Text: SSB03162 Text: SSB03164 Text: SSB03100 - SSB03199 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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 11a. Thea corporateseals.seal, 1 12b. An attestation by the secretary or an assistant1 13secretary.1 14c. Anattestation, acknowledgment, or verification, or1 15proof. 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 filingand must be accompanied by the1 20correct 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 the1 27electronic filing of documents and the certification of1 28electronically 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 filingon the date it is filed, 2 9 as evidenced by such means as the secretary ofstate's date2 10and time endorsement on the original documentstate 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 oneor bothof the followingrequirements: 2 19 a.ContainsThe document contains anincorrect statement2 20 inaccuracy. 2 21 b.WasThe 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 theincorrect statement and the reason it is2 31incorrect or the manner in which the execution was defective2 32 inaccuracy or defect to be corrected. 2 33 (3) Correct theincorrect statement or defective execution2 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 bystamping or3 5otherwise endorsing "filed", together with the secretary's3 6name and official title andrecording it as filed on the date 3 7 and time of receipt, on both the document and the receipt for3 8the 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 deliverthe document, with the filing fee receipt, or3 12acknowledgment 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 certificateattached tofrom 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 may3 22be 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 mailor "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; bytelephone,4 13telegraph, teletype, or other form of wire or wireless4 14communication; or by mail or private carriermail 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 22when 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 33as 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 upon7 23amendment of the articles of incorporation. 7 243. The board of directors may adopt articles of amendment7 25under this section without shareholder action, and deliver7 26them to the secretary of state for filing. The articles must7 27set forth all of the following:7 28a. The name of the corporation.7 29b. The reduction in the number of authorized shares,7 30itemized by class and series.7 31c. The total number of authorized shares, itemized by7 32class 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 13corporation's secretarycorporation 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 personally9 24or by the shareholder's attorney-in-factor 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 thesecretary or other officer or9 32agentinspector 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 appointmentform. 10 1 4. An appointment of a proxy is revocableby the10 2shareholderunless the appointment formconspicuouslyor 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 authorityappearing on the face of10 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 amajorityplurality 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 insubsection 3section 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. 18 213. A corporation having fifty or fewer shareholders may18 22dispense with or limit the authority of a board of directors18 23by describing in its articles of incorporation who will18 24perform 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 the18 28number of directors, the board may increase or decrease by18 29thirty percent or less the number of directors last approved18 30by the shareholders, but only the shareholders may increase or18 31decrease by more than thirty percent the number of directors18 32last 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 13. The articles of incorporation or bylaws may establish a19 2variable range for the size of the board of directors by19 3fixing a minimum and maximum number of directors. If a19 4variable range is established, the number of directors may be19 5fixed or changed from time to time, within the minimum and19 6maximum, by the shareholders or the board of directors. After19 7shares are issued, only the shareholders may change the range19 8for the size of the board or change from a fixed to a19 9variable-range size board or vice versa.19 104.3. 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 commencedeitherby or in the 19 20 right of the corporationor by its shareholders holding at19 21least twenty percent of the outstanding shares of any classif 19 22 the court finds that both of the following apply: 19 23 a. The director engaged in fraudulentor dishonestconduct 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 isConsidering 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. 19 332.3. The courtthat 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 13. If shareholders commence a proceeding under subsection20 21, 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.UnlessExcept to the extent that the articles of 20 9 incorporation or bylawsprovide otherwiserequire 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 takenat aby the 20 12 board ofdirectors' meetingdirectors may be taken without a 20 13 meeting ifthe action is taken by all members of the board.20 14The action must be evidenced by one or more written consents20 15 each director signs a consent describing the action to be 20 16 taken, signed by each director, and included in the minutes or20 17filed with the corporate records reflecting the action taken20 18 and delivers it to the corporation. 