Text: SF02284                           Text: SF02286
Text: SF02200 - SF02299                 Text: SF Index
Bills and Amendments: General Index     Bill History: General Index

Senate File 2285

Partial Bill History

• Bill Introduced: S.J. 389
• Committee Report Issued: S.J. 396
• Complete Bill History

Bill Text

PAG LIN
  1  1    Section 1.  Section 490.120, subsections 4, 7, 9, and 10,
  1  2 Code 2001, are amended to read as follows:
  1  3    4.  The document must be typewritten or printed.  If the
  1  4 document is electronically transmitted, it must be in a format
  1  5 that can be retrieved or reproduced in typewritten or printed
  1  6 form.
  1  7    7.  The person executing the document shall sign it and
  1  8 state beneath or opposite the person's signature, the person's
  1  9 name and the capacity in which the person signs.  The document
  1 10 may, but need not, contain:
  1 11    a.  The a corporate seals. seal,
  1 12    b.  An attestation by the secretary or an assistant
  1 13 secretary.
  1 14    c.  An attestation, acknowledgment, or verification, or
  1 15 proof.
  1 16    The secretary of state may accept for filing a document
  1 17 containing a copy of a signature, however made.
  1 18    9.  The document must be delivered to the office of the
  1 19 secretary of state for filing and must be accompanied by the
  1 20 correct filing fee.  Delivery may be made by electronic
  1 21 transmission if and to the extent permitted by the secretary
  1 22 of state.  If it is filed in typewritten or printed form and
  1 23 not transmitted electronically, the secretary of state may
  1 24 require one exact or conformed copy to be delivered with the
  1 25 document, except as provided in sections 490.503 and 490.1509.
  1 26    10.  The secretary of state may adopt rules for the
  1 27 electronic filing of documents and the certification of
  1 28 electronically filed documents.  When the document is
  1 29 delivered to the office of the secretary of state for filing,
  1 30 the correct filing fee, and any franchise tax, license fee, or
  1 31 penalty, shall be paid in a manner permitted by the secretary
  1 32 of state.
  1 33    Sec. 2.  Section 490.120, Code 2001, is amended by adding
  1 34 the following new subsection:
  1 35    NEW SUBSECTION.  11.  The secretary of state may adopt
  2  1 rules for the electronic filing of documents and the
  2  2 certification of electronically filed documents.
  2  3    Sec. 3.  Section 490.123, subsection 1, Code 2001, is
  2  4 amended to read as follows:
  2  5    1.  Except as provided in subsection 2 and section 490.124,
  2  6 subsection 3, a document accepted for filing is effective at
  2  7 the later of the following times:
  2  8    a.  At the date and time of filing on the date it is filed,
  2  9 as evidenced by such means as the secretary of state's date
  2 10 and time endorsement on the original document state may use
  2 11 for the purpose of recording the date and time of filing.
  2 12    b.  At the time specified in the document as its effective
  2 13 time on the date it is filed.
  2 14    Sec. 4.  Section 490.124, subsections 1 and 2, Code 2001,
  2 15 are amended to read as follows:
  2 16    1.  A domestic or foreign corporation may correct a
  2 17 document filed by the secretary of state if the document
  2 18 satisfies one or both of the following requirements:
  2 19    a.  Contains The document contains an incorrect statement
  2 20 inaccuracy.
  2 21    b.  Was The document was defectively executed, attested,
  2 22 sealed, verified, or acknowledged.
  2 23    c.  The electronic transmission was defective.
  2 24    2.  A document is corrected by complying with both of the
  2 25 following:
  2 26    a.  By preparing articles of correction that satisfy all of
  2 27 the following requirements:
  2 28    (1)  Describe the document, including its filing date, or
  2 29 attach a copy of it to the articles.
  2 30    (2)  Specify the incorrect statement and the reason it is
  2 31 incorrect or the manner in which the execution was defective
  2 32 inaccuracy or defect to be corrected.
  2 33    (3)  Correct the incorrect statement or defective execution
  2 34 inaccuracy or defect.
  2 35    b.  By delivering the articles to the secretary of state
  3  1 for filing.
  3  2    Sec. 5.  Section 490.125, subsection 2, Code 2001, is
  3  3 amended to read as follows:
  3  4    2.  The secretary of state files a document by stamping or
  3  5 otherwise endorsing "filed", together with the secretary's
  3  6 name and official title and recording it as filed on the date
  3  7 and time of receipt, on both the document and the receipt for
  3  8 the filing fee.  After filing a document, except the biennial
  3  9 report required by section 490.1622, and except as provided in
  3 10 sections 490.503 and 490.1509, the secretary of state shall
  3 11 deliver the document, with the filing fee receipt, or
  3 12 acknowledgment of receipt if no fee is required, attached, to
  3 13 the domestic or foreign corporation or its representative a
  3 14 copy of the document with an acknowledgement of the date and
  3 15 time of filing.
  3 16    Sec. 6.  Section 490.127, Code 2001, is amended to read as
  3 17 follows:
  3 18    490.127  EVIDENTIARY EFFECT OF COPY OF FILED DOCUMENT.
  3 19    A certificate attached to from the secretary of state
  3 20 delivered with a copy of a document filed by the secretary of
  3 21 state, bearing the secretary of state's signature, which may
  3 22 be in facsimile, and the seal of the secretary of state, is
  3 23 conclusive evidence that the original document is on file with
  3 24 the secretary of state.
  3 25    Sec. 7.  Section 490.140, subsection 6, Code Supplement
  3 26 2001, is amended to read as follows:
  3 27    6.  "Deliver" includes mail or "delivery" means any method
  3 28 of delivery used in conventional commercial practice,
  3 29 including delivery in person, and by mail, commercial
  3 30 delivery, and electronic transmission.
  3 31    Sec. 8.  Section 490.140, Code Supplement 2001, is amended
  3 32 by adding the following new subsections:
  3 33    NEW SUBSECTION.  8A.  "Electronic transmission" or
  3 34 "electronically transmitted" means any process of
  3 35 communication not directly involving the physical transfer of
  4  1 paper that is suitable for the retention, retrieval, and
  4  2 reproduction of information by the recipient.
  4  3    NEW SUBSECTION.  23A.  "Sign" or "signature" includes any
  4  4 manual, facsimile, conformed, or electronic signature.
  4  5    NEW SUBSECTION.  28.  "Voting power" means the current
  4  6 power to vote in the election of directors.
  4  7    Sec. 9.  Section 490.141, subsections 1, 2, 3, and 5, Code
  4  8 2001, are amended to read as follows:
  4  9    1.  Notice under this chapter must be in writing unless
  4 10 oral notice is reasonable under the circumstances.  Notice by
  4 11 electronic transmission is written notice.
  4 12    2.  Notice may be communicated in person; by telephone,
  4 13 telegraph, teletype, or other form of wire or wireless
  4 14 communication; or by mail or private carrier mail or other
  4 15 method of delivery; or by telephone, voice mail, or other
  4 16 electronic means.  If these forms of personal notice are
  4 17 impracticable, notice may be communicated by a newspaper of
  4 18 general circulation in the area where published; or by radio,
  4 19 television, or other form of public broadcast communication.
  4 20    3.  Written notice by a domestic or foreign corporation to
  4 21 its shareholder, if in a comprehensible form, is effective
  4 22 when mailed, according to one of the following:
  4 23    a.  Upon deposit in the United States mail, if mailed
  4 24 postpaid and correctly addressed to the shareholder's address
  4 25 shown in the corporation's current record of shareholders.
  4 26    b.  When electronically transmitted to the shareholder in a
  4 27 manner authorized by the shareholder.
  4 28    5.  Except as provided in subsection 3, written notice, if
  4 29 in a comprehensible form, is effective at the earliest of the
  4 30 following:
  4 31    a.  When received.
  4 32    b.  Five days after its deposit in the United States mail,
  4 33 as evidenced by the postmark, if mailed postpaid and correctly
  4 34 addressed.
  4 35    c.  On the date shown on the return receipt, if sent by
  5  1 registered or certified mail, return receipt requested, and
  5  2 the receipt is signed by or on behalf of the addressee.
  5  3    Sec. 10.  Section 490.202, subsection 2, Code 2001, is
  5  4 amended to read as follows:
  5  5    2.  The articles of incorporation may set forth any or all
  5  6 of the following:
  5  7    a.  The names and addresses of the individuals who are to
  5  8 serve as the initial directors.
  5  9    b.  Provisions not inconsistent with law regarding:
  5 10    (1)  The purpose or purposes for which the corporation is
  5 11 organized.
  5 12    (2)  Managing the business and regulating the affairs of
  5 13 the corporation.
  5 14    (3)  Defining, limiting, and regulating the powers of the
  5 15 corporation, its board of directors, and shareholders.
  5 16    (4)  A par value for authorized shares or classes of
  5 17 shares.
  5 18    (5)  The imposition of personal liability on shareholders
  5 19 for the debts of the corporation to a specified extent and
  5 20 upon specified conditions.
  5 21    c.  Any provision that under this chapter is required or
  5 22 permitted to be set forth in the bylaws.
  5 23    d.  A provision consistent with section 490.832.  A
  5 24 provision eliminating or limiting the liability of a director
  5 25 to the corporation or its shareholders for money damages for
  5 26 any action taken, or any failure to take any action, as a
  5 27 director, except liability for any of the following:
  5 28    (1)  The amount of a financial benefit received by a
  5 29 director to which the director is not entitled.
  5 30    (2)  An intentional infliction of harm on the corporation
  5 31 or the shareholders.
  5 32    (3)  A violation of section 490.833.
  5 33    (4)  An intentional violation of criminal law.
  5 34    e.  A provision permitting or making obligatory
  5 35 indemnification of a director for liability, as defined in
  6  1 section 490.850, subsection 5, to any person for any action
  6  2 taken, or any failure to take any action, as a director,
  6  3 except liability for any of the following:
  6  4    (1)  Receipt of a financial benefit to which the person is
  6  5 not entitled.
  6  6    (2)  An intentional infliction of harm on the corporation
  6  7 or its shareholders.
  6  8    (3)  A violation of section 490.833.
  6  9    (4)  An intentional violation of criminal law.
  6 10    f.  A provision eliminating or limiting the liability of a
  6 11 director to the corporation or its shareholders for money
  6 12 damages for any action taken, or any failure to take any
  6 13 action, as a director, except liability for any of the
  6 14 following:
  6 15    (1)  The amount of a financial benefit received by a
  6 16 director to which the director is not entitled.
  6 17    (2)  An intentional infliction of harm on the corporation
  6 18 or the shareholders.
  6 19    (3)  A violation of section 490.833.
  6 20    (4)  An intentional violation of criminal law.
  6 21    A provision shall not eliminate or limit the liability of a
  6 22 director for an act or omission occurring prior to the date
  6 23 when the provision in the articles of incorporation becomes
  6 24 effective.
  6 25    Sec. 11.  Section 490.621, Code 2001, is amended by adding
  6 26 the following new subsection:
  6 27    NEW SUBSECTION.  6.  a.  An issuance of shares or other
  6 28 securities convertible into or rights exercisable for shares,
  6 29 in a transaction or a series of integrated transactions,
  6 30 requires approval of the shareholders, at a meeting at which a
  6 31 quorum exists consisting of at least a majority of the votes
  6 32 entitled to be cast on the matter, if both of the following
  6 33 conditions are satisfied:
  6 34    (1)  The shares, other securities, or rights are issued for
  6 35 consideration other than cash or cash equivalents.
  7  1    (2)  The voting power of shares that are issued and
  7  2 issuable as a result of the transaction or series of
  7  3 integrated transactions will comprise more than twenty percent
  7  4 of the voting power of the shares of the corporation that were
  7  5 outstanding immediately before the transaction.
  7  6    b.  (1)  For purposes of determining the voting power of
  7  7 shares issued and issuable as a result of a transaction or
  7  8 series of integrated transactions, the voting power of shares
  7  9 shall be the greater of the following:
  7 10    (a)  The voting power of the shares to be issued.
  7 11    (b)  The voting power of the shares that would be
  7 12 outstanding after giving effect to the conversion of
  7 13 convertible shares and other securities and the exercise of
  7 14 rights to be issued.
  7 15    (2)  A series of transactions is integrated if consummation
  7 16 of one transaction is made contingent on consummation of one
  7 17 or more of the other transactions.
  7 18    Sec. 12.  Section 490.631, subsections 2 and 3, Code 2001,
  7 19 are amended to read as follows:
  7 20    2.  If the articles of incorporation prohibit the reissue
  7 21 of the acquired shares, the number of authorized shares is
  7 22 reduced by the number of shares acquired, effective upon
  7 23 amendment of the articles of incorporation.
  7 24    3.  The board of directors may adopt articles of amendment
  7 25 under this section without shareholder action, and deliver
  7 26 them to the secretary of state for filing.  The articles must
  7 27 set forth all of the following:
  7 28    a.  The name of the corporation.
  7 29    b.  The reduction in the number of authorized shares,
  7 30 itemized by class and series.
  7 31    c.  The total number of authorized shares, itemized by
  7 32 class and series, remaining after reduction of the shares.
  7 33    Sec. 13.  Section 490.640, Code 2001, is amended by adding
  7 34 the following new subsection:
  7 35    NEW SUBSECTION.  7.  This section shall not apply to
  8  1 distributions in liquidation under division XIV.
  8  2    Sec. 14.  Section 490.702, subsection 1, Code 2001, is
  8  3 amended to read as follows:
  8  4    1.  Except as provided in subsection 5, a corporation shall
  8  5 hold a special meeting of shareholders upon the occurrence of
  8  6 either of the following:
  8  7    a.  On call of its board of directors or the person or
  8  8 persons authorized to call a special meeting by the articles
  8  9 of incorporation or bylaws.
  8 10    b.  If the holders of at least ten percent of all the votes
  8 11 entitled to be cast on any issue proposed to be considered at
  8 12 the proposed special meeting sign, date, and deliver to the
  8 13 corporation's secretary corporation one or more written
  8 14 demands for the meeting describing the purpose or purposes for
  8 15 which it is to be held, provided that the articles of
  8 16 incorporation may fix a lower percentage or a higher
  8 17 percentage not exceeding twenty-five percent of all the votes
  8 18 entitled to be cast on any issue proposed to be considered.
  8 19 Unless otherwise provided in the articles of incorporation, a
  8 20 written demand for a special meeting may be revoked by a
  8 21 writing to that effect received by the corporation prior to
  8 22 the receipt by the corporation of demands sufficient in number
  8 23 to require the holding of a special meeting.
  8 24    Sec. 15.  Section 490.704, subsection 2, Code 2001, is
  8 25 amended to read as follows:
  8 26    2.  A written consent shall bear the date of signature of
  8 27 each shareholder who signs the consent and no written consent
  8 28 is effective to take the corporate action referred to in the
  8 29 consent unless, within sixty days of the earliest dated
  8 30 consent delivered in the manner required by this section to
  8 31 the corporation, written consents signed by a sufficient
  8 32 number of holders to take action are delivered to the
  8 33 corporation.  A written consent may be revoked by a writing to
  8 34 that effect received by the corporation prior to the receipt
  8 35 by the corporation of unrevoked written consents sufficient in
  9  1 number to take corporate action.
  9  2    Sec. 16.  NEW SECTION.  490.708  CONDUCT OF THE MEETING.
  9  3    1.  At each meeting of shareholders, a chairperson shall
  9  4 preside.  The chairperson shall be appointed as provided in
  9  5 the bylaws or, in the absence of such provisions, by the
  9  6 board.
  9  7    2.  The chairperson, unless the articles of incorporation
  9  8 or bylaws provide otherwise, shall determine the order of
  9  9 business and shall have the authority to establish rules for
  9 10 the conduct of the meeting.
  9 11    3.  Any rules adopted for, and the conduct of, the meeting
  9 12 shall be fair to shareholders.
  9 13    4.  The chairperson of the meeting shall announce at the
  9 14 meeting when the polls close for each matter voted upon.  If
  9 15 no announcement is made, the polls shall be deemed to have
  9 16 closed upon the final adjournment of the meeting.  After the
  9 17 polls close, no ballots, proxies, or votes nor any revocations
  9 18 or changes to any votes may be accepted.
  9 19    Sec. 17.  Section 490.722, subsections 2, 3, 4, and 8, Code
  9 20 2001, are amended to read as follows:
  9 21    2.  A shareholder or the shareholder's agent or attorney-
  9 22 in-fact may appoint a proxy to vote or otherwise act for the
  9 23 shareholder by signing an appointment form, either personally
  9 24 or by the shareholder's attorney-in-fact or by an electronic
  9 25 transmission.  An electronic transmission must contain or be
  9 26 accompanied by information from which one can determine that
  9 27 the shareholder, the shareholder's agent, or the shareholder's
  9 28 attorney-in-fact authorized the electronic transmission.
  9 29    3.  An appointment of a proxy is effective when a signed
  9 30 appointment form or an electronic transmission of the
  9 31 appointment is received by the secretary or other officer or
  9 32 agent inspector of election or the officer or agent of the
  9 33 corporation authorized to tabulate votes.  An appointment is
  9 34 valid for eleven months unless a longer period is expressly
  9 35 provided in the appointment form.
 10  1    4.  An appointment of a proxy is revocable by the
 10  2 shareholder unless the appointment form conspicuously or
 10  3 electronic transmission states that it is irrevocable and the
 10  4 appointment is coupled with an interest.  Appointments coupled
 10  5 with an interest include, but are not limited to, the
 10  6 appointment of:
 10  7    a.  A pledgee.
 10  8    b.  A person who purchased or agreed to purchase the
 10  9 shares.
 10 10    c.  A creditor of the corporation who extended it credit
 10 11 under terms requiring the appointment.
 10 12    d.  An employee of the corporation whose employment
 10 13 contract requires the appointment.
 10 14    e.  A party to a voting agreement created under section
 10 15 490.731.
 10 16    8.  Subject to section 490.724 and to any express
 10 17 limitation on the proxy's authority appearing on the face of
 10 18 stated in the appointment form or electronic transmission, a
 10 19 corporation is entitled to accept the proxy's vote or other
 10 20 action as that of the shareholder making the appointment.
 10 21    Sec. 18.  Section 490.724, subsections 4 and 5, Code 2001,
 10 22 are amended to read as follows:
 10 23    4.  The corporation and its officer or agent who accepts or
 10 24 rejects a vote, consent, waiver, or proxy appointment in good
 10 25 faith and in accordance with the standards of this section or
 10 26 section 490.722, subsection 2, are not liable in damages to
 10 27 the shareholder for the consequences of the acceptance or
 10 28 rejection.
 10 29    5.  Corporate action based on the acceptance or rejection
 10 30 of a vote, consent, waiver, or proxy appointment under this
 10 31 section or section 490.722, subsection 2, is valid unless a
 10 32 court of competent jurisdiction determines otherwise.
 10 33    Sec. 19.  Section 490.727, subsection 1, Code 2001, is
 10 34 amended to read as follows:
 10 35    1.  The articles of incorporation or bylaws may provide for
 11  1 a greater quorum or voting requirement for shareholders or
 11  2 voting groups of shareholders than is provided for by this
 11  3 chapter.
 11  4    Sec. 20.  Section 490.728, subsection 1, Code 2001, is
 11  5 amended to read as follows:
 11  6    1.  Unless otherwise provided in the articles of
 11  7 incorporation, directors are elected by a majority plurality
 11  8 of the votes cast by the shares entitled to vote in the
 11  9 election at a meeting at which a quorum is present.
 11 10    Sec. 21.  NEW SECTION.  490.729  INSPECTORS OF ELECTION.
 11 11    1.  A corporation having any shares listed on a national
 11 12 securities exchange or regularly traded in a market maintained
 11 13 by one or more members of a national or affiliated securities
 11 14 association shall, and any other corporation may, appoint one
 11 15 or more inspectors to act at a meeting of shareholders and
 11 16 make a written report of the inspectors' determinations.  Each
 11 17 inspector shall take and sign an oath faithfully to execute
 11 18 the duties of inspector with strict impartiality and according
 11 19 to the best of the inspector's ability.
 11 20    2.  The inspectors shall do all of the following:
 11 21    a.  Ascertain the number of shares outstanding and the
 11 22 voting power of each.
 11 23    b.  Determine the shares represented at a meeting.
 11 24    c.  Determine the validity of proxies and ballots.
 11 25    d.  Count all votes.
 11 26    e.  Determine the result.
 11 27    3.  An inspector may be an officer or employee of the
 11 28 corporation.
 11 29    Sec. 22.  NEW SECTION.  490.732  SHAREHOLDER AGREEMENTS.
 11 30    1.  An agreement among the shareholders of a corporation
 11 31 that complies with this section is effective among the
 11 32 shareholders and the corporation even though it is
 11 33 inconsistent with one or more other provisions of this chapter
 11 34 in that it does one of the following:
 11 35    a.  Eliminates the board of directors or restricts the
 12  1 discretion or powers of the board of directors.
 12  2    b.  Governs the authorization or making of distributions
 12  3 whether or not in proportion to ownership of shares, subject
 12  4 to the limitations in section 490.640.
 12  5    c.  Establishes who shall be directors or officers of the
 12  6 corporation, or their terms of office or manner of selection
 12  7 or removal.
 12  8    d.  Governs, in general or in regard to specific matters,
 12  9 the exercise or division of voting power by or between the
 12 10 shareholders and directors or by or among any of them,
 12 11 including use of weighted voting rights or director proxies.
 12 12    e.  Establishes the terms and conditions of any agreement
 12 13 for the transfer or use of property or the provision of
 12 14 services between the corporation and any shareholder,
 12 15 director, officer, or employee of the corporation, or among
 12 16 any of them.
 12 17    f.  Transfers to one or more shareholders or other persons
 12 18 all or part of the authority to exercise the corporate powers
 12 19 or to manage the business and affairs of the corporation,
 12 20 including the resolution of any issue about which there exists
 12 21 a deadlock among directors or shareholders.
 12 22    g.  Requires dissolution of the corporation at the request
 12 23 of one or more of the shareholders or upon the occurrence of a
 12 24 specified event or contingency.
 12 25    h.  Otherwise governs the exercise of the corporate powers
 12 26 or the management of the business and affairs of the
 12 27 corporation or the relationship among the shareholders, the
 12 28 directors, and the corporation, or among any of them, and is
 12 29 not contrary to public policy.
 12 30    2.  An agreement authorized by this section must satisfy
 12 31 all of the following requirements:
 12 32    a.  Be set forth in one of the following places and
 12 33 manners:
 12 34    (1)  The articles of incorporation or bylaws and approved
 12 35 by all persons who are shareholders at the time of the
 13  1 agreement.
 13  2    (2)  In a written agreement that is signed by all persons
 13  3 who are shareholders at the time of the agreement and is made
 13  4 known to the corporation.
 13  5    b.  Be subject to amendment only by all persons who are
 13  6 shareholders at the time of the amendment, unless the
 13  7 agreement provides otherwise.
 13  8    c.  Be valid for ten years, unless the agreement provides
 13  9 otherwise.
 13 10    3.  The existence of an agreement authorized by this
 13 11 section shall be noted conspicuously on the front or back of
 13 12 each certificate for outstanding shares or on the information
 13 13 statement required by section 490.626, subsection 2.  If at
 13 14 the time of the agreement the corporation has shares
 13 15 outstanding represented by certificates, the corporation shall
 13 16 recall the outstanding certificates and issue substitute
 13 17 certificates that comply with this section.  The failure to
 13 18 note the existence of the agreement on the certificate or
 13 19 information statement shall not affect the validity of the
 13 20 agreement or any action taken pursuant to it.  Any purchaser
 13 21 of shares who, at the time of purchase, did not have knowledge
 13 22 of the existence of the agreement shall be entitled to
 13 23 recision of the purchase.  A purchaser shall be deemed to have
 13 24 knowledge of the existence of the agreement if its existence
 13 25 is noted on the certificate or information statement for the
 13 26 shares in compliance with this section and, if the shares are
 13 27 not represented by a certificate, the information statement is
 13 28 delivered to the purchaser at or prior to the time of purchase
 13 29 of the shares.  An action to enforce the right of recision
 13 30 authorized by this subsection must be commenced within the
 13 31 earlier of ninety days after discovery of the existence of the
 13 32 agreement or two years after the time of purchase of the
 13 33 shares.
