or results in
 14 31 failure to observe the corporate formalities otherwise
 14 32 applicable to the matters governed by the agreement.
 14 33    7.  Incorporators or subscribers for shares may act as
 14 34 shareholders with respect to an agreement authorized by this
 14 35 section if no shares have been issued when the agreement is
 15  1 made.
 15  2    Sec. 23.  Section 490.740, Code 2001, is amended by
 15  3 striking the section and inserting in lieu thereof the
 15  4 following:
 15  5    490.740  DEFINITIONS.
 15  6    In this part, unless the context otherwise requires:
 15  7    1.  "Derivative proceeding" means a civil suit in the right
 15  8 of a domestic corporation or, to the extent provided in
 15  9 section 490.747, in the right of a foreign corporation.
 15 10    2.  "Shareholder" includes a beneficial owner whose shares
 15 11 are held in a voting trust or held by a nominee on the
 15 12 beneficial owner's behalf.
 15 13    Sec. 24.  NEW SECTION.  490.741  STANDING.
 15 14    A shareholder shall not commence or maintain a derivative
 15 15 proceeding unless the shareholder satisfies both of the
 15 16 following:
 15 17    1.  Was a shareholder of the corporation at the time of the
 15 18 act or omission complained of or became a shareholder through
 15 19 transfer by operation of law from one who was a shareholder at
 15 20 that time.
 15 21    2.  Fairly and adequately represents the interests of the
 15 22 corporation in enforcing the right of the corporation.
 15 23    Sec. 25.  NEW SECTION.  490.742  DEMAND.
 15 24    A shareholder shall not commence a derivative proceeding
 15 25 until both of the following have occurred:
 15 26    1.  A written demand has been made upon the corporation to
 15 27 take suitable action.
 15 28    2.  Ninety days have expired from the date the demand was
 15 29 made, unless the shareholder has earlier been notified that
 15 30 the demand has been rejected by the corporation or unless
 15 31 irreparable injury to the corporation would result by waiting
 15 32 for the expiration of the ninety-day period.
 15 33    Sec. 26.  NEW SECTION.  490.743  STAY OF PROCEEDINGS.
 15 34    If the corporation commences an inquiry into the
 15 35 allegations made in the demand or complaint, the court may
 16  1 stay any derivative proceeding for a period of time as the
 16  2 court deems appropriate.
 16  3    Sec. 27.  NEW SECTION.  490.744  DISMISSAL.
 16  4    1.  A derivative proceeding shall be dismissed by the court
 16  5 on motion by the corporation if one of the groups specified in
 16  6 subsection 2 or 6 has determined in good faith after
 16  7 conducting a reasonable inquiry upon which its conclusions are
 16  8 based that the maintenance of the derivative proceeding is not
 16  9 in the best interests of the corporation.  A corporation
 16 10 moving to dismiss on this basis shall submit in support of the
 16 11 motion a short and concise statement of the reasons for its
 16 12 determination.
 16 13    2.  Unless a panel is appointed pursuant to subsection 6,
 16 14 the determination in subsection 1 shall be made by one of the
 16 15 following:
 16 16    a.  A majority vote of independent directors present at a
 16 17 meeting of the board of directors if the independent directors
 16 18 constitute a quorum.
 16 19    b.  A majority vote of a committee consisting of two or
 16 20 more independent directors appointed by majority vote of
 16 21 independent directors present at a meeting of the board of
 16 22 directors, whether or not such independent directors
 16 23 constitute a quorum.
 16 24    3.  None of the following shall by itself cause a director
 16 25 to be considered not independent for purposes of this section:
 16 26    a.  The nomination or election of the director by persons
 16 27 who are defendants in the derivative proceeding or against
 16 28 whom action is demanded.
 16 29    b.  The naming of the director as a defendant in the
 16 30 derivative proceeding or as a person against whom action is
 16 31 demanded.
 16 32    c.  The approval by the director of the act being
 16 33 challenged in the derivative proceeding or demand if the act
 16 34 resulted in no personal benefit to the director.
 16 35    4.  If a derivative proceeding is commenced after a
 17  1 determination has been made rejecting a demand by a
 17  2 shareholder, the complaint shall allege with particularity
 17  3 facts establishing one of the following:
 17  4    a.  That a majority of the board of directors did not
 17  5 consist of independent directors at the time the determination
 17  6 was made.
 17  7    b.  That the requirements of subsection 1 have not been
 17  8 met.
 17  9    All discovery and other proceedings shall be stayed during
 17 10 the pendency of any motion to dismiss unless the court finds
 17 11 upon the motion of any party that particularized discovery is
 17 12 necessary to preserve evidence or prevent undue prejudice to
 17 13 that party.
 17 14    5.  If a majority of the board of directors does not
 17 15 consist of independent directors at the time the determination
 17 16 is made, the corporation shall have the burden of proving that
 17 17 the requirements of subsection 1 have been met.  If a majority
 17 18 of the board of directors consists of independent directors at
 17 19 the time the determination is made, the plaintiff shall have
 17 20 the burden of proving that the requirements of subsection 1
 17 21 have not been met.
 17 22    6.  The court may appoint a panel of one or more
 17 23 independent persons upon motion by the corporation to make a
 17 24 determination whether the maintenance of the derivative
 17 25 proceeding is in the best interests of the corporation.  In
 17 26 such case, the plaintiff shall have the burden of proving that
 17 27 the requirements of subsection 1 have not been met.
 17 28    Sec. 28.  NEW SECTION.  490.745  DISCONTINUANCE OR
 17 29 SETTLEMENT.
 17 30    A derivative proceeding shall not be discontinued or
 17 31 settled without the court's approval.  If the court determines
 17 32 that a proposed discontinuance or settlement will
 17 33 substantially affect the interests of the corporation's
 17 34 shareholders or a class of shareholders, the court shall
 17 35 direct that notice be given to the shareholders affected.
 18  1    Sec. 29.  NEW SECTION.  490.746  PAYMENT OF EXPENSES.
 18  2    On termination of the derivative proceeding, the court may
 18  3 do either of the following:
 18  4    1.  Order the corporation to pay the plaintiff's reasonable
 18  5 expenses, including attorney fees incurred in the proceeding,
 18  6 if it finds that the proceeding has resulted in a substantial
 18  7 benefit to the corporation.
 18  8    2.  Order the plaintiff to pay any defendant's reasonable
 18  9 expenses, including attorney fees incurred in defending the
 18 10 proceeding, if it finds that the proceeding was commenced or
 18 11 maintained without reasonable cause or for an improper
 18 12 purpose.
 18 13    Sec. 30.  NEW SECTION.  490.747  APPLICABILITY TO FOREIGN
 18 14 CORPORATIONS.
 18 15    In any derivative proceeding in the right of a foreign
 18 16 corporation, the matters covered by this part shall be
 18 17 governed by the laws of the jurisdiction of incorporation of
 18 18 the foreign corporation except for sections 490.743, 490.745,
 18 19 and 490.746.
 18 20    Sec. 31.  Section 490.801, Code 2001, is amended to read as
 18 21 follows:
 18 22    490.801  REQUIREMENT FOR AND DUTIES OF BOARD OF DIRECTORS.
 18 23    1.  Except as provided in subsection 3 section 490.732,
 18 24 each corporation must have a board of directors.
 18 25    2.  All corporate powers shall be exercised by or under the
 18 26 authority of, and the business and affairs of the corporation
 18 27 managed by or under the direction of, its board of directors,
 18 28 subject to any limitation set forth in the articles of
 18 29 incorporation, or in an agreement authorized under section
 18 30 490.732.
 18 31    3.  A corporation having fifty or fewer shareholders may
 18 32 dispense with or limit the authority of a board of directors
 18 33 by describing in its articles of incorporation who will
 18 34 perform some or all of the duties of a board of directors.
 18 35    Sec. 32.  Section 490.803, subsections 2, 3, and 4, Code
 19  1 2001, are amended to read as follows:
 19  2    2.  If a board of directors has power to fix or change the
 19  3 number of directors, the board may increase or decrease by
 19  4 thirty percent or less the number of directors last approved
 19  5 by the shareholders, but only the shareholders may increase or
 19  6 decrease by more than thirty percent the number of directors
 19  7 last approved by the shareholders.  The number of directors
 19  8 may be increased or decreased from time to time by amendment
 19  9 to, or in the manner provided in, the articles of
 19 10 incorporation or the bylaws.
 19 11    3.  The articles of incorporation or bylaws may establish a
 19 12 variable range for the size of the board of directors by
 19 13 fixing a minimum and maximum number of directors.  If a
 19 14 variable range is established, the number of directors may be
 19 15 fixed or changed from time to time, within the minimum and
 19 16 maximum, by the shareholders or the board of directors.  After
 19 17 shares are issued, only the shareholders may change the range
 19 18 for the size of the board or change from a fixed to a
 19 19 variable-range size board or vice versa.
 19 20    4. 3.  Directors are elected at the first annual
 19 21 shareholders' meeting and at each annual meeting thereafter
 19 22 unless their terms are staggered under section 490.806.
 19 23    Sec. 33.  Section 490.809, Code 2001, is amended to read as
 19 24 follows:
 19 25    490.809  REMOVAL OF DIRECTORS BY JUDICIAL PROCEEDING.
 19 26    1.  The district court of the county where a corporation's
 19 27 principal office or, if none in this state, its registered
 19 28 office is located may remove a director of the corporation
 19 29 from office in a proceeding commenced either by or in the
 19 30 right of the corporation or by its shareholders holding at
 19 31 least twenty percent of the outstanding shares of any class if
 19 32 the court finds that both of the following apply:
 19 33    a.  The director engaged in fraudulent or dishonest conduct
 19 34 with respect to the corporation or its shareholders, grossly
 19 35 abused the position of director, or intentionally inflicted
 20  1 harm on the corporation.
 20  2    b.  Removal is Considering the director's course of conduct
 20  3 and the inadequacy of other available remedies, removal would
 20  4 be in the best interest of the corporation.
 20  5    2.  A shareholder proceeding on behalf of the corporation
 20  6 under subsection 1 shall comply with all of the requirements
 20  7 of division VII, part D, except section 490.741.
 20  8    2. 3.  The court that removes a, in addition to removing
 20  9 the director, may bar the director from reelection for a
 20 10 period prescribed by the court.
 20 11    3.  If shareholders commence a proceeding under subsection
 20 12 1, they shall make the corporation a party defendant.
 20 13    4.  This section does not limit the equitable powers of the
 20 14 court to order other relief.
 20 15    Sec. 34.  Section 490.821, Code 2001, is amended to read as
 20 16 follows:
 20 17    490.821  ACTION WITHOUT MEETING.
 20 18    1.  Unless Except to the extent that the articles of
 20 19 incorporation or bylaws provide otherwise require that action
 20 20 by the board of directors be taken at a meeting, action
 20 21 required or permitted by this chapter to be taken at a by the
 20 22 board of directors' meeting directors may be taken without a
 20 23 meeting if the action is taken by all members of the board.
 20 24 The action must be evidenced by one or more written consents
 20 25 each director signs a consent describing the action to be
 20 26 taken, signed by each director, and included in the minutes or
 20 27 filed with the corporate records reflecting the action taken
 20 28 and delivers it to the corporation.
 20 29    2.  Action taken under this section is effective when the
 20 30 last director signs the consent, unless the consent specifies
 20 31 a different effective date the act of the board of directors
 20 32 when one or more consents signed by all the directors are
 20 33 delivered to the corporation.  The consent may specify the
 20 34 time at which the action taken is to be effective.  A
 20 35 director's consent may be withdrawn by revocation signed by
 21  1 the director and delivered to the corporation prior to
 21  2 delivery to the corporation of unrevoked written consents
 21  3 signed by all the directors.
 21  4    3.  A consent signed under this section has the effect of a
 21  5 meeting vote an action taken at a meeting of the board of
 21  6 directors and may be described as such in any document.
 21  7    Sec. 35.  Section 490.824, subsection 1, unnumbered
 21  8 paragraph 1, Code 2001, is amended to read as follows:
 21  9    Unless the articles of incorporation or bylaws require a
 21 10 different number, or unless otherwise specifically provided in
 21 11 this chapter, a quorum of a board of directors consists of
 21 12 either:
 21 13    Sec. 36.  Section 490.825, Code 2001, is amended to read as
 21 14 follows:
 21 15    490.825  COMMITTEES.
 21 16    1.  Unless this chapter, the articles of incorporation, or
 21 17 the bylaws provide otherwise, a board of directors may create
 21 18 one or more committees and appoint one or more members of the
 21 19 board of directors to serve on them any committee.  Each
 21 20 committee may have two or more members, who serve at the
 21 21 pleasure of the board of directors.
 21 22    2.  The Unless this chapter provides otherwise, the
 21 23 creation of a committee and appointment of members to it must
 21 24 be approved by the greater of either:
 21 25    a.  A majority of all the directors in office when the
 21 26 action is taken.
 21 27    b.  The number of directors required by the articles of
 21 28 incorporation or bylaws to take action under section 490.824.
 21 29    3.  Sections 490.820 through 490.824, which govern
 21 30 meetings, action without meetings, notice and waiver of
 21 31 notice, and quorum and voting requirements of the board of
 21 32 directors, apply both to committees of the board and to their
 21 33 members as well.
 21 34    4.  To the extent specified by the board of directors or in
 21 35 the articles of incorporation or bylaws, each committee may
 22  1 exercise the authority powers of the board of directors under
 22  2 section 490.801.
 22  3    5.  A committee shall not, however:
 22  4    a.  Authorize or approve distributions, except according to
 22  5 formula or method, or within limits, prescribed by the board
 22  6 of directors.
 22  7    b.  Approve or propose to shareholders action that this
 22  8 chapter requires be approved by shareholders.
 22  9    c.  Fill vacancies on the board of directors or, subject to
 22 10 subsection 7, on any of its committees.
 22 11    d.  Amend articles of incorporation pursuant to section
 22 12 490.1002.
 22 13    e. d.  Adopt, amend, or repeal bylaws.
 22 14    f.  Approve a plan of merger not requiring shareholder
 22 15 approval.
 22 16    g.  Authorize or approve reacquisition of shares, except
 22 17 according to a formula or method prescribed by the board of
 22 18 directors.
 22 19    h.  Authorize or approve the issuance or sale or contract
 22 20 for sale of shares, or determine the designation and relative
 22 21 rights, preferences, and limitations of a class or series of
 22 22 shares, except that the board of directors may authorize a
 22 23 committee or a senior executive officer of the corporation to
 22 24 do so within limits specifically prescribed by the board of
 22 25 directors.
 22 26    6.  The creation of, delegation of authority to, or action
 22 27 by a committee does not alone constitute compliance by a
 22 28 director with the standards of conduct described in section
 22 29 490.830.
 22 30    7.  The board of directors may appoint one or more
 22 31 directors as alternate members of any committee to replace any
 22 32 absent or disqualified member during the member's absence or
 22 33 disqualification.  Unless the articles of incorporation or the
 22 34 bylaws or the resolution creating the committee provide
 22 35 otherwise, in the event of the absence or disqualification of
 23  1 a member of a committee, the member or members present at any
 23  2 meeting and not disqualified from voting, unanimously, may
 23  3 appoint another director to act in place of the absent or
 23  4 disqualified member.
 23  5    Sec. 37.  Section 490.830, Code 2001, is amended to read as
 23  6 follows:
 23  7    490.830  GENERAL STANDARDS OF CONDUCT FOR DIRECTORS.
 23  8    1.  A director Each member of the board of directors, when
 23  9 discharging the duties of a director, shall discharge that
 23 10 director's duties as a director, including the director's
 23 11 duties as a member of a committee act in conformity with all
 23 12 of the following:
 23 13    a.  In good faith.
 23 14    b.  With the care an ordinarily prudent person in a like
 23 15 position would exercise under similar circumstances.
 23 16    c. b.  In a manner the director reasonably believes to be
 23 17 in the best interests of the corporation.
 23 18    2.  The members of the board of directors or a committee of
 23 19 the board, when becoming informed in connection with their
 23 20 decision-making function or devoting attention to their
 23 21 oversight function, shall discharge their duties with the care
 23 22 that a person in a like position would reasonably believe
 23 23 appropriate under similar circumstances.
 23 24    3.  In discharging board or committee duties, a director
 23 25 who does not have knowledge that makes reliance unwarranted is
 23 26 entitled to rely on the performance by any of the persons
 23 27 specified in subsection 5, paragraph "a", to whom the board
 23 28 may have delegated, formally or informally by course of
 23 29 conduct, the authority or duty to perform one or more of the
 23 30 board's functions that are delegable under applicable law.
 23 31    2. 4.  In discharging the director's board or committee
 23 32 duties a director, who does not have knowledge that makes
 23 33 reliance unwarranted, is entitled to rely on information,
 23 34 opinions, reports, or statements, including financial
 23 35 statements and other financial data, if prepared or presented
 24  1 by any of the following: persons specified in subsection 5.
 24  2    5.  A director is entitled to rely, in accordance with
 24  3 subsection 3 or 4, on any of the following:
 24  4    a.  One or more officers or employees of the corporation
 24  5 whom the director reasonably believes to be reliable and
 24  6 competent in the matters presented functions performed or the
 24  7 information, opinions, reports, or statements provided.
 24  8    b.  Legal counsel, public accountants, or other persons as
 24  9 to matters involving skills or expertise the director
 24 10 reasonably believes are either of the following:
 24 11    (1)  Matters within the particular person's professional or
 24 12 expert competence.
 24 13    (2)  Matters as to which the particular person merits
 24 14 confidence.
 24 15    c.  A committee of the board of directors of which the
 24 16 director is not a member if the director reasonably believes
 24 17 the committee merits confidence.
 24 18    3.  A director is not acting in good faith if the director
 24 19 has knowledge concerning the matter in question that makes
 24 20 reliance otherwise permitted by subsection 2 unwarranted.
 24 21    4.  A director is not liable for any action taken as a
 24 22 director, or any failure to take any action, if the director
 24 23 performed the duties of the director's office in compliance
 24 24 with this section, or if, and to the extent that, liability
 24 25 for any such action or failure to act has been limited by the
 24 26 articles of incorporation pursuant to section 490.832.
 24 27    Sec. 38.  Section 490.831, Code 2001, is amended by
 24 28 striking the section and inserting in lieu thereof the
 24 29 following:
 24 30    490.831  STANDARDS OF LIABILITY FOR DIRECTORS.
 24 31    1.  A director shall not be liable to the corporation or
 24 32 its shareholders for any decision as director to take or not
 24 33 to take action, or any failure to take any action, unless the
 24 34 party asserting liability in a proceeding establishes both of
 24 35 the following:
 25  1    a.  That any provision in the articles of incorporation
 25  2 authorized by section 490.202, subsection 2, paragraph "d", or
 25  3 the protection afforded by section 490.832 if interposed as a
 25  4 bar to the proceeding by the director, does not preclude
 25  5 liability.
 25  6    b.  That the challenged conduct consisted or was the result
 25  7 of one of the following:
 25  8    (1)  Action not in good faith.
 25  9    (2)  A decision that satisfies one of the following:
 25 10    (a)  That the director did not reasonably believe to be in
 25 11 the best interests of the corporation.
 25 12    (b)  As to which the director was not informed to an extent
 25 13 the director reasonably believed appropriate in the
 25 14 circumstances.
 25 15    (3)  A lack of objectivity due to the director's familial,
 25 16 financial, or business relationship with, or a lack of
 25 17 independence due to the director's domination or control by,
 25 18 another person having a material interest in the challenged
 25 19 conduct, which also meets both of the following criteria:
 25 20    (a)  Which relationship or which domination or control
 25 21 could reasonably be expected to have affected the director's
 25 22 judgment respecting the challenged conduct in a manner adverse
 25 23 to the corporation.
 25 24    (b)  After a reasonable expectation to such effect has been
 25 25 established, the director shall not have established that the
 25 26 challenged conduct was reasonably believed by the director to
 25 27 be in the best interests of the corporation.
 25 28    (4)  A sustained failure of the director to devote
 25 29 attention to ongoing oversight of the business and affairs of
 25 30 the corporation, or a failure to devote timely attention, by
 25 31 making, or causing to be made, appropriate inquiry, when
 25 32 particular facts and circumstances of significant concern
 25 33 materialize that would alert a reasonably attentive director
 25 34 to the need for such oversight, attention, or inquiry.
 25 35    (5)  Receipt of a financial benefit to which the director
 26  1 was not entitled or any other breach of the director's duties
 26  2 to deal fairly with the corporation and its shareholders that
 26  3 is actionable under applicable law.
 26  4    2.  a.  A party seeking to hold the director liable for
 26  5 money damages shall also have the burden of establishing both
 26  6 of the following:
 26  7    (1)  That harm to the corporation or its shareholders has
 26  8 been suffered.
 26  9    (2)  The harm suffered was proximately caused by the
 26 10 director's challenged conduct.
 26 11    b.  A party seeking to hold the director liable for other
 26 12 money payment under a legal remedy, such as compensation for
 26 13 the unauthorized use of corporate assets, shall also have
 26 14 whatever persuasion burden may be called for to establish that
 26 15 the payment sought is appropriate in the circumstances.
 26 16    c.  A party seeking to hold the director liable for other
 26 17 money payment under an equitable remedy, such as profit
 26 18 recovery by or disgorgement to the corporation, shall also
 26 19 have whatever persuasion burden may be called for to establish
 26 20 that the equitable remedy sought is appropriate in the
 26 21 circumstances.
 26 22    3.  This section shall not do any of the following:
 26 23    a.  In any instance where fairness is at issue, such as
 26 24 consideration of the fairness of a transaction to the
 26 25 corporation under section 490.861, subsection 2, paragraph
 26 26 "c", alter the burden of proving the fact or lack of fairness
 26 27 otherwise applicable.