20 19 2. Action taken under this section iseffective when the20 20last director signs the consent, unless the consent specifies20 21a different effective datethe 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 ofa20 30meeting votean 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 onthemany committee.Each21 10committee may have two or more members, who serve at the21 11pleasure of the board of directors.21 12 2.TheUnless 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 govern21 20meetings, action without meetings, notice and waiver of21 21notice, and quorum and voting requirements of the board of21 22directors,apply both to committees of the board and to their 21 23 membersas 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 theauthoritypowers 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 1d. Amend articles of incorporation pursuant to section22 2490.1002.22 3e.d. Adopt, amend, or repeal bylaws. 22 4f. Approve a plan of merger not requiring shareholder22 5approval.22 6g. Authorize or approve reacquisition of shares, except22 7according to a formula or method prescribed by the board of22 8directors.22 9h. Authorize or approve the issuance or sale or contract22 10for sale of shares, or determine the designation and relative22 11rights, preferences, and limitations of a class or series of22 12shares, except that the board of directors may authorize a22 13committee or a senior executive officer of the corporation to22 14do so within limits specifically prescribed by the board of22 15directors.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 32 490.830GENERALSTANDARDS OF CONDUCT FOR DIRECTORS. 22 33 1.A directorEach member of the board of directors, when 22 34 discharging the duties of a director, shalldischarge that22 35director's duties as a director, including the director's23 1duties as a member of a committeeact in conformity with all 23 2 of the following: 23 3 a. In good faith. 23 4b. With the care an ordinarily prudent person in a like23 5position would exercise under similar circumstances.23 6c.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. 23 212.4. In dischargingthe director'sboard 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 thefollowing: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 thematters presentedfunctions 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 83. A director is not acting in good faith if the director24 9has knowledge concerning the matter in question that makes24 10reliance otherwise permitted by subsection 2 unwarranted.24 114. A director is not liable for any action taken as a24 12director, or any failure to take any action, if the director24 13performed the duties of the director's office in compliance24 14with this section, or if, and to the extent that, liability24 15for any such action or failure to act has been limited by the24 16articles 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 applicable26 31standards of conduct described in section 490.830, aA 26 32 director who votes for or assents to a distributionmade in26 33violation of this chapter or the articles of incorporationin 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 violatingthis chapter or the articles of27 4incorporationsection 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 tocontribution fromboth of 27 10 the following: 27 11 a.EveryContribution from every other director whovoted27 12for or assented to the distribution without complying with the27 13applicable standards of conduct described in section 490.83027 14 could be held liable under subsection 1 for the unlawful 27 15 distribution. 27 16 b.EachRecoupment from each shareholderforof 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 ofthis chapter or the articles of incorporation27 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 3 490.840REQUIREDOFFICERS. 28 4 1. A corporation has theofficersoffices described in its 28 5 bylaws orappointeddesignated by the board of directors in 28 6 accordance with the bylaws. 28 7 2.A duly appointedThe 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 officersor assistant28 10officersif authorized by the bylaws or the board of 28 11 directors. 28 12 3. The bylaws or the board of directors shalldelegate28 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 officerwith discretionary authority shall discharge28 24the officer's duties under that authoritywhen 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 carean ordinarily prudentthat 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 theperson'sofficer's duties an 28 34 officer, who does not have knowledge that makes reliance 28 35 unwarranted, is entitled to rely oninformation, opinions,29 1reports, or statements, including financial statements and29 2other financial data, if prepared or presented by eitherany 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 8a.b.OneInformation, opinions, reports, or statements, 29 9 including financial statements and other financial data, 29 10 prepared or presented by one or moreofficers oremployees of 29 11 the corporation whom the officer reasonably believes to be 29 12 reliable and competent in the matters presented. 