 13 34    4.  An agreement authorized by this section shall cease to
 13 35 be effective when shares of the corporation are listed on a
 14  1 national securities exchange or regularly traced in a market
 14  2 maintained by one or more members of a national or affiliated
 14  3 securities association.  If the agreement ceases to be
 14  4 effective for any reason, the board of directors may, if the
 14  5 agreement is contained or referred to in the corporation's
 14  6 articles of incorporation or bylaws, adopt an amendment to the
 14  7 articles of incorporation or bylaws, without shareholder
 14  8 action, to delete the agreement and any references to it.
 14  9    5.  An agreement authorized by this section that limits the
 14 10 discretion or powers of the board of directors shall relieve
 14 11 the directors of, and impose upon the person or persons in
 14 12 whom such discretion or powers are vested, liability for acts
 14 13 or omissions imposed by law on directors to the extent that
 14 14 the discretion or powers of the directors are limited by the
 14 15 agreement.
 14 16    6.  The existence or performance of an agreement authorized
 14 17 by this section shall not be a ground for imposing personal
 14 18 liability on any shareholder for the acts or debts of the
 14 19 corporation even if the agreement or its performance treats
 14 20 the corporation as if it were a partnership or results in
 14 21 failure to observe the corporate formalities otherwise
 14 22 applicable to the matters governed by the agreement.
 14 23    7.  Incorporators or subscribers for shares may act as
 14 24 shareholders with respect to an agreement authorized by this
 14 25 section if no shares have been issued when the agreement is
 14 26 made.
 14 27    Sec. 23.  Section 490.740, Code 2001, is amended by
 14 28 striking the section and inserting in lieu thereof the
 14 29 following:
 14 30    490.740  DEFINITIONS.
 14 31    In this part, unless the context otherwise requires:
 14 32    1.  "Derivative proceeding" means a civil suit in the right
 14 33 of a domestic corporation or, to the extent provided in
 14 34 section 490.747, in the right of a foreign corporation.
 14 35    2.  "Shareholder" includes a beneficial owner whose shares
 15  1 are held in a voting trust or held by a nominee on the
 15  2 beneficial owner's behalf.
 15  3    Sec. 24.  NEW SECTION.  490.741  STANDING.
 15  4    A shareholder shall not commence or maintain a derivative
 15  5 proceeding unless the shareholder satisfies both of the
 15  6 following:
 15  7    1.  Was a shareholder of the corporation at the time of the
 15  8 act or omission complained of or became a shareholder through
 15  9 transfer by operation of law from one who was a shareholder at
 15 10 that time.
 15 11    2.  Fairly and adequately represents the interests of the
 15 12 corporation in enforcing the right of the corporation.
 15 13    Sec. 25.  NEW SECTION.  490.742  DEMAND.
 15 14    A shareholder shall not commence a derivative proceeding
 15 15 until both of the following have occurred:
 15 16    1.  A written demand has been made upon the corporation to
 15 17 take suitable action.
 15 18    2.  Ninety days have expired from the date the demand was
 15 19 made, unless the shareholder has earlier been notified that
 15 20 the demand has been rejected by the corporation or unless
 15 21 irreparable injury to the corporation would result by waiting
 15 22 for the expiration of the ninety-day period.
 15 23    Sec. 26.  NEW SECTION.  490.743  STAY OF PROCEEDINGS.
 15 24    If the corporation commences an inquiry into the
 15 25 allegations made in the demand or complaint, the court may
 15 26 stay any derivative proceeding for a period of time as the
 15 27 court deems appropriate.
 15 28    Sec. 27.  NEW SECTION.  490.744  DISMISSAL.
 15 29    1.  A derivative proceeding shall be dismissed by the court
 15 30 on motion by the corporation if one of the groups specified in
 15 31 subsection 2 or 6 has determined in good faith after
 15 32 conducting a reasonable inquiry upon which its conclusions are
 15 33 based that the maintenance of the derivative proceeding is not
 15 34 in the best interests of the corporation.  A corporation
 15 35 moving to dismiss on this basis shall submit in support of the
 16  1 motion a short and concise statement of the reasons for its
 16  2 determination.
 16  3    2.  Unless a panel is appointed pursuant to subsection 6,
 16  4 the determination in subsection 1 shall be made by one of the
 16  5 following:
 16  6    a.  A majority vote of independent directors present at a
 16  7 meeting of the board of directors if the independent directors
 16  8 constitute a quorum.
 16  9    b.  A majority vote of a committee consisting of two or
 16 10 more independent directors appointed by majority vote of
 16 11 independent directors present at a meeting of the board of
 16 12 directors, whether or not such independent directors
 16 13 constitute a quorum.
 16 14    3.  None of the following shall by itself cause a director
 16 15 to be considered not independent for purposes of this section:
 16 16    a.  The nomination or election of the director by persons
 16 17 who are defendants in the derivative proceeding or against
 16 18 whom action is demanded.
 16 19    b.  The naming of the director as a defendant in the
 16 20 derivative proceeding or as a person against whom action is
 16 21 demanded.
 16 22    c.  The approval by the director of the act being
 16 23 challenged in the derivative proceeding or demand if the act
 16 24 resulted in no personal benefit to the director.
 16 25    4.  If a derivative proceeding is commenced after a
 16 26 determination has been made rejecting a demand by a
 16 27 shareholder, the complaint shall allege with particularity
 16 28 facts establishing one of the following:
 16 29    a.  That a majority of the board of directors did not
 16 30 consist of independent directors at the time the determination
 16 31 was made.
 16 32    b.  That the requirements of subsection 1 have not been
 16 33 met.
 16 34    All discovery and other proceedings shall be stayed during
 16 35 the pendency of any motion to dismiss unless the court finds
 17  1 upon the motion of any party that particularized discovery is
 17  2 necessary to preserve evidence or prevent undue prejudice to
 17  3 that party.
 17  4    5.  If a majority of the board of directors does not
 17  5 consist of independent directors at the time the determination
 17  6 is made, the corporation shall have the burden of proving that
 17  7 the requirements of subsection 1 have been met.  If a majority
 17  8 of the board of directors consists of independent directors at
 17  9 the time the determination is made, the plaintiff shall have
 17 10 the burden of proving that the requirements of subsection 1
 17 11 have not been met.
 17 12    6.  The court may appoint a panel of one or more
 17 13 independent persons upon motion by the corporation to make a
 17 14 determination whether the maintenance of the derivative
 17 15 proceeding is in the best interests of the corporation.  In
 17 16 such case, the plaintiff shall have the burden of proving that
 17 17 the requirements of subsection 1 have not been met.
 17 18    Sec. 28.  NEW SECTION.  490.745  DISCONTINUANCE OR
 17 19 SETTLEMENT.
 17 20    A derivative proceeding shall not be discontinued or
 17 21 settled without the court's approval.  If the court determines
 17 22 that a proposed discontinuance or settlement will
 17 23 substantially affect the interests of the corporation's
 17 24 shareholders or a class of shareholders, the court shall
 17 25 direct that notice be given to the shareholders affected.
 17 26    Sec. 29.  NEW SECTION.  490.746  PAYMENT OF EXPENSES.
 17 27    On termination of the derivative proceeding, the court may
 17 28 do either of the following:
 17 29    1.  Order the corporation to pay the plaintiff's reasonable
 17 30 expenses, including attorney fees incurred in the proceeding,
 17 31 if it finds that the proceeding has resulted in a substantial
 17 32 benefit to the corporation.
 17 33    2.  Order the plaintiff to pay any defendant's reasonable
 17 34 expenses, including attorney fees incurred in defending the
 17 35 proceeding, if it finds that the proceeding was commenced or
 18  1 maintained without reasonable cause or for an improper
 18  2 purpose.
 18  3    Sec. 30.  NEW SECTION.  490.747  APPLICABILITY TO FOREIGN
 18  4 CORPORATIONS.
 18  5    In any derivative proceeding in the right of a foreign
 18  6 corporation, the matters covered by this part shall be
 18  7 governed by the laws of the jurisdiction of incorporation of
 18  8 the foreign corporation except for sections 490.743, 490.745,
 18  9 and 490.746.
 18 10    Sec. 31.  Section 490.801, Code 2001, is amended to read as
 18 11 follows:
 18 12    490.801  REQUIREMENT FOR AND DUTIES OF BOARD OF DIRECTORS.
 18 13    1.  Except as provided in subsection 3 section 490.732,
 18 14 each corporation must have a board of directors.
 18 15    2.  All corporate powers shall be exercised by or under the
 18 16 authority of, and the business and affairs of the corporation
 18 17 managed by or under the direction of, its board of directors,
 18 18 subject to any limitation set forth in the articles of
 18 19 incorporation, or in an agreement authorized under section
 18 20 490.732.
 18 21    3.  A corporation having fifty or fewer shareholders may
 18 22 dispense with or limit the authority of a board of directors
 18 23 by describing in its articles of incorporation who will
 18 24 perform some or all of the duties of a board of directors.
 18 25    Sec. 32.  Section 490.803, subsections 2, 3, and 4, Code
 18 26 2001, are amended to read as follows:
 18 27    2.  If a board of directors has power to fix or change the
 18 28 number of directors, the board may increase or decrease by
 18 29 thirty percent or less the number of directors last approved
 18 30 by the shareholders, but only the shareholders may increase or
 18 31 decrease by more than thirty percent the number of directors
 18 32 last approved by the shareholders.  The number of directors
 18 33 may be increased or decreased from time to time by amendment
 18 34 to, or in the manner provided in, the articles of
 18 35 incorporation or the bylaws.
 19  1    3.  The articles of incorporation or bylaws may establish a
 19  2 variable range for the size of the board of directors by
 19  3 fixing a minimum and maximum number of directors.  If a
 19  4 variable range is established, the number of directors may be
 19  5 fixed or changed from time to time, within the minimum and
 19  6 maximum, by the shareholders or the board of directors.  After
 19  7 shares are issued, only the shareholders may change the range
 19  8 for the size of the board or change from a fixed to a
 19  9 variable-range size board or vice versa.
 19 10    4. 3.  Directors are elected at the first annual
 19 11 shareholders' meeting and at each annual meeting thereafter
 19 12 unless their terms are staggered under section 490.806.
 19 13    Sec. 33.  Section 490.809, Code 2001, is amended to read as
 19 14 follows:
 19 15    490.809  REMOVAL OF DIRECTORS BY JUDICIAL PROCEEDING.
 19 16    1.  The district court of the county where a corporation's
 19 17 principal office or, if none in this state, its registered
 19 18 office is located may remove a director of the corporation
 19 19 from office in a proceeding commenced either by or in the
 19 20 right of the corporation or by its shareholders holding at
 19 21 least twenty percent of the outstanding shares of any class if
 19 22 the court finds that both of the following apply:
 19 23    a.  The director engaged in fraudulent or dishonest conduct
 19 24 with respect to the corporation or its shareholders, grossly
 19 25 abused the position of director, or intentionally inflicted
 19 26 harm on the corporation.
 19 27    b.  Removal is Considering the director's course of conduct
 19 28 and the inadequacy of other available remedies, removal would
 19 29 be in the best interest of the corporation.
 19 30    2.  A shareholder proceeding on behalf of the corporation
 19 31 under subsection 1 shall comply with all of the requirements
 19 32 of division VII, part D, except section 490.741.
 19 33    2. 3.  The court that removes a, in addition to removing
 19 34 the director, may bar the director from reelection for a
 19 35 period prescribed by the court.
 20  1    3.  If shareholders commence a proceeding under subsection
 20  2 1, they shall make the corporation a party defendant.
 20  3    4.  This section does not limit the equitable powers of the
 20  4 court to order other relief.
 20  5    Sec. 34.  Section 490.821, Code 2001, is amended to read as
 20  6 follows:
 20  7    490.821  ACTION WITHOUT MEETING.
 20  8    1.  Unless Except to the extent that the articles of
 20  9 incorporation or bylaws provide otherwise require that action
 20 10 by the board of directors be taken at a meeting, action
 20 11 required or permitted by this chapter to be taken at a by the
 20 12 board of directors' meeting directors may be taken without a
 20 13 meeting if the action is taken by all members of the board.
 20 14 The action must be evidenced by one or more written consents
 20 15 each director signs a consent describing the action to be
 20 16 taken, signed by each director, and included in the minutes or
 20 17 filed with the corporate records reflecting the action taken
 20 18 and delivers it to the corporation.
 20 19    2.  Action taken under this section is effective when the
 20 20 last director signs the consent, unless the consent specifies
 20 21 a different effective date the act of the board of directors
 20 22 when one or more consents signed by all the directors are
 20 23 delivered to the corporation.  The consent may specify the
 20 24 time at which the action taken is to be effective.  A
 20 25 director's consent may be withdrawn by revocation signed by
 20 26 the director and delivered to the corporation prior to
 20 27 delivery to the corporation of unrevoked written consents
 20 28 signed by all the directors.
 20 29    3.  A consent signed under this section has the effect of a
 20 30 meeting vote an action taken at a meeting of the board of
 20 31 directors and may be described as such in any document.
 20 32    Sec. 35.  Section 490.824, subsection 1, unnumbered
 20 33 paragraph 1, Code 2001, is amended to read as follows:
 20 34    Unless the articles of incorporation or bylaws require a
 20 35 different number, or unless otherwise specifically provided in
 21  1 this chapter, a quorum of a board of directors consists of
 21  2 either:
 21  3    Sec. 36.  Section 490.825, Code 2001, is amended to read as
 21  4 follows:
 21  5    490.825  COMMITTEES.
 21  6    1.  Unless this chapter, the articles of incorporation, or
 21  7 the bylaws provide otherwise, a board of directors may create
 21  8 one or more committees and appoint one or more members of the
 21  9 board of directors to serve on them any committee.  Each
 21 10 committee may have two or more members, who serve at the
 21 11 pleasure of the board of directors.
 21 12    2.  The Unless this chapter provides otherwise, the
 21 13 creation of a committee and appointment of members to it must
 21 14 be approved by the greater of either:
 21 15    a.  A majority of all the directors in office when the
 21 16 action is taken.
 21 17    b.  The number of directors required by the articles of
 21 18 incorporation or bylaws to take action under section 490.824.
 21 19    3.  Sections 490.820 through 490.824, which govern
 21 20 meetings, action without meetings, notice and waiver of
 21 21 notice, and quorum and voting requirements of the board of
 21 22 directors, apply both to committees of the board and to their
 21 23 members as well.
 21 24    4.  To the extent specified by the board of directors or in
 21 25 the articles of incorporation or bylaws, each committee may
 21 26 exercise the authority powers of the board of directors under
 21 27 section 490.801.
 21 28    5.  A committee shall not, however:
 21 29    a.  Authorize or approve distributions, except according to
 21 30 formula or method, or within limits, prescribed by the board
 21 31 of directors.
 21 32    b.  Approve or propose to shareholders action that this
 21 33 chapter requires be approved by shareholders.
 21 34    c.  Fill vacancies on the board of directors or, subject to
 21 35 subsection 7, on any of its committees.
 22  1    d.  Amend articles of incorporation pursuant to section
 22  2 490.1002.
 22  3    e. d.  Adopt, amend, or repeal bylaws.
 22  4    f.  Approve a plan of merger not requiring shareholder
 22  5 approval.
 22  6    g.  Authorize or approve reacquisition of shares, except
 22  7 according to a formula or method prescribed by the board of
 22  8 directors.
 22  9    h.  Authorize or approve the issuance or sale or contract
 22 10 for sale of shares, or determine the designation and relative
 22 11 rights, preferences, and limitations of a class or series of
 22 12 shares, except that the board of directors may authorize a
 22 13 committee or a senior executive officer of the corporation to
 22 14 do so within limits specifically prescribed by the board of
 22 15 directors.
 22 16    6.  The creation of, delegation of authority to, or action
 22 17 by a committee does not alone constitute compliance by a
 22 18 director with the standards of conduct described in section
 22 19 490.830.
 22 20    7.  The board of directors may appoint one or more
 22 21 directors as alternate members of any committee to replace any
 22 22 absent or disqualified member during the member's absence or
 22 23 disqualification.  Unless the articles of incorporation or the
 22 24 bylaws or the resolution creating the committee provide
 22 25 otherwise, in the event of the absence or disqualification of
 22 26 a member of a committee, the member or members present at any
 22 27 meeting and not disqualified from voting, unanimously, may
 22 28 appoint another director to act in place of the absent or
 22 29 disqualified member.
 22 30    Sec. 37.  Section 490.830, Code 2001, is amended to read as
 22 31 follows:
 22 32    490.830  GENERAL STANDARDS OF CONDUCT FOR DIRECTORS.
 22 33    1.  A director Each member of the board of directors, when
 22 34 discharging the duties of a director, shall discharge that
 22 35 director's duties as a director, including the director's
 23  1 duties as a member of a committee act in conformity with all
 23  2 of the following:
 23  3    a.  In good faith.
 23  4    b.  With the care an ordinarily prudent person in a like
 23  5 position would exercise under similar circumstances.
 23  6    c. b.  In a manner the director reasonably believes to be
 23  7 in the best interests of the corporation.
 23  8    2.  The members of the board of directors or a committee of
 23  9 the board, when becoming informed in connection with their
 23 10 decision-making function or devoting attention to their
 23 11 oversight function, shall discharge their duties with the care
 23 12 that a person in a like position would reasonably believe
 23 13 appropriate under similar circumstances.
 23 14    3.  In discharging board or committee duties, a director
 23 15 who does not have knowledge that makes reliance unwarranted is
 23 16 entitled to rely on the performance by any of the persons
 23 17 specified in subsection 5 to whom the board may have
 23 18 delegated, formally or informally by course of conduct, the
 23 19 authority or duty to perform one or more of the board's
 23 20 functions that are delegable under applicable law.
 23 21    2. 4.  In discharging the director's board or committee
 23 22 duties a director, who does not have knowledge that makes
 23 23 reliance unwarranted, is entitled to rely on information,
 23 24 opinions, reports, or statements, including financial
 23 25 statements and other financial data, if prepared or presented
 23 26 by any of the following: persons specified in subsection 5.
 23 27    5.  A director is entitled to rely, in accordance with
 23 28 subsection 3 or 4, on any of the following:
 23 29    a.  One or more officers or employees of the corporation
 23 30 whom the director reasonably believes to be reliable and
 23 31 competent in the matters presented functions performed or the
 23 32 information, opinions, reports, or statements provided.
 23 33    b.  Legal counsel, public accountants, or other persons as
 23 34 to matters involving skills or expertise the director
 23 35 reasonably believes are either of the following:
 24  1    (1)  Matters within the particular person's professional or
 24  2 expert competence.
 24  3    (2)  Matters as to which the particular person merits
 24  4 confidence.
 24  5    c.  A committee of the board of directors of which the
 24  6 director is not a member if the director reasonably believes
 24  7 the committee merits confidence.
 24  8    3.  A director is not acting in good faith if the director
 24  9 has knowledge concerning the matter in question that makes
 24 10 reliance otherwise permitted by subsection 2 unwarranted.
 24 11    4.  A director is not liable for any action taken as a
 24 12 director, or any failure to take any action, if the director
 24 13 performed the duties of the director's office in compliance
 24 14 with this section, or if, and to the extent that, liability
 24 15 for any such action or failure to act has been limited by the
 24 16 articles of incorporation pursuant to section 490.832.
 24 17    Sec. 38.  Section 490.831, Code 2001, is amended by
 24 18 striking the section and inserting in lieu thereof the
 24 19 following:
 24 20    490.831  STANDARDS OF LIABILITY FOR DIRECTORS.
 24 21    1.  A director shall not be liable to the corporation or
 24 22 its shareholders for any decision as director to take or not
 24 23 to take action, or any failure to take any action, unless the
 24 24 party asserting liability in a proceeding establishes both of
 24 25 the following:
 24 26    a.  That any provision in the articles of incorporation
 24 27 authorized by section 490.202, subsection 2, paragraph "d", or
 24 28 the protection afforded by section 490.861 for action taken in
 24 29 compliance with section 490.862 or 490.863 if interposed as a
 24 30 bar to the proceeding by the director, does not preclude
 24 31 liability.
 24 32    b.  That the challenged conduct consisted or was the result
 24 33 of one of the following:
 24 34    (1)  Action not in good faith.
 24 35    (2)  A decision that satisfies one of the following:
 25  1    (a)  That the director did not reasonably believe to be in
 25  2 the best interests of the corporation.
 25  3    (b)  As to which the director was not informed to an extent
 25  4 the director reasonably believed appropriate in the
 25  5 circumstances.
 25  6    (3)  A lack of objectivity due to the director's familial,
 25  7 financial, or business relationship with, or a lack of
 25  8 independence due to the director's domination or control by,
 25  9 another person having a material interest in the challenged
 25 10 conduct, which also meets both of the following criteria:
 25 11    (a)  Which relationship or which domination or control
 25 12 could reasonably be expected to have affected the director's
 25 13 judgment respecting the challenged conduct in a manner adverse
 25 14 to the corporation.
 25 15    (b)  After a reasonable expectation to such effect has been
 25 16 established, the director shall not have established that the
 25 17 challenged conduct was reasonably believed by the director to
 25 18 be in the best interests of the corporation.
 25 19    (4)  A sustained failure of the director to devote
 25 20 attention to ongoing oversight of the business and affairs of
 25 21 the corporation, or a failure to devote timely attention, by
 25 22 making, or causing to be made, appropriate inquiry, when
 25 23 particular facts and circumstances of significant concern
 25 24 materialize that would alert a reasonably attentive director
 25 25 to the need for such oversight, attention, or inquiry.
 25 26    (5)  Receipt of a financial benefit to which the director
 25 27 was not entitled or any other breach of the director's duties
 25 28 to deal fairly with the corporation and its shareholders that
 25 29 is actionable under applicable law.
 25 30    2.  a.  A party seeking to hold the director liable for
 25 31 money damages shall also have the burden of establishing both
 25 32 of the following:
 25 33    (1)  That harm to the corporation or its shareholders has
 25 34 been suffered.
 25 35    (2)  The harm suffered was proximately caused by the
 26  1 director's challenged conduct.
 26  2    b.  A party seeking to hold the director liable for other
 26  3 money payment under a legal remedy, such as compensation for
 26  4 the unauthorized use of corporate assets, shall also have
 26  5 whatever persuasion burden may be called for to establish that
 26  6 the payment sought is appropriate in the circumstances.
 26  7    c.  A party seeking to hold the director liable for other
 26  8 money payment under an equitable remedy, such as profit
 26  9 recovery by or disgorgement to the corporation, shall also
 26 10 have whatever persuasion burden may be called for to establish
 26 11 that the equitable remedy sought is appropriate in the
 26 12 circumstances.
 26 13    3.  This section shall not do any of the following:
 26 14    a.  In any instance where fairness is at issue, such as
 26 15 consideration of the fairness of a transaction to the
 26 16 corporation under section 490.861, subsection 2, paragraph
 26 17 "c", alter the burden of proving the fact or lack of fairness
 26 18 otherwise applicable.
 26 19    b.  Alter the fact or lack of liability of a director under
 26 20 another section of this chapter, such as the provisions
 26 21 governing the consequences of an unlawful distribution under
 26 22 section 490.833 or a transactional interest under section
 26 23 490.861.
 26 24    c.  Affect any rights to which the corporation or a
 26 25 shareholder may be entitled under another statute of this
 26 26 state or the United States.
 26 27    Sec. 39.  Section 490.833, Code 2001, is amended to read as
 26 28 follows:
 26 29    490.833  LIABILITY FOR UNLAWFUL DISTRIBUTION.
 26 30    1.  Unless the director complies with the applicable
 26 31 standards of conduct described in section 490.830, a A
 26 32 director who votes for or assents to a distribution made in
 26 33 violation of this chapter or the articles of incorporation in
 26 34 excess of what may be authorized and made pursuant to section
 26 35 490.640, subsection 1, or section 490.1409, subsection 1, is
 27  1 personally liable to the corporation for the amount of the
 27  2 distribution that exceeds what could have been distributed
 27  3 without violating this chapter or the articles of
 27  4 incorporation section 490.640, subsection 1, or section
 27  5 490.1409, subsection 1, if the party asserting liability
 27  6 establishes that when taking the action the director did not
 27  7 comply with section 490.830.
 27  8    2.  A director held liable for an unlawful distribution
 27  9 under subsection 1 is entitled to contribution from both of
 27 10 the following:
 27 11    a.  Every Contribution from every other director who voted
 27 12 for or assented to the distribution without complying with the
 27 13 applicable standards of conduct described in section 490.830
 27 14 could be held liable under subsection 1 for the unlawful
 27 15 distribution.