 26 28    b.  Alter the fact or lack of liability of a director under
 26 29 another section of this chapter, such as the provisions
 26 30 governing the consequences of an unlawful distribution under
 26 31 section 490.833 or a transactional interest under section
 26 32 490.861.
 26 33    c.  Affect any rights to which the corporation or a
 26 34 shareholder may be entitled under another statute of this
 26 35 state or the United States.
 27  1    Sec. 39.  Section 490.832, Code 2001, is amended by
 27  2 striking the section and inserting in lieu thereof the
 27  3 following:
 27  4    490.832  DIRECTOR CONFLICT OF INTEREST.
 27  5    1.  A conflict of interest transaction is a transaction
 27  6 with the corporation in which a director of the corporation
 27  7 has a direct or indirect interest.  A conflict of interest
 27  8 transaction is not voidable by the corporation solely because
 27  9 of the director's interest in the transaction if any one of
 27 10 the following is true:
 27 11    a.  The material facts of the transaction and the
 27 12 director's interest were disclosed or known to the board of
 27 13 directors or a committee of the board of directors and the
 27 14 board of directors or committee authorized, approved, or
 27 15 ratified the transaction.
 27 16    b.  The material facts of the transaction and the
 27 17 director's interest were disclosed or known to the
 27 18 shareholders entitled to vote and the shareholders authorized,
 27 19 approved, or ratified the transaction.
 27 20    c.  The transaction was fair to the corporation.
 27 21    2.  For purposes of this section, a director of the
 27 22 corporation has an indirect interest in a transaction if
 27 23 either of the following is true:
 27 24    a.  Another entity in which the director has a material
 27 25 financial interest or in which the director is a general
 27 26 partner is a party to the transaction.
 27 27    b.  Another entity of which the director is a director,
 27 28 officer, or trustee is a party to the transaction and the
 27 29 transaction is or should be considered by the board of
 27 30 directors of the corporation.
 27 31    3.  For purposes of subsection 1, paragraph "a", a conflict
 27 32 of interest transaction is authorized, approved, or ratified
 27 33 if it receives the affirmative vote of a majority of the
 27 34 directors on the board of directors or on the committee, who
 27 35 have no direct or indirect interest in the transaction, but a
 28  1 transaction may not be authorized, approved, or ratified under
 28  2 this section by a single director.  If a majority of the
 28  3 directors who have no direct or indirect interest in the
 28  4 transaction vote to authorize, approve, or ratify the
 28  5 transaction, a quorum is present for the purpose of taking
 28  6 action under this section.  The presence of, or a vote cast
 28  7 by, a director with a direct or indirect interest in the
 28  8 transaction does not affect the validity of any action taken
 28  9 under subsection 1, paragraph "a", if the transaction is
 28 10 otherwise authorized, approved, or ratified as provided in
 28 11 that subsection.
 28 12    4.  For purposes of subsection 1, paragraph "b", a conflict
 28 13 of interest transaction is authorized, approved, or ratified
 28 14 if it receives the vote of a majority of the shares entitled
 28 15 to be counted under this subsection.  Shares owned by or voted
 28 16 under the control of a director who has a direct or indirect
 28 17 interest in the transaction, and shares owned by or voted
 28 18 under the control of an entity described in subsection 2,
 28 19 paragraph "a", shall not be counted in a vote of shareholders
 28 20 to determine whether to authorize, approve, or ratify a
 28 21 conflict of interest transaction under subsection 1, paragraph
 28 22 "b".  The vote of those shares, however, is counted in
 28 23 determining whether the transaction is approved under other
 28 24 sections of this chapter.  A majority of the shares, whether
 28 25 or not present, that are entitled to be counted in a vote on
 28 26 the transaction under this subsection constitutes a quorum for
 28 27 the purpose of taking action under this section.
 28 28    Sec. 40.  Section 490.833, Code 2001, is amended to read as
 28 29 follows:
 28 30    490.833  LIABILITY FOR UNLAWFUL DISTRIBUTION.
 28 31    1.  Unless the director complies with the applicable
 28 32 standards of conduct described in section 490.830, a A
 28 33 director who votes for or assents to a distribution made in
 28 34 violation of this chapter or the articles of incorporation in
 28 35 excess of what may be authorized and made pursuant to section
 29  1 490.640, subsection 1, or section 490.1409, subsection 1, is
 29  2 personally liable to the corporation for the amount of the
 29  3 distribution that exceeds what could have been distributed
 29  4 without violating this chapter or the articles of
 29  5 incorporation section 490.640, subsection 1, or section
 29  6 490.1409, subsection 1, if the party asserting liability
 29  7 establishes that when taking the action the director did not
 29  8 comply with section 490.830.
 29  9    2.  A director held liable for an unlawful distribution
 29 10 under subsection 1 is entitled to contribution from both of
 29 11 the following:
 29 12    a.  Every Contribution from every other director who voted
 29 13 for or assented to the distribution without complying with the
 29 14 applicable standards of conduct described in section 490.830
 29 15 could be held liable under subsection 1 for the unlawful
 29 16 distribution.
 29 17    b.  Each Recoupment from each shareholder for of the pro
 29 18 rata portion of the amount of the unlawful distribution the
 29 19 shareholder accepted, knowing the distribution was made in
 29 20 violation of this chapter or the articles of incorporation
 29 21 section 490.640, subsection 1, or section 490.1409, subsection
 29 22 1.
 29 23    3.  a.  A proceeding to enforce the liability of a director
 29 24 under subsection 1 is barred unless it is commenced within two
 29 25 years after one of the following dates:
 29 26    (1)  The date on which the effect of the distribution was
 29 27 measured under section 490.640, subsection 5 or 7.
 29 28    (2)  The date as of which the violation of section 490.640,
 29 29 subsection 1, occurred as the consequence of disregard of a
 29 30 restriction in the articles of incorporation.
 29 31    (3)  The date on which the distribution of assets to
 29 32 shareholders under section 490.1409, subsection 1, was made.
 29 33    b.  A proceeding to enforce contribution or recoupment
 29 34 under subsection 2 is barred unless it is commenced within one
 29 35 year after the liability of the claimant has been finally
 30  1 adjudicated under subsection 1.
 30  2    Sec. 41.  Section 490.840, Code 2001, is amended to read as
 30  3 follows:
 30  4    490.840  REQUIRED OFFICERS.
 30  5    1.  A corporation has the officers offices described in its
 30  6 bylaws or appointed designated by the board of directors in
 30  7 accordance with the bylaws.
 30  8    2.  A duly appointed The board of directors may elect
 30  9 individuals to fill one or more offices of the corporation.
 30 10 An officer may appoint one or more officers or assistant
 30 11 officers if authorized by the bylaws or the board of
 30 12 directors.
 30 13    3.  The bylaws or the board of directors shall delegate
 30 14 assign to one of the officers responsibility for preparing
 30 15 minutes of the directors' and shareholders' meetings and for
 30 16 maintaining and authenticating the records of the corporation
 30 17 required to be kept under section 490.1601, subsections 1 and
 30 18 5.
 30 19    4.  The same individual may simultaneously hold more than
 30 20 one office in a corporation.
 30 21    Sec. 42.  Section 490.842, Code 2001, is amended to read as
 30 22 follows:
 30 23    490.842  STANDARDS OF CONDUCT FOR OFFICERS.
 30 24    1.  An officer with discretionary authority shall discharge
 30 25 the officer's duties under that authority when performing in
 30 26 such capacity shall act in conformity with all of the
 30 27 following:
 30 28    a.  In good faith.
 30 29    b.  With the care an ordinarily prudent that a person in a
 30 30 like position would reasonably exercise under similar
 30 31 circumstances.
 30 32    c.  In a manner the officer reasonably believes to be in
 30 33 the best interests of the corporation.
 30 34    2.  In discharging the person's officer's duties an
 30 35 officer, who does not have knowledge that makes reliance
 31  1 unwarranted, is entitled to rely on information, opinions,
 31  2 reports, or statements, including financial statements and
 31  3 other financial data, if prepared or presented by either any
 31  4 of the following:
 31  5    a.  The performance of properly delegated responsibilities
 31  6 by one or more employees of the corporation whom the officer
 31  7 reasonably believes to be reliable and competent in performing
 31  8 the responsibilities delegated.
 31  9    a. b.  One Information, opinions, reports, or statements,
 31 10 including financial statements and other financial data,
 31 11 prepared or presented by one or more officers or employees of
 31 12 the corporation whom the officer reasonably believes to be
 31 13 reliable and competent in the matters presented.
 31 14    b. c.  Legal counsel, public accountants, or other persons
 31 15 retained by the corporation as to matters involving skills or
 31 16 expertise the officer reasonably believes are matters within
 31 17 the particular person's professional or expert competence, or
 31 18 as to which the particular person merits confidence.
 31 19    3.  An officer is not acting in good faith if the officer
 31 20 has knowledge concerning the matter in question that makes
 31 21 reliance otherwise permitted by subsection 2 unwarranted.  An
 31 22 officer shall not be liable as an officer to the corporation
 31 23 or its shareholders for any decision to take or not to take
 31 24 action, or any failure to take any action, if the duties of
 31 25 the officer are performed in compliance with this section.
 31 26 Whether an officer who does not comply with this section shall
 31 27 have liability will depend in such instance on applicable law,
 31 28 including those principles of section 490.831 that have
 31 29 relevance.
 31 30    4.  An officer is not liable for any action taken as an
 31 31 officer, or any failure to take any action, if the officer
 31 32 performed the duties of the officer's office in compliance
 31 33 with this section.
 31 34    Sec. 43.  Section 490.843, Code 2001, is amended to read as
 31 35 follows:
 32  1    490.843  RESIGNATION AND REMOVAL OF OFFICERS.
 32  2    1.  An officer may resign at any time by delivering notice
 32  3 to the corporation.  A resignation is effective when the
 32  4 notice is delivered unless the notice specifies a later
 32  5 effective date time.  If a resignation is made effective at a
 32  6 later date time and the corporation board or appointing
 32  7 officer accepts the future effective date time, its the board
 32  8 of directors or the appointing officer may fill the pending
 32  9 vacancy before the effective date time if the board of
 32 10 directors or appointing officer provides that the successor
 32 11 does not take office until the effective date time.  A
 32 12 resignation may be orally communicated provided that the
 32 13 resignation is effective only if written notice of the
 32 14 resignation is delivered within twenty-four hours of such oral
 32 15 communication.
 32 16    2.  A board of directors may remove any An officer may be
 32 17 removed at any time with or without cause by any of the
 32 18 following:
 32 19    a.  The board of directors.
 32 20    b.  The officer who appointed such officer, unless the
 32 21 bylaws or the board of directors provide otherwise.
 32 22    c.  Any other officer if authorized by the bylaws or the
 32 23 board of directors.
 32 24    3.  In this section, "appointing officer" means the
 32 25 officer, including any successor to that officer, who
 32 26 appointed the officer resigning or being removed.
 32 27    Sec. 44.  Section 490.850, Code 2001, is amended to read as
 32 28 follows:
 32 29    490.850  DEFINITIONS.
 32 30    As used in this part of this chapter, unless the context
 32 31 otherwise requires:
 32 32    1.  "Corporation" includes any domestic or foreign
 32 33 predecessor entity of a corporation in a merger or other
 32 34 transaction in which the predecessor's existence ceased upon
 32 35 consummation of the transaction.
 33  1    2.  "Director" or "officer" means an individual who is or
 33  2 was a director or officer, respectively, of a corporation or
 33  3 an individual who, while a director or officer of a the
 33  4 corporation, is or was serving at the corporation's request as
 33  5 a director, officer, partner, trustee, employee, or agent of
 33  6 another foreign or domestic or foreign corporation,
 33  7 partnership, joint venture, trust, employee benefit plan, or
 33  8 other enterprise entity.  A director or officer is considered
 33  9 to be serving an employee benefit plan at the corporation's
 33 10 request if the director's duties to the corporation also
 33 11 impose duties on, or otherwise involve services by, that
 33 12 director to the plan or to participants in or beneficiaries of
 33 13 the plan.  "Director" or "officer" includes, unless the
 33 14 context requires otherwise, the estate or personal
 33 15 representative of a director or officer.
 33 16    3.  "Disinterested director" means a director who at the
 33 17 time of a vote referred to in section 490.853, subsection 3,
 33 18 or a vote or selection referred to in section 490.855,
 33 19 subsection 2 or 3, is not either of the following:
 33 20    a.  A party to the proceeding.
 33 21    b.  An individual having a familial, financial,
 33 22 professional, or employment relationship with the director
 33 23 whose indemnification or advance for expenses is the subject
 33 24 of the decision being made, which relationship would, in the
 33 25 circumstances, reasonably be expected to exert an influence on
 33 26 the director's judgment when voting on the decision being
 33 27 made.
 33 28    3. 4.  "Expenses" include includes counsel fees.
 33 29    4. 5.  "Liability" means the obligation to pay a judgment,
 33 30 settlement, penalty, fine, including an excise tax assessed
 33 31 with respect to an employee benefit plan, or reasonable
 33 32 expenses incurred with respect to a proceeding.
 33 33    5. 6.  "Official capacity" means:
 33 34    a.  When used with respect to a director, the office of
 33 35 director in a corporation.
 34  1    b.  When used with respect to an individual other than a
 34  2 director officer, as contemplated in section 490.856, the
 34  3 office in a corporation held by the officer or the employment
 34  4 or agency relationship undertaken by the employee or agent on
 34  5 behalf of the corporation.
 34  6    "Official capacity" does not include service for any other
 34  7 foreign or domestic or foreign corporation or any partnership,
 34  8 joint venture, trust, employee benefit plan, or other
 34  9 enterprise entity.
 34 10    6. 7.  "Party" includes means an individual who was, is, or
 34 11 is threatened to be made a named defendant or respondent in a
 34 12 proceeding.
 34 13    7. 8.  "Proceeding" means any threatened, pending, or
 34 14 completed action, suit, or proceeding, whether civil,
 34 15 criminal, administrative, or investigative and whether formal
 34 16 or informal.
 34 17    Sec. 45.  Section 490.851, Code 2001, is amended to read as
 34 18 follows:
 34 19    490.851  AUTHORITY TO INDEMNIFY PERMISSIBLE
 34 20 INDEMNIFICATION.
 34 21    1.  Except as otherwise provided in subsection 4 this
 34 22 section, a corporation may indemnify an individual made who is
 34 23 a party to a proceeding because the individual is or was a
 34 24 director against liability incurred in the proceeding if all
 34 25 of the following apply:
 34 26    a.  The individual acted in good faith.
 34 27    b.  The individual reasonably believed:
 34 28    (1)  In the case of conduct in the individual's official
 34 29 capacity with the corporation, that the individual's conduct
 34 30 was in the corporation's best interests of the corporation.
 34 31    (2)  In all other cases, that the individual's conduct was
 34 32 at least not opposed to the corporation's best interests of
 34 33 the corporation.
 34 34    c.  In the case of any criminal proceeding, the individual
 34 35 had no reasonable cause to believe the individual's conduct
 35  1 was unlawful, or the individual engaged in conduct for which
 35  2 broader indemnification has been made permissible or
 35  3 obligatory under a provision of the articles of incorporation
 35  4 as authorized by section 490.202, subsection 2, paragraph "e".
 35  5    2.  A director's conduct with respect to an employee
 35  6 benefit plan for a purpose the director reasonably believed to
 35  7 be in the interests of the participants in and beneficiaries
 35  8 of the plan is conduct that satisfies the requirement of
 35  9 subsection 1, paragraph "b", subparagraph (2).
 35 10    3.  The termination of a proceeding by judgment, order,
 35 11 settlement, conviction, or upon a plea of nolo contendere or
 35 12 its equivalent is not, of itself, determinative that the
 35 13 director did not meet the relevant standard of conduct
 35 14 described in this section.
 35 15    4.  A Unless ordered by a court under section 490.854,
 35 16 subsection 1, paragraph "c", a corporation shall not indemnify
 35 17 a director under this section in either of the following
 35 18 circumstances:
 35 19    a.  In connection with a proceeding by or in the right of
 35 20 the corporation in which the director was adjudged liable to
 35 21 the corporation, except for reasonable expenses incurred in
 35 22 connection with the proceeding if it is determined that the
 35 23 director has met the relevant standard of conduct under
 35 24 subsection 1.
 35 25    b.  In connection with any other proceeding charging
 35 26 improper personal benefit to the director, whether or not
 35 27 involving action in the director's official capacity, in with
 35 28 respect to conduct for which the director was adjudged liable
 35 29 on the basis that personal the director received a financial
 35 30 benefit was improperly received by the director to which the
 35 31 director was not entitled, whether or not involving action in
 35 32 the director's official capacity.
 35 33    5.  Indemnification permitted under this section in
 35 34 connection with a proceeding by or in the right of the
 35 35 corporation is limited to reasonable expenses incurred in
 36  1 connection with the proceeding.
 36  2    Sec. 46.  Section 490.852, Code 2001, is amended to read as
 36  3 follows:
 36  4    490.852  MANDATORY INDEMNIFICATION.
 36  5    Unless limited by its articles of incorporation, a A
 36  6 corporation shall indemnify a director who was wholly
 36  7 successful, on the merits or otherwise, in the defense of any
 36  8 proceeding to which the director was a party because the
 36  9 director is or was a director of the corporation against
 36 10 reasonable expenses incurred by the director in connection
 36 11 with the proceeding.
 36 12    Sec. 47.  Section 490.853, Code 2001, is amended to read as
 36 13 follows:
 36 14    490.853  ADVANCE FOR EXPENSES.
 36 15    1.  A corporation may, before final disposition of a
 36 16 proceeding, advance funds to pay for or reimburse the
 36 17 reasonable expenses incurred by a director who is a party to a
 36 18 proceeding in advance of final disposition of the proceeding
 36 19 because the person is a director if any of the person delivers
 36 20 all of the following apply to the corporation:
 36 21    a.  The director furnishes the corporation a A written
 36 22 affirmation of the director's good faith belief that the
 36 23 director has met the relevant standard of conduct described in
 36 24 section 490.851 or that the proceeding involved conduct for
 36 25 which liability has been eliminated under a provision of the
 36 26 articles of incorporation as authorized by section 490.202,
 36 27 subsection 2, paragraph "d".
 36 28    b.  The director furnishes the corporation a The director's
 36 29 written undertaking, executed personally or on the director's
 36 30 behalf, to repay the advance any funds advanced if the
 36 31 director is not entitled to mandatory indemnification under
 36 32 section 490.852 and it is ultimately determined under section
 36 33 490.854 or section 490.855 that the director did not meet that
 36 34 has not met the relevant standard of conduct described in
 36 35 section 490.851.
 37  1    c.  A determination is made that the facts then known to
 37  2 those making the determination would not preclude
 37  3 indemnification under this part.
 37  4    2.  The undertaking required by subsection 1, paragraph
 37  5 "b", must be an unlimited general obligation of the director
 37  6 but need not be secured and may be accepted without reference
 37  7 to the financial ability of the director to make repayment.
 37  8    3.  Determinations and authorizations of payments
 37  9 Authorizations under this section shall be made in the manner
 37 10 specified in section 490.855 according to the one of the
 37 11 following:
 37 12    a.  By the board of directors:
 37 13    (1)  If there are two or more disinterested directors, by a
 37 14 majority vote of all the disinterested directors, a majority
 37 15 of whom shall for such purpose constitute a quorum, or by a
 37 16 majority of the members of a committee of two or more
 37 17 disinterested directors appointed by such a vote.
 37 18    (2)  If there are fewer than two disinterested directors,
 37 19 by the vote necessary for action by the board in accordance
 37 20 with section 490.824, subsection 3, in which authorization
 37 21 directors who do not qualify as disinterested directors may
 37 22 participate.
 37 23    b.  By the shareholders, but shares owned by or voted under
 37 24 the control of a director who at the time does not qualify as
 37 25 a disinterested director may not be voted on the
 37 26 authorization.
 37 27    Sec. 48.  Section 490.854, Code 2001, is amended to read as
 37 28 follows:
 37 29    490.854  COURT-ORDERED INDEMNIFICATION.
 37 30    1.  Unless a corporation's articles of incorporation
 37 31 provide otherwise, a A director of the corporation who is a
 37 32 party to a proceeding because the person is a director may
 37 33 apply for indemnification or an advance for expenses to the
 37 34 court conducting the proceeding or to another court of
 37 35 competent jurisdiction.  On After receipt of an application,
 38  1 the court and after giving any notice the court it considers
 38  2 necessary may order, the court shall do one of the following:
 38  3    a.  Order indemnification if it the court determines either
 38  4 of the following:
 38  5    1.  The that the director is entitled to mandatory
 38  6 indemnification under section 490.852, in which case the court
 38  7 shall also order the corporation to pay the directors
 38  8 reasonable expenses incurred to obtain court-ordered
 38  9 indemnification.
 38 10    2.  The director is fairly and reasonably entitled to
 38 11 indemnification in view of all the relevant circumstances,
 38 12 whether or not the director met the standard of conduct set
 38 13 forth in section 490.851 or was adjudged liable as described
 38 14 in section 490.851, subsection 4, but if the director was
 38 15 adjudged so liable the director's indemnification is limited
 38 16 to reasonable expenses incurred.
 38 17    b.  Order indemnification or advance for expenses if the
 38 18 court determines that the director is entitled to
 38 19 indemnification or advance for expenses pursuant to a
 38 20 provision authorized by section 490.858, subsection 1.