29 13b.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 officer29 19has knowledge concerning the matter in question that makes29 20reliance 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. 29 294. An officer is not liable for any action taken as an29 30officer, or any failure to take any action, if the officer29 31performed the duties of the officer's office in compliance29 32with 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 effectivedatetime. If a resignation is made effective at a 30 5 laterdatetime and thecorporationboard or appointing 30 6 officer accepts the future effectivedatetime,itsthe board 30 7of directorsor the appointing officer may fill the pending 30 8 vacancy before the effectivedatetime if the boardof30 9directorsor appointing officer provides that the successor 30 10 does not take office until the effectivedatetime.A30 11resignation may be orally communicated provided that the30 12resignation is effective only if written notice of the30 13resignation is delivered within twenty-four hours of such oral30 14communication.30 15 2.A board of directors may remove anyAn 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 mergeror other30 33transaction in which the predecessor's existence ceased upon30 34consummation 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 corporationor31 2an individualwho, while a director or officer ofathe 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 anotherforeign ordomestic or foreign corporation, 31 6 partnership, joint venture, trust, employee benefit plan, or 31 7 otherenterpriseentity. 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. 31 273.4. "Expenses"includeincludes counsel fees. 31 284.5. "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. 31 325.6. "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 anindividual other than a32 1directorofficer, as contemplated in section 490.856, the 32 2 office in a corporation held by the officeror the employment32 3or agency relationship undertaken by the employee or agent on32 4behalf of the corporation. 32 5 "Official capacity" does not include service for any other 32 6foreign ordomestic or foreign corporation or any partnership, 32 7 joint venture, trust, employee benefit plan, or other 32 8enterpriseentity. 32 96.7. "Party"includesmeans an individual who was, is, or 32 10 is threatened to be made anameddefendant or respondent in a 32 11 proceeding. 32 127.8. "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 18 490.851AUTHORITY TO INDEMNIFYPERMISSIBLE 32 19 INDEMNIFICATION. 32 20 1. Except as otherwise provided insubsection 4this 32 21 section, a corporation may indemnify an individualmadewho is 32 22 a party to a proceeding because the individual isor wasa 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 capacitywith 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.AUnless 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 corporationin which the director was adjudged liable to33 19the 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 anyotherproceedingcharging33 24improper personal benefit to the director, whether or not33 25involving action in the director's official capacity, inwith 33 26 respect to conduct for which the director was adjudged liable 33 27 on the basis thatpersonalthe director received a financial 33 28 benefitwas improperly received by the directorto which the 33 29 director was not entitled, whether or not involving action in 33 30 the director's official capacity. 33 315. Indemnification permitted under this section in33 32connection with a proceeding by or in the right of the33 33corporation is limited to reasonable expenses incurred in33 34connection 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 3Unless limited by its articles of incorporation, aA 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 proceedingin advance of final disposition of the proceeding34 17 because the person is a director ifany ofthe person delivers 34 18 all of the followingapplyto the corporation: 34 19 a.The director furnishes the corporation aA 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 aThe director's 34 27 written undertaking, executed personally or on the director's34 28behalf,to repaythe advanceany 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 directordid not meet that34 32 has not met the relevant standard of conduct described in 34 33 section 490.851. 34 34c. A determination is made that the facts then known to34 35those making the determination would not preclude35 1indemnification 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 authorizationsAuthorizations of 35 7 payments under this section shall be madein the manner35 8specified in section 490.855according to the 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 incorporation35 29provide otherwise, aA directorof the corporationwho 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.OnAfter receipt of an application, 35 34the courtand after giving any noticethe courtit considers 35 35 necessarymay order, the court shall do one of the following: 36 1 a. Order indemnification ifitthe court determineseither36 2of the following:36 31. Thethat the director is entitled to mandatory 36 4 indemnification under section 490.852, in which case the court36 5shall also order the corporation to pay the directors36 6reasonable expenses incurred to obtain court-ordered36 7indemnification. 