 27 16    b.  Each Recoupment from each shareholder for of the pro
 27 17 rata portion of the amount of the unlawful distribution the
 27 18 shareholder accepted, knowing the distribution was made in
 27 19 violation of this chapter or the articles of incorporation
 27 20 section 490.640, subsection 1, or section 490.1409, subsection
 27 21 1.
 27 22    3.  a.  A proceeding to enforce the liability of a director
 27 23 under subsection 1 is barred unless it is commenced within two
 27 24 years after one of the following dates:
 27 25    (1)  The date on which the effect of the distribution was
 27 26 measured under section 490.640, subsection 5 or 7.
 27 27    (2)  The date as of which the violation of section 490.640,
 27 28 subsection 1, occurred as the consequence of disregard of a
 27 29 restriction in the articles of incorporation.
 27 30    (3)  The date on which the distribution of assets to
 27 31 shareholders under section 490.1409, subsection 1, was made.
 27 32    b.  A proceeding to enforce contribution or recoupment
 27 33 under subsection 2 is barred unless it is commenced within one
 27 34 year after the liability of the claimant has been finally
 27 35 adjudicated under subsection 1.
 28  1    Sec. 40.  Section 490.840, Code 2001, is amended to read as
 28  2 follows:
 28  3    490.840  REQUIRED OFFICERS.
 28  4    1.  A corporation has the officers offices described in its
 28  5 bylaws or appointed designated by the board of directors in
 28  6 accordance with the bylaws.
 28  7    2.  A duly appointed The board of directors may elect
 28  8 individuals to fill one or more offices of the corporation.
 28  9 An officer may appoint one or more officers or assistant
 28 10 officers if authorized by the bylaws or the board of
 28 11 directors.
 28 12    3.  The bylaws or the board of directors shall delegate
 28 13 assign to one of the officers responsibility for preparing
 28 14 minutes of the directors' and shareholders' meetings and for
 28 15 maintaining and authenticating the records of the corporation
 28 16 required to be kept under section 490.1601, subsections 1 and
 28 17 5.
 28 18    4.  The same individual may simultaneously hold more than
 28 19 one office in a corporation.
 28 20    Sec. 41.  Section 490.842, Code 2001, is amended to read as
 28 21 follows:
 28 22    490.842  STANDARDS OF CONDUCT FOR OFFICERS.
 28 23    1.  An officer with discretionary authority shall discharge
 28 24 the officer's duties under that authority when performing in
 28 25 such capacity shall act in conformity with all of the
 28 26 following:
 28 27    a.  In good faith.
 28 28    b.  With the care an ordinarily prudent that a person in a
 28 29 like position would reasonably exercise under similar
 28 30 circumstances.
 28 31    c.  In a manner the officer reasonably believes to be in
 28 32 the best interests of the corporation.
 28 33    2.  In discharging the person's officer's duties an
 28 34 officer, who does not have knowledge that makes reliance
 28 35 unwarranted, is entitled to rely on information, opinions,
 29  1 reports, or statements, including financial statements and
 29  2 other financial data, if prepared or presented by either any
 29  3 of the following:
 29  4    a.  The performance of properly delegated responsibilities
 29  5 by one or more employees of the corporation whom the officer
 29  6 reasonably believes to be reliable and competent in performing
 29  7 the responsibilities delegated.
 29  8    a. b.  One Information, opinions, reports, or statements,
 29  9 including financial statements and other financial data,
 29 10 prepared or presented by one or more officers or employees of
 29 11 the corporation whom the officer reasonably believes to be
 29 12 reliable and competent in the matters presented.
 29 13    b. c.  Legal counsel, public accountants, or other persons
 29 14 retained by the corporation as to matters involving skills or
 29 15 expertise the officer reasonably believes are matters within
 29 16 the particular person's professional or expert competence, or
 29 17 in which the particular person merits confidence.
 29 18    3.  An officer is not acting in good faith if the officer
 29 19 has knowledge concerning the matter in question that makes
 29 20 reliance otherwise permitted by subsection 2 unwarranted.  An
 29 21 officer shall not be liable as an officer to the corporation
 29 22 or its shareholders for any decision to take or not to take
 29 23 action, or any failure to take any action, if the duties of
 29 24 the officer are performed in compliance with this section.
 29 25 Whether an officer who does not comply with this section shall
 29 26 have liability will depend in such instance on applicable law,
 29 27 including those principles of section 490.831 that have
 29 28 relevance.
 29 29    4.  An officer is not liable for any action taken as an
 29 30 officer, or any failure to take any action, if the officer
 29 31 performed the duties of the officer's office in compliance
 29 32 with this section.
 29 33    Sec. 42.  Section 490.843, Code 2001, is amended to read as
 29 34 follows:
 29 35    490.843  RESIGNATION AND REMOVAL OF OFFICERS.
 30  1    1.  An officer may resign at any time by delivering notice
 30  2 to the corporation.  A resignation is effective when the
 30  3 notice is delivered unless the notice specifies a later
 30  4 effective date time.  If a resignation is made effective at a
 30  5 later date time and the corporation board or appointing
 30  6 officer accepts the future effective date time, its the board
 30  7 of directors or the appointing officer may fill the pending
 30  8 vacancy before the effective date time if the board of
 30  9 directors or appointing officer provides that the successor
 30 10 does not take office until the effective date time.  A
 30 11 resignation may be orally communicated provided that the
 30 12 resignation is effective only if written notice of the
 30 13 resignation is delivered within twenty-four hours of such oral
 30 14 communication.
 30 15    2.  A board of directors may remove any An officer may be
 30 16 removed at any time with or without cause by any of the
 30 17 following:
 30 18    a.  The board of directors.
 30 19    b.  The officer who appointed such officer, unless the
 30 20 bylaws of the board of directors provide otherwise.
 30 21    c.  Any other officer if authorized by the bylaws of the
 30 22 board of directors.
 30 23    3.  In this section, "appointing officer" means the
 30 24 officer, including any successor to that officer, who
 30 25 appointed the officer resigning or being removed.
 30 26    Sec. 43.  Section 490.850, Code 2001, is amended to read as
 30 27 follows:
 30 28    490.850  DEFINITIONS.
 30 29    As used in this part of this chapter, unless the context
 30 30 otherwise requires:
 30 31    1.  "Corporation" includes any domestic or foreign
 30 32 predecessor entity of a corporation in a merger or other
 30 33 transaction in which the predecessor's existence ceased upon
 30 34 consummation of the transaction.
 30 35    2.  "Director" or "officer" means an individual who is or
 31  1 was a director or officer, respectively, of a corporation or
 31  2 an individual who, while a director or officer of a the
 31  3 corporation, is or was serving at the corporation's request as
 31  4 a director, officer, partner, trustee, employee, or agent of
 31  5 another foreign or domestic or foreign corporation,
 31  6 partnership, joint venture, trust, employee benefit plan, or
 31  7 other enterprise entity.  A director or officer is considered
 31  8 to be serving an employee benefit plan at the corporation's
 31  9 request if the director's duties to the corporation also
 31 10 impose duties on, or otherwise involve services by, that
 31 11 director to the plan or to participants in or beneficiaries of
 31 12 the plan.  "Director" or "officer" includes, unless the
 31 13 context requires otherwise, the estate or personal
 31 14 representative of a director or officer.
 31 15    3.  "Disinterested director" means a director who at the
 31 16 time of a vote referred to in section 490.853, subsection 3,
 31 17 or a vote or selection referred to in section 490.855,
 31 18 subsection 2 or 3, is not either of the following:
 31 19    a.  A party to the proceeding.
 31 20    b.  An individual having a familial, financial,
 31 21 professional, or employment relationship with the director
 31 22 whose indemnification or advance for expenses is the subject
 31 23 of the decision being made, which relationship would, in the
 31 24 circumstances, reasonably be expected to exert an influence on
 31 25 the director's judgment when voting on the decision being
 31 26 made.
 31 27    3. 4.  "Expenses" include includes counsel fees.
 31 28    4. 5.  "Liability" means the obligation to pay a judgment,
 31 29 settlement, penalty, fine, including an excise tax assessed
 31 30 with respect to an employee benefit plan, or reasonable
 31 31 expenses incurred with respect to a proceeding.
 31 32    5. 6.  "Official capacity" means:
 31 33    a.  When used with respect to a director, the office of
 31 34 director in a corporation.
 31 35    b.  When used with respect to an individual other than a
 32  1 director officer, as contemplated in section 490.856, the
 32  2 office in a corporation held by the officer or the employment
 32  3 or agency relationship undertaken by the employee or agent on
 32  4 behalf of the corporation.
 32  5    "Official capacity" does not include service for any other
 32  6 foreign or domestic or foreign corporation or any partnership,
 32  7 joint venture, trust, employee benefit plan, or other
 32  8 enterprise entity.
 32  9    6. 7.  "Party" includes means an individual who was, is, or
 32 10 is threatened to be made a named defendant or respondent in a
 32 11 proceeding.
 32 12    7. 8.  "Proceeding" means any threatened, pending, or
 32 13 completed action, suit, or proceeding, whether civil,
 32 14 criminal, administrative, or investigative and whether formal
 32 15 or informal.
 32 16    Sec. 44.  Section 490.851, Code 2001, is amended to read as
 32 17 follows:
 32 18    490.851  AUTHORITY TO INDEMNIFY PERMISSIBLE
 32 19 INDEMNIFICATION.
 32 20    1.  Except as otherwise provided in subsection 4 this
 32 21 section, a corporation may indemnify an individual made who is
 32 22 a party to a proceeding because the individual is or was a
 32 23 director against liability incurred in the proceeding if all
 32 24 of the following apply:
 32 25    a.  The individual acted in good faith.
 32 26    b.  The individual reasonably believed:
 32 27    (1)  In the case of conduct in the individual's official
 32 28 capacity with the corporation, that the individual's conduct
 32 29 was in the corporation's best interests.
 32 30    (2)  In all other cases, that the individual's conduct was
 32 31 at least not opposed to the corporation's best interests.
 32 32    c.  In the case of any criminal proceeding, the individual
 32 33 had no reasonable cause to believe the individual's conduct
 32 34 was unlawful, or the individual engaged in conduct for which
 32 35 broader indemnification has been made permissible or
 33  1 obligatory under a provision of the articles of incorporation
 33  2 as authorized by section 490.202, subsection 2, paragraph "e".
 33  3    2.  A director's conduct with respect to an employee
 33  4 benefit plan for a purpose the director reasonably believed to
 33  5 be in the interests of the participants in and beneficiaries
 33  6 of the plan is conduct that satisfies the requirement of
 33  7 subsection 1, paragraph "b", subparagraph (2).
 33  8    3.  The termination of a proceeding by judgment, order,
 33  9 settlement, conviction, or upon a plea of nolo contendere or
 33 10 its equivalent is not, of itself, determinative that the
 33 11 director did not meet the relevant standard of conduct
 33 12 described in this section.
 33 13    4.  A Unless ordered by a court under section 490.854,
 33 14 subsection 1, paragraph "c", a corporation shall not indemnify
 33 15 a director under this section in either of the following
 33 16 circumstances:
 33 17    a.  In connection with a proceeding by or in the right of
 33 18 the corporation in which the director was adjudged liable to
 33 19 the corporation, except for reasonable expenses incurred in
 33 20 connection with the proceeding if it is determined that the
 33 21 director has met the relevant standard of conduct under
 33 22 subsection 1.
 33 23    b.  In connection with any other proceeding charging
 33 24 improper personal benefit to the director, whether or not
 33 25 involving action in the director's official capacity, in with
 33 26 respect to conduct for which the director was adjudged liable
 33 27 on the basis that personal the director received a financial
 33 28 benefit was improperly received by the director to which the
 33 29 director was not entitled, whether or not involving action in
 33 30 the director's official capacity.
 33 31    5.  Indemnification permitted under this section in
 33 32 connection with a proceeding by or in the right of the
 33 33 corporation is limited to reasonable expenses incurred in
 33 34 connection with the proceeding.
 33 35    Sec. 45.  Section 490.852, Code 2001, is amended to read as
 34  1 follows:
 34  2    490.852  MANDATORY INDEMNIFICATION.
 34  3    Unless limited by its articles of incorporation, a A
 34  4 corporation shall indemnify a director who was wholly
 34  5 successful, on the merits or otherwise, in the defense of any
 34  6 proceeding to which the director was a party because the
 34  7 director is or was a director of the corporation against
 34  8 reasonable expenses incurred by the director in connection
 34  9 with the proceeding.
 34 10    Sec. 46.  Section 490.853, Code 2001, is amended to read as
 34 11 follows:
 34 12    490.853  ADVANCE FOR EXPENSES.
 34 13    1.  A corporation may, before final disposition of a
 34 14 proceeding, advance funds to pay for or reimburse the
 34 15 reasonable expenses incurred by a director who is a party to a
 34 16 proceeding in advance of final disposition of the proceeding
 34 17 because the person is a director if any of the person delivers
 34 18 all of the following apply to the corporation:
 34 19    a.  The director furnishes the corporation a A written
 34 20 affirmation of the director's good faith belief that the
 34 21 director has met the relevant standard of conduct described in
 34 22 section 490.851 or that the proceeding involved conduct for
 34 23 which liability has been eliminated under a provision of the
 34 24 articles of incorporation as authorized by section 490.202,
 34 25 subsection 2, paragraph "d".
 34 26    b.  The director furnishes the corporation a The director's
 34 27 written undertaking, executed personally or on the director's
 34 28 behalf, to repay the advance any funds advanced if the
 34 29 director is not entitled to mandatory indemnification under
 34 30 section 490.852 and it is ultimately determined under section
 34 31 490.854 or section 490.855 that the director did not meet that
 34 32 has not met the relevant standard of conduct described in
 34 33 section 490.851.
 34 34    c.  A determination is made that the facts then known to
 34 35 those making the determination would not preclude
 35  1 indemnification under this part.
 35  2    2.  The undertaking required by subsection 1, paragraph
 35  3 "b", must be an unlimited general obligation of the director
 35  4 but need not be secured and may be accepted without reference
 35  5 to the financial ability of the director to make repayment.
 35  6    3.  Determinations and authorizations Authorizations of
 35  7 payments under this section shall be made in the manner
 35  8 specified in section 490.855 according to one of the
 35  9 following:
 35 10    a.  By the board of directors:
 35 11    (1)  If there are two or more disinterested directors, by a
 35 12 majority vote of all the disinterested directors, a majority
 35 13 of whom shall for such purpose constitute a quorum, or by a
 35 14 majority of the members of a committee of two or more
 35 15 disinterested directors appointed by such a vote.
 35 16    (2)  If there are fewer than two disinterested directors,
 35 17 by the vote necessary for action by the board in accordance
 35 18 with section 490.824, subsection 3, in which authorization
 35 19 directors who do not qualify as disinterested directors may
 35 20 participate.
 35 21    b.  By the shareholders, but shares owned by or voted under
 35 22 the control of a director who at the time does not qualify as
 35 23 a disinterested director may not be voted on the
 35 24 authorization.
 35 25    Sec. 47.  Section 490.854, Code 2001, is amended to read as
 35 26 follows:
 35 27    490.854  COURT-ORDERED INDEMNIFICATION.
 35 28    1.  Unless a corporation's articles of incorporation
 35 29 provide otherwise, a A director of the corporation who is a
 35 30 party to a proceeding because the person is a director may
 35 31 apply for indemnification or an advance for expenses to the
 35 32 court conducting the proceeding or to another court of
 35 33 competent jurisdiction.  On After receipt of an application,
 35 34 the court and after giving any notice the court it considers
 35 35 necessary may order, the court shall do one of the following:
 36  1    a.  Order indemnification if it the court determines either
 36  2 of the following:
 36  3    1.  The that the director is entitled to mandatory
 36  4 indemnification under section 490.852, in which case the court
 36  5 shall also order the corporation to pay the directors
 36  6 reasonable expenses incurred to obtain court-ordered
 36  7 indemnification.
 36  8    2.  The director is fairly and reasonably entitled to
 36  9 indemnification in view of all the relevant circumstances,
 36 10 whether or not the director met the standard of conduct set
 36 11 forth in section 490.851 or was adjudged liable as described
 36 12 in section 490.851, subsection 4, but if the director was
 36 13 adjudged so liable the director's indemnification is limited
 36 14 to reasonable expenses incurred.
 36 15    b.  Order indemnification or advance for expenses if the
 36 16 court determines that the director is entitled to
 36 17 indemnification or advance for expenses pursuant to a
 36 18 provision authorized by section 490.858, subsection 1.
 36 19    c.  Order indemnification or advance for expenses if the
 36 20 court determines, in view of all the relevant circumstances,
 36 21 that it is fair and reasonable to do one of the following:
 36 22    (1)  To indemnify the director.
 36 23    (2)  To advance expenses to the director, even if the
 36 24 director has not met the relevant standard of conduct set
 36 25 forth in section 490.851, subsection 1, failed to comply with
 36 26 section 490.853 or was adjudged liable in a proceeding
 36 27 referred to in subsection 490.851, subsection 4, paragraph "a"
 36 28 or "b", but if the director was adjudged so liable the
 36 29 director's indemnification shall be limited to reasonable
 36 30 expenses incurred in connection with the proceeding.
 36 31    2.  If the court determines that the director is entitled
 36 32 to indemnification under subsection 1, paragraph "a", or to
 36 33 indemnification or advance for expenses under subsection 1,
 36 34 paragraph "b", it shall also order the corporation to pay the
 36 35 director's reasonable expenses incurred in connection with
 37  1 obtaining court-ordered indemnification or advance for
 37  2 expenses.  If the court determines that the director is
 37  3 entitled to indemnification or advance for expenses under
 37  4 subsection 1, paragraph "c", it may also order the corporation
 37  5 to pay the director's reasonable expenses to obtain court-
 37  6 ordered indemnification or advance for expenses.
 37  7    Sec. 48.  Section 490.855, Code 2001, is amended to read as
 37  8 follows:
 37  9    490.855  DETERMINATION AND AUTHORIZATION OF
 37 10 INDEMNIFICATION.
 37 11    1.  A corporation shall not indemnify a director under
 37 12 section 490.851 unless authorized in the for a specific case
 37 13 proceeding after a determination has been made that
 37 14 indemnification of the director is permissible in the
 37 15 circumstances because the director has met the relevant
 37 16 standard of conduct set forth in section 490.851.
 37 17    2.  The determination shall be made by any of the
 37 18 following:
 37 19    a.  By the board of directors by majority vote of a quorum
 37 20 consisting of directors not at the time parties to the
 37 21 proceeding.  If there are two or more disinterested directors,
 37 22 by the board of directors by a majority vote of all the
 37 23 disinterested directors, a majority of whom shall for such
 37 24 purpose constitute a quorum, or by a majority of the members
 37 25 of a committee of two or more disinterested directors
 37 26 appointed by such a vote.
 37 27    b.  If a quorum cannot be obtained under paragraph "a", by
 37 28 majority vote of a committee duly designated by the board of
 37 29 directors, in which designation directors who are parties may
 37 30 participate, consisting solely of two or more directors not at
 37 31 the time parties to the proceeding.
 37 32    c. b.  By special legal counsel:
 37 33    (1)  Selected by the board of directors or its committee in
 37 34 the manner prescribed in paragraph "a" or "b".
 37 35    (2)  If a quorum of the board of there are fewer than two
 38  1 disinterested directors cannot be obtained under paragraph "a"
 38  2 and a committee cannot be designated under paragraph "b",
 38  3 selected by majority vote of the full board of directors, in
 38  4 which selection directors who are parties do not qualify as
 38  5 disinterested directors may participate.
 38  6    d. c.  By the shareholders, but shares owned by or voted
 38  7 under the control of directors a director who are at the time
 38  8 parties to the proceeding does not qualify as a disinterested
 38  9 director shall not be voted on the determination.
 38 10    3.  Authorization of indemnification and evaluation as to
 38 11 reasonableness of expenses shall be made in the same manner as
 38 12 the determination that indemnification is permissible, except
 38 13 that if there are fewer than two disinterested directors or if
 38 14 the determination is made by special legal counsel,
 38 15 authorization of indemnification and evaluation as to
 38 16 reasonableness of expenses shall be made by those entitled
 38 17 under subsection 2, paragraph "c" "b", to select special legal
 38 18 counsel.
 38 19    Sec. 49.  Section 490.856, Code 2001, is amended to read as
 38 20 follows:
 38 21    490.856  INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND
 38 22 AGENTS.
 38 23    Unless a corporation's articles of incorporation provide
 38 24 otherwise all of the following apply:
 38 25    1.  An officer of the corporation who is not a director is
 38 26 entitled to mandatory indemnification under section 490.852,
 38 27 and is entitled to apply for court-ordered indemnification
 38 28 under section 490.854, in each case to the same extent as a
 38 29 director.
 38 30    2. 1.  The A corporation may indemnify and advance expenses
 38 31 under this part to an officer, employee, or agent of the
 38 32 corporation who is not a director to a party to the proceeding
 38 33 because the person is an officer, according to all of the
 38 34 following:
 38 35    a.  To the same extent as to a director.
 39  1    3. b.  A corporation may also indemnify and advance
 39  2 expenses to an officer, employee, or agent who is not a
 39  3 director to the extent, consistent with law, that If the
 39  4 person is an officer but not a director, to such further
 39  5 extent as may be provided by its the articles of
 39  6 incorporation, the bylaws, general or specific action a
 39  7 resolution of its the board of directors, or contract, except
 39  8 for either of the following:
 39  9    (1)  Liability in connection with a proceeding by or in the
 39 10 right of the corporation other than for reasonable expenses
 39 11 incurred in connection with the proceeding.
 39 12    (2)  Liability arising out of conduct that constitutes any
 39 13 of the following:
 39 14    (a)  Receipt by the officer of a financial benefit to which
 39 15 the officer is not entitled.
 39 16    (b)  An intentional infliction of harm on the corporation
 39 17 or the shareholders.
 39 18    (c)  An intentional violation of criminal law.
 39 19    2.  The provisions of subsection 1, paragraph "b", shall
 39 20 apply to an officer who is also a director if the basis on
 39 21 which the officer is made a party to a proceeding is an act or
 39 22 omission solely as an officer.
 39 23    3.  An officer of a corporation who is not a director is
 39 24 entitled to mandatory indemnification under section 490.852,
 39 25 and may apply to a court under section 490.854 for
 39 26 indemnification or an advance for expenses, in each case to
 39 27 the same extent to which a director may be entitled to
 39 28 indemnification or advance for expenses under those
 39 29 provisions.
 39 30    Sec. 50.  Section 490.857, Code 2001, is amended to read as
 39 31 follows:
 39 32    490.857  INSURANCE.
 39 33    A corporation may purchase and maintain insurance on behalf
 39 34 of an individual who is or was a director, or officer,
 39 35 employee, or agent of the corporation, or who, while a
 40  1 director, or officer, employee, or agent of the corporation,
 40  2 is or was serving serves at the request of the corporation
 40  3 corporation's request as a director, officer, partner,
 40  4 trustee, employee, or agent of another foreign or domestic or
 40  5 foreign corporation, partnership, joint venture, trust,
 40  6 employee benefit plan, or other enterprise entity, against
 40  7 liability asserted against or incurred by that individual in
 40  8 that capacity or arising from the individual's status as a
 40  9 director, or officer, employee, or agent, whether or not the
 40 10 corporation would have power to indemnify or advance expenses
 40 11 to that individual against the same liability under section
 40 12 490.851 or 490.852 this part.
 40 13    Sec. 51.  Section 490.858, Code 2001, is amended by
 40 14 striking the section and inserting in lieu thereof the
 40 15 following:
 40 16    490.858  VARIATION BY CORPORATE ACTION – APPLICATION OF
 40 17 PART.
 40 18    1.  A corporation may, by a provision in its articles of
 40 19 incorporation or bylaws or in a resolution adopted or a
 40 20 contract approved by its board of directors or shareholders,
 40 21 obligate itself in advance of the act or omission giving rise
 40 22 to a proceeding to provide indemnification in accordance with
 40 23 section 490.851 or advance funds to pay for or reimburse
 40 24 expenses in accordance with section 490.853.  Any such
 40 25 obligatory provision shall be deemed to satisfy the
 40 26 requirements for authorization referred to in section 490.853,
 40 27 subsection 3, and in section 490.855, subsection 3.  Any such
 40 28 provision that obligates the corporation to provide
 40 29 indemnification to the fullest extent permitted by law shall
 40 30 be deemed to obligate the corporation to advance funds to pay
 40 31 for or reimburse expenses in accordance with section 490.853
 40 32 to the fullest extent permitted by law, unless the provision
 40 33 specifically provides otherwise.