 38 21    c.  Order indemnification or advance for expenses if the
 38 22 court determines, in view of all the relevant circumstances,
 38 23 that it is fair and reasonable to do one of the following:
 38 24    (1)  To indemnify the director.
 38 25    (2)  To advance expenses to the director, even if the
 38 26 director has not met the relevant standard of conduct set
 38 27 forth in section 490.851, subsection 1, failed to comply with
 38 28 section 490.853 or was adjudged liable in a proceeding
 38 29 referred to in subsection 490.851, subsection 4, paragraph "a"
 38 30 or "b", but if the director was adjudged so liable the
 38 31 director's indemnification shall be limited to reasonable
 38 32 expenses incurred in connection with the proceeding.
 38 33    2.  If the court determines that the director is entitled
 38 34 to indemnification under subsection 1, paragraph "a", or to
 38 35 indemnification or advance for expenses under subsection 1,
 39  1 paragraph "b", it shall also order the corporation to pay the
 39  2 director's reasonable expenses incurred in connection with
 39  3 obtaining court-ordered indemnification or advance for
 39  4 expenses.  If the court determines that the director is
 39  5 entitled to indemnification or advance for expenses under
 39  6 subsection 1, paragraph "c", it may also order the corporation
 39  7 to pay the director's reasonable expenses to obtain court-
 39  8 ordered indemnification or advance for expenses.
 39  9    Sec. 49.  Section 490.855, Code 2001, is amended to read as
 39 10 follows:
 39 11    490.855  DETERMINATION AND AUTHORIZATION OF
 39 12 INDEMNIFICATION.
 39 13    1.  A corporation shall not indemnify a director under
 39 14 section 490.851 unless authorized in the for a specific case
 39 15 proceeding after a determination has been made that
 39 16 indemnification of the director is permissible in the
 39 17 circumstances because the director has met the relevant
 39 18 standard of conduct set forth in section 490.851.
 39 19    2.  The determination shall be made by any of the
 39 20 following:
 39 21    a.  By the board of directors by majority vote of a quorum
 39 22 consisting of directors not at the time parties to the
 39 23 proceeding.  If there are two or more disinterested directors,
 39 24 by the board of directors by a majority vote of all the
 39 25 disinterested directors, a majority of whom shall for such
 39 26 purpose constitute a quorum, or by a majority of the members
 39 27 of a committee of two or more disinterested directors
 39 28 appointed by such a vote.
 39 29    b.  If a quorum cannot be obtained under paragraph "a", by
 39 30 majority vote of a committee duly designated by the board of
 39 31 directors, in which designation directors who are parties may
 39 32 participate, consisting solely of two or more directors not at
 39 33 the time parties to the proceeding.
 39 34    c. b.  By special legal counsel:
 39 35    (1)  Selected by the board of directors or its committee in
 40  1 the manner prescribed in paragraph "a" or "b".
 40  2    (2)  If a quorum of the board of there are fewer than two
 40  3 disinterested directors cannot be obtained under paragraph "a"
 40  4 and a committee cannot be designated under paragraph "b",
 40  5 selected by majority vote of the full board of directors, in
 40  6 which selection directors who are parties do not qualify as
 40  7 disinterested directors may participate.
 40  8    d. c.  By the shareholders, but shares owned by or voted
 40  9 under the control of directors a director who are at the time
 40 10 parties to the proceeding does not qualify as a disinterested
 40 11 director shall not be voted on the determination.
 40 12    3.  Authorization of indemnification and evaluation as to
 40 13 reasonableness of expenses shall be made in the same manner as
 40 14 the determination that indemnification is permissible, except
 40 15 that if there are fewer than two disinterested directors or if
 40 16 the determination is made by special legal counsel,
 40 17 authorization of indemnification and evaluation as to
 40 18 reasonableness of expenses shall be made by those entitled
 40 19 under subsection 2, paragraph "c" "b", to select special legal
 40 20 counsel.
 40 21    Sec. 50.  Section 490.856, Code 2001, is amended to read as
 40 22 follows:
 40 23    490.856  INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND
 40 24 AGENTS.
 40 25    Unless a corporation's articles of incorporation provide
 40 26 otherwise all of the following apply:
 40 27    1.  An officer of the corporation who is not a director is
 40 28 entitled to mandatory indemnification under section 490.852,
 40 29 and is entitled to apply for court-ordered indemnification
 40 30 under section 490.854, in each case to the same extent as a
 40 31 director.
 40 32    2. 1.  The A corporation may indemnify and advance expenses
 40 33 under this part to an officer, employee, or agent of the
 40 34 corporation who is not a director to a party to the proceeding
 40 35 because the person is an officer, according to all of the
 41  1 following:
 41  2    a.  To the same extent as to a director.
 41  3    3. b.  A corporation may also indemnify and advance
 41  4 expenses to an officer, employee, or agent who is not a
 41  5 director to the extent, consistent with law, that If the
 41  6 person is an officer but not a director, to such further
 41  7 extent as may be provided by its the articles of
 41  8 incorporation, the bylaws, general or specific action a
 41  9 resolution of its the board of directors, or contract, except
 41 10 for either of the following:
 41 11    (1)  Liability in connection with a proceeding by or in the
 41 12 right of the corporation other than for reasonable expenses
 41 13 incurred in connection with the proceeding.
 41 14    (2)  Liability arising out of conduct that constitutes any
 41 15 of the following:
 41 16    (a)  Receipt by the officer of a financial benefit to which
 41 17 the officer is not entitled.
 41 18    (b)  An intentional infliction of harm on the corporation
 41 19 or the shareholders.
 41 20    (c)  An intentional violation of criminal law.
 41 21    2.  The provisions of subsection 1, paragraph "b", shall
 41 22 apply to an officer who is also a director if the basis on
 41 23 which the officer is made a party to a proceeding is an act or
 41 24 omission solely as an officer.
 41 25    3.  An officer of a corporation who is not a director is
 41 26 entitled to mandatory indemnification under section 490.852,
 41 27 and may apply to a court under section 490.854 for
 41 28 indemnification or an advance for expenses, in each case to
 41 29 the same extent to which a director may be entitled to
 41 30 indemnification or advance for expenses under those
 41 31 provisions.
 41 32    Sec. 51.  Section 490.857, Code 2001, is amended to read as
 41 33 follows:
 41 34    490.857  INSURANCE.
 41 35    A corporation may purchase and maintain insurance on behalf
 42  1 of an individual who is or was a director, or officer,
 42  2 employee, or agent of the corporation, or who, while a
 42  3 director, or officer, employee, or agent of the corporation,
 42  4 is or was serving serves at the request of the corporation
 42  5 corporation's request as a director, officer, partner,
 42  6 trustee, employee, or agent of another foreign or domestic or
 42  7 foreign corporation, partnership, joint venture, trust,
 42  8 employee benefit plan, or other enterprise entity, against
 42  9 liability asserted against or incurred by that individual in
 42 10 that capacity or arising from the individual's status as a
 42 11 director, or officer, employee, or agent, whether or not the
 42 12 corporation would have power to indemnify or advance expenses
 42 13 to that individual against the same liability under section
 42 14 490.851 or 490.852 this part.
 42 15    Sec. 52.  Section 490.858, Code 2001, is amended by
 42 16 striking the section and inserting in lieu thereof the
 42 17 following:
 42 18    490.858  VARIATION BY CORPORATE ACTION – APPLICATION OF
 42 19 PART.
 42 20    1.  A corporation may, by a provision in its articles of
 42 21 incorporation or bylaws or in a resolution adopted or a
 42 22 contract approved by its board of directors or shareholders,
 42 23 obligate itself in advance of the act or omission giving rise
 42 24 to a proceeding to provide indemnification in accordance with
 42 25 section 490.851 or advance funds to pay for or reimburse
 42 26 expenses in accordance with section 490.853.  Any such
 42 27 obligatory provision shall be deemed to satisfy the
 42 28 requirements for authorization referred to in section 490.853,
 42 29 subsection 3, and in section 490.855, subsection 3.  Any such
 42 30 provision that obligates the corporation to provide
 42 31 indemnification to the fullest extent permitted by law shall
 42 32 be deemed to obligate the corporation to advance funds to pay
 42 33 for or reimburse expenses in accordance with section 490.853
 42 34 to the fullest extent permitted by law, unless the provision
 42 35 specifically provides otherwise.
 43  1    2.  Any provision pursuant to subsection 1 shall not
 43  2 obligate the corporation to indemnify or advance expenses to a
 43  3 director of a predecessor of the corporation, pertaining to
 43  4 conduct with respect to the predecessor, unless otherwise
 43  5 specifically provided.  Any provision for indemnification or
 43  6 advance for expenses in the articles of incorporation, bylaws,
 43  7 or a resolution of the board of directors or shareholders of a
 43  8 predecessor of the corporation in a merger or in a contract to
 43  9 which the predecessor is a party, existing at the time the
 43 10 merger takes effect, shall be governed by section 490.1106,
 43 11 subsection 1, paragraph "c".
 43 12    3.  A corporation may, by a provision in its articles of
 43 13 incorporation, limit any of the rights to indemnification or
 43 14 advance for expenses created by or pursuant to this part.
 43 15    4.  This part does not limit a corporation's power to pay
 43 16 or reimburse expenses incurred by a director or an officer in
 43 17 connection with the director's or officer's appearance as a
 43 18 witness in a proceeding at a time when the director or officer
 43 19 is not a party.
 43 20    5.  This part does not limit a corporation's power to
 43 21 indemnify, advance expenses to, or provide or maintain
 43 22 insurance on behalf of an employee or agent.
 43 23    Sec. 53.  NEW SECTION.  490.859  EXCLUSIVITY OF PART.
 43 24    A corporation may provide indemnification or advance
 43 25 expenses to a director or an officer only as permitted by this
 43 26 part.
 43 27    Sec. 54.  Section 490.1001, subsection 1, Code 2001, is
 43 28 amended to read as follows:
 43 29    1.  A corporation may amend its articles of incorporation
 43 30 at any time to add or change a provision that is required or
 43 31 permitted in the articles of incorporation or to delete a
 43 32 provision not required in the articles of incorporation.
 43 33 Whether a provision is required or permitted in the articles
 43 34 of incorporation is determined as of the effective date of the
 43 35 amendment or to delete a provision that is not required to be
 44  1 contained in the articles of incorporation.
 44  2    Sec. 55.  Section 490.1002, Code 2001, is amended by
 44  3 striking the section and inserting in lieu thereof the
 44  4 following:
 44  5    490.1002  AMENDMENT BEFORE ISSUANCE OF SHARES.
 44  6    If a corporation has not yet issued shares, its board of
 44  7 directors, or its incorporators if it has no board of
 44  8 directors, may adopt one or more amendments to the
 44  9 corporation's articles of incorporation.
 44 10    Sec. 56.  Section 490.1003, Code 2001, is amended to read
 44 11 as follows:
 44 12    490.1003  AMENDMENT BY BOARD OF DIRECTORS AND SHAREHOLDERS.
 44 13    If a corporation has issued shares, an amendment to the
 44 14 articles of incorporation shall be adopted in the following
 44 15 manner:
 44 16    1.  A corporation's The proposed amendment must be adopted
 44 17 by the board of directors may propose one or more amendments
 44 18 to the articles of incorporation for submission to the
 44 19 shareholders.
 44 20    2.  For the amendment to be adopted both of the following
 44 21 must occur:
 44 22    a. 2.  The Except as provided in section 490.1005,
 44 23 490.1007, and 490.1008, after adopting the proposed amendment,
 44 24 the board of directors must recommend submit the amendment to
 44 25 the shareholders for their approval.  The board of directors
 44 26 must also transmit to the shareholders a recommendation that
 44 27 the shareholders approved the amendment, unless the board of
 44 28 directors determines makes a determination that because of
 44 29 conflict conflicts of interest or other special circumstances
 44 30 it should not make no such a recommendation and communicates,
 44 31 in which case the basis for its determination board of
 44 32 directors must transmit to the shareholders with the amendment
 44 33 the basis for the determination.
 44 34    b.  The shareholders entitled to vote on the amendment must
 44 35 approve the amendment as provided in subsection 5.
 45  1    3.  The board of directors may condition its submission of
 45  2 the proposed amendment to the shareholders on any basis.
 45  3    4.  The corporation shall If the amendment is required to
 45  4 be approved by the shareholders, and the approval is to be
 45  5 given at a meeting, the corporation must notify each
 45  6 shareholder, whether or not entitled to vote, of the proposed
 45  7 shareholders' meeting in accordance with section 490.705 of
 45  8 shareholders at which the amendment is to be submitted for
 45  9 approval.  The notice of meeting must also state that the
 45 10 purpose, or one of the purposes, of the meeting is to consider
 45 11 the proposed amendment and must contain or be accompanied by a
 45 12 copy or summary of the amendment.
 45 13    5.  Unless this chapter, the articles of incorporation,
 45 14 bylaws, or the board of directors acting pursuant to
 45 15 subsection 3 requires a greater vote or a vote by voting
 45 16 groups, the amendment to be adopted must be approved by both
 45 17 of the following:
 45 18    a.  A greater number of shares to be present, approval of
 45 19 the amendment requires the approval of the shareholders at a
 45 20 meeting at which a quorum consisting of at least a majority of
 45 21 the votes entitled to be cast on the amendment exists, and, if
 45 22 any class or series of shares is entitled to vote as a
 45 23 separate group on the amendment, except as provided in section
 45 24 490.1004, subsection 3, the approval of each such separate
 45 25 voting group at a meeting at which a quorum of the voting
 45 26 group consisting of at least a majority of the votes entitled
 45 27 to be cast on the amendment by any voting group with respect
 45 28 to which the amendment would create dissenters' rights that
 45 29 voting group exists.
 45 30    b.  The votes required by sections 490.725 and 490.726 by
 45 31 every other voting group entitled to vote on the amendment.
 45 32    Sec. 57.  Section 490.1004, subsections 1, 2, and 3, Code
 45 33 2001, are amended to read as follows:
 45 34    1.  The If a corporation has more than one class of shares
 45 35 outstanding, the holders of the outstanding shares of a class
 46  1 are entitled to vote as a separate voting group, if
 46  2 shareholder voting is otherwise required by this chapter, on a
 46  3 proposed amendment to the articles of incorporation if the
 46  4 amendment would do any of the following:
 46  5    a.  Increase or decrease the aggregate number of authorized
 46  6 shares of the class.
 46  7    b. a.  Effect an exchange or reclassification of all or
 46  8 part of the shares of the class into shares of another class.
 46  9    c. b.  Effect an exchange or reclassification, or create
 46 10 the right of exchange, of all or part of the shares of another
 46 11 class into shares of that the class.
 46 12    d. c.  Change the designation, rights, preferences, or
 46 13 limitations of all or part of the shares of the class.
 46 14    e. d.  Change the shares of all or part of the class into a
 46 15 different number of shares of the same class.
 46 16    f. e.  Create a new class of shares having rights or
 46 17 preferences with respect to distributions or to dissolution
 46 18 that are prior, or superior, or substantially equal to, the
 46 19 shares of the class.
 46 20    g. f.  Increase the rights, preferences, or number of
 46 21 authorized shares of any class that, after giving effect to
 46 22 the amendment, have rights or preferences with respect to
 46 23 distributions or to dissolution that are prior, or superior,
 46 24 or substantially equal to the shares of the class.
 46 25    h. g.  Limit or deny an existing preemptive right of all or
 46 26 part of the shares of the class.
 46 27    i. h.  Cancel or otherwise affect rights to distributions
 46 28 or dividends that have accumulated but not yet been declared
 46 29 authorized on all or part of the shares of the class.
 46 30    2.  If a proposed amendment would affect a series of a
 46 31 class of shares in one or more of the ways described in
 46 32 subsection 1, the holders of shares of that series are
 46 33 entitled to vote as a separate voting group on the proposed
 46 34 amendment.
 46 35    3.  If a proposed amendment that entitles the holders of
 47  1 two or more classes or series of shares to vote as separate
 47  2 voting groups under this section would affect those two or
 47  3 more classes or series in the same or a substantially similar
 47  4 way, the holders of shares of all the classes or series so
 47  5 affected must vote together as a single voting group on the
 47  6 proposed amendment, unless otherwise provided in the articles
 47  7 of incorporation or required by the board of directors.
 47  8    Sec. 58.  Section 490.1005, Code 2001, is amended by
 47  9 striking the section and inserting in lieu thereof the
 47 10 following:
 47 11    490.1005  AMENDMENT BY BOARD OF DIRECTORS.
 47 12    Unless the articles of incorporation provide otherwise, a
 47 13 corporation's board of directors may adopt amendments to the
 47 14 corporation's articles of incorporation without shareholder
 47 15 approval for any of the following purposes:
 47 16    1.  To extend the duration of the corporation if it was
 47 17 incorporated at a time when limited duration was required by
 47 18 law.
 47 19    2.  To delete the names and addresses of the initial
 47 20 directors.
 47 21    3.  To delete the name and address of the initial
 47 22 registered agent or registered office, if a statement of
 47 23 change is on file with the secretary of state.
 47 24    4.  If the corporation has only one class of shares
 47 25 outstanding:
 47 26    a.  To change each issued and unissued authorized share of
 47 27 the class into a greater number of whole shares of that class.
 47 28    b.  To increase the number of authorized shares of the
 47 29 class to the extent necessary to permit the issuance of shares
 47 30 as a share dividend.
 47 31    5.  To change the corporate name by substituting the word
 47 32 "corporation", "incorporated", "company", "limited", or the
 47 33 abbreviation "corp.", "inc.", "co.", or "ltd.", for a similar
 47 34 word or abbreviation in the name, or by adding, deleting, or
 47 35 changing a geographical attribution for the name.
 48  1    6.  To reflect a reduction in authorized shares, as a
 48  2 result of the operation of section 490.631, subsection 2, when
 48  3 the corporation has acquired its own shares and the articles
 48  4 of incorporation prohibit the reissue of the acquired shares.
 48  5    7.  To delete a class of shares from the articles of
 48  6 incorporation, as a result of the operation of section
 48  7 490.631, subsection 2, when there are no remaining shares of
 48  8 the class because the corporation has acquired all shares of
 48  9 the class and the articles of incorporation prohibit the
 48 10 reissue of the acquired shares.
 48 11    8.  To make any change expressly permitted by section
 48 12 490.602, subsection 4, to be made without shareholder
 48 13 approval.
 48 14    Sec. 59.  Section 490.1006, Code 2001, is amended to read
 48 15 as follows:
 48 16    490.1006  ARTICLES OF AMENDMENT.
 48 17    A corporation amending its articles of incorporation After
 48 18 an amendment to the articles of incorporation has been adopted
 48 19 and approved in the manner required by this chapter and by the
 48 20 articles of incorporation, the corporation shall deliver to
 48 21 the secretary of state, for filing, articles of amendment
 48 22 setting, which shall set forth the following:
 48 23    1.  The name of the corporation.
 48 24    2.  The text of each amendment adopted.
 48 25    3.  If an amendment provides for an exchange,
 48 26 reclassification, or cancellation of issued shares, provisions
 48 27 for implementing the amendment if not contained in the
 48 28 amendment itself.
 48 29    4.  The date of each amendment's adoption.
 48 30    5.  If an amendment was adopted by the incorporators or
 48 31 board of directors without shareholder action approval, a
 48 32 statement to that effect that the amendment was duly approved
 48 33 by the incorporators or by the board of directors, as the case
 48 34 may be, and that shareholder action approval was not required.
 48 35    6.  If an amendment was approved required approval by the
 49  1 shareholders:, a statement that the amendment was duly
 49  2 approved by the shareholders in the manner required by this
 49  3 chapter and by the articles of incorporation.
 49  4    a.  The designation, number of outstanding shares, number
 49  5 of votes entitled to be cast by each voting group entitled to
 49  6 vote separately on the amendment, and number of votes of each
 49  7 voting group indisputably represented at the meeting.
 49  8    b.  Either the total number of votes cast for and against
 49  9 the amendment by each voting group entitled to vote separately
 49 10 on the amendment or the total number of undisputed votes cast
 49 11 for the amendment by each voting group and a statement that
 49 12 the number cast for the amendment by each voting group was
 49 13 sufficient for approval by that voting group.
 49 14    Sec. 60.  Section 490.1007, Code 2001, is amended to read
 49 15 as follows:
 49 16    490.1007  RESTATED ARTICLES OF INCORPORATION.
 49 17    1.  A corporation's board of directors may restate its
 49 18 articles of incorporation at any time with or without
 49 19 shareholder action approval, to consolidate all amendments
 49 20 into a single document.
 49 21    2.  The restatement may If the restated articles include
 49 22 one or more new amendments to the articles.  If the
 49 23 restatement includes an amendment requiring that require
 49 24 shareholder approval, it the amendments must be adopted and
 49 25 approved as provided in section 490.1003.
 49 26    3.  If the board of directors submits a restatement for
 49 27 shareholder action, the corporation shall notify each
 49 28 shareholder whether or not entitled to vote, of the proposed
 49 29 shareholders' meeting in accordance with section 490.705.  The
 49 30 notice must also state that the purpose, or one of the
 49 31 purposes, of the meeting is to consider the proposed
 49 32 restatement and contain or be accompanied by a copy of the
 49 33 restatement that identifies any amendment or other change it
 49 34 would make in the articles.
 49 35    4. 3.  A corporation restating that restates its articles
 50  1 of incorporation shall deliver to the secretary of state for
 50  2 filing articles of restatement setting forth the name of the
 50  3 corporation and the text of the restated articles of
 50  4 incorporation together with a certificate setting forth: that
 50  5 states that the restated articles consolidate all amendments
 50  6 into a single document and, if a new amendment is included in
 50  7 the restated articles, that also include the statements
 50  8 required under section 490.1006.
