H.F. 2426 DIVISION I 1 PRINCIPAL PROVISIONS 2 Section 1. Section 490.140, subsections 3, 6, 9, and 26, 3 Code Supplement 2011, are amended to read as follows: 4 3. “Conspicuous” means so written , displayed, or presented 5 that a reasonable person against whom the writing is to operate 6 should have noticed it. For example, printing text in italics , 7 or boldface , or contrasting color, or typing in capitals , or 8 underlined , is conspicuous. 9 6. “Deliver” or “delivery” means any method of delivery 10 used in conventional commercial practice, including delivery in 11 person, by hand, mail, commercial delivery, and , if authorized 12 in accordance with section 490.141, by electronic transmission. 13 9. “Electronic transmission” or “electronically transmitted” 14 means any form or process of communication not directly 15 involving the physical transfer of paper that or another 16 tangible medium, which is suitable all of the following: 17 a. Suitable for the retention, retrieval, and reproduction 18 of information by the recipient. 19 b. Retrievable in paper form by the recipient through an 20 automated process used in conventional commercial practice, 21 unless otherwise authorized in accordance with section 490.141, 22 subsection 10. 23 26. “Sign” or “signature” means, with present intent to 24 authenticate or adopt a document, doing any of the following: 25 a. Executing or adopting a tangible symbol to a document, 26 and includes any manual, facsimile, or conformed , or electronic 27 signature. 28 b. Attaching to or logically associating with an electronic 29 transmission an electronic sound, symbol, or process, and 30 includes an electronic signature in an electronic transmission. 31 Sec. 2. Section 490.140, Code Supplement 2011, is amended by 32 adding the following new subsections: 33 NEW SUBSECTION . 7A. “Document” means any of the following: 34 a. A tangible medium on which information is inscribed, and 35 -1- LSB 5446HV (2) 84 da/nh 1/ 70

H.F. 2426 includes any writing or written instrument. 1 b. An electronic record. 2 NEW SUBSECTION . 7B. “Domestic unincorporated entity” means 3 an unincorporated entity whose internal affairs are governed by 4 the laws of this state. 5 NEW SUBSECTION . 8A. “Electronic” means relating to 6 technology having electrical, digital, magnetic, wireless, 7 optical, electromagnetic, or similar capabilities. 8 NEW SUBSECTION . 8B. “Electronic record” means information 9 that is stored in an electronic or other medium and is 10 retrievable in paper form through an automated process used in 11 conventional commercial practice, unless otherwise authorized 12 in accordance with section 490.141, subsection 10. 13 NEW SUBSECTION . 11A. “Expenses” means reasonable expenses 14 of any kind that are incurred in connection with a matter. 15 NEW SUBSECTION . 21B. “Qualified director” means the same 16 as defined in section 490.143. 17 NEW SUBSECTION . 32. “Writing” or “written” means any 18 information in the form of a document. 19 Sec. 3. Section 490.141, Code 2011, is amended to read as 20 follows: 21 490.141 Notice or other communication . 22 1. Notice under this chapter must be in writing unless oral 23 notice is reasonable under in the circumstances. Notice by 24 electronic transmission is written notice. Unless otherwise 25 agreed between the sender and the recipient, words in a notice 26 or other communication under this chapter must be in English. 27 2. Notice A notice or other communication may be 28 communicated in person; by mail or other given or sent by 29 any method of delivery ; or by telephone, voice mail, or 30 other , except that electronic means transmissions must be in 31 accordance with this section . If these forms of personal 32 notice methods of delivery are impracticable, a notice or 33 other communication may be communicated by a newspaper of 34 general circulation in the area where published; or by radio, 35 -2- LSB 5446HV (2) 84 da/nh 2/ 70

H.F. 2426 television, or other form of public broadcast communication. 1 3. Written notice by a domestic or foreign corporation to 2 its shareholder, if in a comprehensible form, is effective 3 according to one of the following: 4 a. Upon deposit in the United States mail, if mailed 5 postpaid and correctly addressed to the shareholder’s address 6 shown in the corporation’s current record of shareholders. 7 b. When electronically transmitted to the shareholder in a 8 manner authorized by the shareholder. 9 4. Written notice Notice or other communication to a 10 domestic or foreign corporation authorized to transact business 11 in this state may be addressed delivered to its registered 12 agent at its registered office or to the secretary of the 13 corporation or its secretary at its principal office shown in 14 its most recent biennial report or, in the case of a foreign 15 corporation that has not yet delivered a biennial report, in 16 its application for a certificate of authority. 17 4. Notice or other communications may be delivered by 18 electronic transmission if consented to by the recipient or if 19 authorized by subsection 10. 20 5. Any consent under subsection 4 may be revoked by the 21 person who consented by written or electronic notice to the 22 person to whom the consent was delivered. Any such consent is 23 deemed revoked if all of the following apply: 24 a. The corporation is unable to deliver two consecutive 25 electronic transmissions given by the corporation in accordance 26 with such consent. 27 b. Such inability becomes known to the secretary or an 28 assistant secretary of the corporation or to the transfer 29 agent, or other person responsible for the giving of notice 30 or other communications; provided, however, the inadvertent 31 failure to treat such inability as a revocation shall not 32 invalidate any meeting or other action. 33 6. Unless otherwise agreed between the sender and the 34 recipient, an electronic transmission is received when all of 35 -3- LSB 5446HV (2) 84 da/nh 3/ 70

H.F. 2426 the following apply: 1 a. The electronic transmission enters an information 2 processing system that the recipient has designated or uses 3 for the purposes of receiving electronic transmissions or 4 information of the type sent, and from which the recipient is 5 able to retrieve the electronic transmission. 6 b. The electronic transmission is in a form capable of being 7 processed by that system. 8 7. Receipt of an electronic acknowledgment from an 9 information processing system described in subsection 6, 10 paragraph “a” , establishes that an electronic transmission was 11 received but, by itself, does not establish that the content 12 sent corresponds to the content received. 13 8. An electronic transmission is received under this 14 section even if no individual is aware of its receipt. 15 5. 9. Except as provided in subsection 3 , written notice, 16 Notice or other communication if in a comprehensible form or 17 manner , is effective at the earliest of any of the following: 18 a. When received. If in physical form, the earliest of 19 when it is actually received or when it is left at any of the 20 following: 21 (1) A shareholder’s address shown on the corporation’s 22 record of shareholders maintained by the corporation under 23 section 490.1601, subsection 3. 24 (2) A director’s residence or usual place of business. 25 (3) The corporation’s principal place of business. 26 b. Five days after its deposit in the United States mail, 27 if If mailed postpaid by United States mail postage prepaid 28 and correctly addressed to a shareholder, upon deposit in the 29 United States mail . 30 c. On the date shown on the If mailed by United States 31 mail postage prepaid and correctly addressed to a recipient 32 other than a shareholder, the earliest of when it is actually 33 received or as follows: 34 (1) If sent by registered or certified mail, return receipt 35 -4- LSB 5446HV (2) 84 da/nh 4/ 70

H.F. 2426 requested , if sent by registered or certified mail, return 1 receipt requested, and the date shown on the return receipt is 2 signed by or on behalf of the addressee. 3 (2) Five days after it is deposited in the United States 4 mail. 5 d. If an electronic transmission, when it is received as 6 provided in subsection 6. 7 e. If oral, when communicated. 8 6. Oral notice is effective when communicated if 9 communicated in a comprehensible manner. 10 10. A notice or other communication may be in the form of 11 an electronic transmission that cannot be directly reproduced 12 in paper form by the recipient through an automated process 13 used in conventional commercial practice only if all of the 14 following apply: 15 a. The electronic transmission is otherwise retrievable in 16 perceivable form. 17 b. The sender and the recipient have consented in writing to 18 the use of such form of electronic transmission. 19 7. 11. If this chapter prescribes notice requirements for 20 notices or other communications in particular circumstances, 21 those requirements govern. If articles of incorporation or 22 bylaws prescribe notice requirements for notices or other 23 communications, not inconsistent with this section or other 24 provisions of this chapter , those requirements govern. The 25 articles of incorporation or bylaws may authorize or require 26 delivery of notices of meetings of directors by electronic 27 transmission. 28 Sec. 4. NEW SECTION . 490.143 Qualified director. 29 1. For purposes of this chapter, a “qualified director” 30 is a director who takes action under any of the following 31 provisions, if at the time action is to be taken any of the 32 following applies: 33 a. Under section 490.744, the director does not have any of 34 the following: 35 -5- LSB 5446HV (2) 84 da/nh 5/ 70

H.F. 2426 (1) A material interest in the outcome of the proceeding. 1 (2) A material relationship with a person who has such an 2 interest. 3 b. Under section 490.853 or 490.855, all of the following 4 apply: 5 (1) The director is not a party to the proceeding. 6 (2) The director is not a director as to whom a transaction 7 is a director’s conflicting interest transaction or who sought 8 a disclaimer of the corporation’s interest in a business 9 opportunity under section 490.870, which transaction or 10 disclaimer is challenged in the proceeding. 11 (3) The director does not have a material relationship with 12 a director described in either subparagraph (1) or (2). 13 c. Under section 490.862, the director is not any of the 14 following: 15 (1) A director as to whom the transaction is a director’s 16 conflicting interest transaction. 17 (2) A director who has a material relationship with another 18 director as to whom the transaction is a director’s conflicting 19 interest transaction. 20 d. Under section 490.870, the director would be a qualified 21 director under paragraph “c” , if the business opportunity was a 22 director’s conflicting interest transaction. 23 2. For purposes of this section, all of the following apply: 24 a. “Material interest” means an actual or potential 25 benefit or detriment, other than one which would devolve on 26 the corporation or the shareholders generally, that would 27 reasonably be expected to impair the objectivity of the 28 director’s judgment when participating in the action to be 29 taken. 30 b. “Material relationship” means a familial, financial, 31 professional, employment, or other relationship that would 32 reasonably be expected to impair the objectivity of the 33 director’s judgment when participating in the action to be 34 taken. 35 -6- LSB 5446HV (2) 84 da/nh 6/ 70

H.F. 2426 3. The presence of one or more of the following 1 circumstances shall not automatically prevent a director from 2 being a qualified director: 3 a. Nomination or election of the director to the current 4 board by any director who is not a qualified director with 5 respect to the matter, or by any person that has a material 6 relationship with that director, acting alone or participating 7 with others. 8 b. Service as a director of another corporation of which a 9 director who is not a qualified director with respect to the 10 matter, or any individual who has a material relationship with 11 that director, is or was also a director. 12 c. With respect to action to be taken under section 490.744, 13 status as a named defendant, as a director against whom action 14 is demanded, or as a director who approved the conduct being 15 challenged. 16 Sec. 5. NEW SECTION . 490.144 Householding. 17 1. A corporation has delivered written notice or any 18 other report or statement under this chapter, the articles of 19 incorporation, or the bylaws to all shareholders who share a 20 common address if all of the following apply: 21 a. The corporation delivers one copy of the notice, report, 22 or statement to the common address. 23 b. The corporation addresses the notice, report, or 24 statement to those shareholders either as a group or to each 25 of those shareholders individually or to the shareholders in a 26 form to which each of those shareholders has consented. 27 c. Each of those shareholders consents to delivery of 28 a single copy of such notice, report, or statement to the 29 shareholders’ common address. Any such consent shall be 30 revocable by any of such shareholders who deliver written 31 notice of revocation to the corporation. If such written 32 notice of revocation is delivered, the corporation shall begin 33 providing individual notices, reports, or other statements 34 to the revoking shareholder no later than thirty days after 35 -7- LSB 5446HV (2) 84 da/nh 7/ 70

H.F. 2426 delivery of the written notice of revocation. 1 2. Any shareholder who fails to object by written notice 2 to the corporation, within sixty days of written notice by the 3 corporation of its intention to send single copies of notices, 4 reports, or statements to shareholders who share a common 5 address as permitted by subsection 1, shall be deemed to have 6 consented to receiving such single copy at the common address. 7 Sec. 6. Section 490.502, subsection 2, Code 2011, is amended 8 to read as follows: 9 2. If a registered agent changes the street address of the 10 a registered agent’s business office changes , the registered 11 agent may change the street address of the registered office of 12 any corporation for which the person is the registered agent by 13 notifying delivering a signed written notice of the change to 14 the corporation in writing of the change and signing, either 15 manually or in facsimile, and delivering to the secretary of 16 state for filing a signed statement that complies with the 17 requirements of subsection 1 and recites that the corporation 18 has been notified of the change. 19 Sec. 7. Section 490.620, subsection 4, Code 2011, is amended 20 to read as follows: 21 4. If a subscriber defaults in payment of money or 22 property under a subscription agreement entered into before 23 incorporation, the corporation may collect the amount owed 24 as any other debt. Alternatively, unless the subscription 25 agreement provides otherwise, the corporation may rescind the 26 agreement and may sell the shares if the debt remains unpaid 27 more than twenty days after the corporation sends a written 28 demand for payment to the subscriber. 29 Sec. 8. Section 490.624, Code 2011, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 3. The board of directors may authorize one 32 or more officers to do all of the following: 33 a. Designate the recipients of rights, options, warrants, 34 or other equity compensation awards that involve the issuance 35 -8- LSB 5446HV (2) 84 da/nh 8/ 70