 40 34    2.  Any provision pursuant to subsection 1 shall not
 40 35 obligate the corporation to indemnify or advance expenses to a
 41  1 director of a predecessor of the corporation, pertaining to
 41  2 conduct with respect to the predecessor, unless otherwise
 41  3 specifically provided.  Any provision for indemnification or
 41  4 advance for expenses in the articles of incorporation, bylaws,
 41  5 or a resolution of the board of directors or shareholders of a
 41  6 predecessor of the corporation in a merger or in a contract to
 41  7 which the predecessor is a party, existing at the time the
 41  8 merger takes effect, shall be governed by section 490.1106,
 41  9 subsection 1, paragraph "c".
 41 10    3.  A corporation may, by a provision in its articles of
 41 11 incorporation, limit any of the rights to indemnification or
 41 12 advance for expenses created by or pursuant to this part.
 41 13    4.  This part does not limit a corporation's power to pay
 41 14 or reimburse expenses incurred by a director or an officer in
 41 15 connection with the director's or officer's appearance as a
 41 16 witness in a proceeding at a time when the director or officer
 41 17 is not a party.
 41 18    5.  This part does not limit a corporation's power to
 41 19 indemnify, advance expenses to, or provide or maintain
 41 20 insurance on behalf of an employee or agent.
 41 21    Sec. 52.  NEW SECTION.  490.859  EXCLUSIVITY OF PART.
 41 22    A corporation may provide indemnification or advance
 41 23 expenses to a director or an officer only as permitted by this
 41 24 part.
 41 25    Sec. 53.  NEW SECTION.  490.860  DEFINITIONS.
 41 26    In this part:
 41 27    1.  "Conflicting interest" with respect to a corporation
 41 28 means the interest a director of the corporation has
 41 29 respecting a transaction effected or proposed to be effected
 41 30 by the corporation, or by a subsidiary of the corporation or
 41 31 any other entity in which the corporation has a controlling
 41 32 interest, if either of the following applies:
 41 33    a.  Whether or not the transaction is brought before the
 41 34 board of directors of the corporation for action, the director
 41 35 knows at the time of commitment that the director or a related
 42  1 person is a party to the transaction or has a beneficial
 42  2 financial interest in or is so closely linked to the
 42  3 transaction and is of such financial significance to the
 42  4 director or a related person that the interest would
 42  5 reasonably be expected to exert an influence on the director's
 42  6 judgment if the director were called upon to vote on the
 42  7 transaction.
 42  8    b.  The transaction is brought, or is of such character and
 42  9 significance to the corporation that it would in the normal
 42 10 course be brought, before the board of directors of the
 42 11 corporation for action, and the director knows at the time of
 42 12 commitment that any of the following persons is either a party
 42 13 to the transaction or has a beneficial financial interest in
 42 14 or is so closely linked to the transaction and is of such
 42 15 financial significance to the person that the interest would
 42 16 reasonably be expected to exert an influence on the director's
 42 17 judgment if the director were called upon to vote on the
 42 18 transaction:
 42 19    (1)  An entity, other than the corporation, of which the
 42 20 director is a director, general partner, manager, member,
 42 21 agent, or employee.
 42 22    (2)  A person that controls one or more of the entities
 42 23 specified in subparagraph (1) or an entity that is controlled
 42 24 by, or is under common control with, one or more of the
 42 25 entities specified in subparagraph (1).
 42 26    (3)  An individual who is a general partner, principal,
 42 27 comember, or employer of the director.
 42 28    2.  "Director's conflicting interest transaction" with
 42 29 respect to a corporation means a transaction effected or
 42 30 proposed to be effected by the corporation, or by a subsidiary
 42 31 of the corporation or any other entity in which the
 42 32 corporation has a controlling interest, respecting which a
 42 33 director of the corporation has a conflict of interest.
 42 34    3.  "Related person" of a director means any of the
 42 35 following:
 43  1    a.  The spouse of the director, or a parent or a sibling of
 43  2 a spouse of a director.
 43  3    b.  A child, grandchild, sibling, or parent of the
 43  4 director, or a spouse of a child, grandchild, sibling, or
 43  5 parent of the director.
 43  6    c.  An individual having the same home as the director.
 43  7    d.  A trust or estate of which an individual specified in
 43  8 this subsection is a substantial beneficiary.
 43  9    e.  A trust, estate, incompetent, conservatee, or minor of
 43 10 which the director is a fiduciary.
 43 11    4.  "Required disclosure" means disclosure by the director
 43 12 who has a conflicting interest of both of the following:
 43 13    a.  The existence and nature of the director's conflicting
 43 14 interest.
 43 15    b.  All facts known to the director respecting the subject
 43 16 matter of the transaction that an ordinarily prudent person
 43 17 would reasonably believe to be material to a judgment about
 43 18 whether or not to proceed with the transaction.
 43 19    5.  "Time of commitment" respecting a transaction means the
 43 20 time when the transaction is consummated or, if made pursuant
 43 21 to contract, the time when the corporation, or its subsidiary
 43 22 or the entity in which it has a controlling interest, becomes
 43 23 contractually obligated so that its unilateral withdrawal from
 43 24 the transaction would entail significant loss, liability, or
 43 25 other damage.
 43 26    Sec. 54.  NEW SECTION.  490.861  JUDICIAL ACTION.
 43 27    1.  A transaction effected or proposed to be effected by a
 43 28 corporation, or by a subsidiary of the corporation or any
 43 29 other entity in which the corporation has a controlling
 43 30 interest, that is not a director's conflicting interest
 43 31 transaction shall not be enjoined, set aside, or give rise to
 43 32 an award of damages or other sanctions, in a proceeding by a
 43 33 shareholder or by or in the right of the corporation, because
 43 34 a director of the corporation, or any person with whom or
 43 35 which the director has a personal, economic, or other
 44  1 association, has an interest in the transaction.
 44  2    2.  A director's conflicting interest transaction shall not
 44  3 be enjoined, set aside, or give rise to an award of damages or
 44  4 other sanctions, in a proceeding by a shareholder or by or in
 44  5 the right of the corporation, because the director, or any
 44  6 person with whom or which the director has a personal,
 44  7 economic, or other association, has an interest in the
 44  8 transaction, if any one of the following is true:
 44  9    a.  Directors' action respecting the transaction was at any
 44 10 time taken in compliance with section 490.862.
 44 11    b.  Shareholders' action respecting the transaction was at
 44 12 any time taken in compliance with section 490.863.
 44 13    c.  The transaction, judged according to the circumstances
 44 14 at the time of commitment, is established to have been fair to
 44 15 the corporation.
 44 16    Sec. 55.  NEW SECTION.  490.862  DIRECTORS' ACTION.
 44 17    1.  Directors' action respecting a transaction is effective
 44 18 for purposes of section 490.861, subsection 2, paragraph "a",
 44 19 if the transaction received the affirmative vote of a
 44 20 majority, but no fewer than two, of those qualified directors
 44 21 on the board of directors or on a duly empowered committee of
 44 22 the board who voted on the transaction after either required
 44 23 disclosure to them, to the extent the information was not
 44 24 known by them, or compliance with subsection 2.  However,
 44 25 action by a committee is so effective only if both of the
 44 26 following are satisfied:
 44 27    a.  All its members are qualified directors.
 44 28    b.  Its members are either all the qualified directors on
 44 29 the board or are appointed by the affirmative vote of a
 44 30 majority of the qualified directors on the board.
 44 31    2.  If a director has a conflicting interest respecting a
 44 32 transaction but neither the director nor a related person of
 44 33 the director specified in section 490.860, subsection 3,
 44 34 paragraph "a", is a party to the transaction, and if the
 44 35 director has a duty under law or professional canon, or a duty
 45  1 of confidentiality to another person, respecting information
 45  2 relating to the transaction such that the director shall not
 45  3 make the disclosure described in section 490.860, subsection
 45  4 4, paragraph "b", then disclosure is sufficient for purposes
 45  5 of subsection 1 if the director does both of the following:
 45  6    a.  Discloses to the directors voting on the transaction
 45  7 the existence and nature of the director's conflicting
 45  8 interest and informs them of the character and limitations
 45  9 imposed by that duty before their vote on the transaction.
 45 10    b.  Plays no part, directly or indirectly, in their
 45 11 deliberations or vote.
 45 12    3.  A majority, but no fewer than two, of all the qualified
 45 13 directors on the board of directors, or on the committee,
 45 14 constitutes a quorum for purposes of action that complies with
 45 15 this section.  Directors' action that otherwise complies with
 45 16 this section is not affected by the presence or vote of a
 45 17 director who is not a qualified director.
 45 18    4.  For purposes of this section, "qualified director"
 45 19 means, with respect to a director's conflicting interest
 45 20 transaction, any director who does not have either a
 45 21 conflicting interest respecting the transaction, or a
 45 22 familial, financial, professional, or employment relationship
 45 23 with a second director who does have a conflicting interest
 45 24 respecting the transaction, which relationship would, in the
 45 25 circumstances, reasonably be expected to exert an influence on
 45 26 the first director's judgment when voting on the transaction.
 45 27    5.  Directors' action complying with subsection 1 may be
 45 28 taken at any time, before or after the transaction, and may
 45 29 deal with a single transaction or a specified category of
 45 30 similar transactions.
 45 31    Sec. 56.  NEW SECTION.  490.863  SHAREHOLDERS' ACTION.
 45 32    1.  Shareholders' action respecting a transaction is
 45 33 effective for purposes of section 490.861, subsection 2,
 45 34 paragraph "b", if a majority of the votes entitled to be cast
 45 35 by the holders of all qualified shares were cast in favor of
 46  1 the transaction after all of the following occurred:
 46  2    a.  Notice to shareholders describing the director's
 46  3 conflicting interest transaction.
 46  4    b.  Provision of the information referred to in subsection
 46  5 4.
 46  6    c.  Required disclosure to the shareholders who voted on
 46  7 the transaction, to the extent the information was not known
 46  8 by them.
 46  9    2.  For purposes of this section, "qualified shares" means
 46 10 any shares entitled to vote with respect to the director's
 46 11 conflicting interest transaction except shares that, to the
 46 12 knowledge, before the vote, of the secretary, or other officer
 46 13 or agent of the corporation authorized to tabulate votes, are
 46 14 beneficially owned, or the voting of which is controlled, by a
 46 15 director who has a conflicting interest respecting the
 46 16 transaction or by a related person of the director, or both.
 46 17    3.  A majority of the votes entitled to be cast by the
 46 18 holders of all qualified shares constitutes a quorum for
 46 19 purposes of action that complies with this section.  Subject
 46 20 to the provisions of subsections 4 and 5, shareholders' action
 46 21 that otherwise complies with this section is not affected by
 46 22 the presence of holders, or the voting of shares that are not
 46 23 qualified shares.
 46 24    4.  For purposes of compliance with subsection 1, a
 46 25 director who has a conflicting interest respecting the
 46 26 transaction shall, before the shareholders' vote, inform the
 46 27 secretary, or other officer or agent of the corporation
 46 28 authorized to tabulate votes, of the number, and the identity
 46 29 of persons holding or controlling the vote, of all shares that
 46 30 the director knows are beneficially owned, or the voting of
 46 31 which is controlled, by the director or by a related person of
 46 32 the director, or both.
 46 33    5.  If a shareholders' vote does not comply with subsection
 46 34 1 solely because of a failure of a director to comply with
 46 35 subsection 4, and if the director establishes that the
 47  1 director's failure did not determine and was not intended by
 47  2 the director to influence the outcome of the vote, the court
 47  3 may, with or without further proceedings respecting section
 47  4 490.861, subsection 2, paragraph "c", take such action
 47  5 respecting the transaction and the director, and give such
 47  6 effect, if any, to the shareholders' vote, as it considers
 47  7 appropriate in the circumstances.
 47  8    6.  Action that complies with subsection 1 may be taken at
 47  9 any time, before or after the transaction, and may deal with a
 47 10 single transaction or a specified category of similar
 47 11 transactions.
 47 12    Sec. 57.  Section 490.1001, subsection 1, Code 2001, is
 47 13 amended to read as follows:
 47 14    1.  A corporation may amend its articles of incorporation
 47 15 at any time to add or change a provision that is required or
 47 16 permitted in the articles of incorporation or to delete a
 47 17 provision not required in the articles of incorporation.
 47 18 Whether a provision is required or permitted in the articles
 47 19 of incorporation is determined as of the effective date of the
 47 20 amendment or to delete a provision that is not required to be
 47 21 contained in the articles of incorporation.
 47 22    Sec. 58.  Section 490.1002, Code 2001, is amended by
 47 23 striking the section and inserting in lieu thereof the
 47 24 following:
 47 25    490.1002 AMENDMENT BEFORE ISSUANCE OF SHARES.
 47 26    If a corporation has not yet issued shares, its board of
 47 27 directors, or its incorporators if it has no board of
 47 28 directors, may adopt one or more amendments to the
 47 29 corporation's articles of incorporation.
 47 30    Sec. 59.  Section 490.1003, Code 2001, is amended to read
 47 31 as follows:
 47 32    490.1003  AMENDMENT BY BOARD OF DIRECTORS AND SHAREHOLDERS.
 47 33    If a corporation has issued shares, an amendment to the
 47 34 articles of incorporation shall be adopted in the following
 47 35 manner:
 48  1    1.  A corporation's The proposed amendment must be adopted
 48  2 by the board of directors may propose one or more amendments
 48  3 to the articles of incorporation for submission to the
 48  4 shareholders.
 48  5    2.  For the amendment to be adopted both of the following
 48  6 must occur:
 48  7    a. 2.  The Except as provided in section 490.1005,
 48  8 490.1007, and 490.1008, after adopting the proposed amendment,
 48  9 the board of directors must recommend submit the amendment to
 48 10 the shareholders for their approval.  The board of directors
 48 11 must also transmit to the shareholders a recommendation that
 48 12 the shareholders approve the amendment, unless the board of
 48 13 directors determines makes a determination that because of
 48 14 conflict of interest or other special circumstances it should
 48 15 not make no such a recommendation and communicates, in which
 48 16 case the basis for its determination board of directors must
 48 17 transmit to the shareholders with the amendment the basis for
 48 18 the determination.
 48 19    b.  The shareholders entitled to vote on the amendment must
 48 20 approve the amendment as provided in subsection 5.
 48 21    3.  The board of directors may condition its submission of
 48 22 the proposed amendment to the shareholders on any basis.
 48 23    4.  The corporation shall If the amendment is required to
 48 24 be approved by the shareholders, and the approval is to be
 48 25 given at a meeting, the corporation must notify each
 48 26 shareholder, whether or not entitled to vote, of the proposed
 48 27 shareholders' meeting in accordance with section 490.705 of
 48 28 shareholders at which the amendment is to be submitted for
 48 29 approval.  The notice of meeting must also state that the
 48 30 purpose, or one of the purposes, of the meeting is to consider
 48 31 the proposed amendment and must contain or be accompanied by a
 48 32 copy or summary of the amendment.
 48 33    5.  Unless this chapter, the articles of incorporation,
 48 34 bylaws, or the board of directors acting pursuant to
 48 35 subsection 3 requires a greater vote or a vote by voting
 49  1 groups, the amendment to be adopted must be approved by both
 49  2 of the following:
 49  3    a.  A greater number of shares to be present, approval of
 49  4 the amendment requires the approval of the shareholders at a
 49  5 meeting at which a quorum consisting of at least a majority of
 49  6 the votes entitled to be cast on the amendment exists, and, if
 49  7 any class or series of shares is entitled to vote as a
 49  8 separate group on the amendment, except as provided in section
 49  9 490.1004, subsection 3, the approval of each such separate
 49 10 voting group at a meeting at which a quorum of the voting
 49 11 group consisting of at least a majority of the votes entitled
 49 12 to be cast on the amendment by any voting group with respect
 49 13 to which the amendment would create dissenters' rights that
 49 14 voting group exists.
 49 15    b.  The votes required by sections 490.725 and 490.726 by
 49 16 every other voting group entitled to vote on the amendment.
 49 17    Sec. 60.  Section 490.1004, subsections 1, 2, and 3, Code
 49 18 2001, are amended to read as follows:
 49 19    1.  The If a corporation has more than one class of shares
 49 20 outstanding, the holders of the outstanding shares of a class
 49 21 are entitled to vote as a separate voting group, if
 49 22 shareholder voting is otherwise required by this chapter, on a
 49 23 proposed amendment to the articles of incorporation if the
 49 24 amendment would do any of the following:
 49 25    a.  Increase or decrease the aggregate number of authorized
 49 26 shares of the class.
 49 27    b. a.  Effect an exchange or reclassification of all or
 49 28 part of the shares of the class into shares of another class.
 49 29    c. b.  Effect an exchange or reclassification, or create
 49 30 the right of exchange, of all or part of the shares of another
 49 31 class into shares of that class.
 49 32    d. c.  Change the designation, rights, preferences, or
 49 33 limitations of all or part of the shares of the class.
 49 34    e. d.  Change the shares of all or part of the class into a
 49 35 different number of shares of the same class.
 50  1    f. e.  Create a new class of shares having rights or
 50  2 preferences with respect to distributions or to dissolution
 50  3 that are prior, or superior, or substantially equal to, the
 50  4 shares of the class.
 50  5    g. f.  Increase the rights, preferences, or number of
 50  6 authorized shares of any class that, after giving effect to
 50  7 the amendment, have rights or preferences with respect to
 50  8 distributions or to dissolution that are prior, or superior,
 50  9 or substantially equal to the shares of the class.
 50 10    h. g.  Limit or deny an existing preemptive right of all or
 50 11 part of the shares of the class.
 50 12    i. h.  Cancel or otherwise affect rights to distributions
 50 13 or dividends that have accumulated but not yet been declared
 50 14 authorized on all or part of the shares of the class.
 50 15    2.  If a proposed amendment would affect a series of a
 50 16 class of shares in one or more of the ways described in
 50 17 subsection 1, the holders of shares of that series are
 50 18 entitled to vote as a separate voting group on the proposed
 50 19 amendment.
 50 20    3.  If a proposed amendment that entitles the holders of
 50 21 two or more classes or series of shares to vote as separate
 50 22 voting groups under this section would affect those two or
 50 23 more classes or series in the same or a substantially similar
 50 24 way, the holders of shares of all the classes or series so
 50 25 affected must vote together as a single voting group on the
 50 26 proposed amendment, unless otherwise provided in the articles
 50 27 of incorporation or required by the board of directors.
 50 28    Sec. 61.  Section 490.1005, Code 2001, is amended by
 50 29 striking the section and inserting in lieu thereof the
 50 30 following:
 50 31    490.1005  AMENDMENT BY BOARD OF DIRECTORS.
 50 32    Unless the articles of incorporation provide otherwise, a
 50 33 corporation's board of directors may adopt amendments to the
 50 34 corporation's articles of incorporation without shareholder
 50 35 approval for any of the following purposes:
 51  1    1.  To extend the duration of the corporation if it was
 51  2 incorporated at a time when limited duration was required by
 51  3 law.
 51  4    2.  To delete the names and addresses of the initial
 51  5 directors.
 51  6    3.  To delete the name and address of the initial
 51  7 registered agent or registered office, if a statement of
 51  8 change is on file with the secretary of state.
 51  9    4.  If the corporation has only one class of shares
 51 10 outstanding:
 51 11    a.  To change each issued and unissued authorized share of
 51 12 the class into a greater number of whole shares of that class.
 51 13    b.  To increase the number of authorized shares of the
 51 14 class to the extent necessary to permit the issuance of shares
 51 15 as a share dividend.
 51 16    5.  To change the corporate name by substituting the word
 51 17 "corporation", "incorporated", "company", "limited", or the
 51 18 abbreviation "corp.", "inc.", "co.", or "ltd.", for a similar
 51 19 word or abbreviation in the name, or by adding, deleting, or
 51 20 changing a geographical attribution for the name.
 51 21    6.  To reflect a reduction in authorized shares, as a
 51 22 result of the operation of section 490.631, subsection 2, when
 51 23 the corporation has acquired its own shares and the articles
 51 24 of incorporation prohibit the reissue of the acquired shares.
 51 25    7.  To delete a class of shares from the articles of
 51 26 incorporation, as a result of the operation of section
 51 27 490.631, subsection 2, when there are no remaining shares of
 51 28 the class because the corporation has acquired all shares of
 51 29 the class and the articles of incorporation prohibit the
 51 30 reissue of the acquired shares.
 51 31    8.  To make any change expressly permitted by section
 51 32 490.602, subsection 4, to be made without shareholder
 51 33 approval.
 51 34    Sec. 62.  Section 490.1006, Code 2001, is amended to read
 51 35 as follows:
 52  1    490.1006  ARTICLES OF AMENDMENT.
 52  2    A corporation amending its articles of incorporation After
 52  3 an amendment to the articles of incorporation has been adopted
 52  4 and approved in the manner required by this chapter and by the
 52  5 articles of incorporation, the corporation shall deliver to
 52  6 the secretary of state, for filing, articles of amendment
 52  7 setting, which shall set forth the following:
 52  8    1.  The name of the corporation.
 52  9    2.  The text of each amendment adopted.
 52 10    3.  If an amendment provides for an exchange,
 52 11 reclassification, or cancellation of issued shares, provisions
 52 12 for implementing the amendment if not contained in the
 52 13 amendment itself.
 52 14    4.  The date of each amendment's adoption.
 52 15    5.  If an amendment was adopted by the incorporators or
 52 16 board of directors without shareholder action approval, a
 52 17 statement to that effect that the amendment was duly approved
 52 18 by the incorporators or by the board of directors, as the case
 52 19 may be, and that shareholder action approval was not required.
 52 20    6.  If an amendment was approved required approval by the
 52 21 shareholders:, a statement that the amendment was duly
 52 22 approved by the shareholders in the manner required by this
 52 23 chapter and by the articles of incorporation.
 52 24    a.  The designation, number of outstanding shares, number
 52 25 of votes entitled to be cast by each voting group entitled to
 52 26 vote separately on the amendment, and number of votes of each
 52 27 voting group indisputably represented at the meeting.
 52 28    b.  Either the total number of votes cast for and against
 52 29 the amendment by each voting group entitled to vote separately
 52 30 on the amendment or the total number of undisputed votes cast
 52 31 for the amendment by each voting group and a statement that
 52 32 the number cast for the amendment by each voting group was
 52 33 sufficient for approval by that voting group.
 52 34    Sec. 63.  Section 490.1007, Code 2001, is amended to read
 52 35 as follows:
 53  1    490.1007  RESTATED ARTICLES OF INCORPORATION.
 53  2    1.  A corporation's board of directors may restate its
 53  3 articles of incorporation at any time with or without
 53  4 shareholder action approval, to consolidate all amendments
 53  5 into a single document.
 53  6    2.  The restatement may If the restated articles include
 53  7 one or more new amendments to the articles.  If the
 53  8 restatement includes an amendment requiring that require
 53  9 shareholder approval, it the amendments must be adopted and
 53 10 approved as provided in section 490.1003.
 53 11    3.  If the board of directors submits a restatement for
 53 12 shareholder action, the corporation shall notify each
 53 13 shareholder whether or not entitled to vote, of the proposed
 53 14 shareholders' meeting in accordance with section 490.705.  The
 53 15 notice must also state that the purpose, or one of the
 53 16 purposes, of the meeting is to consider the proposed
 53 17 restatement and contain or be accompanied by a copy of the
 53 18 restatement that identifies any amendment or other change it
 53 19 would make in the articles.
 53 20    4. 3.  A corporation restating that restates its articles
 53 21 of incorporation shall deliver to the secretary of state for
 53 22 filing articles of restatement setting forth the name of the
 53 23 corporation and the text of the restated articles of
 53 24 incorporation together with a certificate setting forth: that
 53 25 states that the restated articles consolidate all amendments
 53 26 into a single document and, if a new amendment is included in
 53 27 the restated articles, that also include the statements
 53 28 required under section 490.1006.
 53 29    a.  Whether the restatement contains an amendment to the
 53 30 articles requiring shareholder approval and, if it does not,
 53 31 that the board of directors adopted the restatement.
 53 32    b.  If the restatement contains an amendment to the
 53 33 articles requiring shareholder approval, the information
 53 34 required by section 490.1006.
 53 35    5. 4.  Duly adopted restated articles of incorporation
 54  1 supersede the original articles of incorporation and all
 54  2 amendments to them the original articles of incorporation.