 50  9    a.  Whether the restatement contains an amendment to the
 50 10 articles requiring shareholder approval and, if it does not,
 50 11 that the board of directors adopted the restatement.
 50 12    b.  If the restatement contains an amendment to the
 50 13 articles requiring shareholder approval, the information
 50 14 required by section 490.1006.
 50 15    5. 4.  Duly adopted restated articles of incorporation
 50 16 supersede the original articles of incorporation and all
 50 17 amendments to them the original articles of incorporation.
 50 18    6. 5.  The secretary of state may certify restated articles
 50 19 of incorporation, as the articles of incorporation currently
 50 20 in effect, without including the certificate information
 50 21 required by subsection 4 3.
 50 22    Sec. 61.  Section 490.1008, subsections 1, 3, and 4, Code
 50 23 2001, are amended to read as follows:
 50 24    1.  A corporation's articles of incorporation may be
 50 25 amended without action by the board of directors or
 50 26 shareholders to carry out a plan of reorganization ordered or
 50 27 decreed by a court of competent jurisdiction under federal
 50 28 statute if the articles of incorporation after amendment
 50 29 contain only provisions required or permitted by section
 50 30 490.202 the authority of law of the United States.
 50 31    3.  Shareholders of a corporation undergoing reorganization
 50 32 do not have dissenters' rights except as and to the extent
 50 33 provided in the reorganization plan.
 50 34    4. 3.  This section does not apply after entry of a final
 50 35 decree in the reorganization proceeding even though the court
 51  1 retains jurisdiction of the proceeding for limited purposes
 51  2 unrelated to consummation of the reorganization plan.
 51  3    Sec. 62.  Section 490.1009, Code 2001, is amended to read
 51  4 as follows:
 51  5    490.1009  EFFECT OF AMENDMENT.
 51  6    An amendment to the articles of incorporation does not
 51  7 affect a cause of action existing against or in favor of the
 51  8 corporation, a proceeding to which the corporation is a party,
 51  9 or the existing rights of persons other than shareholders of
 51 10 the corporation.  An amendment changing a corporation's name
 51 11 does not abate a proceeding brought by or against the
 51 12 corporation in its former name.
 51 13    Sec. 63.  Section 490.1020, Code 2001, is amended by
 51 14 striking the section and inserting in lieu thereof the
 51 15 following:
 51 16    490.1020  AMENDMENT OF BYLAWS BY BOARD OF DIRECTORS OR
 51 17 SHAREHOLDERS.
 51 18    1.  A corporation's shareholders may amend or repeal the
 51 19 corporation's bylaws.
 51 20    2.  A corporation's board of directors may amend or repeal
 51 21 the corporation's bylaws unless either of the following apply:
 51 22    a.  The articles of incorporation or section 490.1021
 51 23 reserve that power exclusively to the shareholders in whole or
 51 24 in part.
 51 25    b.  The shareholders in amending, repealing, or adopting a
 51 26 bylaw expressly provide that the board of directors shall not
 51 27 amend, repeal, or reinstate that bylaw.
 51 28    Sec. 64.  Section 490.1021, Code 2001, is amended to read
 51 29 as follows:
 51 30    490.1021  BYLAW INCREASING QUORUM OR VOTING REQUIREMENT FOR
 51 31 SHAREHOLDERS DIRECTORS.
 51 32    1.  If authorized by the articles of incorporation, the
 51 33 shareholders may adopt or amend a bylaw that fixes a greater A
 51 34 bylaw that increases a quorum or voting requirement for the
 51 35 board of directors may be amended or repealed as follows:
 52  1    a.  If adopted by the shareholders, only by the
 52  2 shareholders, unless the bylaws otherwise provide.
 52  3    b.  If adopted by the board of directors, either by the
 52  4 shareholders or voting groups of shareholders than is required
 52  5 by this chapter by the board of directors.  The adoption or
 52  6 amendment of a bylaw that adds, changes, or deletes a greater
 52  7    2.  A bylaw adopted or amended by the shareholders that
 52  8 increases a quorum or voting requirement for the board of
 52  9 directors may provide that it can be amended or repealed only
 52 10 by a specified vote of either the shareholders or the board of
 52 11 directors.
 52 12    3.  Action by the board of directors under subsection 1 to
 52 13 amend or repeal a bylaw that changes the quorum or voting
 52 14 requirement for the board of directors must meet the same
 52 15 quorum requirement and be adopted by the same vote and voting
 52 16 groups required to take action under the quorum and voting
 52 17 requirement then in effect or proposed to be adopted,
 52 18 whichever is greater.
 52 19    2.  A bylaw that fixes a greater quorum or voting
 52 20 requirement for shareholders under subsection 1 shall not be
 52 21 adopted, amended, or repealed by the board of directors.
 52 22    Sec. 65.  Section 490.1101, Code 2001, is amended by
 52 23 striking the section and inserting in lieu thereof the
 52 24 following:
 52 25    490.1101  DEFINITIONS.
 52 26    As used in this division, unless the context otherwise
 52 27 requires:
 52 28    1.  "Interests" means the proprietary interests in an other
 52 29 entity.
 52 30    2.  "Merger" means a business combination pursuant to
 52 31 section 490.1102.
 52 32    3.  "Organizational documents" means the basic document or
 52 33 documents that create, or determine the internal governance
 52 34 of, an other entity.
 52 35    4.  "Other entity" means any association or legal entity,
 53  1 other than a domestic or foreign corporation, organized to
 53  2 conduct business, including, without limitation, limited
 53  3 partnerships, general partnerships, limited liability
 53  4 partnerships, limited liability companies, joint ventures,
 53  5 joint stock companies, and business trusts.
 53  6    5.  "Party to a merger" or "party to a share exchange"
 53  7 means any domestic or foreign corporation or other entity that
 53  8 will accomplish one of the following during a merger:
 53  9    a.  Merge under a plan of merger.
 53 10    b.  Acquire shares or interests of another corporation or
 53 11 an other entity in a share exchange.
 53 12    c.  Have all of its shares or interests or all of one or
 53 13 more classes or series of its shares or interests acquired in
 53 14 a share exchange.
 53 15    6.  "Share exchange" means a business combination pursuant
 53 16 to section 490.1103.
 53 17    7.  "Survivor" in a merger means the corporation or other
 53 18 entity into which one or more other corporations or other
 53 19 entities are merged.  A survivor of a merger may preexist the
 53 20 merger or be created by the merger.
 53 21    Sec. 66.  Section 490.1102, Code 2001, is amended by
 53 22 striking the section and inserting in lieu thereof the
 53 23 following:
 53 24    490.1102  MERGER.
 53 25    1.  One or more domestic corporations may merge with a
 53 26 domestic or foreign corporation or other entity pursuant to a
 53 27 plan of merger.
 53 28    2.  A foreign corporation, or domestic or foreign other
 53 29 entity, may be a party to the merger, or may be created by the
 53 30 terms of the plan of merger, only if both of the following are
 53 31 satisfied:
 53 32    a.  The merger is permitted by the laws under which the
 53 33 corporation or other entity is organized or by which it is
 53 34 governed.
 53 35    b.  In effecting the merger, the corporation or other
 54  1 entity complies with such laws and with its articles of
 54  2 incorporation or organizational documents.
 54  3    3.  The plan of merger must include all of the following:
 54  4    a.  The name of each corporation or other entity that will
 54  5 merge and the name of the corporation or other entity that
 54  6 will be the survivor of the merger.
 54  7    b.  The terms and conditions of the merger.
 54  8    c.  The manner and basis of converting the shares of each
 54  9 merging corporation and interests of each merging other entity
 54 10 into shares, or other securities, interests, obligations,
 54 11 rights to acquire shares or other securities, cash, other
 54 12 property, or any combination of the foregoing.
 54 13    d.  The articles of incorporation of any corporation, or
 54 14 the organizational documents of any other entity, to be
 54 15 created by the merger, or if a new corporation or other entity
 54 16 is not to be created by the merger, any amendments to the
 54 17 survivor's articles of incorporation or organizational
 54 18 documents.
 54 19    e.  Any other provisions required by the laws under which
 54 20 any party to the merger is organized or by which it is
 54 21 governed, or by the articles of incorporation or
 54 22 organizational documents of any such party.
 54 23    4.  The terms described in subsection 3, paragraphs "b" and
 54 24 "c", may be made dependent on facts ascertainable outside the
 54 25 plan of merger, provided that those facts are objectively
 54 26 ascertainable.  The term "facts" includes, but is not limited
 54 27 to, the occurrence of any event, including a determination or
 54 28 action by any person or body, including the corporation.
 54 29    5.  The plan of merger may also include a provision that
 54 30 the plan may be amended prior to filing the articles of merger
 54 31 with the secretary of state, provided that if the shareholders
 54 32 of a domestic corporation that is a party to the merger are
 54 33 required or permitted to vote on the plan, the plan must
 54 34 provide that subsequent to approval of the plan by such
 54 35 shareholders the plan shall not be amended to change any of
 55  1 the following:
 55  2    a.  Change the amount or kind of shares or other
 55  3 securities, interests, obligations, rights to acquire shares
 55  4 or other securities, cash, or other property to be received by
 55  5 the shareholders of or owners of interests in any party to the
 55  6 merger upon conversion of their shares or interests under the
 55  7 plan.
 55  8    b.  Change the articles of incorporation of any
 55  9 corporation, or the organizational documents of any other
 55 10 entity, that will survive or be created as a result of the
 55 11 merger, except for changes permitted by section 490.1005 or by
 55 12 comparable provisions of the laws under which the foreign
 55 13 corporation or other entity is organized or governed.
 55 14    c.  Change any of the other terms or conditions of the plan
 55 15 if the change would adversely affect such shareholders in any
 55 16 material respect.
 55 17    Sec. 67.  Section 490.1103, Code 2001, is amended by
 55 18 striking the section and inserting in lieu thereof the
 55 19 following:
 55 20    490.1103  SHARE EXCHANGE.
 55 21    1.  Either of the following may occur through a share
 55 22 exchange:
 55 23    a.  A domestic corporation may acquire all of the shares of
 55 24 one or more classes or series of shares of another domestic or
 55 25 foreign corporation, or all of the interests of one or more
 55 26 classes or series of interests of a domestic or foreign other
 55 27 entity, in exchange for shares or other securities, interests,
 55 28 obligations, rights to acquire shares or other securities,
 55 29 cash, other property, or any combination of the foregoing,
 55 30 pursuant to a plan of share exchange.
 55 31    b.  All of the shares of one or more classes or series of
 55 32 shares of a domestic corporation may be acquired by another
 55 33 domestic or foreign corporation or other entity, in exchange
 55 34 for shares or other securities, interests, obligations, rights
 55 35 to acquire shares or other securities, cash, other property,
 56  1 or any combination of the foregoing, pursuant to a plan of
 56  2 share exchange.
 56  3    2.  A foreign corporation, or a domestic or foreign other
 56  4 entity, may be a party to the share exchange only if both of
 56  5 the following conditions are met:
 56  6    a.  The share exchange is permitted by the laws under which
 56  7 the corporation or other entity is organized or by which it is
 56  8 governed.
 56  9    b.  In effecting the share exchange, the corporation or
 56 10 other entity complies with such laws and with its articles of
 56 11 incorporation or organizational documents.
 56 12    3.  The plan of share exchange must include all of the
 56 13 following:
 56 14    a.  The name of each corporation or other entity whose
 56 15 shares or interests will be acquired and the name of the
 56 16 corporation or other entity that will acquire those shares or
 56 17 interests.
 56 18    b.  The terms and conditions of the share exchange.
 56 19    c.  The manner and basis of exchanging shares of a
 56 20 corporation or interests in an other entity whose shares or
 56 21 interests will be acquired under the share exchange into
 56 22 shares or other securities, interests, obligations, rights to
 56 23 acquire shares or other securities, cash, other property, or
 56 24 any combination of the foregoing.
 56 25    d.  Any other provisions required by the laws under which
 56 26 any party to the share exchange is organized or by the
 56 27 articles of incorporation or organizational documents of any
 56 28 such party.
 56 29    4.  The terms described in subsection 3, paragraphs "b" and
 56 30 "c", may be made dependent on facts ascertainable outside the
 56 31 plan of share exchange, provided that those facts are
 56 32 objectively ascertainable.  The term "facts" includes, but is
 56 33 not limited to, the occurrence of any event, including a
 56 34 determination or action by any person or body, including the
 56 35 corporation.
 57  1    5.  The plan of share exchange may also include a provision
 57  2 that the plan may be amended prior to filing of the articles
 57  3 of share exchange with the secretary of state, provided that
 57  4 if the shareholders of a domestic corporation that is a party
 57  5 to the share exchange are required or permitted to vote on the
 57  6 plan, the plan must provide that subsequent to approval of the
 57  7 plan by such shareholders the plan shall not be amended to
 57  8 change either of the following:
 57  9    a.  The amount or kind of shares or other securities,
 57 10 interests, obligations, rights to acquire shares or other
 57 11 securities, cash, or other property to be issued by the
 57 12 corporation or to be received by the shareholders of or owners
 57 13 of interests in any party to the share exchange in exchange
 57 14 for their shares or interests under the plan.
 57 15    b.  Any of the terms or conditions of the plan if the
 57 16 change would adversely affect such shareholders in any
 57 17 material respect.
 57 18    6.  This section does not limit the power of a domestic
 57 19 corporation to acquire shares of another corporation or
 57 20 interests in an other entity in a transaction other than a
 57 21 share exchange.
 57 22    Sec. 68.  Section 490.1104, Code 2001, is amended by
 57 23 striking the section and inserting in lieu thereof the
 57 24 following:
 57 25    490.1104  ACTION ON A PLAN OF MERGER OR SHARE EXCHANGE.
 57 26    In the case of a domestic corporation that is a party to a
 57 27 merger or share exchange:
 57 28    1.  The plan of merger or share exchange must be adopted by
 57 29 the board of directors.
 57 30    2.  Except as provided in subsection 7 and in section
 57 31 490.1105, after adopting the plan of merger or share exchange
 57 32 the board of directors must submit the plan to the
 57 33 shareholders for their approval.  The board of directors must
 57 34 also transmit to the shareholders a recommendation that the
 57 35 shareholders approve the plan, unless the board of directors
 58  1 makes a determination that because of conflicts of interest or
 58  2 other special circumstances it should not make such a
 58  3 recommendation, in which case the board of directors must
 58  4 transmit to the shareholders the basis for that determination.
 58  5    3.  The board of directors may condition its submission of
 58  6 the plan of merger or share exchange to the shareholders on
 58  7 any basis.
 58  8    4.  If the plan of merger or share exchange is required to
 58  9 be approved by the shareholders, and if the approval is to be
 58 10 given at a meeting, the corporation must notify each
 58 11 shareholder, whether or not entitled to vote, of the meeting
 58 12 of shareholders at which the plan is to be submitted for
 58 13 approval.  The notice must state that the purpose, or one of
 58 14 the purposes, of the meeting is to consider the plan and must
 58 15 contain or be accompanied by a copy or summary of the plan.
 58 16 If the corporation is to be merged into an existing
 58 17 corporation or other entity, the notice shall also include or
 58 18 be accompanied by a copy or summary of the articles of
 58 19 incorporation or organizational documents of that corporation
 58 20 or other entity.  If the corporation is to be merged into a
 58 21 corporation or other entity that is to be created pursuant to
 58 22 the merger, the notice shall include or be accompanied by a
 58 23 copy or summary of the articles of incorporation or
 58 24 organizational documents of the new corporation or other
 58 25 entity.
 58 26    5.  Unless the articles of incorporation, bylaws, or the
 58 27 board of directors require a greater vote or a greater number
 58 28 of votes to be present, the approval of the plan of merger or
 58 29 share exchange shall require the approval of the shareholders
 58 30 at a meeting at which a quorum consisting of at least a
 58 31 majority of the votes entitled to be cast on the plan exists,
 58 32 and, if any class or series of shares is entitled to vote as a
 58 33 separate group on the plan of merger or share exchange, the
 58 34 approval of each such separate voting group at a meeting at
 58 35 which a quorum of the voting group consisting of at least a
 59  1 majority of the votes entitled to be cast on the merger or
 59  2 share exchange by that voting group is present.
 59  3    6.  Separate voting by voting groups is required for each
 59  4 of the following:
 59  5    a.  On a plan of merger, by each class or series of shares
 59  6 that are to be converted, pursuant to the provisions of the
 59  7 plan of merger, into shares or other securities, interests,
 59  8 obligations, rights to acquire shares or other securities,
 59  9 cash, other property, or any combination of the foregoing, or
 59 10 would have a right to vote as a separate group on a provision
 59 11 in the plan that, if contained in a proposed amendment to
 59 12 articles of incorporation, would require action by separate
 59 13 voting groups under section 490.1004.
 59 14    b.  On a plan of share exchange, by each class or series of
 59 15 shares included in the exchange, with each class or series
 59 16 constituting a separate voting group.
 59 17    c.  On a plan of merger or share exchange, if the voting
 59 18 group is entitled under the articles of incorporation to vote
 59 19 as a voting group to approve a plan of merger or share
 59 20 exchange.
 59 21    7.  Unless the articles of incorporation otherwise provide,
 59 22 approval by the corporation's shareholders of a plan of merger
 59 23 or share exchange is not required if all of the following
 59 24 conditions are satisfied:
 59 25    a.  The corporation will survive the merger or is the
 59 26 acquiring corporation in a share exchange.
 59 27    b.  Except for amendments permitted by section 490.1005,
 59 28 its articles of incorporation will not be changed.
 59 29    c.  Each shareholder of the corporation whose shares were
 59 30 outstanding immediately before the effective date of the
 59 31 merger or share exchange will hold the same number of shares,
 59 32 with identical preferences, limitations, and relative rights,
 59 33 immediately after the effective date of change.
 59 34    d.  The issuance in the merger or share exchange of shares
 59 35 or other securities convertible into or rights exercisable for
 60  1 shares does not require a vote under section 490.621,
 60  2 subsection 6.
 60  3    8.  If as a result of a merger or share exchange one or
 60  4 more shareholders of a domestic corporation would become
 60  5 subject to personal liability for the obligations or
 60  6 liabilities of any other person or other entity, approval of
 60  7 the plan of merger shall require the execution, by each such
 60  8 shareholder, of a separate written consent to become subject
 60  9 to such personal liability.
 60 10    Sec. 69.  Section 490.1105, Code 2001, is amended by
 60 11 striking the section and inserting in lieu thereof the
 60 12 following:
 60 13    490.1105  MERGER BETWEEN PARENT AND SUBSIDIARY OR BETWEEN
 60 14 SUBSIDIARIES.
 60 15    1.  A domestic parent corporation that owns shares of a
 60 16 domestic or foreign subsidiary corporation that carry at least
 60 17 ninety percent of the voting power of each class and series of
 60 18 the outstanding shares of the subsidiary that have voting
 60 19 power may merge the subsidiary into itself or into another
 60 20 such subsidiary, or merge itself into the subsidiary, without
 60 21 the approval of the board of directors or shareholders of the
 60 22 subsidiary unless the articles of incorporation of any of the
 60 23 corporations otherwise provide, and unless, in the case of a
 60 24 foreign subsidiary, approval by the subsidiary's board of
 60 25 directors or shareholders is required by the laws under which
 60 26 the subsidiary is organized.
 60 27    2.  If under subsection 1 approval of a merger by the
 60 28 subsidiary's shareholders is not required, the parent
 60 29 corporation shall, within ten days after the effective date of
 60 30 the merger, notify each of the subsidiary's shareholders that
 60 31 the merger has become effective.
 60 32    3.  Except as provided in subsections 1 and 2, a merger
 60 33 between a parent and subsidiary shall be governed by the
 60 34 provisions of this division, applicable to mergers generally.
 60 35    Sec. 70.  Section 490.1106, Code 2001, is amended by
 61  1 striking the section and inserting in lieu thereof the
 61  2 following:
 61  3    490.1106  ARTICLES OF MERGER OR SHARE EXCHANGE.
 61  4    1.  After a plan of merger or share exchange has been
 61  5 adopted and approved as required by this chapter, articles of
 61  6 merger or share exchange shall be executed on behalf of each
 61  7 party to the merger or share exchange by any officer or other
 61  8 duly authorized representative.  The articles shall set forth
 61  9 the following:
 61 10    a.  The names of the parties to the merger or share
 61 11 exchange and the date on which the merger or share exchange
 61 12 occurred or is to be effective.
 61 13    b.  If the articles of incorporation of the survivor of a
 61 14 merger are amended, or if a new corporation is created as a
 61 15 result of a merger, the amendments to the survivor's articles
 61 16 of incorporation or the articles of incorporation of the new
 61 17 corporation.
 61 18    c.  If the plan of merger or share exchange required
 61 19 approval by the shareholders of a domestic corporation that
 61 20 was a party to the merger or share exchange, a statement that
 61 21 the plan was duly approved by the shareholders and, if voting
 61 22 by any separate voting group was required, by each such
 61 23 separate voting group, in the manner required by this chapter
 61 24 and the articles of incorporation.
 61 25    d.  If the plan of merger or share exchange did not require
 61 26 approval by the shareholders of a domestic corporation that
 61 27 was a party to the merger or share exchange, a statement to
 61 28 that effect.
 61 29    e.  As to each foreign corporation and each other entity
 61 30 that was a party to the merger or share exchange, a statement
 61 31 that the plan and the performance of its terms were duly
 61 32 authorized by all action required by the laws under which the
 61 33 corporation or other entity is organized or by which it is
 61 34 governed, and by its articles of incorporation or
 61 35 organizational documents.