H.F. 2426 of shares. 1 b. Determine, within an amount and subject to any other 2 limitations established by the board and, if applicable, the 3 stockholders, the number of such rights, options, warrants, 4 or other equity compensation awards and the terms thereof to 5 be received by the recipients, provided that an officer shall 6 not use such authority to designate the officer or any other 7 persons the board of directors may specify as a recipient of 8 such rights, options, warrants, or other equity compensation 9 awards. 10 Sec. 9. Section 490.701, subsection 1, Code 2011, is amended 11 to read as follows: 12 1. A Unless directors are elected by written consent in 13 lieu of an annual meeting as permitted by section 490.704, a 14 corporation shall hold annually, at a time stated in or fixed 15 in accordance with the bylaws, a meeting of shareholders ; 16 provided, however, that if a corporation’s articles of 17 incorporation authorize shareholders to cumulate their votes 18 when electing directors pursuant to section 490.728, directors 19 shall not be elected by less than unanimous consent . 20 Sec. 10. Section 490.703, Code 2011, is amended to read as 21 follows: 22 490.703 Court-ordered meeting. 23 1. The district court of the county where a corporation’s 24 principal office, or, if none in this state, its registered 25 office, is located may summarily order a meeting to be held 26 either: pursuant to any of the following: 27 a. On application of any shareholder of the corporation 28 entitled to participate in an annual meeting if an annual 29 meeting was not held or action by written consent in lieu 30 thereof did not become effective within the earlier of six 31 months after the end of the corporation’s fiscal year or 32 fifteen months after its last annual meeting. 33 b. On application of a shareholder who signed a demand for 34 a special meeting valid under section 490.702 if either any of 35 -9- LSB 5446HV (2) 84 da/nh 9/ 70

H.F. 2426 the following applies : 1 (1) Notice of the special meeting was not given within 2 thirty days after the date the demand was delivered to the 3 corporation’s secretary. 4 (2) The special meeting was not held in accordance with the 5 notice. 6 2. The court may fix the time and place of the meeting, 7 ascertain the shares entitled to participate in the meeting, 8 specify a record date or dates for ascertaining shareholders 9 entitled to notice of and to vote at the meeting, prescribe the 10 form and content of the meeting notice, fix the quorum required 11 for specific matters to be considered at the meeting or direct 12 that the votes represented at the meeting constitute a quorum 13 for action on those matters, and enter other orders necessary 14 to accomplish the purpose or purposes of the meeting. 15 Sec. 11. Section 490.704, Code 2011, is amended to read as 16 follows: 17 490.704 Action without meeting. 18 1. Unless otherwise provided in the articles of 19 incorporation, any action required or permitted by this chapter 20 to be taken at a shareholders’ meeting may be taken without 21 a meeting or vote, and, except as provided in subsection 22 5 , without prior notice, if one or more written consents 23 describing the action taken are signed by the holders of 24 outstanding shares having not less than ninety percent of the 25 votes entitled to be cast at a meeting at which all shares 26 entitled to vote on the action were present and voted, and are 27 delivered to the corporation for inclusion in the minutes or 28 filing with the corporate records. 29 2. A written consent shall bear the date of signature of 30 each shareholder who signs the consent and no written consent 31 is effective to take the corporate action referred to in 32 the consent unless, within sixty days of the earliest dated 33 consent delivered in the manner required by this section to the 34 corporation, written consents signed by a sufficient number 35 -10- LSB 5446HV (2) 84 da/nh 10/ 70

H.F. 2426 of holders to take action are delivered to the corporation. 1 A written consent may be revoked by a writing to that effect 2 received by the corporation prior to the receipt by the 3 corporation of unrevoked written consents sufficient in number 4 to take corporate action. The articles of incorporation may 5 provide that any action required or permitted by this chapter 6 to be taken at a shareholders’ meeting may be taken without 7 a meeting, and without prior notice, if consents in writing 8 setting forth the action so taken are signed by the holders of 9 outstanding shares having not less than the minimum number of 10 votes that would be required to authorize or take the action 11 at a meeting at which all shares entitled to vote on the action 12 were present and voted. The written consent shall bear the 13 date of signature of the shareholder who signs the consent and 14 be delivered to the corporation for inclusion in the minutes or 15 filing with the corporate records. 16 3. If not otherwise fixed under section 490.703 or 490.707 , 17 the record date for determining shareholders entitled to take 18 action without a meeting is the date the first shareholder 19 signs the consent under subsection 1 . If not otherwise fixed 20 under section 490.707 and if prior board action is not required 21 respecting the action to be taken without a meeting, the 22 record date for determining the shareholders entitled to take 23 action without a meeting shall be the first date on which a 24 signed written consent is delivered to the corporation. If 25 not otherwise fixed under section 490.707 and if prior board 26 action is required respecting the action to be taken without 27 a meeting, the record date shall be the close of business on 28 the day the resolution of the board taking such prior action 29 is adopted. No written consent shall be effective to take 30 the corporate action referred to therein unless, within sixty 31 days of the earliest date on which a consent delivered to the 32 corporation as required by this section was signed, written 33 consents signed by sufficient shareholders to take the action 34 have been delivered to the corporation. A written consent 35 -11- LSB 5446HV (2) 84 da/nh 11/ 70

H.F. 2426 may be revoked by a writing to that effect delivered to the 1 corporation before unrevoked written consents sufficient in 2 number to take the corporate action are delivered to the 3 corporation. 4 4. A consent signed under pursuant to the provisions of this 5 section has the effect of a meeting vote and may be described 6 as such in any document. Unless the articles of incorporation, 7 bylaws, or a resolution of the board of directors provides for 8 a reasonable delay to permit tabulation of written consents, 9 the action taken by written consent shall be effective when 10 written consents signed by sufficient shareholders to take the 11 action are delivered to the corporation. 12 5. If this chapter requires that notice of proposed action 13 be given to shareholders not entitled to vote and the action 14 is to be taken by consent of the voting shareholders, the 15 corporation must give all shareholders written notice of the 16 proposed action at least ten days before the action is taken. 17 The notice must contain or be accompanied by the same material 18 that, under this chapter , would have been required to be sent 19 to shareholders not entitled to vote in a notice of meeting 20 at which the proposed action would have been submitted to the 21 shareholders for action. 22 6. Prompt notice of the taking of corporate action without 23 a meeting by less than unanimous written consent shall be given 24 to those shareholders who have not consented in writing. If 25 the taking of that corporate action requires the giving of 26 notice under section 490.1320, subsection 2 , the notice of 27 the action shall set forth the matters described in section 28 490.1322 . 29 5. a. If this chapter requires that notice of a proposed 30 action be given to nonvoting shareholders and the action is 31 to be taken by written consent of the voting shareholders, 32 the corporation must give its nonvoting shareholders written 33 notice of the action not more than ten days after any of the 34 following: 35 -12- LSB 5446HV (2) 84 da/nh 12/ 70

H.F. 2426 (1) Written consents sufficient to take the action have been 1 delivered to the corporation. 2 (2) Such later date that tabulation of consents is completed 3 pursuant to an authorization under subsection 4. 4 b. The notice must reasonably describe the action taken and 5 contain or be accompanied by the same material that, under any 6 provision of this chapter, would have been required to be sent 7 to nonvoting shareholders in a notice of a meeting at which the 8 proposed action would have been submitted to the shareholders 9 for action. 10 6. a. If action is taken by less than unanimous written 11 consent of the voting shareholders, the corporation must give 12 its nonconsenting voting shareholders written notice of the 13 action not more than ten days after any of the following: 14 (1) Written consents sufficient to take the action have been 15 delivered to the corporation. 16 (2) Such later date that tabulation of consents is completed 17 pursuant to an authorization under subsection 4. 18 b. The notice must reasonably describe the action taken 19 and contain or be accompanied by the same material that, under 20 any provision of this chapter, would have been required to be 21 sent to voting shareholders in a notice of a meeting at which 22 the action would have been submitted to the shareholders for 23 action. 24 7. The notice requirements in subsections 5 and 6 shall not 25 delay the effectiveness of actions taken by written consent, 26 and a failure to comply with such notice requirements shall 27 not invalidate actions taken by written consent, provided that 28 this subsection shall not be deemed to limit judicial power 29 to fashion any appropriate remedy in favor of a shareholder 30 adversely affected by a failure to give such notice within the 31 required time period. 32 Sec. 12. Section 490.705, subsections 1 and 5, Code 2011, 33 are amended to read as follows: 34 1. A corporation shall notify shareholders of the date, 35 -13- LSB 5446HV (2) 84 da/nh 13/ 70

H.F. 2426 time, and place of each annual and special shareholders’ 1 meeting no fewer than ten nor more than sixty days before 2 the meeting date. The notice shall include the record date 3 for determining the shareholders entitled to vote at the 4 meeting, if such date is different than the record date for 5 determining shareholders entitled to notice of the meeting. If 6 the board of directors has authorized participation by means 7 of remote communication pursuant to section 490.709 for any 8 class or series of shareholders, the notice to such class or 9 series of shareholders shall describe the means of remote 10 communication to be used. Unless this chapter or the articles 11 of incorporation require otherwise, the corporation is required 12 to give notice only to shareholders entitled to vote at the 13 meeting as of the record date for determining the shareholders 14 entitled to notice of the meeting . 15 5. Unless the bylaws require otherwise, if an annual or 16 special shareholders’ meeting is adjourned to a different date, 17 time, or place, notice need not be given of the new date, 18 time, or place if the new date, time, or place is announced at 19 the meeting before adjournment. If a new record date for the 20 adjourned meeting is or must be fixed under section 490.707 , 21 however, notice of the adjourned meeting must be given under 22 this section to persons who are shareholders as of the new 23 record date entitled to vote at such adjourned meeting as of 24 the record date fixed for notice of such adjourned meeting . 25 Sec. 13. Section 490.707, Code 2011, is amended to read as 26 follows: 27 490.707 Record date. 28 1. The bylaws may fix or provide the manner of fixing 29 the record date or dates for one or more voting groups in 30 order to determine the shareholders entitled to notice of a 31 shareholders’ meeting, to demand a special meeting, to vote, 32 or to take any other action. If the bylaws do not fix or 33 provide for fixing a record date, the board of directors of the 34 corporation may fix a future date as the record date. 35 -14- LSB 5446HV (2) 84 da/nh 14/ 70

H.F. 2426 2. A record date fixed under this section shall not be more 1 than seventy days before the meeting or action requiring a 2 determination of shareholders. 3 3. A determination of shareholders entitled to notice of 4 or to vote at a shareholders’ meeting is effective for any 5 adjournment of the meeting unless the board of directors fixes 6 a new record date or dates , which it must do if the meeting is 7 adjourned to a date more than one hundred twenty days after the 8 date fixed for the original meeting. 9 4. If a court orders a meeting adjourned to a date more than 10 one hundred twenty days after the date fixed for the original 11 meeting, it may provide that the original record date continues 12 in effect or it may fix a new record date or dates . 13 5. The record date for a shareholders’ meeting fixed by 14 or in the manner provided in the bylaws or by the board of 15 directors shall be the record date for determining shareholders 16 entitled both to notice of and to vote at the shareholders’ 17 meeting unless, in the case of a record date fixed by the 18 board of directors and to the extent not prohibited by the 19 bylaws, the board, at the time it fixes the record date for 20 shareholders entitled to notice of the meeting, fixes a later 21 record date on or before the date of the meeting to determine 22 the shareholders entitled to vote at the meeting. 23 Sec. 14. NEW SECTION . 490.709 Remote participation in 24 annual and special meetings. 25 1. Shareholders of any class or series may participate in 26 any meeting of shareholders by means of remote communication to 27 the extent the board of directors authorizes such participation 28 for such class or series. Participation by means of remote 29 communication shall be subject to such guidelines and 30 procedures as the board of directors adopts, and shall be in 31 conformity with subsection 2. 32 2. Shareholders participating in a shareholders’ meeting 33 by means of remote communication shall be deemed present and 34 may vote at such a meeting if the corporation has implemented 35 -15- LSB 5446HV (2) 84 da/nh 15/ 70

H.F. 2426 reasonable measures to do all of the following: 1 a. Verify that each person participating remotely is a 2 shareholder. 3 b. Provide such shareholders a reasonable opportunity to 4 participate in the meeting and to vote on matters submitted to 5 the shareholders, including an opportunity to communicate, and 6 to read or hear the proceedings of the meeting, substantially 7 concurrently with such proceedings. 8 Sec. 15. Section 490.720, Code 2011, is amended to read as 9 follows: 10 490.720 Shareholders’ list for meeting. 11 1. After fixing a record date for a meeting, a corporation 12 shall prepare an alphabetical list of the names of all its 13 shareholders who are entitled to notice of a shareholders’ 14 meeting. The If the board of directors fixes a different 15 record date under section 490.707, subsection 5, to determine 16 the shareholders entitled to vote at the meeting, a corporation 17 also shall prepare an alphabetical list of the names of all 18 its shareholders who are entitled to vote at the meeting. A 19 list must be arranged by voting group and within each voting 20 group by class or series of shares, and show the address of and 21 number of shares held by each shareholder. 22 2. The shareholders’ list for notice must be available for 23 inspection by any shareholder beginning two business days after 24 notice of the meeting is given for which the list was prepared 25 and continuing through the meeting, at the corporation’s 26 principal office or at a place identified in the meeting notice 27 in the city where the meeting will be held. A shareholders’ 28 list for voting must be similarly available for inspection 29 promptly after the record date for voting. A shareholder, 30 or a shareholder’s agent or attorney, is entitled on written 31 demand to inspect and, subject to the requirements of section 32 490.1602, subsection 3 4 , to copy the a list, during regular 33 business hours and at the person’s expense, during the period 34 it is available for inspection. 35 -16- LSB 5446HV (2) 84 da/nh 16/ 70

H.F. 2426 3. The corporation shall make the shareholders’ list of 1 shareholders entitled to vote available at the meeting, and any 2 shareholder, or a shareholder’s agent or attorney, is entitled 3 to inspect the list at any time during the meeting or any 4 adjournment. 5 4. If the corporation refuses to allow a shareholder, or a 6 shareholder’s agent or attorney, to inspect the a shareholders’ 7 list before or at the meeting, or copy the a list as permitted 8 by subsection 2 , the district court of the county where a 9 corporation’s principal office or, if none in this state, 10 its registered office, is located, on application of the 11 shareholder, may summarily order the inspection or copying at 12 the corporation’s expense and may postpone the meeting for 13 which the list was prepared until the inspection or copying is 14 complete. 15 5. Refusal or failure to prepare or make available the a 16 shareholders’ list does not affect the validity of action taken 17 at the meeting. 18 Sec. 16. Section 490.722, subsection 2, Code 2011, is 19 amended by striking the subsection. 20 Sec. 17. Section 490.724, subsection 4, Code 2011, is 21 amended to read as follows: 22 4. The corporation and its officer or agent who accepts 23 or rejects a vote, consent, waiver, or proxy appointment in 24 good faith and in accordance with the standards of this section 25 or section 490.722, subsection 2 , are not liable in damages 26 to the shareholder for the consequences of the acceptance or 27 rejection. 28 Sec. 18. Section 490.728, Code 2011, is amended by adding 29 the following new subsection: 30 NEW SUBSECTION . 4. Shares otherwise entitled to vote 31 cumulatively shall not be voted cumulatively at a particular 32 meeting unless any of the following applies: 33 a. The meeting notice or proxy statement accompanying 34 the notice states conspicuously that cumulative voting is 35 -17- LSB 5446HV (2) 84 da/nh 17/ 70