 54  3    6. 5.  The secretary of state may certify restated articles
 54  4 of incorporation, as the articles of incorporation currently
 54  5 in effect, without including the certificate information
 54  6 required by subsection 4 3.
 54  7    Sec. 64.  Section 490.1008, subsections 1, 3, and 4, Code
 54  8 2001, are amended to read as follows:
 54  9    1.  A corporation's articles of incorporation may be
 54 10 amended without action by the board of directors or
 54 11 shareholders to carry out a plan of reorganization ordered or
 54 12 decreed by a court of competent jurisdiction under federal
 54 13 statute if the articles of incorporation after amendment
 54 14 contain only provisions required or permitted by section
 54 15 490.202 the authority of law of the United States.
 54 16    3.  Shareholders of a corporation undergoing reorganization
 54 17 do not have dissenters' rights except as and to the extent
 54 18 provided in the reorganization plan.
 54 19    4. 3.  This section does not apply after entry of a final
 54 20 decree in the reorganization proceeding even though the court
 54 21 retains jurisdiction of the proceeding for limited purposes
 54 22 unrelated to consummation of the reorganization plan.
 54 23    Sec. 65.  Section 490.1009, Code 2001, is amended to read
 54 24 as follows:
 54 25    490.1009  EFFECT OF AMENDMENT.
 54 26    An amendment to the articles of incorporation does not
 54 27 affect a cause of action existing against or in favor of the
 54 28 corporation, a proceeding to which the corporation is a party,
 54 29 or the existing rights of persons other than shareholders of
 54 30 the corporation.  An amendment changing a corporation's name
 54 31 does not abate a proceeding brought by or against the
 54 32 corporation in its former name.
 54 33    Sec. 66.  Section 490.1020, Code 2001, is amended by
 54 34 striking the section and inserting in lieu thereof the
 54 35 following:
 55  1    490.1020  AMENDMENT OF BYLAWS BY BOARD OF DIRECTORS OR
 55  2 SHAREHOLDERS.
 55  3    1.  A corporation's shareholders may amend or repeal the
 55  4 corporation's bylaws.
 55  5    2.  A corporation's board of directors may amend or repeal
 55  6 the corporation's bylaws unless either of the following apply:
 55  7    a.  The articles of incorporation or section 490.1021
 55  8 reserve that power exclusively to the shareholders in whole or
 55  9 in part.
 55 10    b.  The shareholders in amending, repealing, or adopting a
 55 11 bylaw expressly provide that the board of directors shall not
 55 12 amend, repeal, or reinstate that bylaw.
 55 13    Sec. 67.  Section 490.1021, Code 2001, is amended to read
 55 14 as follows:
 55 15    490.1021  BYLAW INCREASING QUORUM OR VOTING REQUIREMENT FOR
 55 16 SHAREHOLDERS DIRECTORS.
 55 17    1.  If authorized by the articles of incorporation, the
 55 18 shareholders may adopt or amend a bylaw that fixes a greater A
 55 19 bylaw that increases a quorum or voting requirement for the
 55 20 board of directors may be amended or repealed as follows:
 55 21    a.  If adopted by the shareholders, only by the
 55 22 shareholders, unless the bylaws otherwise provide.
 55 23    b.  If adopted by the board of directors, either by the
 55 24 shareholders or voting groups of shareholders than is required
 55 25 by this chapter by the board of directors.  The adoption or
 55 26 amendment of a bylaw that adds, changes, or deletes a greater
 55 27    2.  A bylaw adopted or amended by the shareholders that
 55 28 increases a quorum or voting requirement for the board of
 55 29 directors may provide that it can be amended or repealed only
 55 30 by a specified vote of either the shareholders or the board of
 55 31 directors.
 55 32    3.  Action by the board of directors under subsection 1 to
 55 33 amend or repeal a bylaw that changes the quorum or voting
 55 34 requirement for the board of directors must meet the same
 55 35 quorum requirement and be adopted by the same vote and voting
 56  1 groups required to take action under the quorum and voting
 56  2 requirement then in effect or proposed to be adopted,
 56  3 whichever is greater.
 56  4    2.  A bylaw that fixes a greater quorum or voting
 56  5 requirement for shareholders under subsection 1 shall not be
 56  6 adopted, amended, or repealed by the board of directors.
 56  7    Sec. 68.  Section 490.1101, Code 2001, is amended by
 56  8 striking the section and inserting in lieu thereof the
 56  9 following:
 56 10    490.1101  DEFINITIONS.
 56 11    As used in this division, unless the context otherwise
 56 12 requires:
 56 13    1.  "Interests" means the proprietary interests in another
 56 14 entity.
 56 15    2.  "Merger" means a business combination pursuant to
 56 16 section 490.1102.
 56 17    3.  "Organizational documents" means the basic document or
 56 18 documents that create, or determine the internal governance
 56 19 of, another entity.
 56 20    4.  "Other entity" means any association or legal entity,
 56 21 other than a domestic or foreign corporation, organized to
 56 22 conduct business, including, without limitation, limited
 56 23 partnerships, general partnerships, limited liability
 56 24 partnerships, limited liability companies, joint ventures,
 56 25 joint stock companies, and business trusts.
 56 26    5.  "Party to a merger" or "party to a share exchange"
 56 27 means any domestic or foreign corporation or other entity that
 56 28 will accomplish one of the following during a merger:
 56 29    a.  Merge under a plan of merger.
 56 30    b.  Acquire shares or interests of another corporation or
 56 31 another entity in a share exchange.
 56 32    c.  Have all of its shares or interests or all of one or
 56 33 more classes or series of its shares or interests acquired in
 56 34 a share exchange.
 56 35    6.  "Share exchange" means a business combination pursuant
 57  1 to section 490.1103.
 57  2    7.  "Survivor" in a merger means the corporation or other
 57  3 entity into which one or more other corporations or other
 57  4 entities are merged.  A survivor of a merger may preexist the
 57  5 merger or be created by the merger.
 57  6    Sec. 69.  Section 490.1102, Code 2001, is amended by
 57  7 striking the section and inserting in lieu thereof the
 57  8 following:
 57  9    490.1102  MERGER.
 57 10    1.  One or more domestic corporations may merge with a
 57 11 domestic or foreign corporation or other entity pursuant to a
 57 12 plan of merger.
 57 13    2.  A foreign corporation, or domestic or foreign other
 57 14 entity, may be a party to the merger, or may be created by the
 57 15 terms of the plan of merger, only if both of the following are
 57 16 satisfied:
 57 17    a.  The merger is permitted by the laws under which the
 57 18 corporation or other entity is organized or by which it is
 57 19 governed.
 57 20    b.  In effecting the merger, the corporation or other
 57 21 entity complies with such laws and with its articles of
 57 22 incorporation or organizational documents.
 57 23    3.  The plan of merger must include all of the following:
 57 24    a.  The name of each corporation or other entity that will
 57 25 merge and the name of the corporation or other entity that
 57 26 will be the survivor of the merger.
 57 27    b.  The terms and conditions of the merger.
 57 28    c.  The manner and basis of converting the shares of each
 57 29 merging corporation and interests of each merging other entity
 57 30 into shares, or other securities interests, obligations,
 57 31 rights to acquire shares or other securities, cash, other
 57 32 property, or any combination of the foregoing.
 57 33    d.  The articles of incorporation of any corporation, or
 57 34 the organizational documents of any other entity, to be
 57 35 created by the merger, or if a new corporation or other entity
 58  1 is not to be created by the merger, any amendments to the
 58  2 survivor's articles of incorporation or organizational
 58  3 documents.
 58  4    e.  Any other provisions required by the laws under which
 58  5 any party to the merger is organized or by which it is
 58  6 governed, or by the articles of incorporation or
 58  7 organizational documents of any such party.
 58  8    4.  The terms described in subsection 3, paragraphs "b" and
 58  9 "c", may be made dependent on facts ascertainable outside the
 58 10 plan of merger, provided that those facts are objectively
 58 11 ascertainable.  The term "facts" includes, but is not limited
 58 12 to, the occurrence of any event, including a determination or
 58 13 action by any person or body, including the corporation.
 58 14    5.  The plan of merger may also include a provision that
 58 15 the plan may be amended prior to filing the articles of merger
 58 16 with the secretary of state, provided that if the shareholders
 58 17 of a domestic corporation that is a party to the merger are
 58 18 required or permitted to vote on the plan, the plan must
 58 19 provide that subsequent to approval of the plan by such
 58 20 shareholders the plan shall not be amended to change any of
 58 21 the following:
 58 22    a.  Change the amount or kind of shares or other
 58 23 securities, interests, obligations, rights to acquire shares
 58 24 or other securities, cash, or other property to be received by
 58 25 the shareholders of or owners of interests in any party to the
 58 26 merger upon conversion of their shares or interests under the
 58 27 plan.
 58 28    b.  Change the articles of incorporation of any
 58 29 corporation, or the organizational documents of any other
 58 30 entity, that will survive or be created as a result of the
 58 31 merger, except for changes permitted by section 490.1005 or by
 58 32 comparable provisions of the laws under which the foreign
 58 33 corporation or other entity is organized or governed.
 58 34    c.  Change any of the other terms or conditions of the plan
 58 35 if the change would adversely affect such shareholders in any
 59  1 material respect.
 59  2    Sec. 70.  Section 490.1103, Code 2001, is amended by
 59  3 striking the section and inserting in lieu thereof the
 59  4 following:
 59  5    490.1103  SHARE EXCHANGE.
 59  6    1.  Either of the following may occur through a share
 59  7 exchange:
 59  8    a.  A domestic corporation may acquire all of the shares of
 59  9 one or more classes or series of shares of another domestic or
 59 10 foreign corporation, or all of the interests of one or more
 59 11 classes or series of interests of a domestic or foreign other
 59 12 entity, in exchange for shares or other securities, interests,
 59 13 obligations, rights to acquire shares or other securities,
 59 14 cash, other property, or any combination of the foregoing,
 59 15 pursuant to a plan of share exchange.
 59 16    b.  All of the shares of one or more classes or series of
 59 17 shares of a domestic corporation may be acquired by another
 59 18 domestic or foreign corporation or other entity, in exchange
 59 19 for shares or other securities, interests, obligations, rights
 59 20 to acquire shares or other securities, cash, other property,
 59 21 or any combination of the foregoing, pursuant to a plan of
 59 22 share exchange.
 59 23    2.  A foreign corporation, or a domestic or foreign other
 59 24 entity, may be a party to the share exchange only if both of
 59 25 the following conditions are met:
 59 26    a.  The share exchange is permitted by the laws under which
 59 27 the corporation or other entity is organized or by which it is
 59 28 governed.
 59 29    b.  In effecting the share exchange, the corporation or
 59 30 other entity complies with such laws and with its articles of
 59 31 incorporation or organizational documents.
 59 32    3.  The plan of share exchange must include all of the
 59 33 following:
 59 34    a.  The name of each corporation or other entity whose
 59 35 shares or interests will be acquired and the name of the
 60  1 corporation or other entity that will acquire those shares or
 60  2 interests.
 60  3    b.  The terms and conditions of the share exchange.
 60  4    c.  The manner and basis of exchanging shares of a
 60  5 corporation or interests in an other entity whose shares or
 60  6 interests will be acquired under the share exchange into
 60  7 shares or other securities, interests, obligations, rights to
 60  8 acquire shares or other securities, cash, other property, or
 60  9 any combination of the foregoing.
 60 10    d.  Any other provisions required by the laws under which
 60 11 any party to the share exchange is organized or by the
 60 12 articles of incorporation or organizational documents of any
 60 13 such party.
 60 14    4.  The terms described in subsection 3, paragraphs "b" and
 60 15 "c", may be made dependent on facts ascertainable outside the
 60 16 plan of share exchange, provided that those facts are
 60 17 objectively ascertainable.  The term "facts" includes, but is
 60 18 not limited to, the occurrence of any event, including a
 60 19 determination or action by any person or body, including the
 60 20 corporation.
 60 21    5.  The plan of share exchange may also include a provision
 60 22 that the plan may be amended prior to filing of the articles
 60 23 of share exchange with the secretary of state, provided that
 60 24 if the shareholders of a domestic corporation that is a party
 60 25 to the share exchange are required or permitted to vote on the
 60 26 plan, the plan must provide that subsequent to approval of the
 60 27 plan by such shareholders the plan shall not be amended to
 60 28 change either of the following:
 60 29    a.  The amount or kind of shares or other securities,
 60 30 interests, obligations, rights to acquire shares or other
 60 31 securities, cash, or other property to be issued by the
 60 32 corporation or to be received by the shareholders of or owners
 60 33 of interests in any party to the share exchange in exchange
 60 34 for their shares or interests under the plan.
 60 35    b.  Any of the terms or conditions of the plan if the
 61  1 change would adversely affect such shareholders in any
 61  2 material respect.
 61  3    6.  This section does not limit the power of a domestic
 61  4 corporation to acquire shares of another corporation or
 61  5 interests in an other entity in a transaction other than a
 61  6 share exchange.
 61  7    Sec. 71.  Section 490.1104, Code 2001, is amended by
 61  8 striking the section and inserting in lieu thereof the
 61  9 following:
 61 10    490.1104  ACTION ON A PLAN OF MERGER OR SHARE EXCHANGE.
 61 11    In the case of a domestic corporation that is a party to a
 61 12 merger or share exchange:
 61 13    1.  The plan of merger or share exchange must be adopted by
 61 14 the board of directors.
 61 15    2.  Except as provided in subsection 7 and in section
 61 16 490.1105, after adopting the plan of merger or share exchange
 61 17 the board of directors must submit the plan to the
 61 18 shareholders for their approval.  The board of directors must
 61 19 also transmit to the shareholders a recommendation that the
 61 20 shareholders approve the plan, unless the board of directors
 61 21 makes a determination that because of conflicts of interest or
 61 22 other special circumstances it should not make such a
 61 23 recommendation, in which case the board of directors must
 61 24 transmit to the shareholders the basis for that determination.
 61 25    3.  The board of directors may condition its submission of
 61 26 the plan of merger or share exchange to the shareholders on
 61 27 any basis.
 61 28    4.  If the plan of merger or share exchange is required to
 61 29 be approved by the shareholders, and if the approval is to be
 61 30 given at a meeting, the corporation must notify each
 61 31 shareholder, whether or not entitled to vote, of the meeting
 61 32 of shareholders at which the plan is to be submitted for
 61 33 approval.  The notice must state that the purpose, or one of
 61 34 the purposes, of the meeting is to consider the plan and must
 61 35 contain or be accompanied by a copy or summary of the plan.
 62  1 If the corporation is to be merged into an existing
 62  2 corporation or other entity, the notice shall also include or
 62  3 be accompanied by a copy or summary of the articles of
 62  4 incorporation or organizational documents of that corporation
 62  5 or other entity.  If the corporation is to be merged into an
 62  6 existing corporation or other entity that is to be created
 62  7 pursuant to the merger, the notice shall include or be
 62  8 accompanied by a copy or summary of the articles of
 62  9 incorporation or organizational documents of the new
 62 10 corporation or other entity.
 62 11    5.  Unless the articles of incorporation, bylaws, or the
 62 12 board of directors require a greater vote or a greater number
 62 13 of votes to be present, the approval of the plan of merger or
 62 14 share exchange shall require the approval of the shareholders
 62 15 at a meeting at which a quorum consisting of at least a
 62 16 majority of the votes entitled to be cast on the plan exists,
 62 17 and, if any class or series of shares is entitled to vote as a
 62 18 separate group on the plan of merger or share exchange, the
 62 19 approval of each such separate voting group at a meeting at
 62 20 which a quorum of the voting group consisting of at least a
 62 21 majority of the votes entitled to be cast on the merger or
 62 22 share exchange by that voting group is present.
 62 23    6.  Separate voting by voting groups is required for each
 62 24 of the following:
 62 25    a.  On a plan of merger, by each class or series of shares
 62 26 that are to be converted, pursuant to the provisions of the
 62 27 plan of merger, into shares or other securities, interests,
 62 28 obligations, rights to acquire shares or other securities,
 62 29 cash, other property, or any combination of the foregoing, or
 62 30 would have a right to vote as a separate group on a provision
 62 31 in the plan that, if contained in a proposed amendment to
 62 32 articles of incorporation, would require action by separate
 62 33 voting groups under section 490.1004.
 62 34    b.  On a plan of share exchange, by each class or series of
 62 35 shares included in the exchange, with each class or series
 63  1 constituting a separate voting group.
 63  2    c.  On a plan of merger or share exchange, if the voting
 63  3 group is entitled under the articles of incorporation to vote
 63  4 as a voting group to approve a plan of merger or share
 63  5 exchange.
 63  6    7.  Unless the articles of incorporation otherwise provide,
 63  7 approval by the corporation's shareholders of a plan of merger
 63  8 or share exchange is not required if all of the following
 63  9 conditions are satisfied:
 63 10    a.  The corporation will survive the merger or is the
 63 11 acquiring corporation in a share exchange.
 63 12    b.  Except for amendments permitted by section 490.1005,
 63 13 its articles of incorporation will not be changed.
 63 14    c.  Each shareholder of the corporation whose shares were
 63 15 outstanding immediately before the effective date of the
 63 16 merger or share exchange will hold the same number of shares,
 63 17 with identical preferences, limitations, and relative rights,
 63 18 immediately after the effective date of change.
 63 19    d.  The issuance in the merger or share exchange of shares
 63 20 or other securities convertible into or rights exercisable for
 63 21 shares does not require a vote under section 490.621,
 63 22 subsection 6.
 63 23    8.  If as a result of a merger or share exchange one or
 63 24 more shareholders of a domestic corporation would become
 63 25 subject to personal liability for the obligations or
 63 26 liabilities of any other person or other entity, approval of
 63 27 the plan of merger shall require the execution, by each such
 63 28 shareholder, of a separate written consent to become subject
 63 29 to such personal liability.
 63 30    Sec. 72.  Section 490.1105, Code 2001, is amended by
 63 31 striking the section and inserting in lieu thereof the
 63 32 following:
 63 33    490.1105  MERGER BETWEEN PARENT AND SUBSIDIARY OR BETWEEN
 63 34 SUBSIDIARIES.
 63 35    1.  A domestic parent corporation that owns shares of a
 64  1 domestic or foreign subsidiary corporation that carry at least
 64  2 ninety percent of the voting power of each class and series of
 64  3 the outstanding shares of the subsidiary that have voting
 64  4 power may merge the subsidiary into itself or into another
 64  5 such subsidiary, or merge itself into the subsidiary, without
 64  6 the approval of the board of directors or shareholders of the
 64  7 subsidiary unless the articles of incorporation of any of the
 64  8 corporations otherwise provide, and unless, in the case of a
 64  9 foreign subsidiary, approval by the subsidiary's board of
 64 10 directors or shareholders is required by the laws under which
 64 11 the subsidiary is organized.
 64 12    2.  If under subsection 1 approval of a merger by the
 64 13 subsidiary's shareholders is not required, the parent
 64 14 corporation shall, within ten days after the effective date of
 64 15 the merger, notify each of the subsidiary's shareholders that
 64 16 the merger has become effective.
 64 17    3.  Except as provided in subsections 1 and 2, a merger
 64 18 between a parent and subsidiary shall be governed by the
 64 19 provisions of this division, applicable to mergers generally.
 64 20    Sec. 73.  Section 490.1106, Code 2001, is amended by
 64 21 striking the section and inserting in lieu thereof the
 64 22 following:
 64 23    490.1106  ARTICLES OF MERGER OR SHARE EXCHANGE.
 64 24    1.  After a plan of merger or share exchange has been
 64 25 adopted and approved as required by this chapter, articles of
 64 26 merger or share exchange shall be executed on behalf of each
 64 27 party to the merger or share exchange by any officer or other
 64 28 duly authorized representative.  The articles shall set forth
 64 29 the following:
 64 30    a.  The names of the parties to the merger or share
 64 31 exchange and the date on which the merger or share exchange
 64 32 occurred or is to be effective.
 64 33    b.  If the articles of incorporation of the survivor of a
 64 34 merger are amended, or if a new corporation is created as a
 64 35 result of a merger, the amendments to the survivor's articles
 65  1 of incorporation or the articles of incorporation of the new
 65  2 corporation.
 65  3    c.  If the plan of merger or share exchange required
 65  4 approval by the shareholders of a domestic corporation that
 65  5 was a party to the merger or share exchange, a statement that
 65  6 the plan was duly approved by the shareholders and, if voting
 65  7 by any separate voting group was required, by each such
 65  8 separate voting group, in the manner required by this chapter
 65  9 and the articles of incorporation.
 65 10    d.  If the plan of merger or share exchange did not require
 65 11 approval by the shareholders of a domestic corporation that
 65 12 was a party to the merger or share exchange, a statement to
 65 13 that effect.
 65 14    e.  As to each foreign corporation and each other entity
 65 15 that was a party to the merger or share exchange, a statement
 65 16 that the plan and the performance of its terms were duly
 65 17 authorized by all action required by the laws under which the
 65 18 corporation or other entity is organized or by which it is
 65 19 governed, and by its articles of incorporation or
 65 20 organizational documents.
 65 21    2.  Articles of merger or share exchange shall be delivered
 65 22 to the secretary of state for filing by the survivor of the
 65 23 merger or the acquiring corporation in a share exchange and
 65 24 shall take effect on the effective date of the merger or share
 65 25 exchange.
 65 26    Sec. 74.  Section 490.1107, Code 2001, is amended by
 65 27 striking the section and inserting in lieu thereof the
 65 28 following:
 65 29    490.1107  EFFECT OF MERGER OR SHARE EXCHANGE.
 65 30    1.  When a merger becomes effective, certain acts shall
 65 31 occur as follows:
 65 32    a.  The corporation or other entity that is designated in
 65 33 the plan of merger as the survivor continues or comes into
 65 34 existence, as the case may be.
 65 35    b.  The separate existence of every corporation or other
 66  1 entity that is merged into the survivor ceases.
 66  2    c.  All property owned by, and every contract right
 66  3 possessed by, each corporation or other entity that merges
 66  4 into the survivor is vested in the survivor without reversion
 66  5 or impairment.
 66  6    d.  All liabilities of each corporation or other entity
 66  7 that is merged into the survivor are vested in the survivor.
 66  8    e.  The name of the survivor may, but need not be,
 66  9 substituted in any pending proceeding for the name of any
 66 10 party to the merger whose separate existence ceased in the
 66 11 merger.
 66 12    f.  The articles of incorporation or organizational
 66 13 documents of the survivor are amended to the extent provided
 66 14 in the plan of merger.
 66 15    g.  The articles of incorporation or organizational
 66 16 documents of a survivor that is created by the merger become
 66 17 effective.
 66 18    h.  The shares of each corporation that is a party to the
 66 19 merger, and the interests in another entity that is a party to
 66 20 a merger, that are to be converted under the plan of merger
 66 21 into shares, interests, obligations, rights to acquire
 66 22 securities, other securities, cash, other property, or any
 66 23 combination of the foregoing, are converted, and the former
 66 24 holders of such shares or interests are entitled only to the
 66 25 rights provided to them in the plan of merger or to any rights
 66 26 they may have under division XIII.
 66 27    2.  When a share exchange becomes effective, the shares of
 66 28 each domestic corporation that are to be exchanged for shares
 66 29 or other securities, interests, obligations, rights to acquire
 66 30 shares or securities, other securities, cash, other property,
 66 31 or any combination of the foregoing, are entitled only to the
 66 32 rights provided to them in the plan of share exchange or to
 66 33 any rights they may have under division XIII.
 66 34    3.  Any shareholder of a domestic corporation that is a
 66 35 party to a merger or share exchange who, prior to the merger
 67  1 or share exchange, was liable for the liabilities or
 67  2 obligations of such corporation, shall not be released from
 67  3 such liabilities or obligations by reason of the merger or
 67  4 share exchange.
 67  5    4.  Upon a merger becoming effective, a foreign
 67  6 corporation, or a foreign other entity that is the survivor of
 67  7 the mergers, is deemed to do both of the following:
 67  8    a.  Appoint the secretary of state as its agent for service
 67  9 of process in a proceeding to enforce the rights of
 67 10 shareholders of each domestic corporation that is a party to
 67 11 the merger who exercise appraisal rights.
 67 12    b.  Agree that it will promptly pay the amount, if any, to
 67 13 which such shareholders are entitled under division XIII.