36 82. The director is fairly and reasonably entitled to36 9indemnification in view of all the relevant circumstances,36 10whether or not the director met the standard of conduct set36 11forth in section 490.851 or was adjudged liable as described36 12in section 490.851, subsection 4, but if the director was36 13adjudged so liable the director's indemnification is limited36 14to 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 authorizedin thefor a specificcase37 13 proceeding after a determination has been made that 37 14 indemnification of the director is permissiblein the37 15circumstancesbecause 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 quorum37 20consisting of directors not at the time parties to the37 21proceeding.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 27b. If a quorum cannot be obtained under paragraph "a", by37 28majority vote of a committee duly designated by the board of37 29directors, in which designation directors who are parties may37 30participate, consisting solely of two or more directors not at37 31the time parties to the proceeding.37 32c.b. By special legal counsel: 37 33 (1) Selectedby the board of directors or its committeein 37 34 the manner prescribed in paragraph "a"or "b". 37 35 (2) Ifa quorum of the board ofthere are fewer than two 38 1 disinterested directorscannot be obtained under paragraph "a"38 2and a committee cannot be designated under paragraph "b",38 3 selected bymajority vote ofthefullboard of directors, in 38 4 which selection directors whoare partiesdo not qualify as 38 5 disinterested directors may participate. 38 6d.c. By the shareholders, but shares owned by or voted 38 7 under the control ofdirectorsa director whoareat the time 38 8parties to the proceedingdoes not qualify as a disinterested 38 9 director shall not be voted on the determination. 38 10 3. Authorization of indemnificationand evaluation as to38 11reasonableness of expensesshall 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 indemnificationand evaluation as to38 16reasonableness of expensesshall 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, AND38 22AGENTS. 38 23Unless a corporation's articles of incorporation provide38 24otherwise all of the following apply:38 251. An officer of the corporation who is not a director is38 26entitled to mandatory indemnification under section 490.852,38 27and is entitled to apply for court-ordered indemnification38 28under section 490.854, in each case to the same extent as a38 29director.38 302.1.TheA corporation may indemnify and advance expenses 38 31 under this part to an officer, employee, or agentof the 38 32 corporation who isnot a director toa 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 13.b.A corporation may also indemnify and advance39 2expenses to an officer, employee, or agent who is not a39 3director to the extent, consistent with law, thatIf the 39 4 person is an officer but not a director, to such further 39 5 extent as may be provided byitsthe articles of 39 6 incorporation, the bylaws,general or specific actiona 39 7 resolution ofitsthe 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 isor wasa director,or officer,39 35employee, or agentof the corporation, or who, while a 40 1 director,or officer, employee, or agentof the corporation, 40 2is or was servingserves at therequest of the corporation40 3 corporation's request as a director, officer, partner, 40 4 trustee, employee, or agent of anotherforeign ordomestic or 40 5 foreign corporation, partnership, joint venture, trust, 40 6 employee benefit plan, or otherenterpriseentity, 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 undersection40 12490.851 or 490.852this 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 incorporationor to delete a47 17provision not required in the articles of incorporation.47 18Whether a provision is required or permitted in the articles47 19of incorporation is determinedas 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'sThe proposed amendment must be adopted 48 2 by the board of directorsmay propose one or more amendments48 3to the articles of incorporation for submission to the48 4shareholders. 48 52. For the amendment to be adopted both of the following48 6must occur:48 7a.2.TheExcept as provided in section 490.1005, 48 8 490.1007, and 490.1008, after adopting the proposed amendment, 48 9 the board of directors mustrecommendsubmit 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 approved the amendment, unless the board of 48 13 directorsdeterminesmakes a determination that because of 48 14 conflict of interest or other special circumstances it should 48 15 not makenosuch a recommendationand communicates, in which 48 16 case thebasis for its determinationboard of directors must 48 17 transmit to the shareholderswith the amendmentthe basis for 48 18 the determination. 48 19b. The shareholders entitled to vote on the amendment must48 20approve the amendment as provided in subsection 5.48 21 3. The board of directors may condition its submission of 48 22 theproposedamendment to the shareholders on any basis. 48 23 4.The corporation shallIf 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 theproposed48 27shareholders'meetingin accordance with section 490.705of 48 28 shareholders at which the amendment is to be submitted for 48 29 approval. The noticeof meetingmustalsostate 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 copyor summaryof the amendment. 