H.F. 2426 authorized. 1 b. A shareholder who has the right to cumulate the 2 shareholder’s votes gives notice to the corporation not less 3 than forty-eight hours before the time set for the meeting of 4 the shareholder’s intent to cumulate votes during the meeting, 5 and if one shareholder gives this notice all other shareholders 6 in the same voting group participating in the election are 7 entitled to cumulate their votes without giving further notice. 8 Sec. 19. Section 490.742, subsection 2, Code 2011, is 9 amended to read as follows: 10 2. Ninety days have expired from the date delivery of 11 the demand was made, unless the shareholder has earlier been 12 notified that the demand has been rejected by the corporation 13 or unless irreparable injury to the corporation would result by 14 waiting for the expiration of the ninety-day period. 15 Sec. 20. Section 490.744, Code 2011, is amended to read as 16 follows: 17 490.744 Dismissal. 18 1. A derivative proceeding shall be dismissed by the court 19 on motion by the corporation if one of the groups specified 20 in subsection 2 or 6 5 has determined in good faith after 21 conducting a reasonable inquiry upon which its conclusions are 22 based that the maintenance of the derivative proceeding is 23 not in the best interests of the corporation. A corporation 24 moving to dismiss on this basis shall submit in support of the 25 motion a short and concise statement of the reasons for its 26 determination. 27 2. Unless a panel is appointed pursuant to subsection 6 5 , 28 the determination in subsection 1 shall be made by one any of 29 the following: 30 a. A majority vote of independent qualified directors 31 present at a meeting of the board of directors if the 32 independent qualified directors constitute a quorum. 33 b. A majority vote of a committee consisting of two or 34 more independent qualified directors appointed by majority 35 -18- LSB 5446HV (2) 84 da/nh 18/ 70

H.F. 2426 vote of independent qualified directors present at a meeting 1 of the board of directors, regardless of whether or not such 2 independent qualified directors constitute a quorum. 3 3. a. None of the following shall by itself cause a 4 director to be considered not independent for purposes of this 5 section : 6 a. The nomination or election of the director by persons 7 who are defendants in the derivative proceeding or against whom 8 action is demanded. 9 b. The naming of the director as a defendant in the 10 derivative proceeding or as a person against whom action is 11 demanded. 12 c. The approval by the director of the act being challenged 13 in the derivative proceeding or demand if the act resulted in 14 no personal benefit to the director. 15 4. If a derivative proceeding is commenced after 16 a determination has been made rejecting a demand by a 17 shareholder, the complaint shall allege with particularity 18 facts establishing one any of the following: 19 a. (1) That a majority of the board of directors did not 20 consist of independent qualified directors at the time the 21 determination was made. 22 b. (2) That the requirements of subsection 1 have not been 23 met. 24 b. All discovery and other proceedings shall be stayed 25 during the pendency of any motion to dismiss unless the 26 court finds upon the motion of any party that particularized 27 discovery is necessary to preserve evidence or prevent undue 28 prejudice to that party. 29 5. 4. If a majority of the board of directors does not 30 consist of independent directors at the time the determination 31 is made, the corporation If a majority of the board of 32 directors consisted of qualified directors at the time the 33 determination was made, the plaintiff shall have the burden of 34 proving that the requirements of subsection 1 have not been 35 -19- LSB 5446HV (2) 84 da/nh 19/ 70

H.F. 2426 met ; if not, the corporation shall have the burden of proving 1 that the requirements of subsection 1 have been met . If a 2 majority of the board of directors consists of independent 3 directors at the time the determination is made, the plaintiff 4 shall have the burden of proving that the requirements of 5 subsection 1 have not been met. 6 6. 5. The Upon motion by the corporation, the court may 7 appoint a panel of one or more independent persons upon motion 8 by the corporation individuals to make a determination whether 9 the maintenance of the derivative proceeding is in the best 10 interests of the corporation. In such case, the plaintiff 11 shall have the burden of proving that the requirements of 12 subsection 1 have not been met. 13 Sec. 21. Section 490.746, Code 2011, is amended to read as 14 follows: 15 490.746 Payment of expenses. 16 On termination of the derivative proceeding, the court may 17 do either any of the following: 18 1. Order the corporation to pay the plaintiff’s reasonable 19 expenses , including attorney fees incurred in the proceeding, 20 if it finds that the proceeding has resulted in a substantial 21 benefit to the corporation. 22 2. Order the plaintiff to pay any defendant’s reasonable 23 expenses , including attorney fees incurred in defending the 24 proceeding, if it finds that the proceeding was commenced or 25 maintained without reasonable cause or for an improper purpose. 26 Sec. 22. NEW SECTION . 490.748 Shareholder action to appoint 27 custodian or receiver. 28 1. The district court may appoint one or more persons 29 to be custodians, or, if the corporation is insolvent, to 30 be receivers, of and for a corporation in a proceeding by a 31 shareholder where it is established that any of the following 32 applies: 33 a. The directors are deadlocked in the management of 34 the corporate affairs, the shareholders are unable to break 35 -20- LSB 5446HV (2) 84 da/nh 20/ 70

H.F. 2426 the deadlock, and irreparable injury to the corporation is 1 threatened or being suffered. 2 b. The directors or those in control of the corporation are 3 acting fraudulently and irreparable injury to the corporation 4 is threatened or being suffered. 5 2. a. The district court may issue injunctions, appoint a 6 temporary custodian or temporary receiver with all the powers 7 and duties the court directs, take other action to preserve the 8 corporate assets wherever located, and carry on the business of 9 the corporation until a full hearing is held. 10 b. The district court shall hold a full hearing, after 11 notifying all parties to the proceeding and any interested 12 persons designated by the court, before appointing a custodian 13 or receiver. 14 c. The district court has jurisdiction over the corporation 15 and all of its property, wherever located. 16 3. The district court may appoint an individual or domestic 17 or foreign corporation, authorized to transact business in this 18 state, as a custodian or receiver and may require the custodian 19 or receiver to post bond, with or without sureties, in an 20 amount the court directs. 21 4. The district court shall describe the powers and duties 22 of the custodian or receiver in its appointing order, which may 23 be amended from time to time. Among other powers, all of the 24 following apply: 25 a. A custodian may exercise all of the powers of the 26 corporation, through or in place of its board of directors, to 27 the extent necessary to manage the business and affairs of the 28 corporation. 29 b. A receiver may do any of the following: 30 (1) Dispose of all or any part of the assets of the 31 corporation wherever located, at a public or private sale, if 32 authorized by the district court. 33 (2) Sue and defend in the receiver’s own name as receiver in 34 all courts of this state. 35 -21- LSB 5446HV (2) 84 da/nh 21/ 70

H.F. 2426 5. The district court during a custodianship may 1 redesignate the custodian as a receiver, and during a 2 receivership may redesignate the receiver as a custodian, if 3 doing so is in the best interests of the corporation. 4 6. The district court from time to time during the 5 custodianship or receivership may order compensation paid and 6 expense disbursements or reimbursements made to the custodian 7 or receiver from the assets of the corporation or proceeds from 8 the sale of its assets. 9 Sec. 23. Section 490.801, Code 2011, is amended to read as 10 follows: 11 490.801 Requirement for and duties functions of board of 12 directors. 13 1. Except as provided in section 490.732 , each corporation 14 must have a board of directors. 15 2. All corporate powers shall be exercised by or under the 16 authority of the board of directors of the corporation , and 17 the business and affairs of the corporation shall be managed 18 by or under the direction , and subject to the oversight, of , 19 its board of directors, subject to any limitation set forth in 20 the articles of incorporation, or in an agreement authorized 21 under section 490.732 . 22 Sec. 24. Section 490.805, subsection 2, Code Supplement 23 2011, is amended by striking the subsection and inserting in 24 lieu thereof the following: 25 2. The terms of all other directors expire at the next, 26 or if their terms are staggered in accordance with section 27 490.806 or 490.806A, at the applicable second or third, annual 28 shareholders’ meeting following their election, except to 29 the extent a shorter term is specified in the articles of 30 incorporation in the event of a director nominee failing to 31 receive a specified vote for the election. 32 Sec. 25. Section 490.805, subsection 5, Code Supplement 33 2011, is amended to read as follows: 34 5. Despite Except to the extent otherwise provided in 35 -22- LSB 5446HV (2) 84 da/nh 22/ 70

H.F. 2426 the articles of incorporation, despite the expiration of a 1 director’s term, the director continues to serve until a the 2 director’s successor for that director is elected and qualifies 3 or until there is a decrease in the number of directors. 4 Sec. 26. Section 490.807, Code 2011, is amended to read as 5 follows: 6 490.807 Resignation of directors. 7 1. A director may resign at any time by delivering a 8 written notice resignation to the board of directors , or its 9 chairperson chair , or to the secretary of the corporation. 10 2. A resignation is effective when the notice resignation 11 is delivered unless the notice resignation specifies a 12 later effective date or an effective date determined upon 13 the happening of an event or events . A resignation that is 14 conditioned upon failing to receive a specified vote for 15 election as a director may provide that it is irrevocable. 16 Sec. 27. Section 490.810, subsection 2, Code Supplement 17 2011, is amended to read as follows: 18 2. If the vacant office was held by a director elected by 19 a voting group of shareholders, only the holders of shares of 20 that voting group are entitled to vote to fill the vacancy 21 if it is filled by the shareholders , and only the directors 22 elected by that voting group are entitled to fill the vacancy 23 if it is filled by the directors . 24 Sec. 28. NEW SECTION . 490.826 Submission of matters for 25 shareholder vote. 26 A corporation may agree to submit a matter to a vote of its 27 shareholders even if, after approving the matter, the board of 28 directors determines it no longer recommends the matter. 29 Sec. 29. Section 490.830, Code 2011, is amended by adding 30 the following new subsection: 31 NEW SUBSECTION . 2A. In discharging board or committee 32 duties a director shall disclose, or cause to be disclosed, to 33 the other board or committee members information not already 34 known by them but known by the director to be material to the 35 -23- LSB 5446HV (2) 84 da/nh 23/ 70

H.F. 2426 discharge of their decision-making or oversight functions, 1 except that disclosure is not required to the extent that the 2 director reasonably believes that doing so would violate a 3 duty imposed under law, a legally enforceable obligation of 4 confidentiality, or a professional ethics rule. 5 Sec. 30. Section 490.831, subsection 1, paragraph a, 6 subparagraph (1), Code 2011, is amended to read as follows: 7 (1) No defense interposed by the director based on any of 8 the following precludes liability: 9 (a) A provision in the articles of incorporation authorized 10 by section 490.202, subsection 2 , paragraph “d” , or the . 11 (b) The protection afforded by section 490.832 if 12 interposed as a bar to the proceeding by the director, does not 13 preclude liability 490.861 for action taken in compliance with 14 section 490.862 or 490.863. 15 (c) The protection afforded by section 490.870 . 16 Sec. 31. Section 490.831, subsection 3, paragraphs a and b, 17 Code 2011, are amended to read as follows: 18 a. In any instance where fairness is at issue, such 19 as consideration of the fairness of a transaction to the 20 corporation under section 490.832 490.861, subsection 2, 21 paragraph “c” , alter the burden of proving the fact or lack of 22 fairness otherwise applicable. 23 b. Alter the fact or lack of liability of a director 24 under another section of this chapter , such as the provisions 25 governing the consequences of an unlawful distribution under 26 section 490.833 or a transactional interest under section 27 490.832 490.861 . 28 Sec. 32. Section 490.841, Code 2011, is amended to read as 29 follows: 30 490.841 Duties Functions of officers. 31 Each officer has the authority and shall perform the duties 32 functions set forth in the bylaws or, to the extent consistent 33 with the bylaws, the duties functions prescribed by the board 34 of directors or by direction of an officer authorized by the 35 -24- LSB 5446HV (2) 84 da/nh 24/ 70

H.F. 2426 board of directors to prescribe the duties functions of other 1 officers. 2 Sec. 33. Section 490.842, subsection 1, unnumbered 3 paragraph 1, Code 2011, is amended to read as follows: 4 An officer when performing in such capacity shall has the 5 duty to act in conformity with all of the following: 6 Sec. 34. Section 490.842, Code 2011, is amended by adding 7 the following new subsection: 8 NEW SUBSECTION . 1A. The duty of an officer includes the 9 obligation to do all of the following: 10 a. Inform the superior officer to whom, or the board of 11 directors or the committee thereof to which, the officer 12 reports of information about the affairs of the corporation 13 known to the officer, within the scope of the officer’s 14 functions, and known to the officer to be material to such 15 superior officer, board, or committee. 16 b. Inform a superior officer, or another appropriate 17 person within the corporation, or the board of directors, or a 18 committee thereof, of any actual or probable material violation 19 of law involving the corporation or material breach of duty 20 to the corporation by an officer, employee, or agent of the 21 corporation, that the officer believes has occurred or is 22 likely to occur. 23 Sec. 35. Section 490.850, subsection 2, Code 2011, is 24 amended to read as follows: 25 2. “Director” or “officer” means an individual who is or 26 was a director or officer, respectively, of a corporation or 27 who, while a director or officer of the corporation, is or was 28 serving at the corporation’s request as a director, officer, 29 partner, trustee, employee, or agent of another domestic 30 or foreign corporation, partnership, joint venture, trust, 31 employee benefit plan, or other entity. A director or officer 32 is considered to be serving an employee benefit plan at the 33 corporation’s request if the director’s individual’s duties to 34 the corporation also impose duties on, or otherwise involve 35 -25- LSB 5446HV (2) 84 da/nh 25/ 70