 67 14    Sec. 75.  Section 490.1108, Code 2001, is amended by
 67 15 striking the section and inserting in lieu thereof the
 67 16 following:
 67 17    490.1108  ABANDONMENT OF A MERGER OR SHARE EXCHANGE.
 67 18    1.  Unless otherwise provided in a plan of merger or share
 67 19 exchange or in the laws under which a foreign corporation or a
 67 20 domestic or foreign other entity that is a party to a merger
 67 21 or a share exchange is organized or by which it is governed,
 67 22 after the plan has been adopted and approved as required by
 67 23 this division, and at any time before the merger or share
 67 24 exchange has become effective, it may be abandoned by any
 67 25 party to the merger or share exchange without action by the
 67 26 party's shareholders or owners of interests, in accordance
 67 27 with any procedures set forth in the plan of merger or share
 67 28 exchange or, if no such procedures are set forth in the plan,
 67 29 in the manner determined by the board of directors of a
 67 30 corporation, or the managers of any other entity, subject to
 67 31 any contractual rights of other parties to the merger or share
 67 32 exchange.
 67 33    2.  If a merger or share exchange is abandoned under
 67 34 subsection 1 after articles of merger or share exchange have
 67 35 been filed with the secretary of state but before the merger
 68  1 or share exchange has become effective, a statement that the
 68  2 merger or share exchange has been abandoned in accordance with
 68  3 this section, executed on behalf of a party to the merger or
 68  4 share exchange by an officer or other duly authorized
 68  5 representative, shall be delivered to the secretary of state
 68  6 for filing prior to the effective date of the merger or share
 68  7 exchange.  Upon filing, the statement shall take effect and
 68  8 the merger or share exchange shall be deemed abandoned and
 68  9 shall not become effective.
 68 10    Sec. 76.  Section 490.1201, Code 2001, is amended to read
 68 11 as follows:
 68 12    490.1201  SALE DISPOSITION OF ASSETS IN REGULAR COURSE OF
 68 13 BUSINESS AND MORTGAGE OF ASSETS NOT REQUIRING SHAREHOLDER
 68 14 APPROVAL.
 68 15    1.  A corporation may, on the terms and conditions and for
 68 16 the consideration determined by the board of directors
 68 17 Approval of the shareholders of a corporation is not required
 68 18 to do any of the following, unless the articles of
 68 19 incorporation otherwise provide:
 68 20    a. 1.  Sell To sell, lease, exchange, or otherwise dispose
 68 21 of all, or substantially all, of its property any or all of
 68 22 the corporation's assets in the usual and regular course of
 68 23 business.
 68 24    b. 2.  Mortgage To mortgage, pledge, dedicate to the
 68 25 repayment of indebtedness, whether with or without recourse,
 68 26 or otherwise encumber any or all of its property the
 68 27 corporation's assets, whether or not in the usual and regular
 68 28 course of business.
 68 29    c. 3.  Transfer To transfer any or all of its property to a
 68 30 corporation all the shares the corporation's assets to one or
 68 31 more corporations or other entities all of the shares or
 68 32 interests of which are owned by the transferring corporation
 68 33 whether or not in the usual course of business.
 68 34    2.  Unless the articles of incorporation require it,
 68 35 approval by the shareholders of a transaction described in
 69  1 subsection 1 is not required.
 69  2    4.  To distribute assets pro rata to the holders of one or
 69  3 more classes or series of the corporation's shares.
 69  4    Sec. 77.  Section 490.1202, Code 2001, is amended to read
 69  5 as follows:
 69  6    490.1202  SALE OF ASSETS OTHER THAN IN REGULAR COURSE OF
 69  7 BUSINESS SHAREHOLDER APPROVAL OF CERTAIN DISPOSITIONS.
 69  8    1.  A corporation may sell sale, lease, exchange, or
 69  9 otherwise dispose of all, or substantially all, of its
 69 10 property, with or without the good will, otherwise than in the
 69 11 usual and regular course of business, on the terms and
 69 12 conditions and for the consideration determined by other
 69 13 disposition of assets, other than a disposition described in
 69 14 section 490.1201, requires approval of the corporation's board
 69 15 of directors, if corporation's shareholders if the disposition
 69 16 would leave the corporation without a significant continuing
 69 17 business activity.  If a corporation retains a business
 69 18 activity that represented at least twenty-five percent of
 69 19 total assets at the end of the most recently completed fiscal
 69 20 year, and twenty-five percent of either income from continuing
 69 21 operations before taxes or revenues from continuing operations
 69 22 for that fiscal year, in each case of the corporation and its
 69 23 subsidiaries on a consolidated basis, the corporation will
 69 24 conclusively be deemed to have retained a significant
 69 25 continuing business activity; but no presumption that the
 69 26 disposition will leave the corporation without a significant
 69 27 continuing business activity shall arise from the fact that
 69 28 the corporation's continuing business activity does not equal
 69 29 or exceed any of these percentages.
 69 30    2.  A disposition that requires approval of the
 69 31 shareholders under subsection 1 shall be initiated by a
 69 32 resolution by the board of directors proposes and its
 69 33 authorizing the disposition.  After adoption of such a
 69 34 resolution, the board of directors shall submit the proposed
 69 35 disposition to the shareholders for their approval.  The board
 70  1 of directors shall also transmit to the shareholders a
 70  2 recommendation that the shareholders approve the proposed
 70  3 transaction.
 70  4    2.  For a transaction to be authorized both of the
 70  5 following must occur:
 70  6    a.  The board of directors must recommend the proposed
 70  7 transaction to the shareholders disposition, unless the board
 70  8 of directors determines makes a determination that because of
 70  9 conflict conflicts of interest or other special circumstances
 70 10 it should not make no such a recommendation and communicates,
 70 11 in which case the basis for its determination board of
 70 12 directors shall transmit to the shareholders with the
 70 13 submission of the proposed transaction basis for that
 70 14 determination.
 70 15    b.  The shareholders entitled to vote must approve the
 70 16 transaction.
 70 17    3.  The board of directors may condition its submission of
 70 18 a disposition to the proposed transaction shareholders under
 70 19 subsection 2 on any basis.
 70 20    4.  The If a disposition is required to be approved by the
 70 21 shareholders under subsection 1, and if the approval is to be
 70 22 given at a meeting, the corporation shall notify each
 70 23 shareholder, whether or not entitled to vote, of the proposed
 70 24 shareholders' meeting in accordance with section 490.705
 70 25 meeting of shareholders at which the disposition is to be
 70 26 submitted for approval.  The notice must also shall state that
 70 27 the purpose, or one of the purposes, of the meeting is to
 70 28 consider the sale, lease, exchange, or other disposition of
 70 29 all, or substantially all, the property of the corporation and
 70 30 contain or be accompanied by and shall contain a description
 70 31 of the transaction disposition, including the terms and
 70 32 conditions of the disposition and the consideration to be
 70 33 received by the corporation.
 70 34    5.  Unless the articles of incorporation, bylaws, or the
 70 35 board of directors acting pursuant to subsection 3 require a
 71  1 greater vote or a vote by voting groups, the transaction to be
 71  2 authorized must be approved by a majority of all greater
 71  3 number of votes to be presented, the approval of a disposition
 71  4 by the shareholders shall require the approval of the
 71  5 shareholders at a meeting at which a quorum consisting of at
 71  6 least a majority of the votes entitled to be cast on the
 71  7 transaction disposition exists.
 71  8    6.  After a sale, lease, exchange, or other disposition of
 71  9 property is authorized, the transaction disposition has been
 71 10 approved by the shareholders under subsection 2, and at any
 71 11 time before the disposition has been consummated, it may be
 71 12 abandoned by the corporation without action by the
 71 13 shareholders, subject to any contractual rights without
 71 14 further shareholder action of other parties to the
 71 15 disposition.
 71 16    7.  A transaction that constitutes a distribution is
 71 17 governed by section 490.640 and not by this section.  A
 71 18 disposition of assets in the course of dissolution under
 71 19 division XIV is not governed by this section.
 71 20    8.  The assets of a direct or indirect consolidated
 71 21 subsidiary shall be deemed the assets of the parent
 71 22 corporation for the purposes of this section.
 71 23    Sec. 78.  Section 490.1301, Code 2001, is amended by
 71 24 striking the section and inserting in lieu thereof the
 71 25 following:
 71 26    490.1301  DEFINITIONS.
 71 27    In this division, unless the context otherwise requires:
 71 28    1.  "Affiliate" means a person that directly or indirectly
 71 29 through one or more intermediaries controls, is controlled by,
 71 30 or is under common control with another person or is a senior
 71 31 executive thereof.  For purposes of section 490.1302,
 71 32 subsection 2, paragraph "d", a person is deemed to be an
 71 33 affiliate of its senior executives.
 71 34    2.  "Beneficial shareholder" means a person who is the
 71 35 beneficial owner of shares held in a voting trust or by a
 72  1 nominee on the beneficial owner's behalf.
 72  2    3.  "Corporation" means the issuer of the shares held by a
 72  3 shareholder demanding appraisal.  In addition, for matters
 72  4 covered in sections 490.1322 through 490.1331, "corporation"
 72  5 includes the surviving entity in a merger.
 72  6    4.  "Fair value" means the value of the corporation's
 72  7 shares determined according to the following:
 72  8    a.  Immediately before the effectuation of the corporate
 72  9 action to which the shareholder objects.
 72 10    b.  Using customary and current valuation concepts and
 72 11 techniques generally employed for similar businesses in the
 72 12 context of the transaction requiring appraisal.
 72 13    c.  Without discounting for lack of marketability or
 72 14 minority status except, if appropriate, for amendments to the
 72 15 articles pursuant to section 490.1302, subsection 1, paragraph
 72 16 "e".
 72 17    5.  "Interest" means interest from the effective date of
 72 18 the corporate action until the date of payment, at the rate of
 72 19 interest on judgments in this state on the effective date of
 72 20 the corporate action.
 72 21    6.  "Preferred shares" means a class or series of shares
 72 22 whose holders have preference over any other class or series
 72 23 with respect to distributions.
 72 24    7.  "Record shareholder" means the person in whose name
 72 25 shares are registered in the records of the corporation or the
 72 26 beneficial owner of shares to the extent of the rights granted
 72 27 by a nominee certificate on file with the corporation.
 72 28    8.  "Senior executive" means the chief executive officer,
 72 29 chief operating officer, chief financial officer, and anyone
 72 30 in charge of a principal business unit or function.
 72 31    9.  "Shareholder" means both a record shareholder and a
 72 32 beneficial shareholder.
 72 33    Sec. 79.  Section 490.1302, Code 2001, is amended to read
 72 34 as follows:
 72 35    490.1302  SHAREHOLDERS' RIGHT TO DISSENT APPRAISAL.
 73  1    1.  A shareholder is entitled to dissent from appraisal
 73  2 rights, and to obtain payment of the fair value of the
 73  3 shareholder's shares, in the event of, any of the following
 73  4 corporate actions:
 73  5    a.  Consummation of a plan of merger to which the
 73  6 corporation is a party if either of the following apply:
 73  7    (1)  Shareholder approval is required for the merger by
 73  8 section 490.1103 or the articles of incorporation and the
 73  9 shareholder is entitled to vote on the merger 490.1104 and the
 73 10 shareholder is entitled to vote on the merger, except that
 73 11 appraisal rights shall not be available to any shareholder of
 73 12 the corporation with respect to shares of any class or series
 73 13 that remain outstanding after consummation of the merger.
 73 14    (2)  The corporation is a subsidiary that is merged with
 73 15 its parent under and the merger is governed by section
 73 16 490.1104 490.1105.
 73 17    b.  Consummation of a plan of share exchange to which the
 73 18 corporation is a party as the corporation whose shares will be
 73 19 acquired, if the shareholder is entitled to vote on the plan
 73 20 exchange, except that appraisal rights shall not be available
 73 21 to any shareholder of the corporation with respect to any
 73 22 class or series of shares of the corporation that is not
 73 23 exchanged.
 73 24    c.  Consummation of a sale or exchange of all, or
 73 25 substantially all, of the property of the corporation other
 73 26 than in the usual and regular course of business, if the
 73 27 shareholder is entitled to vote on the sale or exchange,
 73 28 including a sale in dissolution, but not including a sale
 73 29 pursuant to court order or a sale for cash pursuant to a plan
 73 30 by which all or substantially all of the net proceeds of the
 73 31 sale will be distributed to the shareholders within one year
 73 32 after the date of sale disposition of assets pursuant to
 73 33 section 490.1202 if the shareholder is entitled to vote on the
 73 34 disposition.
 73 35    d.  An amendment of the articles of incorporation with
 74  1 respect to a class or series of shares that materially and
 74  2 adversely affects rights in respect of a dissenter's shares
 74  3 because it does any or all of the following:
 74  4    (1)  Alters or abolishes a preferential right of the
 74  5 shares.
 74  6    (2)  Creates, alters, or abolishes a right in respect of
 74  7 redemption, including a provision respecting a sinking fund
 74  8 for the redemption or repurchase, of the shares.
 74  9    (3)  Alters or abolishes a preemptive right of the holder
 74 10 of the shares to acquire shares or other securities.
 74 11    (4)  Excludes or limits the right of the shares to vote on
 74 12 any matter, or to cumulate votes, other than a limitation by
 74 13 dilution through issuance of shares or other securities with
 74 14 similar voting rights.
 74 15    (5)  Reduces reduces the number of shares of a class or
 74 16 series owned by the shareholder to a fraction of a share if
 74 17 the corporation has the obligation or right to repurchase the
 74 18 fractional share so created is to be acquired for cash under
 74 19 section 490.604.
 74 20    (6)  Extends, for the first time after being governed by
 74 21 this chapter, the period of duration of a corporation
 74 22 organized under chapter 491 or former chapter 496A and
 74 23 existing for a period of years on the day preceding the date
 74 24 the corporation is first governed by this chapter.
 74 25    e.  Any corporate action taken pursuant to a shareholder
 74 26 vote, other amendment to the articles of incorporation,
 74 27 merger, share exchange, or disposition of assets to the extent
 74 28 provided by the articles of incorporation, bylaws, or a
 74 29 resolution of the board of directors that provides that voting
 74 30 or nonvoting shareholders are entitled to dissent and obtain
 74 31 payment for their shares.
 74 32    2.  Notwithstanding subsection 1, the availability of the
 74 33 appraisal rights under subsection 1, paragraphs "a" through
 74 34 "d", shall be limited in accordance with the following
 74 35 provisions:
 75  1    a.  Appraisal rights shall not be available for the holders
 75  2 of shares of any class or series of shares:
 75  3    (1)  Listed on the New York stock exchange or the American
 75  4 stock exchange or designated as a national market system
 75  5 security on an interdealer quotation system by the national
 75  6 association of securities dealers, inc.
 75  7    (2)  Not so listed or designated, but has at least two
 75  8 thousand shareholders and the outstanding shares of such class
 75  9 or series has a market value of at least twenty million
 75 10 dollars, exclusive of the value of such shares held by its
 75 11 subsidiaries, senior executives, directors, and beneficial
 75 12 shareholders owning more than ten percent of such shares.
 75 13    b.  The applicability of paragraph "a" shall be determined
 75 14 according to the following:
 75 15    (1)  The record date fixed to determine the shareholders
 75 16 entitled to receive notice of, and to vote at, the meeting of
 75 17 shareholders to act upon the corporate action requiring
 75 18 appraisal rights.
 75 19    (2)  The day before the effective date of such corporate
 75 20 action if there is no meeting of shareholders.
 75 21    c.  Paragraph "a" shall not be applicable and appraisal
 75 22 rights shall be available pursuant to subsection 1 for the
 75 23 holders of any class or series of shares who are required by
 75 24 the terms of the corporate action requiring appraisal rights
 75 25 to accept for such shares anything other than cash or shares
 75 26 of any class or any series of shares of any corporation, or
 75 27 any other proprietary interest of any other entity, that
 75 28 satisfies the standards set forth in paragraph "a", at the
 75 29 time the corporate action becomes effective.
 75 30    d.  Paragraph "a" shall not be applicable and appraisal
 75 31 rights shall be available pursuant to subsection 1 for the
 75 32 holders of any class or series of shares where any of the
 75 33 following applies:
 75 34    (1)  Any of the shares or assets of the corporation are
 75 35 being acquired or converted, whether by merger, share
 76  1 exchange, or otherwise, pursuant to the corporate action by a
 76  2 person, or by an affiliate of a person, who:
 76  3    (a)  Is, or at any time in the one-year period immediately
 76  4 preceding approval by the board of directors of the corporate
 76  5 action requiring appraisal rights was, the beneficial owner of
 76  6 twenty percent or more of the voting power of the corporation,
 76  7 excluding any shares acquired pursuant to an offer for all
 76  8 shares having voting power if such offer was made within one
 76  9 year prior to the corporate action requiring appraisal rights
 76 10 for consideration of the same kind and of a value equal to or
 76 11 less than that paid in connection with the corporate action.
 76 12    (b)  Directly or indirectly has, or at any time in the one-
 76 13 year period immediately preceding approval by the board of
 76 14 directors of the corporation of the corporate action requiring
 76 15 appraisal rights had, the power, contractually or otherwise,
 76 16 to cause the appointment or election of twenty-five percent or
 76 17 more of the directors to the board of directors of the
 76 18 corporation.
 76 19    (2)  Any of the shares or assets of the corporation are
 76 20 being acquired or converted, whether by merger, share
 76 21 exchange, or otherwise, pursuant to such corporate action by a
 76 22 person, or by an affiliate of a person, who is, or at any time
 76 23 in the one-year period immediately preceding approval by the
 76 24 board of directors of the corporate action requiring appraisal
 76 25 rights was, a senior executive or director of the corporation
 76 26 or a senior executive of any affiliate thereof, and that
 76 27 senior executive or director will receive, as a result of the
 76 28 corporate action, a financial benefit not generally available
 76 29 to other shareholders as such, other than any of the
 76 30 following:
 76 31    (a)  Employment, consulting, retirement, or similar
 76 32 benefits established separately and not as part of or in
 76 33 contemplation of the corporate action.
 76 34    (b)  Employment, consulting, retirement, or similar
 76 35 benefits established in contemplation of, or as part of, the
 77  1 corporate action that are not more favorable than those
 77  2 existing before the corporate action or, if more favorable,
 77  3 that have been approved on behalf of the corporation in the
 77  4 same manner as is provided in section 490.862.
 77  5    (c)  In the case of a director of the corporation who will,
 77  6 in the corporate action, become a director of the acquiring
 77  7 entity in the corporate action or one of its affiliates,
 77  8 rights and benefits as a director that are provided on the
 77  9 same basis as those afforded by the acquiring entity generally
 77 10 to other directors of such entity or such affiliate.
 77 11    e.  For the purposes of paragraph "d" only, the term
 77 12 "beneficial owner" means any person who, directly or
 77 13 indirectly, through any contract, arrangement, or
 77 14 understanding, other than a revocable proxy, has or shares the
 77 15 power to vote, or to direct the voting of, shares, provided
 77 16 that a member of a national securities exchange shall not be
 77 17 deemed to be a beneficial owner of securities held directly or
 77 18 indirectly by such member on behalf of another person solely
 77 19 because the member is the record holder of such securities if
 77 20 the member is precluded by the rules of such exchange from
 77 21 voting without instruction on contested matters or matters
 77 22 that may affect substantially the rights or privileges of the
 77 23 holders of the securities to be voted.  When two or more
 77 24 persons agree to act together for the purpose of voting their
 77 25 shares of the corporation, each member of the group formed
 77 26 thereby shall be deemed to have acquired beneficial ownership,
 77 27 as of the date of such agreement, of all voting shares of the
 77 28 corporation beneficially owned by any member of the group.
 77 29    3.  Notwithstanding any other provision of this section,
 77 30 the articles of incorporation as originally filed or any
 77 31 amendment thereto may limit or eliminate appraisal rights for
 77 32 any class or series of preferred shares, but any such
 77 33 limitation or elimination contained in an amendment to the
 77 34 articles of incorporation that limits or eliminates appraisal
 77 35 rights for any of such shares that are outstanding immediately
 78  1 prior to the effective date of such amendment or that the
 78  2 corporation is or may be required to issue or sell thereafter
 78  3 pursuant to any conversion, exchange, or other right existing
 78  4 immediately before the effective date of such amendment, shall
 78  5 not apply to any corporate action that becomes effective
 78  6 within one year of that date if such action would otherwise
 78  7 afford appraisal rights.
 78  8    2. 4.  A shareholder entitled to dissent and obtain payment
 78  9 for the shareholder's shares appraisal rights under this
 78 10 chapter is not entitled to challenge the a completed corporate
 78 11 action creating the shareholder's entitlement unless the
 78 12 action is unlawful or fraudulent with respect to the
 78 13 shareholder or the corporation. for which appraisal rights are
 78 14 available unless such corporate action meets one of the
 78 15 following standards:
 78 16    a.  It was not effectuated in accordance with the
 78 17 applicable provisions of division X, XI, or XII or the
 78 18 corporation's articles of incorporation, bylaws, or board of
 78 19 directors' resolution authorizing the corporate action.
 78 20    b.  It was procured as a result of fraud or material
 78 21 misrepresentation.
 78 22    Sec. 80.  Section 490.1303, Code 2001, is amended to read
 78 23 as follows:
 78 24    490.1303  DISSENT ASSERTION OF RIGHTS BY NOMINEES AND
 78 25 BENEFICIAL OWNERS.
 78 26    1.  A record shareholder may assert dissenters' appraisal
 78 27 rights as to fewer than all the shares registered in that the
 78 28 record shareholder's name but owned by a beneficial
 78 29 shareholder only if the record shareholder dissents objects
 78 30 with respect to all shares beneficially of the class or series
 78 31 owned by any one person the beneficial shareholder and
 78 32 notifies the corporation in writing of the name and address of
 78 33 each person beneficial shareholder on whose behalf the
 78 34 shareholder asserts dissenters' appraisal rights are being
 78 35 asserted.  The rights of a partial dissenter record
 79  1 shareholder who asserts appraisal rights for only part of the
 79  2 shares held of record in the record shareholder's name under
 79  3 this subsection are shall be determined as if the shares as to
 79  4 which the record shareholder dissents objects and the record
 79  5 shareholder's other shares were registered in the names of
 79  6 different record shareholders.
 79  7    2.  A beneficial shareholder may assert dissenters'
 79  8 appraisal rights as to shares of any class or series held on
 79  9 the shareholder's behalf of the shareholder only if the
 79 10 shareholder does both of the following:
 79 11    a.  Submits to the corporation the record shareholder's
 79 12 written consent to the dissent not later than the time the
 79 13 beneficial shareholder asserts dissenters' rights assertion of
 79 14 such rights no later than the date referred to in section
 79 15 490.1322, subsection 2, paragraph "b", subparagraph (2).
 79 16    b.  Does so with respect to all shares of which the
 79 17 shareholder is the class of series that are beneficially owned
 79 18 by the beneficial shareholder or over which that beneficial
 79 19 shareholder has power to direct the vote.
 79 20    Sec. 81.  Section 490.1320, Code 2001, is amended to read
 79 21 as follows:
 79 22    490.1320  NOTICE OF DISSENTERS' APPRAISAL RIGHTS.
 79 23    1.  If proposed corporate action creating dissenters'
 79 24 rights under described in section 490.1302, subsection 1, is
 79 25 to be submitted to a vote at a shareholders' meeting, the
 79 26 meeting notice must state that the corporation has concluded
 79 27 that the shareholders are, are not, or may be entitled to
 79 28 assert dissenters' appraisal rights under this part and be
 79 29 accompanied by.  If the corporation concludes that appraisal
 79 30 rights are or may be available, a copy of this part must
 79 31 accompany the meeting notice sent to those record shareholders
 79 32 entitled to exercise appraisal rights.
 79 33    2.  If corporate action creating dissenters' rights under
 79 34 In a merger pursuant to section 490.1302 is taken without a
 79 35 vote of shareholders 490.1105, the parent corporation shall
 80  1 must notify in writing all record shareholders of the
 80  2 subsidiary who are entitled to assert dissenters' appraisal
 80  3 rights that the corporate action was taken and send them the
 80  4 dissenters' notice described became effective.  Such notice
 80  5 must be sent within ten days after the corporate action became
 80  6 effective and include the materials described in section
 80  7 490.1322.
 80  8    Sec. 82.  Section 490.1321, Code 2001, is amended to read
 80  9 as follows:
 80 10    490.1321  NOTICE OF INTENT TO DEMAND PAYMENT.