 62  1    2.  Articles of merger or share exchange shall be delivered
 62  2 to the secretary of state for filing by the survivor of the
 62  3 merger or the acquiring corporation in a share exchange and
 62  4 shall take effect on the effective date of the merger or share
 62  5 exchange.
 62  6    Sec. 71.  Section 490.1107, Code 2001, is amended by
 62  7 striking the section and inserting in lieu thereof the
 62  8 following:
 62  9    490.1107  EFFECT OF MERGER OR SHARE EXCHANGE.
 62 10    1.  When a merger becomes effective, certain acts shall
 62 11 occur as follows:
 62 12    a.  The corporation or other entity that is designated in
 62 13 the plan of merger as the survivor continues or comes into
 62 14 existence, as the case may be.
 62 15    b.  The separate existence of every corporation or other
 62 16 entity that is merged into the survivor ceases.
 62 17    c.  All property owned by, and every contract right
 62 18 possessed by, each corporation or other entity that merges
 62 19 into the survivor is vested in the survivor without reversion
 62 20 or impairment.
 62 21    d.  All liabilities of each corporation or other entity
 62 22 that is merged into the survivor are vested in the survivor.
 62 23    e.  The name of the survivor may, but need not be,
 62 24 substituted in any pending proceeding for the name of any
 62 25 party to the merger whose separate existence ceased in the
 62 26 merger.
 62 27    f.  The articles of incorporation or organizational
 62 28 documents of the survivor are amended to the extent provided
 62 29 in the plan of merger.
 62 30    g.  The articles of incorporation or organizational
 62 31 documents of a survivor that is created by the merger become
 62 32 effective.
 62 33    h.  The shares of each corporation that is a party to the
 62 34 merger, and the interests in another entity that is a party to
 62 35 a merger, that are to be converted under the plan of merger
 63  1 into shares, interests, obligations, rights to acquire
 63  2 securities, other securities, cash, other property, or any
 63  3 combination of the foregoing, are converted, and the former
 63  4 holders of such shares or interests are entitled only to the
 63  5 rights provided to them in the plan of merger or to any rights
 63  6 they may have under division XIII.
 63  7    2.  When a share exchange becomes effective, the shares of
 63  8 each domestic corporation that are to be exchanged for shares
 63  9 or other securities, interests, obligations, rights to acquire
 63 10 shares or securities, other securities, cash, other property,
 63 11 or any combination of the foregoing, are entitled only to the
 63 12 rights provided to them in the plan of share exchange or to
 63 13 any rights they may have under division XIII.
 63 14    3.  Any shareholder of a domestic corporation that is a
 63 15 party to a merger or share exchange who, prior to the merger
 63 16 or share exchange, was liable for the liabilities or
 63 17 obligations of such corporation, shall not be released from
 63 18 such liabilities or obligations by reason of the merger or
 63 19 share exchange.
 63 20    4.  Upon a merger becoming effective, a foreign
 63 21 corporation, or a foreign other entity, that is the survivor
 63 22 of the mergers, is deemed to do both of the following:
 63 23    a.  Appoint the secretary of state as its agent for service
 63 24 of process in a proceeding to enforce the rights of
 63 25 shareholders of each domestic corporation that is a party to
 63 26 the merger who exercise appraisal rights.
 63 27    b.  Agree that it will promptly pay the amount, if any, to
 63 28 which such shareholders are entitled under division XIII.
 63 29    Sec. 72.  Section 490.1108, Code 2001, is amended by
 63 30 striking the section and inserting in lieu thereof the
 63 31 following:
 63 32    490.1108  ABANDONMENT OF A MERGER OR SHARE EXCHANGE.
 63 33    1.  Unless otherwise provided in a plan of merger or share
 63 34 exchange or in the laws under which a foreign corporation or a
 63 35 domestic or foreign other entity that is a party to a merger
 64  1 or a share exchange is organized or by which it is governed,
 64  2 after the plan has been adopted and approved as required by
 64  3 this division, and at any time before the merger or share
 64  4 exchange has become effective, it may be abandoned by any
 64  5 party to the merger or share exchange without action by the
 64  6 party's shareholders or owners of interests, in accordance
 64  7 with any procedures set forth in the plan of merger or share
 64  8 exchange or, if no such procedures are set forth in the plan,
 64  9 in the manner determined by the board of directors of a
 64 10 corporation, or the managers of any other entity, subject to
 64 11 any contractual rights of other parties to the merger or share
 64 12 exchange.
 64 13    2.  If a merger or share exchange is abandoned under
 64 14 subsection 1 after articles of merger or share exchange have
 64 15 been filed with the secretary of state but before the merger
 64 16 or share exchange has become effective, a statement that the
 64 17 merger or share exchange has been abandoned in accordance with
 64 18 this section, executed on behalf of a party to the merger or
 64 19 share exchange by an officer or other duly authorized
 64 20 representative, shall be delivered to the secretary of state
 64 21 for filing prior to the effective date of the merger or share
 64 22 exchange.  Upon filing, the statement shall take effect and
 64 23 the merger or share exchange shall be deemed abandoned and
 64 24 shall not become effective.
 64 25    Sec. 73.  NEW SECTION.  490.1108A  CONSIDERATION OF
 64 26 ACQUISITION PROPOSALS – COMMUNITY INTERESTS.
 64 27    1.  A director, in determining what is in the best interest
 64 28 of the corporation when considering a tender offer or proposal
 64 29 of acquisition, merger, consolidation, or similar proposal,
 64 30 may consider any or all of the following community interest
 64 31 factors, in addition to consideration of the effects of any
 64 32 action on shareholders:
 64 33    a.  The effects of the action on the corporation's
 64 34 employees, suppliers, creditors, and customers.
 64 35    b.  The effects of the action on the communities in which
 65  1 the corporation operates.
 65  2    c.  The long-term as well as short-term interests of the
 65  3 corporation and its shareholders, including the possibility
 65  4 that these interests may be best served by the continued
 65  5 independence of the corporation.
 65  6    2.  If on the basis of the community interest factors
 65  7 described in subsection 1, the board of directors determines
 65  8 that a proposal or offer to acquire or merge the corporation
 65  9 is not in the best interests of the corporation, it may reject
 65 10 the proposal or offer.  If the board of directors determines
 65 11 to reject any such proposal or offer, the board of directors
 65 12 has no obligation to facilitate, to remove any barriers to, or
 65 13 to refrain from impeding, the proposal or offer.
 65 14 Consideration of any or all of the community interest factors
 65 15 is not a violation of the business judgment rule or of any
 65 16 duty of the director to the shareholders, or a group of
 65 17 shareholders, even if the director reasonably determines that
 65 18 a community interest factor or factors outweigh the financial
 65 19 or other benefits to the corporation or a shareholder or group
 65 20 of shareholders.
 65 21    Sec. 74.  Section 490.1110, subsection 2, paragraph f,
 65 22 subparagraph (2), subparagraph subdivision (a), Code 2001, is
 65 23 amended to read as follows:
 65 24    (a)  A merger of the corporation, other than a merger
 65 25 pursuant to section 490.1104 490.1105.
 65 26    Sec. 75.  Section 490.1110, subsection 3, paragraph c,
 65 27 subparagraph (3), subparagraph subdivision (b), Code 2001, is
 65 28 amended to read as follows:
 65 29    (b)  Pursuant to a merger under section 490.1104 490.1105.
 65 30    Sec. 76.  Section 490.1201, Code 2001, is amended to read
 65 31 as follows:
 65 32    490.1201  SALE DISPOSITION OF ASSETS IN REGULAR COURSE OF
 65 33 BUSINESS AND MORTGAGE OF ASSETS NOT REQUIRING SHAREHOLDER
 65 34 APPROVAL.
 65 35    1.  A corporation may, on the terms and conditions and for
 66  1 the consideration determined by the board of directors
 66  2 Approval of the shareholders of a corporation is not required
 66  3 to do any of the following, unless the articles of
 66  4 incorporation otherwise provide:
 66  5    a. 1.  Sell To sell, lease, exchange, or otherwise dispose
 66  6 of all, or substantially all, of its property any or all of
 66  7 the corporation's assets in the usual and regular course of
 66  8 business.
 66  9    b. 2.  Mortgage To mortgage, pledge, dedicate to the
 66 10 repayment of indebtedness, whether with or without recourse,
 66 11 or otherwise encumber any or all of its property the
 66 12 corporation's assets, whether or not in the usual and regular
 66 13 course of business.
 66 14    c. 3.  Transfer To transfer any or all of its property to a
 66 15 corporation all the shares the corporation's assets to one or
 66 16 more corporations or other entities all of the shares or
 66 17 interests of which are owned by the transferring corporation
 66 18 whether or not in the usual course of business.
 66 19    2.  Unless the articles of incorporation require it,
 66 20 approval by the shareholders of a transaction described in
 66 21 subsection 1 is not required.
 66 22    4.  To distribute assets pro rata to the holders of one or
 66 23 more classes or series of the corporation's shares.
 66 24    Sec. 77.  Section 490.1202, Code 2001, is amended to read
 66 25 as follows:
 66 26    490.1202  SALE OF ASSETS OTHER THAN IN REGULAR COURSE OF
 66 27 BUSINESS SHAREHOLDER APPROVAL OF CERTAIN DISPOSITIONS.
 66 28    1.  A corporation may sell sale, lease, exchange, or
 66 29 otherwise dispose of all, or substantially all, of its
 66 30 property, with or without the good will, otherwise than in the
 66 31 usual and regular course of business, on the terms and
 66 32 conditions and for the consideration determined by other
 66 33 disposition of assets, other than a disposition described in
 66 34 section 490.1201, requires approval of the corporation's board
 66 35 of directors, if corporation's shareholders if the disposition
 67  1 would leave the corporation without a significant continuing
 67  2 business activity.  If a corporation retains a business
 67  3 activity that represented at least twenty-five percent of
 67  4 total assets at the end of the most recently completed fiscal
 67  5 year, and twenty-five percent of either income from continuing
 67  6 operations before taxes or revenues from continuing operations
 67  7 for that fiscal year, in each case of the corporation and its
 67  8 subsidiaries on a consolidated basis, the corporation will
 67  9 conclusively be deemed to have retained a significant
 67 10 continuing business activity; but no presumption that the
 67 11 disposition will leave the corporation without a significant
 67 12 continuing business activity shall arise from the fact that
 67 13 the corporation's continuing business activity does not equal
 67 14 or exceed any of these percentages.
 67 15    2.  A disposition that requires approval of the
 67 16 shareholders under subsection 1 shall be initiated by a
 67 17 resolution by the board of directors proposes and its
 67 18 authorizing the disposition.  After adoption of such a
 67 19 resolution, the board of directors shall submit the proposed
 67 20 disposition to the shareholders for their approval.  The board
 67 21 of directors shall also transmit to the shareholders a
 67 22 recommendation that the shareholders approve the proposed
 67 23 transaction.
 67 24    2.  For a transaction to be authorized both of the
 67 25 following must occur:
 67 26    a.  The board of directors must recommend the proposed
 67 27 transaction to the shareholders disposition, unless the board
 67 28 of directors determines makes a determination that because of
 67 29 conflict conflicts of interest or other special circumstances
 67 30 it should not make no such a recommendation and communicates,
 67 31 in which case the basis for its determination board of
 67 32 directors shall transmit to the shareholders with the
 67 33 submission of the proposed transaction basis for that
 67 34 determination.
 67 35    b.  The shareholders entitled to vote must approve the
 68  1 transaction.
 68  2    3.  The board of directors may condition its submission of
 68  3 a disposition to the proposed transaction shareholders under
 68  4 subsection 2 on any basis.
 68  5    4.  The If a disposition is required to be approved by the
 68  6 shareholders under subsection 1, and if the approval is to be
 68  7 given at a meeting, the corporation shall notify each
 68  8 shareholder, whether or not entitled to vote, of the proposed
 68  9 shareholders' meeting in accordance with section 490.705
 68 10 meeting of shareholders at which the disposition is to be
 68 11 submitted for approval.  The notice must also shall state that
 68 12 the purpose, or one of the purposes, of the meeting is to
 68 13 consider the sale, lease, exchange, or other disposition of
 68 14 all, or substantially all, the property of the corporation and
 68 15 contain or be accompanied by and shall contain a description
 68 16 of the transaction disposition, including the terms and
 68 17 conditions of the disposition and the consideration to be
 68 18 received by the corporation.
 68 19    5.  Unless the articles of incorporation, bylaws, or the
 68 20 board of directors acting pursuant to subsection 3 require a
 68 21 greater vote or a vote by voting groups, the transaction to be
 68 22 authorized must be approved by a majority of all greater
 68 23 number of votes to be present, the approval of a disposition
 68 24 by the shareholders shall require the approval of the
 68 25 shareholders at a meeting at which a quorum consisting of at
 68 26 least a majority of the votes entitled to be cast on the
 68 27 transaction disposition exists.
 68 28    6.  After a sale, lease, exchange, or other disposition of
 68 29 property is authorized, the transaction disposition has been
 68 30 approved by the shareholders under subsection 2, and at any
 68 31 time before the disposition has been consummated, it may be
 68 32 abandoned by the corporation without action by the
 68 33 shareholders, subject to any contractual rights without
 68 34 further shareholder action of other parties to the
 68 35 disposition.
 69  1    7.  A transaction that constitutes a distribution is
 69  2 governed by section 490.640 and not by this section.  A
 69  3 disposition of assets in the course of dissolution under
 69  4 division XIV is not governed by this section.
 69  5    8.  The assets of a direct or indirect consolidated
 69  6 subsidiary shall be deemed the assets of the parent
 69  7 corporation for the purposes of this section.
 69  8    Sec. 78.  Section 490.1301, Code 2001, is amended by
 69  9 striking the section and inserting in lieu thereof the
 69 10 following:
 69 11    490.1301  DEFINITIONS.
 69 12    In this division, unless the context otherwise requires:
 69 13    1.  "Affiliate" means a person that directly or indirectly
 69 14 through one or more intermediaries controls, is controlled by,
 69 15 or is under common control with another person or is a senior
 69 16 executive thereof.  For purposes of section 490.1302,
 69 17 subsection 2, paragraph "d", a person is deemed to be an
 69 18 affiliate of its senior executives.
 69 19    2.  "Beneficial shareholder" means a person who is the
 69 20 beneficial owner of shares held in a voting trust or by a
 69 21 nominee on the beneficial owner's behalf.
 69 22    3.  "Corporation" means the issuer of the shares held by a
 69 23 shareholder demanding appraisal.  In addition, for matters
 69 24 covered in sections 490.1322 through 490.1331, "corporation"
 69 25 includes the surviving entity in a merger.
 69 26    4.  "Fair value" means the value of the corporation's
 69 27 shares determined according to the following:
 69 28    a.  Immediately before the effectuation of the corporate
 69 29 action to which the shareholder objects.
 69 30    b.  Using customary and current valuation concepts and
 69 31 techniques generally employed for similar businesses in the
 69 32 context of the transaction requiring appraisal.
 69 33    c.  Without discounting for lack of marketability or
 69 34 minority status except, if appropriate, for amendments to the
 69 35 articles pursuant to section 490.1302, subsection 1, paragraph
 70  1 "e".
 70  2    With respect to shares of a corporation that is a bank
 70  3 holding company as defined in section 524.1801, the factors
 70  4 identified in section 524.1406, subsection 3, paragraph "a",
 70  5 shall also be considered in determining fair value.
 70  6    5.  "Interest" means interest from the effective date of
 70  7 the corporate action until the date of payment, at the rate of
 70  8 interest on judgments in this state on the effective date of
 70  9 the corporate action.
 70 10    6.  "Preferred shares" means a class or series of shares
 70 11 whose holders have preference over any other class or series
 70 12 with respect to distributions.
 70 13    7.  "Record shareholder" means the person in whose name
 70 14 shares are registered in the records of the corporation or the
 70 15 beneficial owner of shares to the extent of the rights granted
 70 16 by a nominee certificate on file with the corporation.
 70 17    8.  "Senior executive" means the chief executive officer,
 70 18 chief operating officer, chief financial officer, and anyone
 70 19 in charge of a principal business unit or function.
 70 20    9.  "Shareholder" means both a record shareholder and a
 70 21 beneficial shareholder.
 70 22    Sec. 79.  Section 490.1302, Code 2001, is amended to read
 70 23 as follows:
 70 24    490.1302  SHAREHOLDERS' RIGHT TO DISSENT APPRAISAL.
 70 25    1.  A shareholder is entitled to dissent from appraisal
 70 26 rights, and to obtain payment of the fair value of the
 70 27 shareholder's shares, in the event of, any of the following
 70 28 corporate actions:
 70 29    a.  Consummation of a plan of merger to which the
 70 30 corporation is a party if either of the following apply:
 70 31    (1)  Shareholder approval is required for the merger by
 70 32 section 490.1103 or the articles of incorporation and the
 70 33 shareholder is entitled to vote on the merger 490.1104 and the
 70 34 shareholder is entitled to vote on the merger, except that
 70 35 appraisal rights shall not be available to any shareholder of
 71  1 the corporation with respect to shares of any class or series
 71  2 that remain outstanding after consummation of the merger.
 71  3    (2)  The corporation is a subsidiary that is merged with
 71  4 its parent under and the merger is governed by section
 71  5 490.1104 490.1105.
 71  6    b.  Consummation of a plan of share exchange to which the
 71  7 corporation is a party as the corporation whose shares will be
 71  8 acquired, if the shareholder is entitled to vote on the plan
 71  9 exchange, except that appraisal rights shall not be available
 71 10 to any shareholder of the corporation with respect to any
 71 11 class or series of shares of the corporation that is not
 71 12 exchanged.
 71 13    c.  Consummation of a sale or exchange of all, or
 71 14 substantially all, of the property of the corporation other
 71 15 than in the usual and regular course of business, if the
 71 16 shareholder is entitled to vote on the sale or exchange,
 71 17 including a sale in dissolution, but not including a sale
 71 18 pursuant to court order or a sale for cash pursuant to a plan
 71 19 by which all or substantially all of the net proceeds of the
 71 20 sale will be distributed to the shareholders within one year
 71 21 after the date of sale disposition of assets pursuant to
 71 22 section 490.1202 if the shareholder is entitled to vote on the
 71 23 disposition.
 71 24    d.  An amendment of the articles of incorporation with
 71 25 respect to a class or series of shares that materially and
 71 26 adversely affects rights in respect of a dissenter's shares
 71 27 because it does any or all of the following:
 71 28    (1)  Alters or abolishes a preferential right of the
 71 29 shares.
 71 30    (2)  Creates, alters, or abolishes a right in respect of
 71 31 redemption, including a provision respecting a sinking fund
 71 32 for the redemption or repurchase, of the shares.
 71 33    (3)  Alters or abolishes a preemptive right of the holder
 71 34 of the shares to acquire shares or other securities.
 71 35    (4)  Excludes or limits the right of the shares to vote on
 72  1 any matter, or to cumulate votes, other than a limitation by
 72  2 dilution through issuance of shares or other securities with
 72  3 similar voting rights.
 72  4    (5)  Reduces reduces the number of shares of a class or
 72  5 series owned by the shareholder to a fraction of a share if
 72  6 the corporation has the obligation or right to repurchase the
 72  7 fractional share so created is to be acquired for cash under
 72  8 section 490.604.
 72  9    (6)  Extends, for the first time after being governed by
 72 10 this chapter, the period of duration of a corporation
 72 11 organized under chapter 491 or former chapter 496A and
 72 12 existing for a period of years on the day preceding the date
 72 13 the corporation is first governed by this chapter.
 72 14    e.  Any corporate action taken pursuant to a shareholder
 72 15 vote other amendment to the articles of incorporation, merger,
 72 16 share exchange, or disposition of assets to the extent
 72 17 provided by the articles of incorporation, bylaws, or a
 72 18 resolution of the board of directors provides that voting or
 72 19 nonvoting shareholders are entitled to dissent and obtain
 72 20 payment for their shares.
 72 21    2.  Notwithstanding subsection 1, the availability of the
 72 22 appraisal rights under subsection 1, paragraphs "a" through
 72 23 "d", shall be limited in accordance with the following
 72 24 provisions:
 72 25    a.  Appraisal rights shall not be available for the holders
 72 26 of shares of any class or series of shares:
 72 27    (1)  Listed on the New York stock exchange or the American
 72 28 stock exchange or designated as a national market system
 72 29 security on an interdealer quotation system by the national
 72 30 association of securities dealers, inc.
 72 31    (2)  Not so listed or designated, but has at least two
 72 32 thousand shareholders and the outstanding shares of such class
 72 33 or series has a market value of at least twenty million
 72 34 dollars, exclusive of the value of such shares held by its
 72 35 subsidiaries, senior executives, directors, and beneficial
 73  1 shareholders owning more than ten percent of such shares.
 73  2    b.  The applicability of paragraph "a" shall be determined
 73  3 according to the following:
 73  4    (1)  The record date fixed to determine the shareholders
 73  5 entitled to receive notice of, and to vote at, the meeting of
 73  6 shareholders to act upon the corporate action requiring
 73  7 appraisal rights.
 73  8    (2)  The day before the effective date of such corporate
 73  9 action if there is no meeting of shareholders.
 73 10    c.  Paragraph "a" shall not be applicable and appraisal
 73 11 rights shall be available pursuant to subsection 1 for the
 73 12 holders of any class or series of shares who are required by
 73 13 the terms of the corporate action requiring appraisal rights
 73 14 to accept for such shares anything other than cash or shares
 73 15 of any class or any series of shares of any corporation, or
 73 16 any other proprietary interest of any other entity, that
 73 17 satisfies the standards set forth in paragraph "a", at the
 73 18 time the corporate action becomes effective.