H.F. 2426 services by, that director the individual to the plan or to 1 participants in or beneficiaries of the plan. “Director” or 2 “officer” includes, unless the context requires otherwise, the 3 estate or personal representative of a director or officer. 4 Sec. 36. Section 490.850, subsections 3 and 4, Code 2011, 5 are amended by striking the subsections. 6 Sec. 37. Section 490.850, subsection 5, Code 2011, is 7 amended to read as follows: 8 5. “Liability” means the obligation to pay a judgment, 9 settlement, penalty, fine, including an excise tax assessed 10 with respect to an employee benefit plan, or reasonable 11 expenses incurred with respect to a proceeding. 12 Sec. 38. Section 490.853, Code 2011, is amended to read as 13 follows: 14 490.853 Advance for expenses. 15 1. A corporation may, before final disposition of 16 a proceeding, advance funds to pay for or reimburse the 17 reasonable expenses incurred in connection with the proceeding 18 by a director an individual who is a party to a the proceeding 19 because the person is a director if the person that individual 20 is a member of the board of directors if the director delivers 21 all of the following to the corporation: 22 a. A signed written affirmation of the director’s good 23 faith belief that the director has met the relevant standard 24 of conduct described in section 490.851 has been met by the 25 director or that the proceeding involved conduct for which 26 liability has been eliminated under a provision of the articles 27 of incorporation as authorized by section 490.202, subsection 28 2 , paragraph “d” . 29 b. The director’s A signed written undertaking of the 30 director to repay any funds advanced if the director is not 31 entitled to mandatory indemnification under section 490.852 and 32 it is ultimately determined under section 490.854 or section 33 490.855 that the director has not met the relevant standard of 34 conduct described in section 490.851 . 35 -26- LSB 5446HV (2) 84 da/nh 26/ 70

H.F. 2426 2. The undertaking required by subsection 1 , paragraph “b” , 1 must be an unlimited general obligation of the director but 2 need not be secured and may be accepted without reference to 3 the financial ability of the director to make repayment. 4 3. Authorizations under this section shall be made 5 according to one any of the following: 6 a. By the board of directors as follows : 7 (1) If there are two or more disinterested qualified 8 directors, by a majority vote of all the disinterested 9 qualified directors, a majority of whom shall for such purpose 10 constitute a quorum, or by a majority of the members of a 11 committee of two or more disinterested qualified directors 12 appointed by such a vote. 13 (2) If there are fewer than two disinterested qualified 14 directors, by the vote necessary for action by the board 15 in accordance with section 490.824, subsection 3 , in which 16 authorization directors who do are not qualify as disinterested 17 qualified directors may participate. 18 b. By the shareholders, but shares owned by or voted under 19 the control of a director who at the time does not qualify as is 20 not a disinterested qualified director may shall not be voted 21 on the authorization. 22 Sec. 39. Section 490.855, Code 2011, is amended to read as 23 follows: 24 490.855 Determination and authorization of indemnification. 25 1. A corporation shall not indemnify a director under 26 section 490.851 unless authorized for a specific proceeding 27 after a determination has been made that indemnification of 28 the director is permissible because the director has met the 29 relevant standard of conduct set forth in section 490.851 . 30 2. The determination shall be made by any of the following: 31 a. If there are two or more disinterested qualified 32 directors, by the board of directors by a majority vote of all 33 the disinterested qualified directors, a majority of whom shall 34 for such purpose constitute a quorum, or by a majority of the 35 -27- LSB 5446HV (2) 84 da/nh 27/ 70

H.F. 2426 members of a committee of two or more disinterested qualified 1 directors appointed by such a vote. 2 b. By special legal counsel selected in one of the following 3 manners : 4 (1) Selected in the manner prescribed in paragraph “a” . 5 (2) If there are fewer than two disinterested qualified 6 directors, selected by the board of directors, in which 7 selection directors who do not qualify as disinterested are not 8 qualified directors may participate. 9 c. By the shareholders, but shares owned by or voted under 10 the control of a director who at the time does not qualify as a 11 disinterested is not a qualified director shall not be voted on 12 the determination. 13 3. Authorization of indemnification shall be made in 14 the same manner as the determination that indemnification 15 is permissible, except that if there are fewer than two 16 disinterested qualified directors or if the determination is 17 made by special legal counsel, authorization of indemnification 18 shall be made by those entitled under subsection 2 , paragraph 19 “b” , to select special legal counsel under subsection 2, 20 paragraph “b” , subparagraph (2) . 21 Sec. 40. Section 490.858, Code 2011, is amended by adding 22 the following new subsection: 23 NEW SUBSECTION . 1A. A right of indemnification or to 24 advances for expenses created by this division or under 25 subsection 1 and in effect at the time of an act or omission 26 shall not be eliminated or impaired with respect to such act 27 or omission by an amendment of the articles of incorporation 28 or bylaws or a resolution of the directors or shareholders, 29 adopted after the occurrence of such act or omission, unless, 30 in the case of a right created under subsection 1, the 31 provision creating such right and in effect at the time of 32 such act or omission explicitly authorizes such elimination or 33 impairment after such act or omission has occurred. 34 Sec. 41. Section 490.858, subsection 3, Code 2011, is 35 -28- LSB 5446HV (2) 84 da/nh 28/ 70

H.F. 2426 amended to read as follows: 1 3. A Subject to subsection 1A, a corporation may, by a 2 provision in its articles of incorporation, limit any of the 3 rights to indemnification or advance for expenses created by or 4 pursuant to this part. 5 Sec. 42. NEW SECTION . 490.860 Part definitions. 6 As used in this part, unless the context otherwise requires: 7 1. “Control” , including the term “controlled by” , means any 8 of the following: 9 a. Having the power, directly or indirectly, to elect or 10 remove a majority of the members of the board of directors 11 or other governing body of an entity, whether through the 12 ownership of voting shares or interests, by contract, or 13 otherwise. 14 b. Being subject to a majority of the risk of loss from the 15 entity’s activities or entitled to receive a majority of the 16 entity’s residual returns. 17 2. “Director’s conflicting interest transaction” means 18 a transaction effected or proposed to be effected by the 19 corporation, or by an entity controlled by the corporation to 20 which, or respecting which, any of the following applies: 21 a. To which, at the relevant time, the director is a party. 22 b. Respecting which, at the relevant time, the director 23 had knowledge and a material financial interest known to the 24 director. 25 c. Respecting which, at the relevant time, the director knew 26 that a related person was a party or had a material financial 27 interest. 28 3. “Fair to the corporation” means, for purposes of section 29 490.861, subsection 2, paragraph “c” , that the transaction 30 as a whole was beneficial to the corporation, taking into 31 appropriate account whether it was all of the following: 32 a. Fair in terms of the director’s dealings with the 33 corporation. 34 b. Comparable to what might have been obtainable in an arm’s 35 -29- LSB 5446HV (2) 84 da/nh 29/ 70

H.F. 2426 length transaction, given the consideration paid or received 1 by the corporation. 2 4. “Material financial interest” means a financial interest 3 in a transaction that would reasonably be expected to impair 4 the objectivity of the director’s judgment when participating 5 in action on the authorization of the transaction. 6 5. “Related person” means any of the following: 7 a. The director’s spouse. 8 b. A child, stepchild, grandchild, parent, stepparent, 9 grandparent, sibling, step sibling, half sibling, aunt, uncle, 10 niece, or nephew, or spouse of any thereof, of the director or 11 of the director’s spouse. 12 c. An individual living in the same home as the director. 13 d. An entity, other than the corporation or an entity 14 controlled by the corporation, controlled by the director or 15 any person specified in this subsection. 16 e. A domestic or foreign person who is any of the following: 17 (1) A business or nonprofit corporation, other than the 18 corporation or an entity controlled by the corporation, of 19 which the director is a director. 20 (2) An unincorporated entity of which the director is a 21 general partner or a member of the governing body. 22 (3) An individual, trust, or estate for whom or of which the 23 director is a trustee, guardian, personal representative, or 24 like fiduciary. 25 f. A person that is, or an entity that is controlled by, an 26 employer of the director. 27 6. “Relevant time” means any of the following: 28 a. The time at which directors’ action respecting the 29 transaction is taken in compliance with section 490.862. 30 b. If the transaction is not brought before the board of 31 directors of the corporation, or its committee, for action 32 under section 490.862, at the time the corporation, or an 33 entity controlled by the corporation, becomes legally obligated 34 to consummate the transaction. 35 -30- LSB 5446HV (2) 84 da/nh 30/ 70

H.F. 2426 7. “Required disclosure” means disclosure of all of the 1 following: 2 a. The existence and nature of the director’s conflicting 3 interest. 4 b. All facts known to the director respecting the subject 5 matter of the transaction that a director free of such 6 conflicting interest would reasonably believe to be material in 7 deciding whether to proceed with the transaction. 8 Sec. 43. NEW SECTION . 490.861 Judicial action. 9 1. A transaction effected or proposed to be effected by the 10 corporation, or by an entity controlled by the corporation, 11 shall not be the subject of equitable relief, or give rise to 12 an award of damages or other sanctions against a director of 13 the corporation, in a proceeding by a shareholder or by or in 14 the right of the corporation, on the ground that the director 15 has an interest respecting the transaction, if it is not a 16 director’s conflicting interest transaction. 17 2. A director’s conflicting interest transaction may 18 not be the subject of equitable relief, or give rise to an 19 award of damages or other sanctions against a director of the 20 corporation, in a proceeding by a shareholder or by or in the 21 right of the corporation, on the ground that the director has 22 an interest respecting the transaction, if any of the following 23 apply: 24 a. Directors’ action respecting the transaction was taken in 25 compliance with section 490.862 at any time. 26 b. Shareholders’ action respecting the transaction was taken 27 in compliance with section 490.863 at any time. 28 c. The transaction, judged according to the circumstances 29 at the relevant time, is established to have been fair to the 30 corporation. 31 Sec. 44. NEW SECTION . 490.862 Directors’ action. 32 1. Directors’ action respecting a director’s conflicting 33 interest transaction is effective for purposes of section 34 490.861, subsection 2, paragraph “a” , if the transaction has 35 -31- LSB 5446HV (2) 84 da/nh 31/ 70

H.F. 2426 been authorized by the affirmative vote of a majority, but 1 no fewer than two, of the qualified directors who voted on 2 the transaction, after required disclosure by the conflicted 3 director of information not already known by such qualified 4 directors, or after modified disclosure in compliance with 5 subsection 2, provided that all of the following apply: 6 a. The qualified directors have deliberated and voted 7 outside the presence of and without the participation by any 8 other director. 9 b. Where the action has been taken by a committee, all 10 members of the committee were qualified directors, and any of 11 the following apply: 12 (1) The committee was composed of all the qualified 13 directors on the board of directors. 14 (2) The members of the committee were appointed by the 15 affirmative vote of a majority of the qualified directors on 16 the board. 17 2. Notwithstanding subsection 1, when a transaction is 18 a director’s conflicting interest transaction only because a 19 related person described in section 490.860, subsection 5, 20 paragraph “e” or “f” , is a party to or has a material financial 21 interest in the transaction, the conflicted director is not 22 obligated to make required disclosure to the extent that the 23 director reasonably believes that doing so would violate a 24 duty imposed under law, a legally enforceable obligation of 25 confidentiality, or a professional ethics rule, provided that 26 the conflicted director discloses to the qualified directors 27 voting on the transaction all of the following: 28 a. All information required to be disclosed that is not so 29 violative. 30 b. The existence and nature of the director’s conflicting 31 interest. 32 c. The nature of the conflicted director’s duty not to 33 disclose the confidential information. 34 3. A majority, but no fewer than two, of all the qualified 35 -32- LSB 5446HV (2) 84 da/nh 32/ 70

H.F. 2426 directors on the board of directors, or on the committee, 1 constitutes a quorum for purposes of action that complies with 2 this section. 3 4. Where directors’ action under this section does not 4 satisfy a quorum or voting requirement applicable to the 5 authorization of the transaction by reason of the articles of 6 incorporation, the bylaws, or a provision of law, independent 7 action to satisfy those authorization requirements must be 8 taken by the board of directors or a committee, in which action 9 directors who are not qualified directors may participate. 10 Sec. 45. NEW SECTION . 490.863 Shareholders’ action. 11 1. a. Shareholders’ action respecting a director’s 12 conflicting interest transaction is effective for purposes of 13 section 490.861, subsection 2, paragraph “b” , if a majority of 14 the votes cast by the holders of all qualified shares are in 15 favor of the transaction after all of the following occur: 16 (1) Notice to shareholders describing the action to be taken 17 respecting the transaction. 18 (2) Provision to the corporation of the information 19 referred to in subsection 2. 20 (3) Communication to the shareholders entitled to vote 21 on the transaction of the information that is the subject of 22 required disclosure, to the extent the information is not known 23 by them. 24 b. In the case of shareholders’ action at a meeting, the 25 shareholders entitled to vote shall be determined as of the 26 record date for notice of the meeting. 27 2. A director who has a conflicting interest respecting 28 the transaction shall, before the shareholders’ vote, inform 29 the secretary or other officer or agent of the corporation 30 authorized to tabulate votes, in writing, of the number of 31 shares that the director knows are not qualified shares under 32 subsection 3, and the identity of the holders of those shares. 33 3. For purposes of this section, all of the following apply: 34 a. “Holder” means and “held by” refers to shares held by 35 -33- LSB 5446HV (2) 84 da/nh 33/ 70