 80 11    1.  If proposed corporate action creating dissenters'
 80 12 requiring appraisal rights under section 490.1302 is submitted
 80 13 to a vote at a shareholders' meeting, a shareholder who wishes
 80 14 to assert dissenters' appraisal rights with respect to any
 80 15 class or series of shares must do all of the following:
 80 16    a.  Deliver to the corporation before the vote is taken
 80 17 written notice of the shareholder's intent to demand payment
 80 18 for the shareholder's shares if the proposed action is
 80 19 effectuated.
 80 20    b.  Not vote the dissenting shareholder's shares, or cause
 80 21 or permit to be voted, any shares of such class or series in
 80 22 favor of the proposed action.
 80 23    2.  A shareholder who does not satisfy the requirements of
 80 24 subsection 1, is not entitled to payment for the shareholder's
 80 25 shares under this part.
 80 26    Sec. 83.  Section 490.1322, Code 2001, is amended to read
 80 27 as follows:
 80 28    490.1322  DISSENTERS' APPRAISAL NOTICE AND FORM.
 80 29    1.  If proposed corporate action creating dissenters'
 80 30 requiring appraisal rights under section 490.1302 is
 80 31 authorized at a shareholders' meeting, subsection 1, becomes
 80 32 effective, the corporation shall must deliver a written
 80 33 dissenters' appraisal notice and form required by subsection
 80 34 2, paragraph "a", to all shareholders who satisfied the
 80 35 requirements of section 490.1321.  In the case of a merger
 81  1 under section 490.1105, the parent must deliver a written
 81  2 appraisal notice and form to all record shareholders who may
 81  3 be entitled to assert appraisal rights.
 81  4    2.  The dissenters' appraisal notice must be sent no
 81  5 earlier than the date the corporate action became effective
 81  6 and no later than ten days after the proposed corporate action
 81  7 is authorized at a shareholders' meeting, or, if the corporate
 81  8 action is taken without a vote of the shareholders, no later
 81  9 than ten days after the corporate action is taken, such date
 81 10 and must do all of the following:
 81 11    a.  State where the payment demand must be sent and where
 81 12 and when Be accompanied by a form that specifies the date of
 81 13 the first announcement to shareholders of the principal terms
 81 14 of the proposed corporate action and requires the shareholder
 81 15 asserting appraisal rights to certify whether or not
 81 16 beneficial ownership of those shares for which appraisal
 81 17 rights are asserted was acquired before that date, and that
 81 18 the shareholder did not vote for the transaction.
 81 19    b.  State all of the following:
 81 20    (1)  Where the form must be sent and where certificates for
 81 21 certificated shares must be deposited and the date by which
 81 22 those certificates must be deposited, which date shall not be
 81 23 earlier than the date for receiving the required form under
 81 24 subparagraph (2).
 81 25    b.  Inform holders of uncertificated shares to what extent
 81 26 transfer of the shares will be restricted after the payment
 81 27 demand is received.
 81 28    c.  Supply a form for demanding payment that includes the
 81 29 date of the first announcement to news media or to
 81 30 shareholders of the terms of the proposed corporate action and
 81 31 requires that the person asserting dissenters' rights certify
 81 32 whether or not the person acquired beneficial ownership of the
 81 33 shares before that date.
 81 34    d. (2)  Set a A date by which the corporation must receive
 81 35 the payment demand form, which date shall not be fewer than
 82  1 thirty forty nor more than sixty days after the date the
 82  2 dissenters' notice is delivered appraisal notice and form are
 82  3 sent under subsection 1, and state that the shareholder shall
 82  4 have waived the right to demand appraisal with respect to the
 82  5 shares unless the form is received by the corporation by such
 82  6 specified date.
 82  7    (3)  The corporation's estimate of the fair value of the
 82  8 shares.
 82  9    (4)  That, if requested in writing, the corporation will
 82 10 provide, to the shareholder so requesting, within ten days
 82 11 after the date specified in subparagraph (2) the number of
 82 12 shareholders who return the forms by the specified date and
 82 13 the total number of shares owned by them.
 82 14    (5)  The date by which the notice to withdraw under section
 82 15 490.1323 must be received, which date must be within twenty
 82 16 days after the date specified in subparagraph (2).
 82 17    e. c.  Be accompanied by a copy of this division.
 82 18    Sec. 84.  Section 490.1323, Code 2001, is amended to read
 82 19 as follows:
 82 20    490.1323  DUTY TO DEMAND PAYMENT PERFECTION OF RIGHTS –
 82 21 RIGHT TO WITHDRAW.
 82 22    1.  A shareholder sent a dissenters' who receives notice
 82 23 described in pursuant to section 490.1322 and who wishes to
 82 24 exercise appraisal rights must demand payment, certify on the
 82 25 form sent by the corporation whether the shareholder
 82 26 beneficial owner of such shares acquired beneficial ownership
 82 27 of the shares before the date required to be set forth in the
 82 28 dissenters' notice pursuant to section 490.1322, subsection 2,
 82 29 paragraph "c" "a".  If a shareholder fails to make this
 82 30 certification, the corporation may elect to treat the
 82 31 shareholder's shares as after-acquired shares under section
 82 32 490.1325, and deposit the shareholder's certificates in
 82 33 accordance with the terms of the notice by the date referred
 82 34 to in the notice pursuant to section 490.1322, subsection 2,
 82 35 paragraph "b", subparagraph (2).  Once a shareholder deposits
 83  1 that shareholder's certificates or, in the case of
 83  2 uncertificated shares, returns the executed forms, that
 83  3 shareholder loses all rights as a shareholder, unless the
 83  4 shareholder withdraws pursuant to subsection 2.
 83  5    2.  The shareholder who demands payment and deposits the
 83  6 shareholder's shares under subsection 1 retains all other
 83  7 rights of a shareholder until these rights are canceled or
 83  8 modified by the taking of the proposed corporate action.  A
 83  9 shareholder who has complied with subsection 1 may
 83 10 nevertheless decline to exercise appraisal rights and withdraw
 83 11 from the appraisal process by so notifying the corporation in
 83 12 writing by the date set forth in the appraisal notice pursuant
 83 13 to section 490.1322, subsection 2, paragraph "b", subparagraph
 83 14 (5).  A shareholder who fails to so withdraw from the
 83 15 appraisal process shall not thereafter withdraw without the
 83 16 corporation's written consent.
 83 17    3.  A shareholder who does not demand payment or execute
 83 18 and return the form and, in the case of certificated shares,
 83 19 deposit the shareholder's share certificates where required,
 83 20 each by the date set forth in the dissenters' notice described
 83 21 in section 490.1322, subsection 2, is shall not be entitled to
 83 22 payment for the shareholder's shares under this division.
 83 23    Sec. 85.  Section 490.1324, Code 2001, is amended by
 83 24 striking the section and inserting in lieu thereof the
 83 25 following:
 83 26    490.1324  PAYMENT.
 83 27    1.  Except as provided in section 490.1325, within thirty
 83 28 days after the form required by section 490.1322, subsection
 83 29 2, paragraph "b", subparagraph (2), the corporation shall pay
 83 30 in cash to those shareholders who complied with section
 83 31 490.1323, subsection 1, the amount the corporation estimates
 83 32 to be the fair value of their shares, plus interest.
 83 33    2.  The payment to each shareholder pursuant to subsection
 83 34 1 must be accompanied by all of the following:
 83 35    a.  Financial statements of the corporation that issued the
 84  1 shares to be appraised, consisting of a balance sheet as of
 84  2 the end of a fiscal year ending not more than sixteen months
 84  3 before the date of payment, an income statement for that year,
 84  4 a statement of changes in shareholders' equity for that year,
 84  5 and the latest available interim financial statements, if any.
 84  6    b.  A statement of the corporation's estimate of the fair
 84  7 value of the shares, which estimate must equal or exceed the
 84  8 corporation's estimate given pursuant to section 490.1322,
 84  9 subsection 2, paragraph "b", subparagraph (3).
 84 10    c.  A statement that shareholders described in subsection 1
 84 11 have the right to demand further payment under section
 84 12 490.1326 and that if any such shareholder does not do so
 84 13 within the time period specified therein, such shareholder
 84 14 shall be deemed to have accepted such payment in full
 84 15 satisfaction of the corporation's obligations under this
 84 16 chapter.
 84 17    Sec. 86.  Section 490.1325, Code 2001, is amended by
 84 18 striking the section and inserting in lieu thereof the
 84 19 following:
 84 20    490.1325  AFTER-ACQUIRED SHARES.
 84 21    1.  A corporation may elect to withhold payment required by
 84 22 section 490.1324 from any shareholder who did not certify that
 84 23 beneficial ownership of all of the shareholder's shares for
 84 24 which appraisal rights are asserted was acquired before the
 84 25 date set forth in the appraisal notice sent pursuant to
 84 26 section 490.1322, subsection 2, paragraph "a".
 84 27    2.  If the corporation elects to withhold payment under
 84 28 subsection 1, it must within thirty days after the form
 84 29 required by section 490.1322, subsection 2, paragraph "b",
 84 30 subparagraph (2), is due, notify all shareholders who are
 84 31 described in subsection 1 regarding all of the following:
 84 32    a.  Of the information required by section 490.1324,
 84 33 subsection 2, paragraph "a".
 84 34    b.  Of the corporation's estimate of fair value pursuant to
 84 35 section 490.1324, subsection 2, paragraph "b".
 85  1    c.  That they may accept the corporation's estimate of fair
 85  2 value, plus interest, in full satisfaction of their demands or
 85  3 demand appraisal under section 490.1326.
 85  4    d.  That those shareholders who wish to accept such offer
 85  5 must notify the corporation of their acceptance of the
 85  6 corporation's offer within thirty days after receiving the
 85  7 offer.
 85  8    e.  That those shareholders who do not satisfy the
 85  9 requirements for demanding appraisal under section 490.1326
 85 10 shall be deemed to have accepted the corporation's offer.
 85 11    3.  Within ten days after receiving the shareholder's
 85 12 acceptance pursuant to subsection 2, the corporation must pay
 85 13 in cash the amount it offered under subsection 2, paragraph
 85 14 "b", to each shareholder who agreed to accept the
 85 15 corporation's offer in full satisfaction of the shareholder's
 85 16 demand.
 85 17    4.  Within forty days after sending the notice described in
 85 18 subsection 2, the corporation must pay in cash the amount it
 85 19 offered to pay under subsection 2, paragraph "b", to each
 85 20 shareholder described in subsection 2, paragraph "e".
 85 21    Sec. 87.  Section 490.1326, Code 2001, is amended by
 85 22 striking the section and inserting in lieu thereof the
 85 23 following:
 85 24    490.1326  PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
 85 25 PAYMENT OR OFFER.
 85 26    1.  A shareholder paid pursuant to section 490.1324 who is
 85 27 dissatisfied with the amount of the payment must notify the
 85 28 corporation in writing of that shareholder's estimate of the
 85 29 fair value of the shares and demand payment of that estimate
 85 30 plus interest, less any payment under section 490.1324.  A
 85 31 shareholder offered payment under section 490.1325 who is
 85 32 dissatisfied with that offer must reject the offer and demand
 85 33 payment of the shareholder's stated estimate of the fair value
 85 34 of the shares plus interest.
 85 35    2.  A shareholder who fails to notify the corporation in
 86  1 writing of that shareholder's demand to be paid the
 86  2 shareholder's stated estimate of the fair value plus interest
 86  3 under subsection 1 within thirty days after receiving the
 86  4 corporation's payment or offer of payment under section
 86  5 490.1324 or 490.1325, respectively, waives the right to demand
 86  6 payment under this section and shall be entitled only to the
 86  7 payment made or offered pursuant to those respective sections.
 86  8    Sec. 88.  Section 490.1330, Code 2001, is amended to read
 86  9 as follows:
 86 10    490.1330  COURT ACTION.
 86 11    1.  If a demand shareholder makes demands for payment under
 86 12 section 490.1328 490.1326 that remains unsettled, the
 86 13 corporation shall commence a proceeding within sixty days
 86 14 after receiving the payment demand and petition the court to
 86 15 determine the fair value of the shares and accrued interest.
 86 16 If the corporation does not commence the proceeding within the
 86 17 sixty-day period, it shall pay in cash to each dissenter whose
 86 18 demand remains unsettled the amount demanded shareholder the
 86 19 amount the shareholder demanded pursuant to section 490.1326
 86 20 plus interest.
 86 21    2.  The corporation shall commence the proceeding in the
 86 22 district court of the county where a the corporation's
 86 23 principal office or, if none in this state, its registered
 86 24 office, in this state is located.  If the corporation is a
 86 25 foreign corporation without a registered office in this state,
 86 26 it shall commence the proceeding in the county in this state
 86 27 where the principal office or registered office of the
 86 28 domestic corporation merged with or whose shares were acquired
 86 29 by the foreign corporation was located at the time of the
 86 30 transaction.
 86 31    3.  The corporation shall make all dissenters shareholders,
 86 32 whether or not residents of this state, whose demands remain
 86 33 unsettled parties to the proceeding as in an action against
 86 34 their shares and all parties must be served with a copy of the
 86 35 petition.  Nonresidents may be served by registered or
 87  1 certified mail or by publication as provided by law.
 87  2    4.  The jurisdiction of the court in which the proceeding
 87  3 is commenced under subsection 2 is plenary and exclusive.  The
 87  4 court may appoint one or more persons as appraisers to receive
 87  5 evidence and recommend a decision on the question of fair
 87  6 value.  The appraisers shall have the powers described in the
 87  7 order appointing them, or in any amendment to it.  The
 87  8 dissenters shareholders demanding appraisal rights are
 87  9 entitled to the same discovery rights as parties in other
 87 10 civil proceedings.  There shall be no right to a jury trial.
 87 11    5.  Each dissenter shareholder made a party to the
 87 12 proceeding is entitled to judgment for either of the
 87 13 following:
 87 14    a.  The amount, if any, by which the court finds the fair
 87 15 value of the dissenter's shareholder's shares, plus interest,
 87 16 exceeds the amount paid by the corporation to the shareholder
 87 17 for such shares.
 87 18    b.  The fair value, plus accrued interest, of the
 87 19 dissenter's after-acquired shareholder's shares for which the
 87 20 corporation elected to withhold payment under section 490.1327
 87 21 490.1325.
 87 22    6.  Notwithstanding the provisions of this division, if the
 87 23 corporation is a bank holding company as defined in section
 87 24 524.1801, fair value, at the election of the bank holding
 87 25 company, may be determined as provided in section 524.1406,
 87 26 subsection 3, prior to giving notice under section 490.1320 or
 87 27 490.1322.  The fair value as determined shall be included in
 87 28 any notice under section 490.1320 or 490.1322, and section
 87 29 490.1328 490.1326 shall not apply.
 87 30    Sec. 89.  Section 490.1331, Code 2001, is amended to read
 87 31 as follows:
 87 32    490.1331  COURT COSTS AND COUNSEL FEES.
 87 33    1.  The court in an appraisal proceeding commenced under
 87 34 section 490.1330 shall determine all costs of the proceeding,
 87 35 including the reasonable compensation and expenses of
 88  1 appraisers appointed by the court.  The court shall assess the
 88  2 costs against the corporation, except that the court may
 88  3 assess costs against all or some of the dissenters
 88  4 shareholders demanding appraisal, in amounts the court finds
 88  5 equitable, to the extent the court finds the dissenters such
 88  6 shareholders acted arbitrarily, vexatiously, or not in good
 88  7 faith in demanding payment under section 490.1328 with respect
 88  8 to the rights provided by this division.
 88  9    2.  The court in an appraisal proceeding may also assess
 88 10 the fees and expenses of counsel and experts for the
 88 11 respective parties, in amounts the court finds equitable, for
 88 12 either of the following:
 88 13    a.  Against the corporation and in favor of any or all
 88 14 dissenters shareholders demanding appraisal if the court finds
 88 15 the corporation did not substantially comply with the
 88 16 requirements of sections section 490.1320 through 490.1328,
 88 17 490.1322, 490.1324, or 490.1325.
 88 18    b.  Against either the corporation or a dissenter
 88 19 shareholder demanding appraisal, in favor of any other party,
 88 20 if the court finds that the party against whom the fees and
 88 21 expenses are assessed acted arbitrarily, vexatiously, or not
 88 22 in good faith with respect to the rights provided by this
 88 23 chapter.
 88 24    3.  If the court in an appraisal proceeding finds that the
 88 25 services of counsel for any dissenter shareholder were of
 88 26 substantial benefit to other dissenters shareholders similarly
 88 27 situated, and that the fees for those services should not be
 88 28 assessed against the corporation, the court may award to these
 88 29 such counsel reasonable fees to be paid out of the amounts
 88 30 awarded the dissenters shareholders who were benefited.
 88 31    4.  To the extent the corporation fails to make a required
 88 32 payment pursuant to section 490.1324, 490.1325, or 490.1326,
 88 33 the shareholder may sue directly for the amount owed and, to
 88 34 the extent successful, shall be entitled to recover from the
 88 35 corporation all costs and expenses of the suit, including
 89  1 counsel fees.
 89  2    Sec. 90.  Section 490.1402, subsections 4 and 5, Code 2001,
 89  3 are amended to read as follows:
 89  4    4.  The corporation shall notify each shareholder, whether
 89  5 or not entitled to vote, of the proposed shareholders' meeting
 89  6 in accordance with section 490.705.  The notice must also
 89  7 state that the purpose, or one of the purposes, of the meeting
 89  8 is to consider dissolving the corporation.
 89  9    5.  Unless the articles of incorporation, bylaws, or the
 89 10 board of directors acting pursuant to subsection 3 requires a
 89 11 greater vote, a greater number of shares to be present, or a
 89 12 vote by voting groups, adoption of the proposal to dissolve to
 89 13 be adopted must be approved by a majority of all shall require
 89 14 the approval of the shareholders at a meeting at which the
 89 15 quorum consisting of at least a majority of the votes entitled
 89 16 to be cast on that proposal exists.
 89 17    Sec. 91.  Section 490.1403, Code 2001, is amended to read
 89 18 as follows:
 89 19    490.1403  ARTICLES OF DISSOLUTION.
 89 20    1.  At any time after dissolution is authorized, the
 89 21 corporation may dissolve by delivering to the secretary of
 89 22 state for filing articles of dissolution setting forth all of
 89 23 the following:
 89 24    a.  The name of the corporation.
 89 25    b.  The date dissolution was authorized.
 89 26    c.  If dissolution was approved by the shareholders, both
 89 27 of the following:
 89 28    (1)  The number of votes entitled to be cast on a statement
 89 29 that the proposal to dissolve was duly approved by the
 89 30 shareholders in the manner required by this chapter and by the
 89 31 articles of incorporation.
 89 32    (2)  Either the total number of votes cast for and against
 89 33 dissolution or the total number of undisputed votes cast for
 89 34 dissolution and a statement that the number cast for
 89 35 dissolution was sufficient for approval.
 90  1    d.  If voting by voting groups was required, the
 90  2 information required by paragraph "c" must be separately
 90  3 provided for each voting group entitled to vote separately on
 90  4 the plan to dissolve.
 90  5    2.  A corporation is dissolved upon the effective date of
 90  6 its articles of dissolution.
 90  7    3.  For purposes of this division, "dissolved corporation"
 90  8 means a corporation whose articles of dissolution have become
 90  9 effective and includes a successor entity to which the
 90 10 remaining assets of the corporation are transferred subject to
 90 11 its liabilities for purposes of liquidation.
 90 12    Sec. 92.  Section 490.1404, subsection 3, paragraph f, Code
 90 13 2001, is amended to read as follows:
 90 14    f.  If shareholder action was required to revoke the
 90 15 dissolution, the information required by section 490.1403,
 90 16 subsection 1, paragraph "c" or "d".
 90 17    Sec. 93.  Section 490.1406, subsections 1 and 2, Code 2001,
 90 18 are amended to read as follows:
 90 19    1.  A dissolved corporation may dispose of the known claims
 90 20 against it by following the procedure described in this
 90 21 section notifying its known claimants in writing of the
 90 22 dissolution at any time after its effective date.
 90 23    2.  The dissolved corporation shall notify its known
 90 24 claimants in writing of the dissolution at any time after its
 90 25 effective date.  The written notice must do all of the
 90 26 following:
 90 27    a.  Describe information that must be included in a claim.
 90 28    b.  Provide a mailing address where a claim may be sent.
 90 29    c.  State the deadline, which may not be fewer than one
 90 30 hundred twenty days from the effective date of the written
 90 31 notice, by which the dissolved corporation must receive the
 90 32 claim.
 90 33    d.  State that the claim will be barred if not received by
 90 34 the deadline.
 90 35    Sec. 94.  Section 490.1407, Code 2001, is amended to read
 91  1 as follows:
 91  2    490.1407  UNKNOWN OTHER CLAIMS AGAINST DISSOLVED
 91  3 CORPORATION.
 91  4    1.  A dissolved corporation may also publish notice of its
 91  5 dissolution and request that persons with claims against the
 91  6 dissolved corporation present them in accordance with the
 91  7 notice.
 91  8    2.  The notice must meet all of the following requirements:
 91  9    a.  Be published one time in a newspaper of general
 91 10 circulation in the county where the dissolved corporation's
 91 11 principal office or, if none in this state, its registered
 91 12 office is or was last located.
 91 13    b.  Describe the information that must be included in a
 91 14 claim and provide a mailing address where the claim may be
 91 15 sent.
 91 16    c.  State that a claim against the dissolved corporation
 91 17 will be barred unless a proceeding to enforce the claim is
 91 18 commenced within five three years after the publication of the
 91 19 notice.
 91 20    3.  If the dissolved corporation publishes a newspaper
 91 21 notice in accordance with subsection 2, the claim of each of
 91 22 the following claimants is barred unless the claimant
 91 23 commences a proceeding to enforce the claim against the
 91 24 dissolved corporation within five three years after the
 91 25 publication date of the newspaper notice:
 91 26    a.  A claimant who did not receive was not given written
 91 27 notice under section 490.1406.
 91 28    b.  A claimant whose claim was timely sent to the dissolved
 91 29 corporation but not acted on.
 91 30    c.  A claimant whose claim is contingent or based on an
 91 31 event occurring after the effective date of dissolution.
 91 32    4.  A claim that is not barred by section 490.1406,
 91 33 subsection 2, or subsection 3 of this section, may be enforced
 91 34 under this section in either of the following ways:
 91 35    a.  Against the dissolved corporation, to the extent of its
 92  1 undistributed assets.
 92  2    b.  If Except as provided in section 490.1408, subsection
 92  3 4, the assets have been distributed in liquidation, against a
 92  4 shareholder of the dissolved corporation to the extent of the
 92  5 shareholder's pro rata share of the claim or the corporate
 92  6 assets distributed to the shareholder in liquidation,
 92  7 whichever is less, but a shareholder's total liability for all
 92  8 claims under this section shall not exceed the total amount of
 92  9 assets distributed to the shareholder in liquidation.
 92 10    Sec. 95.  NEW SECTION.  490.1408  COURT PROCEEDINGS.
 92 11    1.  A dissolved corporation that has published a notice
 92 12 under section 490.1407 may file an application with the
 92 13 district court of the county where the dissolved corporation's
 92 14 principal office or, if none in this state, its registered
 92 15 office is located for a determination of the amount and form
 92 16 of security to be provided for payment of claims that are
 92 17 contingent or have not been made known to the dissolved
 92 18 corporation or that are based on an event occurring after the
 92 19 effective date of dissolution but that, based on the facts
 92 20 known to the dissolved corporation, are reasonably estimated
 92 21 to arise after the effective date of dissolution.  Provision
 92 22 need not be made for any claim that is or is reasonably
 92 23 anticipated to be barred under section 490.1407, subsection 3.
 92 24    2.  Within ten days after the filing of the application,
 92 25 notice of the proceeding shall be given by the dissolved
 92 26 corporation to each claimant holding a contingent claim whose
 92 27 contingent claim is shown on the records of the dissolved
 92 28 corporation.
 92 29    3.  The court may appoint a guardian ad litem to represent
 92 30 all claimants whose identities are unknown in any proceeding
 92 31 brought under this section.  The reasonable fees and expenses
 92 32 of such guardian, including all reasonable expert witness
 92 33 fees, shall be paid by the dissolved corporation.