 73 19    d.  Paragraph "a" shall not be applicable and appraisal
 73 20 rights shall be available pursuant to subsection 1 for the
 73 21 holders of any class or series of shares where any of the
 73 22 following applies:
 73 23    (1)  Any of the shares or assets of the corporation are
 73 24 being acquired or converted, whether by merger, share
 73 25 exchange, or otherwise, pursuant to the corporate action by a
 73 26 person, or by an affiliate of a person, who fulfills either of
 73 27 the following:
 73 28    (a)  Is, or at any time in the one-year period immediately
 73 29 preceding approval by the board of directors of the corporate
 73 30 action requiring appraisal rights was, the beneficial owner of
 73 31 twenty percent or more of the voting power of the corporation,
 73 32 excluding any shares acquired pursuant to an offer for all
 73 33 shares having voting power if such offer was made within one
 73 34 year prior to the corporate action requiring appraisal rights
 73 35 for consideration of the same kind and of a value equal to or
 74  1 less than that paid in connection with the corporate action.
 74  2    (b)  Directly or indirectly has, or at any time in the one-
 74  3 year period immediately preceding approval by the board of
 74  4 directors of the corporation of the corporate action requiring
 74  5 appraisal rights had, the power, contractually or otherwise,
 74  6 to cause the appointment or election of twenty-five percent or
 74  7 more of the directors to the board of directors of the
 74  8 corporation.
 74  9    (2)  Any of the shares or assets of the corporation are
 74 10 being acquired or converted, whether by merger, share
 74 11 exchange, or otherwise, pursuant to such corporate action by a
 74 12 person, or by an affiliate of a person, who is, or at any time
 74 13 in the one-year period immediately preceding approval by the
 74 14 board of directors of the corporate action requiring appraisal
 74 15 rights was, a senior executive or director of the corporation
 74 16 or a senior executive of any affiliate thereof, and that
 74 17 senior executive or director will receive, as a result of the
 74 18 corporate action, a financial benefit not generally available
 74 19 to other shareholders as such, other than any of the
 74 20 following:
 74 21    (a)  Employment, consulting, retirement, or similar
 74 22 benefits established separately and not as part of or in
 74 23 contemplation of the corporate action.
 74 24    (b)  Employment, consulting, retirement, or similar
 74 25 benefits established in contemplation of, or as part of, the
 74 26 corporate action that are not more favorable than those
 74 27 existing before the corporate action or, if more favorable,
 74 28 that have been approved on behalf of the corporation in the
 74 29 same manner as is provided in section 490.832.
 74 30    (c)  In the case of a director of the corporation who will,
 74 31 in the corporate action, become a director of the acquiring
 74 32 entity in the corporate action or one of its affiliates,
 74 33 rights and benefits as a director that are provided on the
 74 34 same basis as those afforded by the acquiring entity generally
 74 35 to other directors of such entity or such affiliate.
 75  1    e.  For the purposes of paragraph "d" only, the term
 75  2 "beneficial owner" means any person who, directly or
 75  3 indirectly, through any contract, arrangement, or
 75  4 understanding, other than a revocable proxy, has or shares the
 75  5 power to vote, or to direct the voting of, shares, provided
 75  6 that a member of a national securities exchange shall not be
 75  7 deemed to be a beneficial owner of securities held directly or
 75  8 indirectly by such member on behalf of another person solely
 75  9 because the member is the record holder of such securities if
 75 10 the member is precluded by the rules of such exchange from
 75 11 voting without instruction on contested matters or matters
 75 12 that may affect substantially the rights or privileges of the
 75 13 holders of the securities to be voted.  When two or more
 75 14 persons agree to act together for the purpose of voting their
 75 15 shares of the corporation, each member of the group formed
 75 16 thereby shall be deemed to have acquired beneficial ownership,
 75 17 as of the date of such agreement, of all voting shares of the
 75 18 corporation beneficially owned by any member of the group.
 75 19    3.  Notwithstanding any other provision of section
 75 20 490.1302, the articles of incorporation as originally filed or
 75 21 any amendment thereto may limit or eliminate appraisal rights
 75 22 for any class or series of preferred shares, but any such
 75 23 limitation or elimination contained in an amendment to the
 75 24 articles of incorporation that limits or eliminates appraisal
 75 25 rights for any of such shares that are outstanding immediately
 75 26 prior to the effective date of such amendment or that the
 75 27 corporation is or may be required to issue or sell thereafter
 75 28 pursuant to any conversion, exchange, or other right existing
 75 29 immediately before the effective date of such amendment, shall
 75 30 not apply to any corporate action that becomes effective
 75 31 within one year of that date if such action would otherwise
 75 32 afford appraisal rights.
 75 33    2. 4.  A shareholder entitled to dissent and obtain payment
 75 34 for the shareholder's shares appraisal rights under this
 75 35 chapter is not entitled to challenge the a completed corporate
 76  1 action creating the shareholder's entitlement unless the
 76  2 action is unlawful or fraudulent with respect to the
 76  3 shareholder or the corporation. for which appraisal rights are
 76  4 available unless such corporate action meets one of the
 76  5 following standards:
 76  6    a.  It was not effectuated in accordance with the
 76  7 applicable provisions of division X, XI, or XII or the
 76  8 corporation's articles of incorporation, bylaws, or board of
 76  9 directors' resolution authorizing the corporate action.
 76 10    b.  It was procured as a result of fraud or material
 76 11 misrepresentation.
 76 12    Sec. 80.  Section 490.1303, Code 2001, is amended to read
 76 13 as follows:
 76 14    490.1303  DISSENT ASSERTION OF RIGHTS BY NOMINEES AND
 76 15 BENEFICIAL OWNERS.
 76 16    1.  A record shareholder may assert dissenters' appraisal
 76 17 rights as to fewer than all the shares registered in that the
 76 18 record shareholder's name but owned by a beneficial
 76 19 shareholder only if the record shareholder dissents objects
 76 20 with respect to all shares beneficially of the class or series
 76 21 owned by any one person the beneficial shareholder and
 76 22 notifies the corporation in writing of the name and address of
 76 23 each person beneficial shareholder on whose behalf the
 76 24 shareholder asserts dissenters' appraisal rights are being
 76 25 asserted.  The rights of a partial dissenter record
 76 26 shareholder who asserts appraisal rights for only part of the
 76 27 shares held of record in the record shareholder's name under
 76 28 this subsection are shall be determined as if the shares as to
 76 29 which the record shareholder dissents objects and the record
 76 30 shareholder's other shares were registered in the names of
 76 31 different record shareholders.
 76 32    2.  A beneficial shareholder may assert dissenters'
 76 33 appraisal rights as to shares of any class or series held on
 76 34 the shareholder's behalf of the shareholder only if the
 76 35 shareholder does both of the following:
 77  1    a.  Submits to the corporation the record shareholder's
 77  2 written consent to the dissent not later than the time the
 77  3 beneficial shareholder asserts dissenters' rights assertion of
 77  4 such rights no later than the date referred to in section
 77  5 490.1322, subsection 2, paragraph "b", subparagraph (2).
 77  6    b.  Does so with respect to all shares of which the
 77  7 shareholder is the class of series that are beneficially owned
 77  8 by the beneficial shareholder or over which that beneficial
 77  9 shareholder has power to direct the vote.
 77 10    Sec. 81.  Section 490.1320, Code 2001, is amended to read
 77 11 as follows:
 77 12    490.1320  NOTICE OF DISSENTERS' APPRAISAL RIGHTS.
 77 13    1.  If proposed corporate action creating dissenters'
 77 14 rights under described in section 490.1302, subsection 1, is
 77 15 to be submitted to a vote at a shareholders' meeting, the
 77 16 meeting notice must state that the corporation has concluded
 77 17 that the shareholders are, are not, or may be entitled to
 77 18 assert dissenters' appraisal rights under this part and be
 77 19 accompanied by.  If the corporation concludes that appraisal
 77 20 rights are or may be available, a copy of this part must
 77 21 accompany the meeting notice sent to those record shareholders
 77 22 entitled to exercise appraisal rights.
 77 23    2.  If corporate action creating dissenters' rights under
 77 24 In a merger pursuant to section 490.1302 is taken without a
 77 25 vote of shareholders 490.1105, the parent corporation shall
 77 26 must notify in writing all record shareholders of the
 77 27 subsidiary who are entitled to assert dissenters' appraisal
 77 28 rights that the corporate action was taken and send them the
 77 29 dissenters' notice described became effective.  Such notice
 77 30 must be sent within ten days after the corporate action became
 77 31 effective and include the materials described in section
 77 32 490.1322.
 77 33    Sec. 82.  Section 490.1321, Code 2001, is amended to read
 77 34 as follows:
 77 35    490.1321  NOTICE OF INTENT TO DEMAND PAYMENT.
 78  1    1.  If proposed corporate action creating dissenters'
 78  2 requiring appraisal rights under section 490.1302 is submitted
 78  3 to a vote at a shareholders' meeting, a shareholder who wishes
 78  4 to assert dissenters' appraisal rights with respect to any
 78  5 class or series of shares must do all of the following:
 78  6    a.  Deliver to the corporation before the vote is taken
 78  7 written notice of the shareholder's intent to demand payment
 78  8 for the shareholder's shares if the proposed action is
 78  9 effectuated.
 78 10    b.  Not vote the dissenting shareholder's shares, or cause
 78 11 or permit to be voted, any shares of such class or series in
 78 12 favor of the proposed action.
 78 13    2.  A shareholder who does not satisfy the requirements of
 78 14 subsection 1, is not entitled to payment for the shareholder's
 78 15 shares under this part.
 78 16    Sec. 83.  Section 490.1322, Code 2001, is amended to read
 78 17 as follows:
 78 18    490.1322  DISSENTERS' APPRAISAL NOTICE AND FORM.
 78 19    1.  If proposed corporate action creating dissenters'
 78 20 requiring appraisal rights under section 490.1302 is
 78 21 authorized at a shareholders' meeting, subsection 1, becomes
 78 22 effective, the corporation shall must deliver a written
 78 23 dissenters' appraisal notice and form required by subsection
 78 24 2, paragraph "a", to all shareholders who satisfied the
 78 25 requirements of section 490.1321.  In the case of a merger
 78 26 under section 490.1105, the parent must deliver a written
 78 27 appraisal notice and form to all record shareholders who may
 78 28 be entitled to assert appraisal rights.
 78 29    2.  The dissenters' appraisal notice must be sent no
 78 30 earlier than the date the corporate action became effective
 78 31 and no later than ten days after the proposed corporate action
 78 32 is authorized at a shareholders' meeting, or, if the corporate
 78 33 action is taken without a vote of the shareholders, no later
 78 34 than ten days after the corporate action is taken, such date
 78 35 and must do all of the following:
 79  1    a.  State where the payment demand must be sent and where
 79  2 and when Be accompanied by a form that specifies the date of
 79  3 the first announcement to shareholders of the principal terms
 79  4 of the proposed corporate action and requires the shareholder
 79  5 asserting appraisal rights to certify whether or not
 79  6 beneficial ownership of those shares for which appraisal
 79  7 rights are asserted was acquired before that date, and that
 79  8 the shareholder did not vote for the transaction.
 79  9    b.  State all of the following:
 79 10    (1)  Where the form must be sent and where certificates for
 79 11 certificated shares must be deposited and the date by which
 79 12 those certificates must be deposited, which date shall not be
 79 13 earlier than the date for receiving the required form under
 79 14 subparagraph (2).
 79 15    b.  Inform holders of uncertificated shares to what extent
 79 16 transfer of the shares will be restricted after the payment
 79 17 demand is received.
 79 18    c.  Supply a form for demanding payment that includes the
 79 19 date of the first announcement to news media or to
 79 20 shareholders of the terms of the proposed corporate action and
 79 21 requires that the person asserting dissenters' rights certify
 79 22 whether or not the person acquired beneficial ownership of the
 79 23 shares before that date.
 79 24    d. (2)  Set a A date by which the corporation must receive
 79 25 the payment demand form, which date shall not be fewer than
 79 26 thirty forty nor more than sixty days after the date the
 79 27 dissenters' notice is delivered appraisal notice and form are
 79 28 sent under subsection 1, and state that the shareholder shall
 79 29 have waived the right to demand appraisal with respect to the
 79 30 shares unless the form is received by the corporation by such
 79 31 specified date.
 79 32    (3)  The corporation's estimate of the fair value of the
 79 33 shares.
 79 34    (4)  That, if requested in writing, the corporation will
 79 35 provide, to the shareholder so requesting, within ten days
 80  1 after the date specified in subparagraph (2) the number of
 80  2 shareholders who return the forms by the specified date and
 80  3 the total number of shares owned by them.
 80  4    (5)  The date by which the notice to withdraw under section
 80  5 490.1323 must be received, which date must be within twenty
 80  6 days after the date specified in subparagraph (2).
 80  7    e. c.  Be accompanied by a copy of this division.
 80  8    Sec. 84.  Section 490.1323, Code 2001, is amended to read
 80  9 as follows:
 80 10    490.1323  DUTY TO DEMAND PAYMENT PERFECTION OF RIGHTS –
 80 11 RIGHT TO WITHDRAW.
 80 12    1.  A shareholder sent a dissenters' who receives notice
 80 13 described in pursuant to section 490.1322 and who wishes to
 80 14 exercise appraisal rights must demand payment, certify on the
 80 15 form sent by the corporation whether the shareholder
 80 16 beneficial owner of such shares acquired beneficial ownership
 80 17 of the shares before the date required to be set forth in the
 80 18 dissenters' notice pursuant to section 490.1322, subsection 2,
 80 19 paragraph "c", "a".  If a shareholder fails to make this
 80 20 certification, the corporation may elect to treat the
 80 21 shareholder's shares as after-acquired shares under section
 80 22 490.1325.  In addition, a shareholder who wishes to exercise
 80 23 appraisal rights must execute and return the form and, in a
 80 24 case of certificated shares, deposit the shareholder's
 80 25 certificates in accordance with the terms of the notice by the
 80 26 date referred to in the notice pursuant to section 490.1322,
 80 27 subsection 2, paragraph "b", subparagraph (2).  Once a
 80 28 shareholder deposits that shareholder's certificates or, in
 80 29 the case of uncertificated shares, returns the executed forms,
 80 30 that shareholder loses all rights as a shareholder, unless the
 80 31 shareholder withdraws pursuant to subsection 2.
 80 32    2.  The shareholder who demands payment and deposits the
 80 33 shareholder's shares under subsection 1 retains all other
 80 34 rights of a shareholder until these rights are canceled or
 80 35 modified by the taking of the proposed corporate action.  A
 81  1 shareholder who has complied with subsection 1 may
 81  2 nevertheless decline to exercise appraisal rights and withdraw
 81  3 from the appraisal process by so notifying the corporation in
 81  4 writing by the date set forth in the appraisal notice pursuant
 81  5 to section 490.1322, subsection 2, paragraph "b", subparagraph
 81  6 (5).  A shareholder who fails to so withdraw from the
 81  7 appraisal process shall not thereafter withdraw without the
 81  8 corporation's written consent.
 81  9    3.  A shareholder who does not demand payment or execute
 81 10 and return the form and, in the case of certificated shares,
 81 11 deposit the shareholder's share certificates where required,
 81 12 each by the date set forth in the dissenters' notice described
 81 13 in section 490.1322, subsection 2, is shall not be entitled to
 81 14 payment for the shareholder's shares under this division.
 81 15    Sec. 85.  Section 490.1324, Code 2001, is amended by
 81 16 striking the section and inserting in lieu thereof the
 81 17 following:
 81 18    490.1324  PAYMENT.
 81 19    1.  Except as provided in section 490.1325, within thirty
 81 20 days after the form required by section 490.1322, subsection
 81 21 2, paragraph "b", subparagraph (2), is due, the corporation
 81 22 shall pay in cash to those shareholders who complied with
 81 23 section 490.1323, subsection 1, the amount the corporation
 81 24 estimates to be the fair value of their shares, plus interest.
 81 25    2.  The payment to each shareholder pursuant to subsection
 81 26 1 must be accompanied by all of the following:
 81 27    a.  Financial statements of the corporation that issued the
 81 28 shares to be appraised, consisting of a balance sheet as of
 81 29 the end of a fiscal year ending not more than sixteen months
 81 30 before the date of payment, an income statement for that year,
 81 31 a statement of changes in shareholders' equity for that year,
 81 32 and the latest available interim financial statements, if any.
 81 33    b.  A statement of the corporation's estimate of the fair
 81 34 value of the shares, which estimate must equal or exceed the
 81 35 corporation's estimate given pursuant to section 490.1322,
 82  1 subsection 2, paragraph "b", subparagraph (3).
 82  2    c.  A statement that shareholders described in subsection 1
 82  3 have the right to demand further payment under section
 82  4 490.1326 and that if any such shareholder does not do so
 82  5 within the time period specified therein, such shareholder
 82  6 shall be deemed to have accepted such payment in full
 82  7 satisfaction of the corporation's obligations under this
 82  8 chapter.
 82  9    Sec. 86.  Section 490.1325, Code 2001, is amended by
 82 10 striking the section and inserting in lieu thereof the
 82 11 following:
 82 12    490.1325  AFTER-ACQUIRED SHARES.
 82 13    1.  A corporation may elect to withhold payment required by
 82 14 section 490.1324 from any shareholder who did not certify that
 82 15 beneficial ownership of all of the shareholder's shares for
 82 16 which appraisal rights are asserted was acquired before the
 82 17 date set forth in the appraisal notice sent pursuant to
 82 18 section 490.1322, subsection 2, paragraph "a".
 82 19    2.  If the corporation elects to withhold payment under
 82 20 subsection 1, it must within thirty days after the form
 82 21 required by section 490.1322, subsection 2, paragraph "b",
 82 22 subparagraph (2), is due, notify all shareholders who are
 82 23 described in subsection 1 regarding all of the following:
 82 24    a.  Of the information required by section 490.1324,
 82 25 subsection 2, paragraph "a".
 82 26    b.  Of the corporation's estimate of fair value pursuant to
 82 27 section 490.1324, subsection 2, paragraph "b".
 82 28    c.  That they may accept the corporation's estimate of fair
 82 29 value, plus interest, in full satisfaction of their demands or
 82 30 demand appraisal under section 490.1326.
 82 31    d.  That those shareholders who wish to accept such offer
 82 32 must notify the corporation of their acceptance of the
 82 33 corporation's offer within thirty days after receiving the
 82 34 offer.
 82 35    e.  That those shareholders who do not satisfy the
 83  1 requirements for demanding appraisal under section 490.1326
 83  2 shall be deemed to have accepted the corporation's offer.
 83  3    3.  Within ten days after receiving the shareholder's
 83  4 acceptance pursuant to subsection 2, the corporation must pay
 83  5 in cash the amount it offered under subsection 2, paragraph
 83  6 "b", to each shareholder who agreed to accept the
 83  7 corporation's offer in full satisfaction of the shareholder's
 83  8 demand.
 83  9    4.  Within forty days after sending the notice described in
 83 10 subsection 2, the corporation must pay in cash the amount it
 83 11 offered to pay under subsection 2, paragraph "b", to each
 83 12 shareholder described in subsection 2, paragraph "e".
 83 13    Sec. 87.  Section 490.1326, Code 2001, is amended by
 83 14 striking the section and inserting in lieu thereof the
 83 15 following:
 83 16    490.1326  PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
 83 17 PAYMENT OR OFFER.
 83 18    1.  A shareholder paid pursuant to section 490.1324 who is
 83 19 dissatisfied with the amount of the payment must notify the
 83 20 corporation in writing of that shareholder's estimate of the
 83 21 fair value of the shares and demand payment of that estimate
 83 22 plus interest, less any payment under section 490.1324.  A
 83 23 shareholder offered payment under section 490.1325 who is
 83 24 dissatisfied with that offer must reject the offer and demand
 83 25 payment of the shareholder's stated estimate of the fair value
 83 26 of the shares plus interest.
 83 27    2.  A shareholder who fails to notify the corporation in
 83 28 writing of that shareholder's demand to be paid the
 83 29 shareholder's stated estimate of the fair value plus interest
 83 30 under subsection 1 within thirty days after receiving the
 83 31 corporation's payment or offer of payment under section
 83 32 490.1324 or 490.1325, respectively, waives the right to demand
 83 33 payment under this section and shall be entitled only to the
 83 34 payment made or offered pursuant to those respective sections.
 83 35    Sec. 88.  Section 490.1330, Code 2001, is amended to read
 84  1 as follows:
 84  2    490.1330  COURT ACTION.
 84  3    1.  If a demand shareholder makes demands for payment under
 84  4 section 490.1328 490.1326 that remains unsettled, the
 84  5 corporation shall commence a proceeding within sixty days
 84  6 after receiving the payment demand and petition the court to
 84  7 determine the fair value of the shares and accrued interest.
 84  8 If the corporation does not commence the proceeding within the
 84  9 sixty-day period, it shall pay in cash to each dissenter whose
 84 10 demand remains unsettled the amount demanded shareholder the
 84 11 amount the shareholder demanded pursuant to section 490.1326
 84 12 plus interest.
 84 13    2.  The corporation shall commence the proceeding in the
 84 14 district court of the county where a the corporation's
 84 15 principal office or, if none in this state, its registered
 84 16 office, in this state is located.  If the corporation is a
 84 17 foreign corporation without a registered office in this state,
 84 18 it shall commence the proceeding in the county in this state
 84 19 where the principal office or registered office of the
 84 20 domestic corporation merged with or whose shares were acquired
 84 21 by the foreign corporation was located at the time of the
 84 22 transaction.