H.F. 2426 both a record shareholder, as defined in section 490.1301, 1 subsection 7, and a beneficial shareholder, as defined in 2 490.1301, subsection 2. 3 b. “Qualified shares” means all shares entitled to be 4 voted with respect to the transaction except for shares that 5 the secretary or other officer or agent of the corporation 6 authorized to tabulate votes either knows, or under subsection 7 2 is notified, are held by any of the following: 8 (1) A director who has a conflicting interest respecting the 9 transaction. 10 (2) A related person of the director, excluding a person 11 described in section 490.860, subsection 5, paragraph “f” . 12 4. A majority of the votes entitled to be cast by the 13 holders of all qualified shares constitutes a quorum for 14 purposes of compliance with this section. Subject to the 15 provisions of subsection 5, shareholders’ action that otherwise 16 complies with this section is not affected by the presence of 17 holders, or by the voting, of shares that are not qualified 18 shares. 19 5. If a shareholders’ vote does not comply with subsection 20 1 solely because of a director’s failure to comply with 21 subsection 2, and if the director establishes that the failure 22 was not intended to influence and did not in fact determine the 23 outcome of the vote, the court may take such action respecting 24 the transaction and the director, and may give such effect, 25 if any, to the shareholders’ vote, as the court considers 26 appropriate in the circumstances. 27 6. Where shareholders’ action under this section does 28 not satisfy a quorum or voting requirement applicable to the 29 authorization of the transaction by reason of the articles of 30 incorporation, the bylaws, or a provision of law, independent 31 action to satisfy those authorization requirements must be 32 taken by the shareholders, in which action shares that are not 33 qualified shares may participate. 34 Sec. 46. Section 490.870, subsection 1, paragraphs a and b, 35 -34- LSB 5446HV (2) 84 da/nh 34/ 70

H.F. 2426 Code 2011, are amended to read as follows: 1 a. Action by qualified directors disclaiming the 2 corporation’s interest in the opportunity is taken in 3 compliance with the procedures set forth in section 490.832 4 490.862 , as if the decision being made concerned a director’s 5 conflicting interest transaction. 6 b. Shareholders’ action disclaiming the corporation’s 7 interest in the opportunity is taken in compliance with the 8 procedure set forth in section 490.832 490.863 , as if the 9 decision being made concerned a director’s conflicting interest 10 transaction; except that, rather than making the disclosure 11 “required disclosure” as required defined in section 490.832 12 490.860 , in each case the director shall have made prior 13 disclosure to those acting on behalf of the corporation of all 14 material facts concerning the business opportunity that are 15 then known to the director. 16 Sec. 47. Section 490.1003, subsection 2, Code 2011, is 17 amended to read as follows: 18 2. a. Except as provided in sections 490.1005 , 490.1007 , 19 and 490.1008 , after adopting the proposed amendment, the board 20 of directors must submit the amendment to the shareholders for 21 their approval. The board of directors must also transmit to 22 the shareholders a recommendation that the shareholders approve 23 the amendment, unless any of the following apply: 24 (1) The board of directors makes a determination that 25 because of conflicts of interest or other special circumstances 26 it should not make such a recommendation , in which case the . 27 (2) Section 490.826 applies. 28 b. If paragraph “a” , subparagraph (1) or (2), applies, the 29 board of directors must transmit to the shareholders the basis 30 for the determination so proceeding . 31 Sec. 48. Section 490.1104, subsection 2, Code 2011, is 32 amended to read as follows: 33 2. a. Except as provided in subsection 7 and in section 34 490.1105 , after adopting the plan of merger or share exchange 35 -35- LSB 5446HV (2) 84 da/nh 35/ 70

H.F. 2426 the board of directors must submit the plan to the shareholders 1 for their approval. The board of directors must also transmit 2 to the shareholders a recommendation that the shareholders 3 approve the plan, unless the any of the following apply: 4 (1) The board of directors makes a determination that 5 because of conflicts of interest or other special circumstances 6 it should not make such a recommendation , in which case . 7 (2) Section 490.826 applies. 8 b. If paragraph “a” , subparagraph (1) or (2), applies, the 9 board of directors must transmit to the shareholders the basis 10 for that determination so proceeding . 11 Sec. 49. Section 490.1106, subsection 1, unnumbered 12 paragraph 1, Code 2011, is amended to read as follows: 13 After a plan of merger or share exchange has been adopted 14 and approved as required by this chapter , articles of merger 15 or share exchange shall be executed signed on behalf of each 16 party to the merger or share exchange by any officer or other 17 duly authorized representative. The articles shall set forth 18 the following: 19 Sec. 50. Section 490.1108, subsection 2, Code 2011, is 20 amended to read as follows: 21 2. If a merger or share exchange is abandoned under 22 subsection 1 after articles of merger or share exchange have 23 been filed with the secretary of state but before the merger 24 or share exchange has become effective, a statement that the 25 merger or share exchange has been abandoned in accordance with 26 this section , executed signed on behalf of a party to the 27 merger or share exchange by an officer or other duly authorized 28 representative, shall be delivered to the secretary of state 29 for filing prior to the effective date of the merger or share 30 exchange. Upon filing, the statement shall take effect and the 31 merger or share exchange shall be deemed abandoned and shall 32 not become effective. 33 Sec. 51. Section 490.1202, subsection 2, Code 2011, is 34 amended to read as follows: 35 -36- LSB 5446HV (2) 84 da/nh 36/ 70

H.F. 2426 2. a. A disposition that requires approval of the 1 shareholders under subsection 1 shall be initiated by 2 a resolution by the board of directors authorizing the 3 disposition. After adoption of such a resolution, the board 4 of directors shall submit the proposed disposition to the 5 shareholders for their approval. The board of directors shall 6 also transmit to the shareholders a recommendation that the 7 shareholders approve the proposed disposition, unless the any 8 of the following apply: 9 (1) The board of directors makes a determination that 10 because of conflicts of interest or other special circumstances 11 it should not make such a recommendation , in which case . 12 (2) Section 490.826 applies. 13 b. If paragraph “a” , subparagraph (1) or (2), applies, the 14 board of directors shall transmit to the shareholders the basis 15 for that determination so proceeding . 16 Sec. 52. Section 490.1301, Code 2011, is amended by adding 17 the following new subsection: 18 NEW SUBSECTION . 5A. “Interested transaction” means a 19 corporate action described in section 490.1302, subsection 1, 20 other than a merger pursuant to section 490.1105, involving an 21 interested person in which any of the shares or assets of the 22 corporation are being acquired or converted. As used in this 23 definition, all of the following apply: 24 a. “Beneficial owner” means any person who, directly 25 or indirectly, through any contract, arrangement, or 26 understanding, other than a revocable proxy, has or shares the 27 power to vote, or to direct the voting of, shares; except that 28 a member of a national securities exchange is not deemed to be 29 a beneficial owner of securities held directly or indirectly 30 by it on behalf of another person solely because the member is 31 the record holder of the securities if the member is precluded 32 by the rules of the exchange from voting without instruction 33 on contested matters or matters that may affect substantially 34 the rights or privileges of the holders of the securities to 35 -37- LSB 5446HV (2) 84 da/nh 37/ 70

H.F. 2426 be voted. When two or more persons agree to act together for 1 the purpose of voting their shares of the corporation, each 2 member of the group formed thereby is deemed to have acquired 3 beneficial ownership, as of the date of the agreement, of all 4 voting shares of the corporation beneficially owned by any 5 member of the group. 6 b. “Excluded shares” means shares acquired pursuant to an 7 offer for all shares having voting power if the offer was made 8 within one year prior to the corporate action for consideration 9 of the same kind and of a value equal to or less than that paid 10 in connection with the corporate action. 11 c. “Interested person” means a person, or an affiliate of a 12 person, who at any time during the one-year period immediately 13 preceding approval by the board of directors of the corporate 14 action was or had any of the following: 15 (1) Was the beneficial owner of twenty percent or more of 16 the voting power of the corporation, other than as owner of 17 excluded shares. 18 (2) Had the power, contractually or otherwise, other than as 19 owner of excluded shares, to cause the appointment or election 20 of twenty-five percent or more of the directors to the board of 21 directors of the corporation. 22 (3) Was a senior executive or director of the corporation 23 or a senior executive of any affiliate thereof, and that 24 senior executive or director will receive, as a result of the 25 corporate action, a financial benefit not generally available 26 to other shareholders as such, other than any of the following: 27 (a) Employment, consulting, retirement, or similar benefits 28 established separately and not as part of or in contemplation 29 of the corporate action. 30 (b) Employment, consulting, retirement, or similar benefits 31 established in contemplation of, or as part of, the corporate 32 action that are not more favorable than those existing before 33 the corporate action or, if more favorable, that have been 34 approved on behalf of the corporation in the same manner as is 35 -38- LSB 5446HV (2) 84 da/nh 38/ 70

H.F. 2426 provided in section 490.862. 1 (c) In the case of a director of the corporation who will, 2 in the corporate action, become a director of the acquiring 3 entity in the corporate action or one of its affiliates, rights 4 and benefits as a director that are provided on the same basis 5 as those afforded by the acquiring entity generally to other 6 directors of such entity or such affiliate. 7 Sec. 53. Section 490.1302, subsection 2, paragraph a, Code 8 2011, is amended by striking the paragraph and inserting in 9 lieu thereof the following: 10 a. Appraisal rights shall not be available for the holders 11 of shares of any class or series of shares which is any of the 12 following: 13 (1) A covered security under section 18(b)(1)(A) or (B) of 14 the federal Securities Act of 1933, as amended. 15 (2) Traded in an organized market and has at least two 16 thousand shareholders and a market value of at least twenty 17 million dollars, exclusive of the value of such shares held by 18 the corporation’s subsidiaries, senior executives, directors, 19 and beneficial shareholders owning more than ten percent of 20 such shares. 21 (3) Issued by an open-end management investment company 22 registered with the United States securities and exchange 23 commission under the federal Investment Company Act of 1940 and 24 may be redeemed at the option of the holder at net asset value. 25 Sec. 54. Section 490.1302, subsection 2, paragraph b, 26 subparagraph (1), Code 2011, is amended to read as follows: 27 (1) The record date fixed to determine the shareholders 28 entitled to receive notice of , and to vote at, the meeting 29 of shareholders to act upon the corporate action requiring 30 appraisal rights. 31 Sec. 55. Section 490.1302, subsection 2, paragraph d, Code 32 2011, is amended by striking the paragraph and inserting in 33 lieu thereof the following: 34 d. Paragraph “a” , shall not be applicable and appraisal 35 -39- LSB 5446HV (2) 84 da/nh 39/ 70

H.F. 2426 rights shall be available pursuant to subsection 1 for the 1 holders of any class or series of shares where the corporate 2 action is an interested transaction. 3 Sec. 56. Section 490.1302, subsection 2, paragraph e, Code 4 2011, is amended by striking the paragraph. 5 Sec. 57. Section 490.1302, subsection 4, Code 2011, is 6 amended by striking the subsection. 7 Sec. 58. Section 490.1320, Code 2011, is amended to read as 8 follows: 9 490.1320 Notice of appraisal rights. 10 1. If Where any proposed corporate action described 11 specified in section 490.1302, subsection 1 , is to be submitted 12 to a vote at a shareholders’ meeting, the meeting notice must 13 state that the corporation has concluded that the shareholders 14 are, are not, or may be entitled to assert appraisal rights 15 under this part. If the corporation concludes that appraisal 16 rights are or may be available, a copy of this part must 17 accompany the meeting notice sent to those record shareholders 18 entitled to exercise appraisal rights. 19 2. In a merger pursuant to section 490.1105 , the parent 20 corporation must notify in writing all record shareholders of 21 the subsidiary who are entitled to assert appraisal rights 22 that the corporate action became effective. Such notice must 23 be sent within ten days after the corporate action became 24 effective and include the materials described in section 25 490.1322 . 26 3. Where any corporate action specified in section 27 490.1302, subsection 1, is to be approved by written consent 28 of the shareholders pursuant to section 490.704, all of the 29 following apply: 30 a. Written notice that appraisal rights are, are not, or may 31 be available must be sent to each record shareholder from whom 32 a consent is solicited at the time consent of such shareholder 33 is first solicited and, if the corporation has concluded that 34 appraisal rights are or may be available, must be accompanied 35 -40- LSB 5446HV (2) 84 da/nh 40/ 70

H.F. 2426 by a copy of this chapter. 1 b. Written notice that appraisal rights are, are not, or 2 may be available must be delivered together with the notice to 3 nonconsenting and nonvoting shareholders required by section 4 490.704, subsections 5 and 6, may include the materials 5 described in section 490.1322 and, if the corporation has 6 concluded that appraisal rights are or may be available, must 7 be accompanied by a copy of this chapter. 8 4. Where corporate action described in section 490.1302, 9 subsection 1, is proposed, or a merger pursuant to section 10 490.1105 is effected, the notice referred to in subsection 1 11 or 3, if the corporation concludes that appraisal rights are 12 or may be available, and in subsection 2 shall be accompanied 13 by all of the following: 14 a. The annual financial statements specified in section 15 490.1620, subsection 1, of the corporation that issued the 16 shares that may be subject to appraisal, which shall be as of 17 a date ending not more than sixteen months before the date of 18 the notice and shall comply with section 490.1620, subsection 19 2; provided that, if such annual financial statements are not 20 reasonably available, the corporation shall provide reasonably 21 equivalent financial information. 22 b. The latest available quarterly financial statements of 23 such corporation, if any. 24 5. The right to receive the information described in 25 subsection 4 may be waived in writing by a shareholder before 26 or after the corporate action. 27 Sec. 59. Section 490.1321, Code 2011, is amended to read as 28 follows: 29 490.1321 Notice of intent to demand payment. 30 1. If proposed a corporate action requiring appraisal 31 rights under specified in section 490.1302 , subsection 1, is 32 submitted to a vote at a shareholders’ meeting, a shareholder 33 who wishes to assert appraisal rights with respect to any class 34 or series of shares must do all of the following: 35 -41- LSB 5446HV (2) 84 da/nh 41/ 70