48 33 5. Unlessthis chapter,the articles of incorporation, 48 34 bylaws, or the board of directors acting pursuant to 48 35 subsection 3 requires a greater vote ora vote by voting49 1groups, the amendment to be adopted must be approved by both49 2of the following:49 3a. Agreater 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 byany voting group with respect49 13to which the amendment would create dissenters' rightsthat 49 14 voting group exists. 49 15b. The votes required by sections 490.725 and 490.726 by49 16every 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.TheIf 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 25a. Increase or decrease the aggregate number of authorized49 26shares of the class.49 27b.a. Effect an exchange or reclassification of all or 49 28 part of the shares of the class into shares of another class. 49 29c.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 32d.c. Change thedesignation,rights, preferences, or 49 33 limitations of all or part of the shares of the class. 49 34e.d. Change the shares of all or part of the class into a 49 35 different number of shares of the same class. 50 1f.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 equalto,the 50 4 shares of the class. 50 5g.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 9or substantially equalto the shares of the class. 50 10h.g. Limit or deny an existing preemptive right of all or 50 11 part of the shares of the class. 50 12i.h. Cancel or otherwise affect rights to distributions 50 13or dividendsthat have accumulated but not yet beendeclared50 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 2A corporation amending its articles of incorporationAfter 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 7setting, 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 shareholderactionapproval, a 52 17 statementto that effectthat 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 shareholderactionapproval was not required. 52 20 6. If an amendmentwas approvedrequired 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 24a. The designation, number of outstanding shares, number52 25of votes entitled to be cast by each voting group entitled to52 26vote separately on the amendment, and number of votes of each52 27voting group indisputably represented at the meeting.52 28b. Either the total number of votes cast for and against52 29the amendment by each voting group entitled to vote separately52 30on the amendment or the total number of undisputed votes cast52 31for the amendment by each voting group and a statement that52 32the number cast for the amendment by each voting group was52 33sufficient 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 shareholderactionapproval, to consolidate all amendments 53 5 into a single document. 53 6 2.The restatement mayIf the restated articles include 53 7 one or more new amendmentsto the articles. If the53 8restatement includes an amendment requiringthat require 53 9 shareholder approval,itthe amendments must be adopted and 53 10 approved as provided in section 490.1003. 53 113. If the board of directors submits a restatement for53 12shareholder action, the corporation shall notify each53 13shareholder whether or not entitled to vote, of the proposed53 14shareholders' meeting in accordance with section 490.705. The53 15notice must also state that the purpose, or one of the53 16purposes, of the meeting is to consider the proposed53 17restatement and contain or be accompanied by a copy of the53 18restatement that identifies any amendment or other change it53 19would make in the articles.53 204.3. A corporationrestatingthat 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 certificatesetting 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 29a. Whether the restatement contains an amendment to the53 30articles requiring shareholder approval and, if it does not,53 31that the board of directors adopted the restatement.53 32b. If the restatement contains an amendment to the53 33articles requiring shareholder approval, the information53 34required by section 490.1006.53 355.4. Duly adopted restated articles of incorporation 54 1 supersede the original articles of incorporation and all 54 2 amendments tothemthe original articles of incorporation. 54 36.5. 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 subsection43. 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 underfederal54 13statute if the articles of incorporation after amendment54 14contain only provisions required or permitted by section54 15490.202the authority of law of the United States. 54 163. Shareholders of a corporation undergoing reorganization54 17do not have dissenters' rights except as and to the extent54 18provided in the reorganization plan.54 194.3. 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 16SHAREHOLDERSDIRECTORS. 55 17 1.If authorized by the articles of incorporation, the55 18shareholders may adopt or amend a bylaw that fixes a greaterA 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 orvoting groups of shareholders than is required55 25by this chapterby the board of directors.The adoption or55 26amendment of a bylaw that adds, changes, or deletes a greater55 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 voteand voting56 1groupsrequired 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 42. A bylaw that fixes a greater quorum or voting56 5requirement for shareholders under subsection 1 shall not be56 6adopted, 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 12 490.1201SALEDISPOSITION OF ASSETSIN REGULAR COURSE OF68 13BUSINESS AND MORTGAGE OF ASSETSNOT REQUIRING SHAREHOLDER 68 14 APPROVAL. 