 84 23    3.  The corporation shall make all dissenters shareholders,
 84 24 whether or not residents of this state, whose demands remain
 84 25 unsettled, parties to the proceeding as in an action against
 84 26 their shares and all parties must be served with a copy of the
 84 27 petition.  Nonresidents may be served by registered or
 84 28 certified mail or by publication as provided by law.
 84 29    4.  The jurisdiction of the court in which the proceeding
 84 30 is commenced under subsection 2 is plenary and exclusive.  The
 84 31 court may appoint one or more persons as appraisers to receive
 84 32 evidence and recommend a decision on the question of fair
 84 33 value.  The appraisers shall have the powers described in the
 84 34 order appointing them, or in any amendment to it.  The
 84 35 dissenters shareholders demanding appraisal rights are
 85  1 entitled to the same discovery rights as parties in other
 85  2 civil proceedings.  There shall be no right to a jury trial.
 85  3    5.  Each dissenter shareholder made a party to the
 85  4 proceeding is entitled to judgment for either of the
 85  5 following:
 85  6    a.  The amount, if any, by which the court finds the fair
 85  7 value of the dissenter's shareholder's shares, plus interest,
 85  8 exceeds the amount paid by the corporation to the shareholder
 85  9 for such shares.
 85 10    b.  The fair value, plus accrued interest, of the
 85 11 dissenter's after-acquired shareholder's shares for which the
 85 12 corporation elected to withhold payment under section 490.1327
 85 13 490.1325.
 85 14    6.  Notwithstanding the provisions of this division, if the
 85 15 corporation is a bank holding company as defined in section
 85 16 524.1801, fair value, at the election of the bank holding
 85 17 company, may be determined as provided in section 524.1406,
 85 18 subsection 3, prior to giving notice under section 490.1320 or
 85 19 490.1322.  The fair value as determined shall be included in
 85 20 any notice under section 490.1320 or 490.1322, and section
 85 21 490.1328 490.1326 shall not apply.
 85 22    Sec. 89.  Section 490.1331, Code 2001, is amended to read
 85 23 as follows:
 85 24    490.1331  COURT COSTS AND COUNSEL FEES.
 85 25    1.  The court in an appraisal proceeding commenced under
 85 26 section 490.1330 shall determine all costs of the proceeding,
 85 27 including the reasonable compensation and expenses of
 85 28 appraisers appointed by the court.  The court shall assess the
 85 29 costs against the corporation, except that the court may
 85 30 assess costs against all or some of the dissenters
 85 31 shareholders demanding appraisal, in amounts the court finds
 85 32 equitable, to the extent the court finds the dissenters such
 85 33 shareholders acted arbitrarily, vexatiously, or not in good
 85 34 faith in demanding payment under section 490.1328 with respect
 85 35 to the rights provided by this division.
 86  1    2.  The court in an appraisal proceeding may also assess
 86  2 the fees and expenses of counsel and experts for the
 86  3 respective parties, in amounts the court finds equitable, for
 86  4 either of the following:
 86  5    a.  Against the corporation and in favor of any or all
 86  6 dissenters shareholders demanding appraisal if the court finds
 86  7 the corporation did not substantially comply with the
 86  8 requirements of sections section 490.1320 through 490.1328,
 86  9 490.1322, 490.1324, or 490.1325.
 86 10    b.  Against either the corporation or a dissenter
 86 11 shareholder demanding appraisal, in favor of any other party,
 86 12 if the court finds that the party against whom the fees and
 86 13 expenses are assessed acted arbitrarily, vexatiously, or not
 86 14 in good faith with respect to the rights provided by this
 86 15 chapter.
 86 16    3.  If the court in an appraisal proceeding finds that the
 86 17 services of counsel for any dissenter shareholder were of
 86 18 substantial benefit to other dissenters shareholders similarly
 86 19 situated, and that the fees for those services should not be
 86 20 assessed against the corporation, the court may award to these
 86 21 such counsel reasonable fees to be paid out of the amounts
 86 22 awarded the dissenters shareholders who were benefited.
 86 23    4.  To the extent the corporation fails to make a required
 86 24 payment pursuant to section 490.1324, 490.1325, or 490.1326,
 86 25 the shareholder may sue directly for the amount owed and, to
 86 26 the extent successful, shall be entitled to recover from the
 86 27 corporation all costs and expenses of the suit, including
 86 28 counsel fees.
 86 29    Sec. 90.  Section 490.1402, subsections 4 and 5, Code 2001,
 86 30 are amended to read as follows:
 86 31    4.  The corporation shall notify each shareholder, whether
 86 32 or not entitled to vote, of the proposed shareholders' meeting
 86 33 in accordance with section 490.705.  The notice must also
 86 34 state that the purpose, or one of the purposes, of the meeting
 86 35 is to consider dissolving the corporation.
 87  1    5.  Unless the articles of incorporation, bylaws, or the
 87  2 board of directors acting pursuant to subsection 3 requires a
 87  3 greater vote, a greater number of shares to be present, or a
 87  4 vote by voting groups, adoption of the proposal to dissolve to
 87  5 be adopted must be approved by a majority of all shall require
 87  6 the approval of the shareholders at a meeting at which the
 87  7 quorum consisting of at least a majority of the votes entitled
 87  8 to be cast on that proposal exists.
 87  9    Sec. 91.  Section 490.1403, Code 2001, is amended to read
 87 10 as follows:
 87 11    490.1403  ARTICLES OF DISSOLUTION.
 87 12    1.  At any time after dissolution is authorized, the
 87 13 corporation may dissolve by delivering to the secretary of
 87 14 state for filing articles of dissolution setting forth all of
 87 15 the following:
 87 16    a.  The name of the corporation.
 87 17    b.  The date dissolution was authorized.
 87 18    c.  If dissolution was approved by the shareholders, both
 87 19 of the following:
 87 20    (1)  The number of votes entitled to be cast on a statement
 87 21 that the proposal to dissolve was duly approved by the
 87 22 shareholders in the manner required by this chapter and by the
 87 23 articles of incorporation.
 87 24    (2)  Either the total number of votes cast for and against
 87 25 dissolution or the total number of undisputed votes cast for
 87 26 dissolution and a statement that the number cast for
 87 27 dissolution was sufficient for approval.
 87 28    d.  If voting by voting groups was required, the
 87 29 information required by paragraph "c" must be separately
 87 30 provided for each voting group entitled to vote separately on
 87 31 the plan to dissolve.
 87 32    2.  A corporation is dissolved upon the effective date of
 87 33 its articles of dissolution.
 87 34    3.  For purposes of this division, "dissolved corporation"
 87 35 means a corporation whose articles of dissolution have become
 88  1 effective and includes a successor entity to which the
 88  2 remaining assets of the corporation are transferred subject to
 88  3 its liabilities for purposes of liquidation.
 88  4    Sec. 92.  Section 490.1404, subsection 3, paragraph f, Code
 88  5 2001, is amended to read as follows:
 88  6    f.  If shareholder action was required to revoke the
 88  7 dissolution, the information required by section 490.1403,
 88  8 subsection 1, paragraph "c" or "d".
 88  9    Sec. 93.  Section 490.1406, subsections 1 and 2, Code 2001,
 88 10 are amended to read as follows:
 88 11    1.  A dissolved corporation may dispose of the known claims
 88 12 against it by following the procedure described in this
 88 13 section notifying its known claimants in writing of the
 88 14 dissolution at any time after its effective date.
 88 15    2.  The dissolved corporation shall notify its known
 88 16 claimants in writing of the dissolution at any time after its
 88 17 effective date.  The written notice must do all of the
 88 18 following:
 88 19    a.  Describe information that must be included in a claim.
 88 20    b.  Provide a mailing address where a claim may be sent.
 88 21    c.  State the deadline, which may not be fewer than one
 88 22 hundred twenty days from the effective date of the written
 88 23 notice, by which the dissolved corporation must receive the
 88 24 claim.
 88 25    d.  State that the claim will be barred if not received by
 88 26 the deadline.
 88 27    Sec. 94.  Section 490.1407, Code 2001, is amended to read
 88 28 as follows:
 88 29    490.1407  UNKNOWN OTHER CLAIMS AGAINST DISSOLVED
 88 30 CORPORATION.
 88 31    1.  A dissolved corporation may also publish notice of its
 88 32 dissolution and request that persons with claims against the
 88 33 dissolved corporation present them in accordance with the
 88 34 notice.
 88 35    2.  The notice must meet all of the following requirements:
 89  1    a.  Be published one time in a newspaper of general
 89  2 circulation in the county where the dissolved corporation's
 89  3 principal office or, if none in this state, its registered
 89  4 office is or was last located.
 89  5    b.  Describe the information that must be included in a
 89  6 claim and provide a mailing address where the claim may be
 89  7 sent.
 89  8    c.  State that a claim against the dissolved corporation
 89  9 will be barred unless a proceeding to enforce the claim is
 89 10 commenced within five three years after the publication of the
 89 11 notice.
 89 12    3.  If the dissolved corporation publishes a newspaper
 89 13 notice in accordance with subsection 2, the claim of each of
 89 14 the following claimants is barred unless the claimant
 89 15 commences a proceeding to enforce the claim against the
 89 16 dissolved corporation within five three years after the
 89 17 publication date of the newspaper notice:
 89 18    a.  A claimant who did not receive was not given written
 89 19 notice under section 490.1406.
 89 20    b.  A claimant whose claim was timely sent to the dissolved
 89 21 corporation but not acted on.
 89 22    c.  A claimant whose claim is contingent or based on an
 89 23 event occurring after the effective date of dissolution.
 89 24    4.  A claim that is not barred by section 490.1406,
 89 25 subsection 2, or subsection 3 of this section, may be enforced
 89 26 under this section in either of the following ways:
 89 27    a.  Against the dissolved corporation, to the extent of its
 89 28 undistributed assets.
 89 29    b.  If Except as provided in section 490.1408, subsection
 89 30 4, if the assets have been distributed in liquidation, against
 89 31 a shareholder of the dissolved corporation to the extent of
 89 32 the shareholder's pro rata share of the claim or the corporate
 89 33 assets distributed to the shareholder in liquidation,
 89 34 whichever is less, but a shareholder's total liability for all
 89 35 claims under this section shall not exceed the total amount of
 90  1 assets distributed to the shareholder in liquidation.
 90  2    Sec. 95.  NEW SECTION.  490.1408  COURT PROCEEDINGS.
 90  3    1.  A dissolved corporation that has published a notice
 90  4 under section 490.1407 may file an application with the
 90  5 district court of the county where the dissolved corporation's
 90  6 principal office or, if none in this state, its registered
 90  7 office is located for a determination of the amount and form
 90  8 of security to be provided for payment of claims that are
 90  9 contingent or have not been made known to the dissolved
 90 10 corporation or that are based on an event occurring after the
 90 11 effective date of dissolution but that, based on the facts
 90 12 known to the dissolved corporation, are reasonably estimated
 90 13 to arise after the effective date of dissolution.  Provision
 90 14 need not be made for any claim that is or is reasonably
 90 15 anticipated to be barred under section 490.1407, subsection 3.
 90 16    2.  Within ten days after the filing of the application,
 90 17 notice of the proceeding shall be given by the dissolved
 90 18 corporation to each claimant holding a contingent claim whose
 90 19 contingent claim is shown on the records of the dissolved
 90 20 corporation.
 90 21    3.  The court may appoint a guardian ad litem to represent
 90 22 all claimants whose identities are unknown in any proceeding
 90 23 brought under this section.  The reasonable fees and expenses
 90 24 of such guardian, including all reasonable expert witness
 90 25 fees, shall be paid by the dissolved corporation.
 90 26    4.  Provision by the dissolved corporation for security in
 90 27 the amount and the form ordered by the court under subsection
 90 28 1, shall satisfy the dissolved corporation's obligations with
 90 29 respect to claims that are contingent, have not been made
 90 30 known to the dissolved corporation or are based on an event
 90 31 occurring after the effective date of dissolution, and such
 90 32 claims shall not be enforced against a shareholder who
 90 33 received assets in liquidation.
 90 34    Sec. 96.  NEW SECTION.  490.1409  DIRECTOR DUTIES.
 90 35    1.  Directors shall cause the dissolved corporation to
 91  1 discharge or make reasonable provision for the payment of
 91  2 claims and make distributions of assets to shareholders after
 91  3 payment or provision for claims.
 91  4    2.  Directors of a dissolved corporation which has disposed
 91  5 of claims under section 490.1406, 490.1407, or 490.1408 shall
 91  6 not be liable for breach of subsection 1, with respect to
 91  7 claims against the dissolved corporation that are barred or
 91  8 satisfied under section 490.1406, 490.1407, or 490.1408.
 91  9    Sec. 97.  Section 490.1431, Code 2001, is amended by adding
 91 10 the following new subsection:
 91 11    NEW SUBSECTION.  4.  Within ten days of the commencement of
 91 12 a proceeding under section 490.1430, subsection 2, to dissolve
 91 13 a corporation that has no shares listed on a national
 91 14 securities exchange or regularly traded in a market maintained
 91 15 by one or more members of a national securities exchange, the
 91 16 corporation must send to all shareholders, other than the
 91 17 petitioner, a notice stating that the shareholders are
 91 18 entitled to avoid the dissolution of the corporation by
 91 19 electing to purchase the petitioner's shares under section
 91 20 490.1434, and a copy of section 490.1434.
 91 21    Sec. 98.  NEW SECTION.  490.1434  ELECTION TO PURCHASE IN
 91 22 LIEU OF DISSOLUTION.
 91 23    1.  In a proceeding under section 490.1430, subsection 2,
 91 24 to dissolve a corporation that has no shares listed on a
 91 25 national securities exchange or regularly traded in a market
 91 26 maintained by one or more members of a national or affiliated
 91 27 securities association, the corporation may elect or, if it
 91 28 fails to elect, one or more shareholders may elect to purchase
 91 29 all shares owned by the petitioning shareholder at the fair
 91 30 value of the shares.  An election pursuant to this section
 91 31 shall be irrevocable unless the court determines that it is
 91 32 equitable to set aside or modify the election.
 91 33    2.  An election to purchase pursuant to this section may be
 91 34 filed with the court at any time within ninety days after the
 91 35 filing of the petition under section 490.1430, subsection 2,
 92  1 or at such later time as the court in its discretion may
 92  2 allow.  If the election to purchase is filed by one or more
 92  3 shareholders, the corporation shall, within ten days
 92  4 thereafter, give written notice to all shareholders, other
 92  5 than the petitioner.  The notice must state the name and
 92  6 number of shares owned by the petitioner and the name and
 92  7 number of shares owned by each electing shareholder and must
 92  8 advise the recipients of their right to join the election to
 92  9 purchase shares in accordance with this section.  Shareholders
 92 10 who wish to participate must file notice of their intention to
 92 11 join in the purchase no later than thirty days after the
 92 12 effective date of the notice to them.  All shareholders who
 92 13 have filed an election or notice of their intention to
 92 14 participate in the election to purchase thereby become parties
 92 15 to the proceeding and shall participate in the purchase in
 92 16 proportion to their ownership of shares as of the date the
 92 17 first election was filed, unless they otherwise agree or the
 92 18 court otherwise directs.  After an election has been filed by
 92 19 the corporation or one or more shareholders, the proceeding
 92 20 under section 490.1430, subsection 2, shall not be
 92 21 discontinued or settled, nor shall the petitioning shareholder
 92 22 sell or otherwise dispose of the shareholder's shares, unless
 92 23 the court determines that it would be equitable to the
 92 24 corporation and the shareholders, other than the petitioner,
 92 25 to permit such discontinuance, settlement, sale, or other
 92 26 disposition.
 92 27    3.  If, within sixty days of the filing of the first
 92 28 election, the parties reach agreement as to the fair value and
 92 29 terms of purchase of the petitioner's shares, the court shall
 92 30 enter an order directing the purchase of the petitioner's
 92 31 shares upon the terms and conditions agreed to by the parties.
 92 32    4.  If the parties are unable to reach an agreement as
 92 33 provided for in subsection 3, the court, upon application of
 92 34 any party, shall stay the section 490.1430, subsection 2,
 92 35 proceedings and determine the fair value of the petitioner's
 93  1 shares as of the day before the date on which the petition
 93  2 under section 490.1430, subsection 2, was filed or as of such
 93  3 other date as the court deems appropriate under the
 93  4 circumstances.
 93  5    5.  Upon determining the fair value of the shares, the
 93  6 court shall enter an order directing the purchase upon such
 93  7 terms and conditions as the court deems appropriate, which may
 93  8 include payment of the purchase price in installments, where
 93  9 necessary in the interests of equity, provision for security
 93 10 to assure payment of the purchase price and any additional
 93 11 costs, fees, and expenses as may have been awarded, and, if
 93 12 the shares are to be purchased by shareholders, the allocation
 93 13 of shares among them.  In allocating petitioner's shares among
 93 14 holders of different classes of shares, the court shall
 93 15 attempt to preserve the existing distribution of voting rights
 93 16 among holders of different classes insofar as practicable and
 93 17 may direct that holders of a specific class or classes shall
 93 18 not participate in the purchase.  Interest may be allowed at
 93 19 the rate and from the date determined by the court to be
 93 20 equitable, but if the court finds that the refusal of the
 93 21 petitioning shareholder to accept an offer of payment was
 93 22 arbitrary or otherwise not in good faith, no interest shall be
 93 23 allowed.  If the court finds that the petitioning shareholder
 93 24 has probable grounds for relief under section 490.1430,
 93 25 subsection 2, paragraph "b" or "d", it may award to the
 93 26 petitioning shareholder reasonable fees and expenses of
 93 27 counsel and of any experts employed by the shareholder.
 93 28    6.  Upon entry of an order under subsection 3 or 5, the
 93 29 court shall dismiss the petition to dissolve the corporation
 93 30 under section 490.1430, and the petitioning shareholder shall
 93 31 no longer have any rights or status as a shareholder of the
 93 32 corporation, except the right to receive the amounts awarded
 93 33 to the shareholder by the order of the court which shall be
 93 34 enforceable in the same manner as any other judgment.
 93 35    7.  The purchase ordered pursuant to subsection 5 shall be
 94  1 made within ten days after the date the order becomes final
 94  2 unless before that time the corporation files with the court a
 94  3 notice of its intention to adopt articles of dissolution
 94  4 pursuant to sections 490.1402 and 490.1403, which articles
 94  5 must then be adopted and filed within fifty days thereafter.
 94  6 Upon filing of such articles of dissolution, the corporation
 94  7 shall be dissolved in accordance with the provisions of
 94  8 sections 490.1405 through 490.1407, and the order entered
 94  9 pursuant to subsection 5 shall no longer be of any force or
 94 10 effect, except that the court may award the petitioning
 94 11 shareholder reasonable fees and expenses in accordance with
 94 12 the provisions of the last sentence of subsection 5 and the
 94 13 petitioner may continue to pursue any claims previously
 94 14 asserted on behalf of the corporation.
 94 15    8.  Any payment by the corporation pursuant to an order
 94 16 under subsection 3 or 5, other than an award of fees and
 94 17 expenses pursuant to subsection 5, is subject to the
 94 18 provisions of section 490.640.
 94 19    Sec. 99.  Section 490.1603, Code 2001, is amended to read
 94 20 as follows:
 94 21    490.1603  SCOPE OF INSPECTION RIGHT.
 94 22    1.  A shareholder's agent or attorney has the same
 94 23 inspection and copying rights as the shareholder the agent or
 94 24 attorney represents represented.
 94 25    2.  The right to copy records under section 490.1602
 94 26 includes, if reasonable, the right to receive copies made by
 94 27 photographic, xerographic, or other technological means by
 94 28 xerographic or other means, including copies through an
 94 29 electronic transmission if available and so requested by the
 94 30 shareholder.
 94 31    3.  The corporation may comply at its expense with a
 94 32 shareholder's demand to inspect the record of shareholders
 94 33 under section 490.1602, subsection 2, paragraph "c", by
 94 34 providing the shareholder with a list of shareholders that was
 94 35 compiled no earlier than the date of the shareholder's demand.
 95  1    3. 4.  The corporation may impose a reasonable charge,
 95  2 covering the costs of labor and material, for copies of any
 95  3 documents provided to the shareholder.  The charge shall not
 95  4 exceed the estimated cost of production, or reproduction, or
 95  5 transmission of the records.
 95  6    4.  The corporation may comply with a shareholder's demand
 95  7 to inspect the record of shareholders under section 490.1602,
 95  8 subsection 2, paragraph "c" by providing the shareholder with
 95  9 a list of its shareholders that was compiled no earlier than
 95 10 the date of the shareholder's demand.
 95 11    Sec. 100.  NEW SECTION.  490.1605  INSPECTION OF RECORDS BY
 95 12 DIRECTORS.
 95 13    1.  A director of a corporation is entitled to inspect and
 95 14 copy the books, records, and documents of the corporation at
 95 15 any reasonable time to the extent reasonably related to the
 95 16 performance of the director's duties as a director, including
 95 17 duties as a member of a committee, but not for any other
 95 18 purpose or in any manner that would violate any duty to the
 95 19 corporation.
 95 20    2.  The district court of the county where the
 95 21 corporation's principal office, or if none in this state, its
 95 22 registered office, is located may order inspection and copying
 95 23 of the books, records, and documents at the corporation's
 95 24 expense, upon application of a director who has been refused
 95 25 such inspection rights, unless the corporation establishes
 95 26 that the director is not entitled to such inspection rights.
 95 27 The court shall dispose of an application under this
 95 28 subsection on an expedited basis.