H.F. 2426 a. Deliver to the corporation before the vote is taken 1 written notice of the shareholder’s intent to demand payment if 2 the proposed action is effectuated. 3 b. Not vote, or cause or permit to be voted, any shares of 4 such class or series in favor of the proposed action. 5 2. If a corporate action specified in section 490.1302, 6 subsection 1, is to be approved by less than unanimous written 7 consent, a shareholder who wishes to assert appraisal rights 8 with respect to any class or series of shares must not sign a 9 consent in favor of the proposed action with respect to that 10 class or series of shares. 11 3. A shareholder who does not fails to satisfy the 12 requirements of subsection 1 or 2, is not entitled to payment 13 under this part. 14 Sec. 60. Section 490.1322, subsection 1, Code 2011, is 15 amended to read as follows: 16 1. If proposed corporate action requiring appraisal rights 17 under section 490.1302, subsection 1 , becomes effective, the 18 corporation must deliver send a written appraisal notice 19 and the form required by subsection 2 , paragraph “a” , to 20 all shareholders who satisfied the requirements of section 21 490.1321 , subsection 1, or section 490.1321, subsection 2 . In 22 the case of a merger under section 490.1105 , the parent must 23 deliver a written an appraisal notice and form to all record 24 shareholders who may be entitled to assert appraisal rights. 25 Sec. 61. Section 490.1322, subsection 2, unnumbered 26 paragraph 1, Code 2011, is amended to read as follows: 27 The appraisal notice must be sent delivered no earlier than 28 the date the corporate action specified in section 490.1302, 29 subsection 1, became effective and no later than ten days after 30 such date and must do all of the following: 31 Sec. 62. Section 490.1322, subsection 2, paragraph a, Code 32 2011, is amended to read as follows: 33 a. Be accompanied by Supply a form that specifies does all 34 of the following: 35 -42- LSB 5446HV (2) 84 da/nh 42/ 70

H.F. 2426 (1) Specifies the first date of any announcement to 1 shareholders made prior to the date the corporate action became 2 effective of the first announcement to shareholders of the 3 principal terms of the proposed corporate action and requires , 4 if any. 5 (2) If such announcement was made, requires the shareholder 6 asserting appraisal rights to certify whether beneficial 7 ownership of those shares for which appraisal rights are 8 asserted was acquired before that date. 9 (3) Requires the shareholder asserting appraisal rights to 10 certify whether or not beneficial ownership of those shares for 11 which appraisal rights are asserted was acquired before that 12 date, and that the such shareholder did not vote for or consent 13 to the transaction. 14 Sec. 63. Section 490.1322, subsection 2, paragraph b, 15 subparagraph (2), Code 2011, is amended to read as follows: 16 (2) A date by which the corporation must receive the form, 17 which date shall not be fewer than forty nor more than sixty 18 days after the date the appraisal notice and form are is sent 19 under subsection 1 , and state that the shareholder shall have 20 waived the right to demand appraisal with respect to the 21 shares unless the form is received by the corporation by such 22 specified date. 23 Sec. 64. Section 490.1323, subsections 1 and 3, Code 2011, 24 are amended to read as follows: 25 1. A shareholder who receives notice pursuant to section 26 490.1322 and who wishes to exercise appraisal rights must 27 certify on sign and return the form sent by the corporation 28 and, in the case of certificated shares, deposit the 29 shareholder’s certificates in accordance with the terms of 30 the notice by the date referred to in the notice pursuant to 31 section 490.1322, subsection 2, paragraph “b” , subparagraph 32 (2). In addition, if applicable, the shareholder must certify 33 on the form whether the beneficial owner of such shares 34 acquired beneficial ownership of the shares before the date 35 -43- LSB 5446HV (2) 84 da/nh 43/ 70

H.F. 2426 required to be set forth in the notice pursuant to section 1 490.1322, subsection 2 , paragraph “a” . If a shareholder fails 2 to make this certification, the corporation may elect to 3 treat the shareholder’s shares as after-acquired shares under 4 section 490.1325 . In addition, a shareholder who wishes to 5 exercise appraisal rights must execute and return the form and, 6 in a case of certificated shares, deposit the shareholder’s 7 certificates in accordance with the terms of the notice 8 by the date referred to in the notice pursuant to section 9 490.1322, subsection 2 , paragraph “b” , subparagraph (2). Once 10 a shareholder deposits that shareholder’s certificates or, in 11 the case of uncertificated shares, returns the executed signed 12 forms, that shareholder loses all rights as a shareholder, 13 unless the shareholder withdraws pursuant to subsection 2 . 14 3. A shareholder who does not execute sign and return the 15 form and, in the case of certificated shares, deposit the 16 shareholder’s share certificates where required, each by the 17 date set forth in the notice described in section 490.1322, 18 subsection 2 , shall not be entitled to payment under this 19 division . 20 Sec. 65. Section 490.1324, subsection 2, paragraph a, Code 21 2011, is amended to read as follows: 22 a. (i) Financial The annual financial statements specified 23 in section 490.1620, subsection 1, of the corporation that 24 issued the shares to be appraised, consisting of a balance 25 sheet as of the end of a fiscal year which shall be of a date 26 ending not more than sixteen months before the date of payment , 27 an income statement for that year, a statement of changes 28 in shareholders’ equity for that year, and the shall comply 29 with section 490.1620, subsection 2; provided that, if such 30 annual financial statements are not reasonably available, the 31 corporation shall provide reasonably equivalent financial 32 information. 33 (ii) The latest available interim quarterly financial 34 statements of such corporation , if any. 35 -44- LSB 5446HV (2) 84 da/nh 44/ 70

H.F. 2426 Sec. 66. Section 490.1325, subsection 1, Code 2011, is 1 amended to read as follows: 2 1. A corporation may elect to withhold payment required 3 by section 490.1324 from any shareholder who was required to, 4 but did not certify that beneficial ownership of all of the 5 shareholder’s shares for which appraisal rights are asserted 6 was acquired before the date set forth in the appraisal notice 7 sent pursuant to section 490.1322, subsection 2 , paragraph “a” . 8 Sec. 67. Section 490.1331, Code 2011, is amended to read as 9 follows: 10 490.1331 Court costs and counsel fees expenses . 11 1. The court in an appraisal proceeding commenced under 12 section 490.1330 shall determine all court costs of the 13 proceeding, including the reasonable compensation and expenses 14 of appraisers appointed by the court. The court shall assess 15 the court costs against the corporation, except that the court 16 may assess court costs against all or some of the shareholders 17 demanding appraisal, in amounts the court finds equitable, to 18 the extent the court finds such shareholders acted arbitrarily, 19 vexatiously, or not in good faith with respect to the rights 20 provided by this division . 21 2. The court in an appraisal proceeding may also assess the 22 fees and expenses of counsel and experts for the respective 23 parties, in amounts the court finds equitable, for either any 24 of the following: 25 a. Against the corporation and in favor of any or all 26 shareholders demanding appraisal if the court finds the 27 corporation did not substantially comply with the requirements 28 of section 490.1320 , 490.1322 , 490.1324 , or 490.1325 . 29 b. Against either the corporation or a shareholder demanding 30 appraisal, in favor of any other party, if the court finds that 31 the party against whom the fees and expenses are assessed acted 32 arbitrarily, vexatiously, or not in good faith with respect to 33 the rights provided by this chapter . 34 3. If the court in an appraisal proceeding finds that the 35 -45- LSB 5446HV (2) 84 da/nh 45/ 70

H.F. 2426 services of counsel for expenses incurred by any shareholder 1 were of substantial benefit to other shareholders similarly 2 situated, and that the fees for those services such expenses 3 should not be assessed against the corporation, the court may 4 award to such counsel reasonable fees to direct that such 5 expenses be paid out of the amounts awarded the shareholders 6 who were benefited. 7 4. To the extent the corporation fails to make a required 8 payment pursuant to section 490.1324 , 490.1325 , or 490.1326 , 9 the shareholder may sue directly for the amount owed and, to 10 the extent successful, shall be entitled to recover from the 11 corporation all costs and expenses of the suit , including 12 counsel fees . 13 Sec. 68. NEW SECTION . 490.1340 Other remedies limited. 14 1. The legality of a proposed or completed corporate 15 action described in section 490.1302, subsection 1, shall not 16 be contested, nor may the corporate action be enjoined, set 17 aside, or rescinded, in a legal or equitable proceeding by a 18 shareholder after the shareholders have approved the corporate 19 action. 20 2. Subsection 1 does not apply to a corporate action that 21 meets any of the following conditions: 22 a. Was not authorized and approved in accordance with the 23 applicable provisions of any of the following: 24 (1) Division X, XI, or XII of this chapter. 25 (2) The articles of incorporation or bylaws. 26 (3) The resolution of the board of directors authorizing the 27 corporate action. 28 b. Was procured as a result of fraud, a material 29 misrepresentation, or an omission of a material fact necessary 30 to make statements made, in light of the circumstances in which 31 they were made, not misleading. 32 c. Is an interested transaction, unless it has been 33 recommended by the board of directors in the same manner as 34 is provided in section 490.862 and has been approved by the 35 -46- LSB 5446HV (2) 84 da/nh 46/ 70

H.F. 2426 shareholders in the same manner as is provided in section 1 490.863 as if the interested transaction were a director’s 2 conflicting interest transaction. 3 d. Is approved by less than unanimous consent of the 4 voting shareholders pursuant to section 490.704, if all of the 5 following apply: 6 (1) The challenge to the corporate action is brought by a 7 shareholder who did not consent and as to whom notice of the 8 approval of the corporate action was not effective at least ten 9 days before the corporate action was effected. 10 (2) The proceeding challenging the corporate action is 11 commenced within ten days after notice of the approval of the 12 corporate action is effective as to the shareholder bringing 13 the proceeding. 14 Sec. 69. Section 490.1402, subsection 2, paragraph a, Code 15 2011, is amended to read as follows: 16 a. (1) The board of directors must recommend dissolution to 17 the shareholders unless the any of the following apply: 18 (a) The board of directors determines that because of 19 conflict of interest or other special circumstances it should 20 make no recommendation and communicates . 21 (b) Section 490.826 applies. 22 (2) If paragraph “a” , subparagraph (1) or (2), applies, 23 it must communicate the basis for its determination to the 24 shareholders so proceeding . 25 Sec. 70. Section 490.1430, Code 2011, is amended to read as 26 follows: 27 490.1430 Grounds for judicial dissolution. 28 1. The district court may dissolve a corporation in any of 29 the following ways: 30 1. a. A proceeding by the attorney general, if it is 31 established that either any of the following apply: 32 a. (1) The corporation obtained its articles of 33 incorporation through fraud. 34 b. (2) The corporation has continued to exceed or abuse the 35 -47- LSB 5446HV (2) 84 da/nh 47/ 70

H.F. 2426 authority conferred upon it by law. 1 2. b. A proceeding by a shareholder if it is established 2 that any of the following conditions exist: 3 a. (1) The directors are deadlocked in the management of 4 the corporate affairs, the shareholders are unable to break the 5 deadlock, and either irreparable injury to the corporation is 6 threatened or being suffered, or the business and affairs of 7 the corporation can no longer be conducted to the advantage of 8 the shareholders generally, because of the deadlock. 9 b. (2) The directors or those in control of the corporation 10 have acted, are acting, or will act in a manner that is 11 illegal, oppressive, or fraudulent. 12 c. (3) The shareholders are deadlocked in voting power 13 and have failed, for a period that includes at least two 14 consecutive annual meeting dates, to elect successors to 15 directors whose terms have expired. 16 d. (4) The corporate assets are being misapplied or wasted. 17 3. c. A proceeding by a creditor if it is established that 18 either any of the following apply: 19 a. (1) The creditor’s claim has been reduced to judgment, 20 the execution on the judgment returned unsatisfied, and the 21 corporation is insolvent. 22 b. (2) The corporation has admitted in writing that the 23 creditor’s claim is due and owing and the corporation is 24 insolvent. 25 4. d. A proceeding by the corporation to have its voluntary 26 dissolution continued under court supervision. 27 e. A proceeding by a shareholder if the corporation has 28 abandoned its business and has failed within a reasonable time 29 to liquidate and distribute its assets and dissolve. 30 2. Subsection 1, paragraph “b” , shall not apply in the 31 case of a corporation that, on the date of the filing of the 32 proceeding, has shares which are any of the following: 33 a. Listed on the New York stock exchange, the American stock 34 exchange, or on any exchange owned or operated by the NASDAQ 35 -48- LSB 5446HV (2) 84 da/nh 48/ 70

H.F. 2426 stock market, l.l.c., or listed or quoted on a system owned or 1 operated by the national association of securities dealers, 2 inc. 3 b. Not so listed or quoted, but are held by at least three 4 hundred shareholders and the shares outstanding have a market 5 value of at least twenty million dollars, exclusive of the 6 value of such shares held by the corporation’s subsidiaries, 7 senior executives, directors, and beneficial shareholders 8 owning more than ten percent of such shares. 9 3. As used in this section, “beneficial shareholder” has the 10 meaning specified in section 490.1301, subsection 2. 11 Sec. 71. Section 490.1431, subsection 4, Code 2011, is 12 amended to read as follows: 13 4. Within ten days of the commencement of a proceeding 14 under section 490.1430, subsection 2 , to dissolve a corporation 15 that has no shares listed on a national securities exchange or 16 regularly traded in a market maintained by one or more members 17 of a national securities exchange under section 490.1430, 18 subsection 1, paragraph “b” , the corporation must send to all 19 shareholders, other than the petitioner, a notice stating that 20 the shareholders are entitled to avoid the dissolution of the 21 corporation by electing to purchase the petitioner’s shares 22 under section 490.1434 , and a copy of section 490.1434 . 23 Sec. 72. Section 490.1432, subsections 1 and 5, Code 2011, 24 are amended to read as follows: 25 1. A Unless an election to purchase has been filed under 26 section 490.1434, a court in a judicial proceeding brought to 27 dissolve a corporation may appoint one or more receivers to 28 wind up and liquidate, or one or more custodians to manage, 29 the business and affairs of the corporation. The court shall 30 hold a hearing, after notifying all parties to the proceeding 31 and any interested persons designated by the court, before 32 appointing a receiver or custodian. The court appointing a 33 receiver or custodian has exclusive jurisdiction over the 34 corporation and all its property wherever located. 35 -49- LSB 5446HV (2) 84 da/nh 49/ 70