68 151. A corporation may, on the terms and conditions and for68 16the consideration determined by the board of directors68 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 20a.1.SellTo sell, lease, exchange, or otherwise dispose 68 21 ofall, or substantially all, of its propertyany or all of 68 22 the corporation's assets in the usual and regular course of 68 23 business. 68 24b.2.MortgageTo mortgage, pledge, dedicate to the 68 25 repayment of indebtedness, whether with or without recourse, 68 26 or otherwise encumber any or all ofits propertythe 68 27 corporation's assets, whether or not in the usual and regular 68 28 course of business. 68 29c.3.TransferTo transfer any or all ofits property to a68 30corporation all the sharesthe 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 33whether or not in the usual course of business. 68 342. Unless the articles of incorporation require it,68 35approval by the shareholders of a transaction described in69 1subsection 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 6 490.1202SALE OF ASSETS OTHER THAN IN REGULAR COURSE OF69 7BUSINESSSHAREHOLDER APPROVAL OF CERTAIN DISPOSITIONS. 69 8 1. Acorporation may sellsale, lease, exchange, or 69 9otherwise dispose of all, or substantially all, of its69 10property, with or without the good will, otherwise than in the69 11usual and regular course of business, on the terms and69 12conditions and for the consideration determined byother 69 13 disposition of assets, other than a disposition described in 69 14 section 490.1201, requires approval of thecorporation's board69 15of directors, ifcorporation'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 directorsproposes and its69 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 3transaction.70 42. For a transaction to be authorized both of the70 5following must occur:70 6a. The board of directors must recommend the proposed70 7transaction to the shareholdersdisposition, unless the board 70 8 of directorsdeterminesmakes a determination that because of 70 9conflictconflicts of interest or other special circumstances 70 10 it should not makenosuch a recommendationand communicates, 70 11 in which case thebasis for its determinationboard of 70 12 directors shall transmit to the shareholderswiththe 70 13submission of the proposed transactionbasis for that 70 14 determination. 70 15b. The shareholders entitled to vote must approve the70 16transaction.70 17 3. The board of directors may condition its submission of 70 18 a disposition to theproposed transactionshareholders under 70 19 subsection 2 on any basis. 70 20 4.TheIf 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 theproposed70 24shareholders' meeting in accordance with section 490.70570 25 meeting of shareholders at which the disposition is to be 70 26 submitted for approval. The noticemust alsoshall state that 70 27 the purpose, or one of the purposes, of the meeting is to 70 28 consider thesale, lease, exchange, or otherdispositionof70 29all, or substantially all, the property of the corporation and70 30contain or be accompanied byand shall contain a description 70 31 of thetransactiondisposition, 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 avote by voting groups, the transaction to be71 2authorized must be approved by a majority of allgreater 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 7transactiondisposition exists. 71 8 6. After asale, lease, exchange, or other disposition of71 9property is authorized, the transactiondisposition 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 rightswithout71 14further shareholder actionof other parties to the 71 15 disposition. 71 16 7.A transaction that constitutes a distribution is71 17governed 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 TODISSENTAPPRAISAL. 73 1 1. A shareholder is entitled todissent fromappraisal 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 aplan ofmerger 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 section490.1103 or the articles of incorporation and the73 9shareholder is entitled to vote on the merger490.1104 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 subsidiarythat is merged with73 15its parent underand the merger is governed by section 73 16490.1104490.1105. 73 17 b. Consummation of aplan ofshare 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 theplan73 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 asale or exchange of all, or73 25substantially all, of the property of the corporation other73 26than in the usual and regular course of business, if the73 27shareholder is entitled to vote on the sale or exchange,73 28including a sale in dissolution, but not including a sale73 29pursuant to court order or a sale for cash pursuant to a plan73 30by which all or substantially all of the net proceeds of the73 31sale will be distributed to the shareholders within one year73 32after the date of saledisposition 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 thatmaterially and74 2adversely affects rights in respect of a dissenter's shares74 3because it does any or all of the following:74 4(1) Alters or abolishes a preferential right of the74 5shares.74 6(2) Creates, alters, or abolishes a right in respect of74 7redemption, including a provision respecting a sinking fund74 8for the redemption or repurchase, of the shares.74 9(3) Alters or abolishes a preemptive right of the holder74 10of the shares to acquire shares or other securities.74 11(4) Excludes or limits the right of the shares to vote on74 12any matter, or to cumulate votes, other than a limitation by74 13dilution through issuance of shares or other securities with74 14similar voting rights.74 15(5) Reducesreduces 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 createdis to be acquired for cash under74 19section 490.604. 