 92 34    4.  Provision by the dissolved corporation for security in
 92 35 the amount and the form ordered by the court under subsection
 93  1 1, shall satisfy the dissolved corporation's obligations with
 93  2 respect to claims that are contingent, have not been made
 93  3 known to the dissolved corporation or are based on an event
 93  4 occurring after the effective date of dissolution, and such
 93  5 claims shall not be enforced against a shareholder who
 93  6 received assets in liquidation.
 93  7    Sec. 96.  NEW SECTION.  490.1409  DIRECTOR DUTIES.
 93  8    1.  Directors shall cause the dissolved corporation to
 93  9 discharge or make reasonable provision for the payment of
 93 10 claims and make distributions of assets to shareholders after
 93 11 payment or provision for claims.
 93 12    2.  Directors of a dissolved corporation which has disposed
 93 13 of claims under section 490.1406, 490.1407, or 490.1408 shall
 93 14 not be liable for breach of subsection 1, with respect to
 93 15 claims against the dissolved corporation that are barred or
 93 16 satisfied under section 490.1406, 490.1407, or 490.1408.
 93 17    Sec. 97.  Section 490.1431, Code 2001, is amended by adding
 93 18 the following new subsection:
 93 19    NEW SUBSECTION.  4.  Within ten days of the commencement of
 93 20 a proceeding under section 490.1430, subsection 2, to dissolve
 93 21 a corporation that has no shares listed on a national
 93 22 securities exchange or regularly traded in a market maintained
 93 23 by one or more members of a national securities exchange, the
 93 24 corporation must send to all shareholders, other than the
 93 25 petitioner, a notice stating that the shareholders are
 93 26 entitled to avoid the dissolution of the corporation by
 93 27 electing to purchase the petitioner's shares under section
 93 28 490.1434, and a copy of section 490.1434.
 93 29    Sec. 98.  NEW SECTION.  490.1434  ELECTION TO PURCHASE IN
 93 30 LIEU OF DISSOLUTION.
 93 31    1.  In a proceeding under section 490.1430, subsection 2,
 93 32 to dissolve a corporation that has no shares listed on a
 93 33 national securities exchange or regularly traded in a market
 93 34 maintained by one or more members of a national or affiliated
 93 35 securities association, the corporation may elect or, if it
 94  1 fails to elect, one or more shareholders may elect to purchase
 94  2 all shares owned by the petitioning shareholder at the fair
 94  3 value of the shares.  An election pursuant to this section
 94  4 shall be irrevocable unless the court determines that it is
 94  5 equitable to set aside or modify the election.
 94  6    2.  An election to purchase pursuant to this section may be
 94  7 filed with the court at any time within ninety days after the
 94  8 filing of the petition under section 490.1430, subsection 2,
 94  9 or at such later time as the court in its discretion may
 94 10 allow.  If the election to purchase is filed by one or more
 94 11 shareholders, the corporation shall, within ten days
 94 12 thereafter, give written notice to all shareholders, other
 94 13 than the petitioner.  The notice must state the name and
 94 14 number of shares owned by the petitioner and the name and
 94 15 number of shares owned by each electing shareholder and must
 94 16 advise the recipients of their right to join the election to
 94 17 purchase shares in accordance with this section.  Shareholders
 94 18 who wish to participate must file notice of their intention to
 94 19 join in the purchase no later than thirty days after the
 94 20 effective date of the notice to them.  All shareholders who
 94 21 have filed an election or notice of their intention to
 94 22 participate in the election to purchase thereby become parties
 94 23 to the proceeding and shall participate in the purchase in
 94 24 proportion to their ownership of shares as of the date the
 94 25 first election was filed, unless they otherwise agree or the
 94 26 court otherwise directs.  After an election has been filed by
 94 27 the corporation or one or more shareholders, the proceeding
 94 28 under section 490.1430, subsection 2, shall not be
 94 29 discontinued or settled, nor may the petitioning shareholder
 94 30 sell or otherwise dispose of the shareholder's shares, unless
 94 31 the court determines that it would be equitable to the
 94 32 corporation and the shareholders, other than the petitioner,
 94 33 to permit such discontinuance, settlement, sale, or other
 94 34 disposition.
 94 35    3.  If, within sixty days of the filing of the first
 95  1 election, the parties reach agreement as to the fair value and
 95  2 terms of purchase of the petitioner's shares, the court shall
 95  3 enter an order directing the purchase of the petitioner's
 95  4 shares upon the terms and conditions agreed to by the parties.
 95  5    4.  If the parties are unable to reach an agreement as
 95  6 provided for in subsection 3, the court, upon application of
 95  7 any party, shall stay the section 490.1430, subsection 2,
 95  8 proceedings and determine the fair value of the petitioner's
 95  9 shares as of the day before the date on which the petition
 95 10 under section 490.1430, subsection 2, was filed or as of such
 95 11 other date as the court deems appropriate under the
 95 12 circumstances.
 95 13    5.  Upon determining the fair value of the shares, the
 95 14 court shall enter an order directing the purchase upon such
 95 15 terms and conditions as the court deems appropriate, which may
 95 16 include payment of the purchase price in installments, where
 95 17 necessary in the interests of equity, provision for security
 95 18 to assure payment of the purchase price and any additional
 95 19 costs, fees, and expenses as may have been awarded, and, if
 95 20 the shares are to be purchased by shareholders, the allocation
 95 21 of shares among them.  In allocating petitioner's shares among
 95 22 holders of different classes of shares, the court shall
 95 23 attempt to preserve the existing distribution of voting rights
 95 24 among holders of different classes insofar as practicable and
 95 25 may direct that holders of a specific class or classes shall
 95 26 not participate in the purchase.  Interest may be allowed at
 95 27 the rate and from the date determined by the court to be
 95 28 equitable, but if the court finds that the refusal of the
 95 29 petitioning shareholder to accept an offer of payment was
 95 30 arbitrary or otherwise not in good faith, no interest shall be
 95 31 allowed.  If the court finds that the petitioning shareholder
 95 32 has probable grounds for relief under section 490.1430,
 95 33 subsection 2, paragraph "b" or "d", it may award to the
 95 34 petitioning shareholder reasonable fees and expenses of
 95 35 counsel and of any experts employed by the shareholder.
 96  1    6.  Upon entry of an order under subsection 3 or 5, the
 96  2 court shall dismiss the petition to dissolve the corporation
 96  3 under section 490.1430, and the petitioning shareholder shall
 96  4 no longer have any rights or status as a shareholder of the
 96  5 corporation, except the right to receive the amounts awarded
 96  6 to the shareholder by the order of the court which shall be
 96  7 enforceable in the same manner as any other judgment.
 96  8    7.  The purchase ordered pursuant to subsection 5 shall be
 96  9 made within ten days after the date the order becomes final
 96 10 unless before that time the corporation files with the court a
 96 11 notice of its intention to adopt articles of dissolution
 96 12 pursuant to sections 490.1402 and 490.1403, which articles
 96 13 must then be adopted and filed within fifty days thereafter.
 96 14 Upon filing of such articles of dissolution, the corporation
 96 15 shall be dissolved in accordance with the provisions of
 96 16 sections 490.1405 through 490.1407, and the order entered
 96 17 pursuant to subsection 5 shall no longer be of any force or
 96 18 effect, except that the court may award the petitioning
 96 19 shareholder reasonable fees and expenses in accordance with
 96 20 the provisions of the last sentence of subsection 5 and the
 96 21 petitioner may continue to pursue any claims previously
 96 22 asserted on behalf of the corporation.
 96 23    8.  Any payment by the corporation pursuant to an order
 96 24 under subsection 3 or 5, other than an award of fees and
 96 25 expenses pursuant to subsection 5, is subject to the
 96 26 provisions of section 490.640.
 96 27    Sec. 99.  Section 490.1603, Code 2001, is amended to read
 96 28 as follows:
 96 29    490.1603  SCOPE OF INSPECTION RIGHT.
 96 30    1.  A shareholder's agent or attorney has the same
 96 31 inspection and copying rights as the shareholder the agent or
 96 32 attorney represents represented.
 96 33    2.  The right to copy records under section 490.1602
 96 34 includes, if reasonable, the right to receive copies made by
 96 35 photographic, xerographic, or other technological means by
 97  1 xerographic or other means, including copies through an
 97  2 electronic transmission if available and so requested by the
 97  3 shareholder.
 97  4    3.  The corporation may comply at its expense with a
 97  5 shareholder's demand to inspect the record of shareholders
 97  6 under section 490.1602, subsection 2, paragraph "c", by
 97  7 providing the shareholder with a list of shareholders that was
 97  8 compiled no earlier than the date of the shareholder's demand.
 97  9    3. 4.  The corporation may impose a reasonable charge,
 97 10 covering the costs of labor and material, for copies of any
 97 11 documents provided to the shareholder.  The charge shall not
 97 12 exceed the estimated cost of production, or reproduction, or
 97 13 transmission of the records.
 97 14    4.  The corporation may comply with a shareholder's demand
 97 15 to inspect the record of shareholders under section 490.1602,
 97 16 subsection 2, paragraph "c" by providing the shareholder with
 97 17 a list of its shareholders that was compiled no earlier than
 97 18 the date of the shareholder's demand.
 97 19    Sec. 100.  NEW SECTION.  490.1605  INSPECTION OF RECORDS BY
 97 20 DIRECTORS.
 97 21    1.  A director of a corporation is entitled to inspect and
 97 22 copy the books, records, and documents of the corporation at
 97 23 any reasonable time to the extent reasonably related to the
 97 24 performance of the director's duties as a director, including
 97 25 duties as a member of a committee, but not for any other
 97 26 purpose or in any manner that would violate any duty to the
 97 27 corporation.
 97 28    2.  The district court of the county where the
 97 29 corporation's principal office, or if none in this state, its
 97 30 registered office, is located may order inspection and copying
 97 31 of the books, records, and documents at the corporation's
 97 32 expense, upon application of a director who has been refused
 97 33 such inspection rights, unless the corporation establishes
 97 34 that the director is not entitled to such inspection rights.
 97 35 The court shall dispose of an application under this
 98  1 subsection on an expedited basis.
 98  2    3.  If an order is issued, the court may include provisions
 98  3 protecting the corporation from undue burden or expense, and
 98  4 prohibiting the director from using information obtained upon
 98  5 exercise of the inspection rights in a manner that would
 98  6 violate a duty to the corporation, and may also order the
 98  7 corporation to reimburse the director for the director's
 98  8 costs, including reasonable counsel fees, incurred in
 98  9 connection with the application.
 98 10    Sec. 101.  NEW SECTION.  490.1606  EXCEPTION TO NOTICE
 98 11 REQUIREMENT.
 98 12    1.  Whenever notice is required to be given under any
 98 13 provision of this chapter to any shareholder, such notice
 98 14 shall not be required to be given if either of the following
 98 15 applies:
 98 16    a.  Notice of two consecutive annual meetings, and all
 98 17 notices of meetings during the period between such two
 98 18 consecutive annual meetings, have been sent to such
 98 19 shareholder at such shareholder's address as shown on the
 98 20 records of the corporation and have been returned
 98 21 undeliverable.
 98 22    b.  All, but not less than two, payments of dividends on
 98 23 securities during a twelve-month period, or two consecutive
 98 24 payments of dividends on securities during a period of more
 98 25 than twelve months, have been sent to such shareholder at such
 98 26 shareholder's address as shown on the records of the
 98 27 corporation and have been returned undeliverable.
 98 28    2.  If any such shareholder shall deliver to the
 98 29 corporation a written notice setting forth such shareholder's
 98 30 then-current address, the requirement that notice be given to
 98 31 such shareholder shall be reinstated.
 98 32    Sec. 102.  Sections 490.832, 490.1022, 490.1327, 490.1328,
 98 33 and 490.1621, Code 2001, are repealed.
 98 34    Sec. 103.  CODE EDITOR DIRECTIVE.  The following division
 98 35 and part titles shall be changed by the Code editor:
 99  1    1.  Division XII shall be retitled DISPOSITION OF ASSETS.
 99  2    2.  Division XIII shall be retitled APPRAISAL RIGHTS.
 99  3    3.  Division XIII, Part A, shall be retitled RIGHT TO
 99  4 APPRAISAL AND PAYMENT FOR SHARES.
 99  5    4.  Division XIII, Part B, shall be retitled PROCEDURE FOR
 99  6 EXERCISE OF APPRAISAL RIGHTS.
 99  7    Sec. 104.  EFFECTIVE DATE.  This Act, takes effect January
 99  8 1, 2003.  
 99  9                           EXPLANATION
 99 10    The following overview highlights the areas of change to
 99 11 the Iowa Business Corporations Act:
 99 12    AMENDMENT PERTAINING TO LIABILITY OF DIRECTORS.  Code
 99 13 section 490.202 allows shareholders the option to include in
 99 14 the articles of incorporation a provision eliminating or
 99 15 limiting the liability of a director to the corporation or its
 99 16 shareholders, with certain exceptions.  The provision on this
 99 17 issue is currently in Code section 490.832, but it contains
 99 18 more general language on exceptions than the new provision.
 99 19    AMENDMENTS PERTAINING TO DIRECTOR CONFLICT OF INTERESTS.
 99 20 Current Code section 490.831 on director conflicts of interest
 99 21 is deleted and several new sections on the issue are added
 99 22 from Code sections 490.860 through 490.863.  Director
 99 23 conflicting interest transactions require independent
 99 24 examination and approval, either by independent directors, or
 99 25 shareholders, or the court.  Definitions are added for
 99 26 "conflicting interest", "director's conflicting interest
 99 27 transaction", "related person", "required disclosure", and
 99 28 "time of commitment" in Code section 490.860.
 99 29    AMENDMENTS PERTAINING TO DERIVATIVE PROCEEDINGS.  Current
 99 30 Code section 490.740 on derivative proceedings is replaced
 99 31 with a new part that includes definitions and addresses
 99 32 shareholder demand on the corporation, stay of proceedings,
 99 33 dismissal of the action, settlement, and payment of expenses.
 99 34    Code section 490.742 would allow a shareholder to commence
 99 35 a derivative proceeding after 90 days after the demand was
100  1 made unless the shareholder has earlier been notified that the
100  2 demand has been rejected by the corporation or unless
100  3 irreparable injury to the corporation would result by waiting
100  4 for the expiration of the 90-day period.
100  5    An independent litigation committee may be appointed to
100  6 investigate and make recommendations concerning derivative
100  7 proceedings under Code section 490.744.
100  8    In addition, the bill allows such investigation and
100  9 recommendation to be made by a panel appointed either by the
100 10 independent directors present at a meeting of the board of
100 11 directors if the independent directors constitute a quorum or,
100 12 if the independent directors do not constitute a quorum, a
100 13 committee of two or more independent directors appointed by a
100 14 majority vote of independent directors present at a meeting of
100 15 the board of directors.  Code section 490.744 addresses the
100 16 issue of independence and provides that by itself, the
100 17 nomination or election of the director by persons who are
100 18 defendants in the derivative proceeding or against whom the
100 19 action is demanded shall not cause a director to be considered
100 20 as not independent.
100 21    AMENDMENTS PERTAINING TO CLOSELY HELD CORPORATIONS.  Code
100 22 section 490.732 validates shareholder agreements appearing in
100 23 the articles or signed by all shareholders, and it authorizes
100 24 wide latitude in their content for corporations whose shares
100 25 are not listed on a national securities exchange or regularly
100 26 traded in a market maintained by one or more members of a
100 27 national or affiliated securities association.
100 28    New Code section 490.1434 provides an alternative to the
100 29 corporation and its shareholders where one or more but fewer
100 30 than all shareholders petition for judicial dissolution on
100 31 grounds, for example, of deadlock or oppression.  The
100 32 alternative essentially is a buyout of the petitioning
100 33 shareholders, either for an amount the parties can negotiate
100 34 or for "fair value", with the corporation having the right to
100 35 do so in the first instance, and, if the corporation does not
101  1 so elect, due regard for shareholders' relative positions.
101  2    AMENDMENTS PERTAINING TO INDEMNIFICATION AND ADVANCE FOR
101  3 EXPENSES.  The bill expands the authority of a corporation to
101  4 indemnify a director through a charter provision adopted
101  5 pursuant to new Code section 490.202, which generally permits
101  6 indemnification with respect to a director's conduct to the
101  7 same extent that the director's liability for that conduct can
101  8 be limited under the section.  Code sections 490.851 through
101  9 490.859 address the procedures for making decisions on
101 10 granting indemnification and authorizing an advance for
101 11 expenses, and make a court order available as a remedy to
101 12 enforce a legal right to indemnification or expense
101 13 advancement.  Code section 490.854 permits a court to order an
101 14 advance for expenses.
101 15    AMENDMENTS PERTAINING TO SHAREHOLDER MEETINGS AND VOTING.
101 16 The bill amends Code section 490.702 regarding the percentage
101 17 of shares required before a special meeting of shareholders
101 18 must be granted, and new Code section 490.704 establishes a
101 19 procedure for revoking such a demand.  New Code section
101 20 490.708 addresses conduct of a meeting of shareholders,
101 21 providing that a chair shall preside who, unless the articles
101 22 or bylaws provide otherwise, has the authority to determine
101 23 the order of business and establish rules for the conduct of
101 24 the meeting.  The rules adopted and the conduct of the meeting
101 25 must be fair to shareholders.  Code section 490.722, dealing
101 26 with proxies, has been amended to encompass electronic
101 27 transmission of proxies.  New Code section 490.729 requires
101 28 the appointment of one or more inspectors of election for
101 29 publicly traded corporations and also delineates the
101 30 inspector's duties.  Any other corporation may appoint
101 31 inspectors pursuant to section 490.729.
101 32    AMENDMENTS PERTAINING TO ELECTRONIC FILINGS.  Code section
101 33 490.140 adds definitions for "deliver", "electronic
101 34 transmission", "sign" or "signature", and "voting power".
101 35 Code section 490.141 provides that notice by electronic
102  1 transmission is written notice, and that notice from a
102  2 corporation to a shareholder may be effective when
102  3 electronically transmitted in a manner authorized by the
102  4 shareholder.  Code sections 490.120, 490.123, 490.124,
102  5 490.125, and 490.127 all address electronic filings with the
102  6 secretary of state.
102  7    AMENDMENTS PERTAINING TO STANDARDS OF CONDUCT AND STANDARDS
102  8 OF LIABILITY FOR DIRECTORS.  New Code section 490.831,
102  9 standards of liability for directors, has been added to
102 10 clarify and distinguish the standard a plaintiff must meet in
102 11 order for a director to be held liable.
102 12    AMENDMENTS PERTAINING TO STANDARDS OF CONDUCT FOR OFFICERS
102 13 AND ALSO TO INSPECTION RIGHTS AND NOTICES.  Code section
102 14 490.842 on standards of conduct for officers is amended in
102 15 light of the changes made pertaining to directors.  In
102 16 addition, Code section 490.1603 on the scope of a
102 17 shareholder's inspection right is revised to reflect
102 18 availability of electronic transmissions.  New Code section
102 19 490.1605 provides for inspection of records by directors.  A
102 20 court action is authorized in which the corporation has the
102 21 burden of proof, and the court is directed to dispose of an
102 22 application of a director for inspection on an expedited
102 23 basis.
102 24    AMENDMENTS PERTAINING TO FUNDAMENTAL CHANGES.  The quorum
102 25 required is that stated in current 490.725, namely, "a
102 26 majority of votes entitled to be cast on the matter by the
102 27 voting group", unless the articles or bylaws require a greater
102 28 number.  Current Code language requires that the votes cast in
102 29 favor of a proposed change exceed those cast opposing it.
102 30    Current Code section 490.1202 addresses sales of assets
102 31 other than in the regular course of business and requires
102 32 shareholder approval of a sale or other disposition of all or
102 33 substantially all corporate assets where it does not occur in
102 34 the regular course of business.  As amended, Code section
102 35 490.1202 does not utilize the standard "all or substantially
103  1 all" and the requirement of a shareholder vote instead turns
103  2 upon whether the disposition will leave the corporation
103  3 without a significant continuing business activity.
103  4    AMENDMENTS PERTAINING TO APPRAISAL RIGHTS.  A number of
103  5 changes have been made in a continuing effort to allow
103  6 corporations, acting through their boards of directors and
103  7 shareholders, to change the nature and shape of the enterprise
103  8 and the rights of security holders, on the one hand, and, on
103  9 the other hand, to allow shareholders who object to the change
103 10 to withdraw from the corporation and obtain the fair value of
103 11 their investment.  This accommodation has been known as
103 12 "dissenters' rights" or "appraisal rights".  Division XIII is
103 13 amended to change the name from the former to the latter.
103 14 Shareholders will not be entitled to appraisal if the terms of
103 15 the class or series of shares that they hold will not be
103 16 changed.
103 17    The amendments to division XIII provide that a shareholder
103 18 who objects to corporate action effecting fundamental change
103 19 will receive fair value where the shares are publicly traded
103 20 and there is a sufficient market for the shares.  However, the
103 21 division also includes provisions identifying conflict-of-
103 22 interest transactions in which the market exception will not
103 23 apply and appraisal rights will be available to shareholders.
103 24    AMENDMENTS PERTAINING TO DIRECTORS AND OFFICERS.  Code
103 25 section 490.803 provides that a variable range for the size of
103 26 the board of directors may be established by the articles or
103 27 bylaws.  Code section 490.825, committees of the board, has
103 28 been amended to allow committees to be given more authority to
103 29 act, primarily within limits stated by the board; and a new
103 30 provision in Code section 490.825 would allow the board to
103 31 appoint one or more directors as alternates to serve on a
103 32 committee where one or more is absent or disqualified, and
103 33 unless the articles, bylaws, or resolution of the board
103 34 creating the committee provided otherwise, would allow the
103 35 committee, upon unanimous vote of those present and not
104  1 disqualified, to appoint another director to serve in place of
104  2 the absent or disqualified member.
104  3    DISSOLUTION.  Code section 490.640, governing
104  4 distributions, provides that the corporation must satisfy
104  5 equity and bankruptcy insolvency tests before the board can
104  6 authorize a distribution, but does not apply to distributions
104  7 made in liquidation.
104  8    The bill provides for a three-year period to assert claims
104  9 against the dissolved corporation, rather than the five years
104 10 provided under the current Code, and adds two new Code
104 11 sections, 490.1408 and 490.1409, that encourage directors to
104 12 anticipate and provide for such claims.  Critical steps
104 13 include giving notice to known creditors and claimants,
104 14 publication, and in the claims that are unknown or contingent,
104 15 a court proceeding pursuant to Code section 490.1408, which
104 16 authorizes the corporation's board to file an application in
104 17 court for a determination of the amount and form of security
104 18 to be provided for payment of claims that are contingent or
104 19 have not been made known to the dissolved corporation or that
104 20 are based on an event occurring after the effective date of
104 21 dissolution, excluding claims that are or are reasonably
104 22 anticipated to be barred.  The court is authorized to appoint
104 23 a guardian ad litem to represent such claimants.  The court
104 24 hearing the matter may then determine the amount and form to
104 25 be provided for payment, and compliance with the court order
104 26 shall satisfy the dissolved corporation's obligations with
104 27 respect to claims that are contingent, have not been made
104 28 known to the dissolved corporation, or are based on an event
104 29 occurring after the effective date of dissolution, and such
104 30 claims may not be enforced against a shareholder who received
104 31 assets in liquidation.
104 32    ADDITIONAL AMENDMENTS PERTAINING TO DIRECTORS.  Code
104 33 section 490.809, dealing with the judicial removal of
104 34 directors, requires the action be brought by or in the right
104 35 of the corporation, rather than by an authorized percentage of
105  1 a class of shareholders.  In addition, grounds for removal of
105  2 directors have been amended.  Fraudulent conduct remains a
105  3 basis for removal, but dishonest conduct has been eliminated.
105  4 Other grounds added are that the director "intentionally
105  5 inflicted harm on the corporation", or "grossly abused the
105  6 position of director".  Code section 490.821, allowing the
105  7 board of directors to take action without a meeting, requires
105  8 that action taken without a meeting by consent must be
105  9 unanimous, and that action taken by consent is the act of the
105 10 board of directors when one or more consents signed by all the
105 11 directors are delivered to the corporation.  Consent may be
105 12 withdrawn by signed revocation delivered to the corporation
105 13 prior to delivery to the corporation of unrevoked consents
105 14 signed by all directors.
105 15    The bill takes effect January 1, 2003.  
105 16 LSB 5155SV 79
105 17 jj/cf/24
     

Text: SF02284                           Text: SF02286
Text: SF02200 - SF02299                 Text: SF Index
Bills and Amendments: General Index     Bill History: General Index

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