 95 29    3.  If an order is issued, the court may include provisions
 95 30 protecting the corporation from undue burden or expense, and
 95 31 prohibiting the director from using information obtained upon
 95 32 exercise of the inspection rights in a manner that would
 95 33 violate a duty to the corporation, and may also order the
 95 34 corporation to reimburse the director for the director's
 95 35 costs, including reasonable counsel fees, incurred in
 96  1 connection with the application.
 96  2    Sec. 101.  NEW SECTION.  490.1606  EXCEPTION TO NOTICE
 96  3 REQUIREMENT.
 96  4    1.  Whenever notice is required to be given under any
 96  5 provision of this chapter to any shareholder, such notice
 96  6 shall not be required to be given if either of the following
 96  7 applies:
 96  8    a.  Notice of two consecutive annual meetings, and all
 96  9 notices of meetings during the period between such two
 96 10 consecutive annual meetings, have been sent to such
 96 11 shareholder at such shareholder's address as shown on the
 96 12 records of the corporation and have been returned
 96 13 undeliverable.
 96 14    b.  All, but not less than two, payments of dividends on
 96 15 securities during a twelve-month period, or two consecutive
 96 16 payments of dividends on securities during a period of more
 96 17 than twelve months, have been sent to such shareholder at such
 96 18 shareholder's address as shown on the records of the
 96 19 corporation and have been returned undeliverable.
 96 20    2.  If any such shareholder shall deliver to the
 96 21 corporation a written notice setting forth such shareholder's
 96 22 then-current address, the requirement that notice be given to
 96 23 such shareholder shall be reinstated.
 96 24    Sec. 102.  Section 491.3, subsection 8, Code 2001, is
 96 25 amended to read as follows:
 96 26    8.  A corporation organized under or subject to this
 96 27 chapter may make indemnification as provided in sections
 96 28 490.850 through 490.858 490.859.
 96 29    Sec. 103.  Section 491.16, Code 2001, is amended to read as
 96 30 follows:
 96 31    491.16  INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES,
 96 32 AND AGENTS – INSURANCE.
 96 33    Sections 490.850 through 490.858 490.859 apply to
 96 34 corporations organized under or subject to this chapter.
 96 35    Sec. 104.  Section 497.34, Code 2001, is amended to read as
 97  1 follows:
 97  2    497.34  INDEMNIFICATION.
 97  3    A cooperative association operating under this chapter may
 97  4 indemnify any present or former director, officer, employee,
 97  5 member, or volunteer in the manner and in the instances
 97  6 authorized in sections 490.850 through 490.858 490.859,
 97  7 provided that where sections 490.850 through 490.858 490.859
 97  8 provide for action by shareholders the sections are applicable
 97  9 to action by voting members of the cooperative association,
 97 10 and where sections 490.850 through 490.858 490.859 refer to
 97 11 the corporation organized under chapter 490 the sections are
 97 12 applicable to the cooperative association organized under this
 97 13 chapter, and where sections 490.850 through 490.858 490.859
 97 14 refer to the director the sections are applicable to a
 97 15 director, officer, employee, member, or volunteer of the
 97 16 cooperative association organized under this chapter.
 97 17    Sec. 105.  Section 498.36, Code 2001, is amended to read as
 97 18 follows:
 97 19    498.36  INDEMNIFICATION.
 97 20    A cooperative association operating under this chapter may
 97 21 indemnify any present or former director, officer, employee,
 97 22 member, or volunteer in the manner and in the instances
 97 23 authorized in sections 490.850 through 490.858 490.859,
 97 24 provided that where sections 490.850 through 490.858 490.859
 97 25 provide for action by shareholders the sections are applicable
 97 26 to action by voting members of the cooperative association,
 97 27 and where sections 490.850 through 490.858 490.859 refer to
 97 28 the corporation organized under chapter 490 the sections are
 97 29 applicable to the cooperative association organized under this
 97 30 chapter, and where sections 490.850 through 490.858 490.859
 97 31 refer to the director the sections are applicable to a
 97 32 director, officer, employee, member, or volunteer of the
 97 33 cooperative association organized under this chapter.
 97 34    Sec. 106.  Section 499.59A, Code 2001, is amended to read
 97 35 as follows:
 98  1    499.59A  INDEMNIFICATION.
 98  2    A cooperative association operating under this chapter may
 98  3 indemnify any present or former director, officer, employee,
 98  4 member, or volunteer in the manner and in the instances
 98  5 authorized in sections 490.850 through 490.858 490.859,
 98  6 provided that where sections 490.850 through 490.858 490.859
 98  7 provide for action by shareholders the sections are applicable
 98  8 to action by voting members of the cooperative association,
 98  9 and where sections 490.850 through 490.858 490.859 refer to
 98 10 the corporation organized under chapter 490 the sections are
 98 11 applicable to the cooperative association organized under this
 98 12 chapter, and where sections 490.850 through 490.858 490.859
 98 13 refer to the director the sections are applicable to a
 98 14 director, officer, employee, member, or volunteer of the
 98 15 cooperative association organized under this chapter.
 98 16    Sec. 107.  Section 499.69A, subsections 4 and 7, Code 2001,
 98 17 are amended to read as follows:
 98 18    4.  For a surviving cooperative association, a qualified
 98 19 merger becomes effective upon the filing of the articles of
 98 20 merger with the secretary of state and the issuance of a
 98 21 certificate of merger pursuant to section 499.68 or the date
 98 22 stated in the articles of merger, whichever is later.  For a
 98 23 surviving qualified corporation, a qualified merger becomes
 98 24 effective upon the filing of the articles of merger with the
 98 25 secretary of state pursuant to section 490.1105 490.1106 or
 98 26 the date stated in the articles, whichever is later.
 98 27    7.  A foreign cooperative association may participate in a
 98 28 qualified merger as provided in this section, if the foreign
 98 29 cooperative association complies with the requirements for a
 98 30 cooperative association under this section and the
 98 31 requirements for a foreign cooperative association under
 98 32 section 499.69.  A foreign corporation may participate in a
 98 33 qualified merger as provided in this section if it complies
 98 34 with the requirements of a qualified corporation under this
 98 35 section and the requirements for a foreign corporation under
 99  1 section 490.1107 490.1102.
 99  2    Sec. 108.  Section 508B.2, unnumbered paragraph 2, Code
 99  3 2001, is amended to read as follows:
 99  4    A plan of conversion may provide that a mutual company may
 99  5 convert into a domestic stock company, convert and merge, or
 99  6 convert and consolidate with a domestic stock company, as
 99  7 provided in chapter 490 or 491, whichever is applicable.
 99  8 However, the mutual company is not required to comply with
 99  9 sections 491.102 through 491.105 or sections 490.1101 490.1102
 99 10 and 490.1103 490.1104 relating to approval of merger or
 99 11 consolidation plans by boards of directors and shareholders,
 99 12 if at the time of approval of the plan of conversion the board
 99 13 of directors approves the merger or consolidation and if at
 99 14 the time of approval of the plan by policyholders as provided
 99 15 in section 508B.6, the policyholders approve the merger or
 99 16 consolidation.  This chapter supersedes any conflicting
 99 17 provisions of chapters 521 and 521A.  A mutual company may
 99 18 convert, merge, or consolidate as part of a plan of conversion
 99 19 in which a majority or all of the common shares of the stock
 99 20 company are acquired by another corporation, which may be a
 99 21 corporation organized for that purpose, or in which the new
 99 22 stock company consolidates with a stock company to form
 99 23 another stock company.
 99 24    Sec. 109.  Section 504A.4, subsection 14, Code 2001, is
 99 25 amended to read as follows:
 99 26    14.  A corporation operating under this chapter may
 99 27 indemnify any present or former director, officer, employee,
 99 28 member, or volunteer in the manner and in the instances
 99 29 authorized in sections 490.850 through 490.858 490.859.
 99 30    Sec. 110.  Section 508B.13, Code 2001, is amended to read
 99 31 as follows:
 99 32    508B.13  PROHIBITIONS ON CERTAIN OFFERS TO ACQUIRE SHARES.
 99 33    Prior to and for a period of five years following the
 99 34 effective date of the conversion, and in the case of the plans
 99 35 of conversion specified in subsections 1 and 3 of section
100  1 508B.3, five years following the date of distribution of
100  2 consideration to the policyholders in exchange for their
100  3 membership interests, a person, other than the reorganized
100  4 company, other than an employee benefit plan or employee
100  5 benefit trust sponsored by the reorganized company, or as
100  6 otherwise specifically provided for in the plan of conversion,
100  7 shall not directly or indirectly acquire or offer to acquire
100  8 the beneficial ownership of more than five percent of any
100  9 class of voting security of the reorganized company, and a
100 10 person, other than the reorganized company or other than an
100 11 employee benefit plan or employee benefit trust sponsored by
100 12 the reorganized company, who acquires five percent or more of
100 13 any class of voting security of the reorganized company prior
100 14 to the conversion or as specifically provided for in the plan
100 15 of conversion, shall not directly or indirectly acquire or
100 16 offer to acquire the beneficial ownership of additional voting
100 17 securities of the reorganized company, unless the acquisition
100 18 is approved by the commissioner as not being contrary to the
100 19 interests of the policyholders of the reorganized company or
100 20 its life insurance company subsidiary and by the board of
100 21 directors of the reorganized company.  The commissioner and
100 22 the board of directors may consider the factors set forth in
100 23 section 490.1108 490.1108A.  The provisions of section 521A.3,
100 24 except subsection 4, paragraph "a", shall be applicable to a
100 25 proposed acquisition subject to this section.  An approved
100 26 plan of conversion may include a stock option plan.  As used
100 27 in this section, "beneficial ownership" means, with respect to
100 28 a security, the sole or shared power to vote or direct the
100 29 voting of the security or the sole power to dispose or direct
100 30 the disposition of the security.
100 31    Sec. 111.  Section 508C.16, unnumbered paragraph 2, Code
100 32 2001, is amended to read as follows:
100 33    Sections 490.850 through 490.858 490.859 apply to the
100 34 association.
100 35    Sec. 112.  Section 524.801, subsection 7, Code 2001, is
101  1 amended to read as follows:
101  2    7.  To indemnify a director, officer, or employee, or a
101  3 former director, officer, or employee of the state bank in the
101  4 manner and in the instances authorized by sections 490.850
101  5 through 490.858 490.859.
101  6    Sec. 113.  Section 524.1213, subsection 2, Code Supplement
101  7 2001, is amended to read as follows:
101  8    2.  A united community bank office formed under this
101  9 section shall have a united community bank office board, at
101 10 least one-half or more of the members of which shall be
101 11 residents of the county in which the united community bank
101 12 office is located.  The liability of the united community bank
101 13 office board shall be limited as provided in section 524.614.
101 14 The bank establishing and operating the united community bank
101 15 office may indemnify members of the united community bank
101 16 office board as agents of the bank in the manner and in the
101 17 instances authorized by sections 490.850 through 490.858
101 18 490.859.
101 19    Sec. 114.  Section 524.1309, subsection 8, Code 2001, is
101 20 amended to read as follows:
101 21    8.  A shareholder of a state bank who objects to adoption
101 22 by the state bank of a plan to cease to carry on the business
101 23 of banking and to continue as a corporation subject to chapter
101 24 490, is entitled to the rights and remedies of a dissenting
101 25 shareholder appraisal rights provided for in chapter 490,
101 26 division XIII.
101 27    Sec. 115.  Section 524.1402, subsection 2, Code 2001, is
101 28 amended to read as follows:
101 29    2.  In the case of a state bank which is a party to the
101 30 plan, if the proposed merger will result in a state bank
101 31 subject to this chapter, adoption of the plan by such state
101 32 bank requires the affirmative vote of at least a majority of
101 33 the directors and approval by the shareholders, in the manner
101 34 and according to the procedures prescribed in section 490.1103
101 35 490.1104, at a meeting called in accordance with the terms of
102  1 that section.  In the case of a national bank, or if the
102  2 proposed merger will result in a national bank, adoption of
102  3 the plan by each party to the merger shall require the
102  4 affirmative vote of at least such directors and shareholders
102  5 whose affirmative vote on the plan is required under the laws
102  6 of the United States.  Subject to applicable requirements of
102  7 the laws of the United States in a case in which a national
102  8 bank is a party to a plan, any modification of a plan which
102  9 has been adopted shall be made by any method provided in the
102 10 plan, or in the absence of such provision, by the same vote as
102 11 required for adoption.
102 12    Sec. 116.  Section 524.1406, Code 2001, is amended to read
102 13 as follows:
102 14    524.1406  RIGHTS APPRAISAL RIGHTS OF DISSENTING
102 15 SHAREHOLDERS.
102 16    1.  A shareholder of a state bank, which is a party to a
102 17 proposed merger plan which will result in a state bank subject
102 18 to this chapter, who objects to the plan is entitled to the
102 19 rights and remedies of a dissenting shareholder appraisal
102 20 rights as provided in chapter 490, division XIII.
102 21    2.  If a shareholder of a national bank which is a party to
102 22 a proposed merger plan which will result in a state bank, or a
102 23 shareholder of a state bank which is a party to a plan which
102 24 will result in a national bank, objects to the plan and
102 25 complies with the requirements of the applicable laws of the
102 26 United States, the resulting state bank or national bank, as
102 27 the case may be, is liable for the value of the shareholder's
102 28 shares as determined in accordance with such laws of the
102 29 United States.
102 30    3.  a.  Notwithstanding any contrary provision in chapter
102 31 490, division XIII, in determining the fair value of the
102 32 shareholder's shares of a bank organized under this chapter or
102 33 a bank holding company as defined in section 524.1801 in a
102 34 transaction or event in which the shareholder is entitled to
102 35 the rights and remedies of a dissenting shareholder appraisal
103  1 rights, due consideration shall be given to valuation factors
103  2 recognized for federal and estate tax purposes, including
103  3 discounts for minority interests and discounts for lack of
103  4 marketability.  However, any payment made to dissenting
103  5 shareholders under section 490.1325 490.1324 shall be in an
103  6 amount not less than the stockholders' equity in the bank
103  7 disclosed in its last statement of condition filed under
103  8 section 524.220 or the total equity capital of the bank
103  9 holding company disclosed in the most recent report filed by
103 10 the bank holding company with the board of governors of the
103 11 federal reserve system, divided by the number of shares
103 12 outstanding.
103 13    b.  Prior to giving notice of a meeting at which a
103 14 shareholder of a bank organized under this chapter or a bank
103 15 holding company as defined in section 524.1801 would be
103 16 entitled to the rights and remedies of a dissenting
103 17 shareholder appraisal rights, such bank or bank holding
103 18 company may seek a declaratory judgment to establish the fair
103 19 value for purposes of section 490.1301, subsection 4, of
103 20 shares held by such shareholders.  Another cause of action or
103 21 a counterclaim shall not be joined with such a declaratory
103 22 action.  A declaratory judgment shall be filed in the county
103 23 where the principal place of business of the bank or bank
103 24 holding company is located.  The court shall appoint an
103 25 attorney to represent minority shareholders.  All shareholders
103 26 of the bank or bank holding company shall be served with
103 27 notice of the action and be advised of the name, address, and
103 28 telephone number of the attorney appointed to represent
103 29 minority shareholders.  The attorney appointed to represent
103 30 minority shareholders shall select an appraiser to give an
103 31 opinion of the fair value of such shares.  The bank or bank
103 32 holding company may select an appraiser to give an opinion on
103 33 the fair value of the shares of the bank or bank holding
103 34 company.  Any shareholder may participate individually and
103 35 present evidence of the fair value of such shareholder's
104  1 shares.  All court costs, appraiser's fees, and the fees and
104  2 expenses of the attorney appointed to represent the minority
104  3 shareholders shall be assessed against the bank or the bank
104  4 holding company.  A judgment in the action shall not determine
104  5 fair value for a share to be less than the stockholders'
104  6 equity in the bank disclosed in its last statement of
104  7 condition filed under section 524.220 or the total equity
104  8 capital of the bank holding company disclosed in the most
104  9 recent report filed by the bank holding company with the board
104 10 of governors of the federal reserve system, divided by the
104 11 number of shares outstanding.  A final judgment in the action
104 12 shall establish fair value for the purposes of chapter 490,
104 13 division XIII and shall be disclosed to the shareholders in
104 14 the notice to shareholders of the meeting to approve the
104 15 transaction that gives rise to dissenters' appraisal rights.
104 16 If the proposed transaction is approved by the shareholders,
104 17 upon consummation of the proposed transaction the fair value
104 18 so established shall be paid to each shareholder entitled to
104 19 payment for the shareholder's shares upon receipt of such
104 20 shareholder's share certificates.
104 21    Sec. 117.  Section 524.1408, Code 2001, is amended to read
104 22 as follows:
104 23    524.1408  MERGER OF CORPORATION SUBSTANTIALLY OWNED BY A
104 24 STATE BANK.
104 25    A state bank owning at least ninety percent of the
104 26 outstanding shares, of each class, of another corporation
104 27 which it is authorized to own under this chapter, may merge
104 28 the other corporation into itself without approval by a vote
104 29 of the shareholders of either the state bank or the subsidiary
104 30 corporation.  The board of directors of the state bank shall
104 31 approve a plan of merger, mail to shareholders of record of
104 32 the subsidiary corporation, and prepare and execute articles
104 33 of merger in the manner provided for in section 490.1104
104 34 490.1105.  The articles of merger, together with the
104 35 applicable filing and recording fees, shall be delivered to
105  1 the superintendent who shall, if the superintendent approves
105  2 of the proposed merger and if the superintendent finds the
105  3 articles of merger satisfy the requirements of this section,
105  4 deliver them to the secretary of state for filing and
105  5 recording in the secretary of state's office, and they shall
105  6 be filed in the office of the county recorder.  The secretary
105  7 of state upon filing the articles of merger shall issue a
105  8 certificate of merger and send the certificate to the state
105  9 bank and a copy of it to the superintendent.
105 10    Sec. 118.  Section 524.1417, Code 2001, is amended to read
105 11 as follows:
105 12    524.1417  RIGHTS APPRAISAL RIGHTS OF DISSENTING SHAREHOLDER
105 13 OF CONVERTING STATE OR NATIONAL BANK OR FEDERAL SAVINGS
105 14 ASSOCIATION.
105 15    1.  A shareholder of a state bank which that converts into
105 16 a national bank or federal savings association who objects to
105 17 the plan of conversion is entitled to the rights and remedies
105 18 of a dissenting shareholder appraisal rights as provided in
105 19 chapter 490, division XIII.
105 20    2.  If a shareholder of a national bank or federal savings
105 21 association, which that converts into a state bank, objects to
105 22 the plan of conversion and complies with the requirements of
105 23 applicable laws of the United States, the resulting state bank
105 24 is liable for the value of the shareholder's shares as
105 25 determined in accordance with such laws of the United States.
105 26    Sec. 119.  Section 533.4, subsection 27, Code 2001, is
105 27 amended to read as follows:
105 28    27.  To provide indemnity for the director, officer, or
105 29 employee in the same fashion that a corporation organized
105 30 under chapter 490 could under sections 490.850 through 490.858
105 31 490.859; however, where those sections provide for action by
105 32 shareholders the provision is applicable to action by members
105 33 of the credit union and where the sections have reference to
105 34 the corporation organized under chapter 490, the provision is
105 35 applicable to the association organized under this chapter.
106  1    Sec. 120.  Section 534.504, Code 2001, is amended to read
106  2 as follows:
106  3    534.504  MEETINGS OF STOCKHOLDERS.
106  4    Sections 490.701 through 490.731 490.732 apply to stock
106  5 associations.
106  6    Sec. 121.  Section 534.605, subsection 4, Code Supplement
106  7 2001, is amended to read as follows:
106  8    4.  An association operating under this chapter may
106  9 indemnify any present or former director, officer, or employee
106 10 in the manner and in the instances authorized in sections
106 11 490.850 through 490.858 490.859.  If the association is a
106 12 mutual association, the references in those sections to
106 13 stockholder shall be deemed to be references to members.
106 14    Sec. 122.  Section 534.607, Code 2001, is amended to read
106 15 as follows:
106 16    534.607  INDEMNIFICATION.
106 17    Except as otherwise provided in section 534.602, sections
106 18 490.850 through 490.858 490.859 apply to associations
106 19 incorporated under this chapter.
106 20    Sec. 123.  Sections 490.1022, 490.1327, 490.1328, and
106 21 490.1621, Code 2001, are repealed.
106 22    Sec. 124.  CODE EDITOR DIRECTIVE.  The following division
106 23 and part titles shall be changed by the Code editor:
106 24    1.  Division XII shall be retitled DISPOSITION OF ASSETS.
106 25    2.  Division XIII shall be retitled APPRAISAL RIGHTS.
106 26    3.  Division XIII, Part A, shall be retitled RIGHT TO
106 27 APPRAISAL AND PAYMENT FOR SHARES.
106 28    4.  Division XIII, Part B, shall be retitled PROCEDURE FOR
106 29 EXERCISE OF APPRAISAL RIGHTS.
106 30    Sec. 125.  EFFECTIVE DATE.  This Act takes effect January
106 31 1, 2003.  
106 32 
106 33 
106 34                                                             
106 35                               BRENT SIEGRIST
107  1                               Speaker of the House
107  2 
107  3 
107  4                                                             
107  5                               MARY E. KRAMER
107  6                               President of the Senate
107  7 
107  8    I hereby certify that this bill originated in the House and
107  9 is known as House File 2509, Seventy-ninth General Assembly.
107 10 
107 11 
107 12                                                             
107 13                               MARGARET THOMSON
107 14                               Chief Clerk of the House
107 15 Approved                , 2002
107 16 
107 17 
107 18                            
107 19 THOMAS J. VILSACK
107 20 Governor
     
Text: HF02508                           Text: HF02510
Text: HF02500 - HF02599                 Text: HF Index
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