74 20(6) Extends, for the first time after being governed by74 21this chapter, the period of duration of a corporation74 22organized under chapter 491 or former chapter 496A and74 23existing for a period of years on the day preceding the date74 24the 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 section 77 30 490.1302, the articles of incorporation as originally filed or 77 31 any amendment thereto may limit or eliminate appraisal rights 77 32 for 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 82.4. A shareholder entitled todissent and obtain payment78 9for the shareholder's sharesappraisal rights under this 78 10 chapter is not entitled to challengethea completed corporate 78 11 actioncreating the shareholder's entitlement unless the78 12action is unlawful or fraudulent with respect to the78 13shareholder 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 24 490.1303DISSENTASSERTION OF RIGHTS BY NOMINEES AND 78 25 BENEFICIAL OWNERS. 78 26 1. A record shareholder may assertdissenters'appraisal 78 27 rights as to fewer than all the shares registered inthatthe 78 28 record shareholder's name but owned by a beneficial 78 29 shareholder only if the record shareholderdissentsobjects 78 30 with respect to all sharesbeneficiallyof the class or series 78 31 owned byany one personthe beneficial shareholder and 78 32 notifies the corporation in writing of the name and address of 78 33 eachpersonbeneficial shareholder on whose behalfthe78 34shareholder asserts dissenters'appraisal rights are being 78 35 asserted. The rights of apartial dissenterrecord 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 subsectionareshall be determined as if the shares as to 79 4 which the record shareholderdissentsobjects 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 assertdissenters'79 8 appraisal rights as to shares of any class or series held on 79 9the shareholder'sbehalf 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 thedissent not later than the time the79 13beneficial shareholder asserts dissenters' rightsassertion 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 ofwhich the79 17shareholder isthe class of series that are beneficially owned 79 18 by the beneficial shareholderor over which that beneficial79 19shareholder 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 OFDISSENTERS'APPRAISAL RIGHTS. 79 23 1. If proposed corporate actioncreating dissenters'79 24rights underdescribed 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 assertdissenters'appraisal rights under this partand be79 29accompanied 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 under79 34 In a merger pursuant to section490.1302 is taken without a79 35vote of shareholders490.1105, the parent corporationshall80 1 must notify in writing all record shareholders of the 80 2 subsidiary who are entitled to assertdissenters'appraisal 80 3 rights that the corporate actionwas taken and send them the80 4dissenters' notice describedbecame 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 actioncreating 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 assertdissenters'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 18for the shareholder's sharesif the proposed action is 80 19 effectuated. 80 20 b. Not votethe 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 paymentfor the shareholder's80 25sharesunder this part. 80 26 Sec. 83. Section 490.1322, Code 2001, is amended to read 80 27 as follows: 80 28 490.1322DISSENTERS'APPRAISAL NOTICE AND FORM. 80 29 1. If proposed corporate actioncreating dissenters'80 30 requiring appraisal rights under section 490.1302is80 31authorized at a shareholders' meeting, subsection 1, becomes 80 32 effective, the corporationshallmust deliver a written 80 33dissenters'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. Thedissenters'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 afterthe proposed corporate action81 7is authorized at a shareholders' meeting, or, if the corporate81 8action is taken without a vote of the shareholders, no later81 9than 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 where81 12and whenBe 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 25b. Inform holders of uncertificated shares to what extent81 26transfer of the shares will be restricted after the payment81 27demand is received.81 28c. Supply a form for demanding payment that includes the81 29date of the first announcement to news media or to81 30shareholders of the terms of the proposed corporate action and81 31requires that the person asserting dissenters' rights certify81 32whether or not the person acquired beneficial ownership of the81 33shares before that date.81 34d.(2)Set aA date by which the corporation must receive 81 35 thepayment demandform, which date shall not be fewer than 82 1thirtyforty nor more than sixty days after the date the 82 2dissenters' notice is deliveredappraisal 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 17e.