H.F. 2426 5. The court from time to time during the receivership 1 or custodianship may order compensation paid and expense 2 disbursements or reimbursements made expenses paid or 3 reimbursed to the receiver or custodian and the receiver’s 4 or custodian’s counsel from the assets of the corporation or 5 proceeds from the sale of the assets. 6 Sec. 73. Section 490.1434, subsections 1, 2, 4, and 5, Code 7 2011, are amended to read as follows: 8 1. In a proceeding under section 490.1430, subsection 2 1, 9 paragraph “b” , to dissolve a corporation that has no shares 10 listed on a national securities exchange or regularly traded 11 in a market maintained by one or more members of a national or 12 affiliated securities association , the corporation may elect 13 or, if it fails to elect, one or more shareholders may elect to 14 purchase all shares owned by the petitioning shareholder at the 15 fair value of the shares. An election pursuant to this section 16 shall be irrevocable unless the court determines that it is 17 equitable to set aside or modify the election. 18 2. An election to purchase pursuant to this section may 19 be filed with the court at any time within ninety days after 20 the filing of the petition under section 490.1430, subsection 21 2 1, paragraph “b” , or at such later time as the court in its 22 discretion may allow. If the election to purchase is filed 23 by one or more shareholders, the corporation shall, within 24 ten days thereafter, give written notice to all shareholders, 25 other than the petitioner. The notice must state the name 26 and number of shares owned by the petitioner and the name and 27 number of shares owned by each electing shareholder and must 28 advise the recipients of their right to join the election to 29 purchase shares in accordance with this section . Shareholders 30 who wish to participate must file notice of their intention 31 to join in the purchase no later than thirty days after 32 the effective date of the notice to them. All shareholders 33 who have filed an election or notice of their intention to 34 participate in the election to purchase thereby become parties 35 -50- LSB 5446HV (2) 84 da/nh 50/ 70

H.F. 2426 to the proceeding and shall participate in the purchase in 1 proportion to their ownership of shares as of the date the 2 first election was filed, unless they otherwise agree or the 3 court otherwise directs. After an election has been filed by 4 the corporation or one or more shareholders, the proceeding 5 under section 490.1430, subsection 2 1, paragraph “b” , shall 6 not be discontinued or settled, nor shall the petitioning 7 shareholder sell or otherwise dispose of the shareholder’s 8 shares, unless the court determines that it would be equitable 9 to the corporation and the shareholders, other than the 10 petitioner, to permit such discontinuance, settlement, sale, or 11 other disposition. 12 4. If the parties are unable to reach an agreement as 13 provided for in subsection 3 , the court, upon application of 14 any party, shall stay the section 490.1430, subsection 2 1, 15 paragraph “b” , proceedings and determine the fair value of the 16 petitioner’s shares as of the day before the date on which the 17 petition under section 490.1430, subsection 2 1, paragraph 18 “b” , was filed or as of such other date as the court deems 19 appropriate under the circumstances. 20 5. Upon determining the fair value of the shares, the 21 court shall enter an order directing the purchase upon such 22 terms and conditions as the court deems appropriate, which may 23 include payment of the purchase price in installments, where 24 necessary in the interests of equity, provision for security 25 to assure payment of the purchase price and any additional 26 costs, fees, and expenses as may have been awarded, and, if 27 the shares are to be purchased by shareholders, the allocation 28 of shares among them. In allocating petitioner’s shares among 29 holders of different classes of shares, the court shall attempt 30 to preserve the existing distribution of voting rights among 31 holders of different classes insofar as practicable and may 32 direct that holders of a specific class or classes shall not 33 participate in the purchase. Interest may be allowed at the 34 rate and from the date determined by the court to be equitable, 35 -51- LSB 5446HV (2) 84 da/nh 51/ 70

H.F. 2426 but if the court finds that the refusal of the petitioning 1 shareholder to accept an offer of payment was arbitrary or 2 otherwise not in good faith, no interest shall be allowed. If 3 the court finds that the petitioning shareholder has probable 4 grounds for relief under section 490.1430, subsection 2 1 , 5 paragraph “b” or “d” “b” , subparagraph (2) or (4) , it may award 6 to the petitioning shareholder reasonable fees and expenses of 7 counsel and of any experts employed by the shareholder. 8 Sec. 74. Section 490.1508, subsection 2, Code 2011, is 9 amended to read as follows: 10 2. If a registered agent changes the street address of the 11 a registered agent’s business office changes , the registered 12 agent may change the street address of the registered office 13 of any foreign corporation for which the agent person is the 14 registered agent by notifying the corporation in writing of 15 the change , and signing , either manually or in facsimile, and 16 delivering to the secretary of state for filing a statement of 17 change that complies with the requirements of subsection 1 and 18 recites that the corporation has been notified of the change. 19 Sec. 75. NEW SECTION . 490.1523 Transfer of authority. 20 1. A foreign business corporation authorized to transact 21 business in this state that converts to a foreign nonprofit 22 corporation or to any form of foreign unincorporated entity 23 that is required to obtain a certificate of authority or make 24 a similar type of filing with the secretary of state if it 25 transacts business in this state shall file with the secretary 26 of state an application for transfer of authority signed by 27 any officer or other duly authorized representative. The 28 application shall set forth all of the following: 29 a. The name of the corporation. 30 b. The type of unincorporated entity to which it has been 31 converted and the jurisdiction whose laws govern its internal 32 affairs. 33 c. Any other information that would be required in a filing 34 under the laws of this state by an unincorporated entity of the 35 -52- LSB 5446HV (2) 84 da/nh 52/ 70

H.F. 2426 type the corporation has become seeking authority to transact 1 business in this state. 2 2. The application for transfer of authority shall be 3 delivered to the secretary of state for filing and shall take 4 effect at the effective time provided in section 490.123. 5 3. Upon the effectiveness of the application for transfer of 6 authority, the authority of the corporation under this chapter 7 to transact business in this state shall be transferred without 8 interruption to the converted entity which shall thereafter 9 hold such authority subject to the provisions of the laws of 10 this state applicable to that type of unincorporated entity. 11 Sec. 76. Section 490.1601, subsection 4, Code 2011, is 12 amended to read as follows: 13 4. A corporation shall maintain its records in written 14 the form of a document, including an electronic record, or in 15 another form capable of conversion into written paper form 16 within a reasonable time. 17 Sec. 77. Section 490.1602, Code 2011, is amended to read as 18 follows: 19 490.1602 Inspection of records by shareholders. 20 1. A shareholder of a corporation is entitled to 21 inspect and copy, during regular business hours at the 22 corporation’s principal office, any of the records of the 23 corporation described in section 490.1601, subsection 5 , if the 24 shareholder gives the corporation signed written notice of the 25 shareholder’s demand at least five business days before the 26 date on which the shareholder wishes to inspect and copy. 27 2. For any meeting of shareholders for which the record date 28 for determining shareholders entitled to vote at the meeting 29 is different than the record date for notice of the meeting, 30 any person who becomes a shareholder subsequent to the record 31 date for notice of the meeting and is entitled to vote at 32 the meeting is entitled to obtain from the corporation upon 33 request the notice and any other information provided by the 34 corporation to shareholders in connection with the meeting, 35 -53- LSB 5446HV (2) 84 da/nh 53/ 70

H.F. 2426 unless the corporation has made such information generally 1 available to shareholders by posting it on its website or by 2 other generally recognized means. Failure of a corporation to 3 provide such information does not affect the validity of action 4 taken at the meeting. 5 3. A shareholder of a corporation is entitled to inspect and 6 copy, during regular business hours at a reasonable location 7 specified by the corporation, any of the following records 8 of the corporation if the shareholder meets the requirements 9 of subsection 3 4 and gives the corporation a signed written 10 notice of the shareholder’s demand at least five business days 11 before the date on which the shareholder wishes to inspect and 12 copy any of the following: 13 a. Excerpts from minutes of any meeting of the board of 14 directors , records of any action of or a committee of the board 15 of directors while acting in place of the board of directors 16 on behalf of the corporation, minutes of any meeting of the 17 shareholders, and records of action taken by the shareholders , 18 or board of directors , or a committee of the board without 19 a meeting, to the extent not subject to inspection under 20 subsection 1 of this section . 21 b. Accounting records of the corporation. 22 c. The record of shareholders. 23 3. 4. A shareholder may inspect and copy the records 24 described in subsection 2 3 only if all of the following apply : 25 a. The shareholder’s demand is made in good faith and for 26 a proper purpose. 27 b. The shareholder describes with reasonable particularity 28 the shareholder’s purpose and the records the shareholder 29 desires to inspect. 30 c. The records are directly connected with the shareholder’s 31 purpose. 32 4. 5. The right of inspection granted by this section shall 33 not be abolished or limited by a corporation’s articles of 34 incorporation or bylaws. 35 -54- LSB 5446HV (2) 84 da/nh 54/ 70

H.F. 2426 5. 6. This section does not affect either any of the 1 following: 2 a. The right of a shareholder to inspect records under 3 section 490.720 or, if the shareholder is in litigation with 4 the corporation, to the same extent as any other litigant. 5 b. The power of a court, independently of this chapter , to 6 compel the production of corporate records for examination. 7 7. For purposes of this section, “shareholder” includes a 8 beneficial owner whose shares are held in a voting trust or by 9 a nominee on the shareholder’s behalf. 10 Sec. 78. Section 490.1603, subsection 3, Code 2011, is 11 amended to read as follows: 12 3. The corporation may comply at its expense with a 13 shareholder’s demand to inspect the record of shareholders 14 under section 490.1602 , subsection 2 , paragraph “c” , by 15 providing the shareholder with a list of shareholders that was 16 compiled no earlier than the date of the shareholder’s demand. 17 Sec. 79. Section 490.1604, subsection 2, Code 2011, is 18 amended to read as follows: 19 2. If a corporation does not within a reasonable time 20 allow a shareholder to inspect and copy any other records, the 21 shareholder who complies with section 490.1602 , subsections 2 22 and 3 may apply to the district court in the county where the 23 corporation’s principal office or, if none in this state, its 24 registered office is located for an order to permit inspection 25 and copying of the records demanded. The court shall dispose 26 of an application under this subsection on an expedited basis. 27 Sec. 80. Section 490.1606, subsection 1, Code 2011, is 28 amended to read as follows: 29 1. Whenever notice is would otherwise be required to be 30 given under any provision of this chapter to any a shareholder, 31 such notice shall need not be required to be given if either 32 any of the following applies apply : 33 a. Notice Notices to the shareholders of two consecutive 34 annual meetings, and all notices of meetings during the period 35 -55- LSB 5446HV (2) 84 da/nh 55/ 70

H.F. 2426 between such two consecutive annual meetings, have been sent to 1 such shareholder at such shareholder’s address as shown on the 2 records of the corporation and have been returned undeliverable 3 or could not be delivered . 4 b. All, but not less than two, payments of dividends on 5 securities during a twelve-month period, or two consecutive 6 payments of dividends on securities during a period of more 7 than twelve months, have been sent to such shareholder at 8 such shareholder’s address as shown on the records of the 9 corporation and have been returned undeliverable or could not 10 be delivered . 11 Sec. 81. Section 490.1620, Code 2011, is amended by striking 12 the section and inserting in lieu thereof the following: 13 490.1620 Financial statements for shareholders. 14 1. A corporation shall deliver to its shareholders 15 annual financial statements, which may be consolidated or 16 combined statements of the corporation and one or more of its 17 subsidiaries, as appropriate, that include a balance sheet as 18 of the end of the fiscal year, an income statement for that 19 year, and a statement of changes in shareholders’ equity for 20 the year unless that information appears elsewhere in the 21 financial statements. If financial statements are prepared for 22 the corporation on the basis of generally accepted accounting 23 principles, the annual financial statements must also be 24 prepared on that basis. 25 2. If the annual financial statements are reported upon by a 26 public accountant, the report must accompany them. If not, the 27 statements must be accompanied by a statement of the president 28 or the person responsible for the corporation’s accounting 29 records which does all of the following: 30 a. States such person’s reasonable belief whether the 31 statements were prepared on the basis of generally accepted 32 accounting principles and, if not, describing the basis of 33 preparation. 34 b. Describes any respects in which the statements were 35 -56- LSB 5446HV (2) 84 da/nh 56/ 70

H.F. 2426 not prepared on a basis of accounting consistent with the 1 statements prepared for the preceding year. 2 3. Within one hundred twenty days after the close of each 3 fiscal year, the corporation shall send the annual financial 4 statements to each shareholder. Thereafter, on written 5 request from a shareholder to whom the statements were not 6 sent, the corporation shall send the shareholder the latest 7 financial statements. A public corporation may fulfill its 8 responsibilities under this section by delivering the specified 9 financial statements, or otherwise making them available, in 10 any manner permitted by the applicable rules and regulations of 11 the United States securities and exchange commission. 12 Sec. 82. Section 490.1703, Code 2011, is amended by adding 13 the following new subsection: 14 NEW SUBSECTION . 3. In the event that any provision of this 15 chapter is deemed to modify, limit, or supersede the federal 16 Electronic Signatures in Global and National Commerce Act, 15 17 U.S.C. § 7001 et seq., the provisions of this chapter shall 18 control to the maximum extent permitted by section 102(a)(2) of 19 that federal Act. 20 Sec. 83. REPEAL. Section 490.832, Code 2011, is repealed. 21 Sec. 84. AMENDMENTS PREVAIL OVER REPEAL. The section of 22 this division of this Act amending section 490.805, subsection 23 2, Code Supplement 2011, shall prevail over the repeal of the 24 enactment of and amendment to that provision by 2011 Iowa Acts, 25 chapter 2, section 4, pursuant to 2011 Iowa Acts, chapter 2, 26 section 9, subsection 1. 27 Sec. 85. EFFECTIVE DATE. This division of this Act takes 28 effect January 1, 2013. 29 DIVISION II 30 FUTURE PROVISIONS 31 Sec. 86. Section 490.140, subsection 21A, Code Supplement 32 2011, is amended by striking the subsection and inserting in 33 lieu thereof the following: 34 21A. “Public corporation” means a corporation that has 35 -57- LSB 5446HV (2) 84 da/nh 57/ 70