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 20 490.1323DUTY TO DEMAND PAYMENTPERFECTION OF RIGHTS 82 21 RIGHT TO WITHDRAW. 82 22 1. A shareholdersent a dissenters'who receives notice 82 23described inpursuant to section 490.1322 and who wishes to 82 24 exercise appraisal rights mustdemand payment,certify on the 82 25 form sent by the corporation whether theshareholder82 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 28dissenters'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,isshall 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 ademandshareholder makes demands for payment under 86 12 section490.1328490.1326 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 eachdissenter whose86 18demand remains unsettled the amount demandedshareholder 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 whereathe corporation's 86 23 principal office or, if nonein 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 withor whose shares were acquired86 29bythe foreign corporation was located at the time of the 86 30 transaction. 86 31 3. The corporation shall make alldissentersshareholders, 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 8dissentersshareholders 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. Eachdissentershareholder 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 thedissenter'sshareholder'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, plusaccruedinterest, of the 87 19dissenter's after-acquiredshareholder's shares for which the 87 20 corporation elected to withhold payment under section490.132787 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 29490.1328490.1326 shall not apply. 87 30 Sec. 89. Section 490.1331, Code 2001, is amended to read s 87 31 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 thedissenters88 4 shareholders demanding appraisal, in amounts the court finds 88 5 equitable, to the extent the court findsthe dissenterssuch 88 6 shareholders acted arbitrarily, vexatiously, or not in good 88 7 faithin demanding payment under section 490.1328with 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 14dissentersshareholders demanding appraisal if the court finds 88 15 the corporation did not substantially comply with the 88 16 requirements ofsectionssection 490.1320through 490.1328, 88 17 490.1322, 490.1324, or 490.1325. 88 18 b. Against either the corporation or adissenter88 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 anydissentershareholder were of 88 26 substantial benefit to otherdissentersshareholders similarly 88 27 situated, and that the fees for those services should not be 88 28 assessed against the corporation, the court may award tothese88 29 such counsel reasonable fees to be paid out of the amounts 88 30 awarded thedissentersshareholders 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 6in 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 dissolveto89 13be adopted must be approved by a majority of allshall 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 caston that proposalexists. 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, both89 27of the following:89 28(1) The number of votes entitled to be cast ona 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 against89 33dissolution or the total number of undisputed votes cast for89 34dissolution and a statement that the number cast for89 35dissolution was sufficient for approval.90 1d. If voting by voting groups was required, the90 2information required by paragraph "c" must be separately90 3provided for each voting group entitled to vote separately on90 4the 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 byfollowing the procedure described in this90 21sectionnotifying 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 known90 24claimants in writing of the dissolution at any time after its90 25effective 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 2 490.1407UNKNOWNOTHER 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 withinfivethree 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 withinfivethree years after the 91 25 publication date of the newspaper notice: 91 26 a. A claimant whodid not receivewas 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 34under this sectionin either of the following ways: 91 35 a. Against the dissolved corporation, to the extent of its 92 1 undistributed assets. 92 2 b.IfExcept 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 shareholderthe agent or96 32attorney representsrepresented. 96 33 2. The right to copy records under section 490.1602 96 34 includes, if reasonable, the right to receive copiesmade by96 35photographic, xerographic, or other technological meansby 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 93.4. 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,orreproduction, or 97 13 transmission of the records. 97 144. The corporation may comply with a shareholder's demand97 15to inspect the record of shareholders under section 490.1602,97 16subsection 2, paragraph "c" by providing the shareholder with97 17a list of its shareholders that was compiled no earlier than97 18the 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 5155XC 79 105 17 jj/cf/24
Text: SSB03162 Text: SSB03164 Text: SSB03100 - SSB03199 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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