H.F. 2426 shares listed on a national securities exchange or regularly 1 traded in a market maintained by one or more members of a 2 national securities association. 3 Sec. 87. Section 490.732, subsection 4, Code 2011, is 4 amended by striking the subsection and inserting in lieu 5 thereof the following: 6 4. An agreement authorized by this section shall cease to be 7 effective when the corporation becomes a public corporation. 8 If the agreement ceases to be effective for any reason, the 9 board of directors may, if the agreement is contained or 10 referred to in the corporation’s articles of incorporation or 11 bylaws, adopt an amendment to the articles of incorporation or 12 bylaws, without shareholder action, to delete the agreement and 13 any references to it. 14 Sec. 88. EFFECTIVE DATE. This division of this Act takes 15 effect upon the repeal of 2011 Iowa Acts, chapter 2, as 16 provided in section 9, subsection 1, of that Act. 17 EXPLANATION 18 BACKGROUND. The “Iowa Business Corporation Act” (Code 19 chapter 490), a model Act adopted by the American Bar 20 Association, governs the requirements for the creation, 21 organization, and operation of corporations and the 22 relationship between shareholders, directors, and officers of 23 the corporation. Generally, the Act’s provisions establish 24 default requirements and procedures which may be modified by a 25 corporation’s articles of incorporation or bylaws. 26 PUBLIC CORPORATIONS. A public corporation is a corporation 27 that has a class of voting stock that is listed on a national 28 securities exchange or held of record by more than 2,000 29 shareholders (Code section 490.140). The bill amends the 30 definition to eliminate the reference to a class of shares 31 or number of shareholders. It provides that a corporation 32 is public if traded in a market maintained by a member of 33 the national securities association. The bill also amends 34 a provision regulating shareholder agreements that govern a 35 -58- LSB 5446HV (2) 84 da/nh 58/ 70

H.F. 2426 corporation’s corporate affairs including by eliminating or 1 restricting the powers of its board of directors (Code section 2 490.732). Specifically, the bill provides that a shareholder 3 agreement is automatically terminated when the corporation 4 becomes public. These provisions take effect January 1, 2015. 5 NOTICES, DOCUMENTS, AND COMMUNICATION. A notice must be 6 in writing unless oral notice is reasonable (Code section 7 490.141). The bill requires that notices be in English. 8 It provides for the electronic transmission and receipt 9 and acknowledgment of information. The bill replaces the 10 requirement that documents be executed with a requirement 11 that they be signed, including documents associated with 12 the adoption or abandonment of articles of merger or share 13 exchange (Code sections 490.1106 and 490.1108). The bill also 14 authorizes a corporation to keep its records in an electronic 15 form so long as it can be converted into a paper form (Code 16 section 490.1601). The corporation is required to deliver a 17 written notice, report, or statement to shareholders who share 18 a common address, complies with delivery requirements, by 19 delivering to that address, unless a shareholder makes a timely 20 objection (Code section 490.144). 21 QUALIFIED DIRECTORS. In a number of circumstances a 22 director must be considered “disinterested” when taking an 23 action affecting the welfare of the corporation. The bill 24 eliminates the term “disinterested” and replaces it with 25 “qualified” (Code section 490.143; see Code sections 490.853 26 and 490.855). The bill requires a director to be qualified 27 under different circumstances which may involve board action 28 or court proceedings. For purposes of dismissing a derivative 29 proceeding by a court based on a good-faith determination of 30 directors (Code section 490.744), directors are qualified if 31 they do not have a material interest in the outcome of the 32 proceeding or a material relationship with a person who has 33 such an interest. For purposes of advancing expenses to a 34 board member before the disposition of a case (Code section 35 -59- LSB 5446HV (2) 84 da/nh 59/ 70

H.F. 2426 490.853) or later indemnifying a director (Code section 1 490.855), the authorization must be made by directors who are 2 qualified because they are not parties to the proceeding, do 3 not have a conflicting interest in the related transaction, 4 and do not have a material relationship with a director 5 who is a party or has a conflicting interest. For purposes 6 of voting to excuse a director from a conflicting interest 7 transaction (Code section 490.862), the vote must be taken 8 by directors who are qualified because they do not have a 9 conflict or have a material relationship with the director who 10 does have a conflict. For purposes of determining whether a 11 director may take advantage of a business opportunity because 12 other directors disclaimed the corporation’s interest in the 13 opportunity (Code section 490.870), the directors are qualified 14 if the business opportunity was a conflicting interest 15 transaction for those directors. 16 DIRECTORS AND OFFICERS —— FUNCTIONS AND DUTIES. Generally, 17 a corporation must have a board of directors, unless dispensed 18 with pursuant to a shareholder agreement (Code sections 490.801 19 and 490.732). The bill provides that the business affairs of a 20 corporation may be subject to the directors’ oversight rather 21 than direct management. It authorizes a corporate officer to 22 designate recipients of compensation awards (e.g., rights, 23 options, or warrants associated with shares) (Code section 24 490.624). The bill substitutes the term “functions” in lieu 25 of “duties” in some places when referring to an officer’s 26 obligations (Code section 490.841). 27 SHAREHOLDER MEETINGS —— WRITTEN CONSENT IN LIEU OF HOLDING 28 MEETINGS. Shareholders are allowed to act by written consent 29 without holding a meeting if the action is taken by unanimous 30 written consent (Code section 490.704). The bill provides 31 that a corporation’s articles of incorporation may provide for 32 shareholder action by less than unanimous written consent, 33 if a written consent is signed by shareholders having the 34 minimum number of votes that would be required to authorize the 35 -60- LSB 5446HV (2) 84 da/nh 60/ 70

H.F. 2426 action at a shareholder meeting assuming that all shareholders 1 entitled to vote were present. It creates a corresponding 2 exception to the requirement that a corporation must hold at 3 least one annual shareholder meeting, presumably to elect 4 directors (Code sections 490.701 and 490.803), by providing 5 that the annual meeting is not necessary when directors are 6 elected by the written consent of shareholders. The bill 7 also provides a number of procedures for providing notice to 8 shareholders and tabulating written consents delivered to the 9 corporation. 10 SHAREHOLDER MEETING —— RECORD DATE. A corporation 11 establishes procedures for providing notice to and voting by 12 shareholders at a meeting (or by written consent) according to 13 a record date. The record date determines both shareholders 14 who are entitled to notice of the meeting and to vote at 15 the meeting. The catch-all provision states that the record 16 date is the date before notice is mailed to a voting group or 17 shareholders (Code section 490.705), although a record date 18 may be established by court order (Code section 490.703) or 19 according to the corporation’s bylaws or board of directors 20 (Code section 490.707). The bill provides that there may be 21 more than one record date. According to the bill, the record 22 date for a shareholder meeting may be established by the 23 corporation’s bylaws or by the board unless the board provides 24 a different date to determine shareholders entitled to vote at 25 the meeting (Code section 490.707). The bill provides that 26 the corporation may be required to provide a list of names of 27 shareholders entitled to vote at the meeting, to be available 28 for inspection (Code section 490.720). The record date is 29 also used to determine when appraisal rights of shareholders 30 apply (Code section 490.1302). The bill requires shareholders’ 31 appraisal rights to be triggered on the record date by tying 32 it only to when a shareholder is entitled to receive notice 33 and not when entitled to vote on the matter. The bill also 34 provides that the board may fix a record date for determining 35 -61- LSB 5446HV (2) 84 da/nh 61/ 70

H.F. 2426 when a shareholder is entitled to vote that is different than 1 the record date for determining when a shareholder is entitled 2 to notice of the meeting. A person who becomes a shareholder 3 after the record date for the notice, and is otherwise entitled 4 to vote at the meeting, may obtain the notice and other 5 information provided to the shareholders in preparation for the 6 meeting (Code sections 490.1602 and 490.1606). 7 SHAREHOLDER MEETINGS —— REMOTE PARTICIPATION. The bill 8 authorizes shareholders to participate in a meeting of 9 shareholders by means of remote communication to the extent 10 approved by the board (Code section 490.709). 11 ELECTIONS AND VOTING —— CUMULATIVE VOTING. Generally, 12 directors are elected by a plurality of votes cast unless the 13 corporation’s articles of incorporation provide for cumulative 14 voting allowing shareholders to cast all their votes for a 15 single candidate (Code section 490.728). The bill provides 16 that shareholders otherwise entitled to vote cumulatively 17 cannot so vote unless the meeting notice authorizes it, or a 18 shareholder who has that right gives notice to the corporation 19 before the meeting. 20 LEGAL PROCEEDING —— DERIVATIVE ACTIONS. As a result of a 21 derivative action, the court may order a corporation to pay 22 the plaintiff’s expenses (defined in Code section 490.140) 23 if the court determines that the proceeding has resulted in 24 substantial benefit to the corporation and alternatively may 25 order the plaintiff to pay the defendant’s expenses if it 26 finds the proceeding was commenced without reasonable cause 27 or for an improper purpose (Code section 490.746). The bill 28 eliminates the court’s statutory authority to order the payment 29 of attorney fees. 30 PROCEEDINGS —— COURT APPOINTMENT OF A CUSTODIAN OR RECEIVER. 31 The bill provides that a shareholder may obtain relief from a 32 court, due to an injury suffered by the corporation due to the 33 action or inaction of the board (through deadlock or fraud) or 34 because the corporation is insolvent (Code section 490.748). 35 -62- LSB 5446HV (2) 84 da/nh 62/ 70

H.F. 2426 The custodian or receiver appointed by the court has all 1 authority to manage the corporation as provided by court order. 2 ELECTIONS AND VOTING. The bill provides for the directors’ 3 terms of office including when the board’s terms are staggered 4 (Code sections 490.806 and 490.806A). The bill provides that a 5 corporation’s articles of incorporation may govern situations 6 in which a nominated director fails to receive the requisite 7 votes for election (Code sections 490.805, 490.806, 490.806A, 8 and 490.807). The bill also provides that in the case of a 9 director’s vacancy, where a director was elected by a voting 10 group of shareholders, and the vacancy is to be filled by the 11 remaining directors, only directors elected by that voting 12 group may vote to fill the vacancy (Code section 490.810). 13 RIGHT OF SHAREHOLDERS TO VOTE. The bill provides that a 14 corporation may agree to submit a matter to a vote of its 15 shareholders even if the board determines not to recommend 16 the matter (Code section 490.826). It expressly authorizes 17 such vote on an amendment to the corporation’s articles of 18 incorporation (Code section 490.1003), an action on a plan of 19 merger or share exchange (Code section 490.1104), the approval 20 of a plan of merger or share exchange (Code section 490.1106), 21 and the dissolution of the corporation (Code section 490.1402). 22 DIRECTORS AND OFFICERS —— STANDARDS OF CONDUCT. A director 23 must perform all required duties in good faith and in a 24 manner that the director reasonably believes to be in the 25 corporation’s best interest (Code section 490.830) and an 26 officer has the same duty to act in good faith (Code section 27 490.842). The bill expressly obligates a director to disclose 28 relevant material regarding the corporation to the board. It 29 also provides that an officer has an obligation to inform a 30 superior officer or the board (or a committee of the board) 31 about the affairs of the corporation or a probable material 32 violation of law or a material breach of duty involving an 33 officer or other person connected to the corporation. 34 PROCEEDINGS —— ADVANCING FUNDS TO A DIRECTOR OR INDEMNIFYING 35 -63- LSB 5446HV (2) 84 da/nh 63/ 70

H.F. 2426 A DIRECTOR FOR EXPENSES. A corporation may advance funds to a 1 director or indemnify the director for legal expenses incurred 2 in the course of a director’s defense of an act or omission 3 (Code sections 490.850, 490.853, 490.855, and 490.858). The 4 bill provides that in the case of advances, writings required 5 to be submitted to the board (e.g., an affirmation that the 6 director acted in compliance with applicable standards of 7 conduct or a promise to repay advanced funds) must be in 8 writing (Code section 490.853). It also provides that when 9 the board authorizes an advance or indemnification, the voting 10 directors must be qualified rather than disinterested (Code 11 sections 490.853 and 490.854). Finally, the bill provides that 12 the defending director’s right to an advance or indemnification 13 in effect prior to the director’s act or omission cannot be 14 eliminated or impaired after the conduct occurred, unless that 15 right was expressly qualified in the authorization (i.e., in 16 the articles of incorporation, bylaws, or board’s resolution) 17 (Code section 490.858). 18 DIRECTOR’S CONFLICT OF INTEREST —— GENERAL. Generally, a 19 director is prohibited from taking action on a matter which 20 would be detrimental to the interests of the corporation. The 21 bill replaces the current provision addressing a director’s 22 conflict of interest (Code section 490.832) with four 23 provisions (Code sections 490.860 through 490.863) that 24 govern conflicting interest transactions. In order to be so 25 classified, a transaction must be effectuated or proposed to 26 be effectuated by the corporation or an entity controlled 27 by the corporation. In addition, the director must be in a 28 special position to take personal advantage of the transaction, 29 as a party to the transaction or by virtue of the fact that 30 the director, or a related person, has a material financial 31 interest in the transaction. The bill provides that a director 32 is related to a person if the person is a close family member, 33 an individual who lives in the same home, or another entity 34 controlled by the director. The bill provides that in order 35 -64- LSB 5446HV (2) 84 da/nh 64/ 70

H.F. 2426 for a court to invalidate a transaction or otherwise provide a 1 legal or equitable remedy, such conduct must fall within the 2 statutory parameters (Code section 490.861). The definition 3 of “director’s conflicting interest transaction” requires 4 knowledge of the transaction, except where the director is a 5 party. In addition, the transaction must occur at a relevant 6 time, meaning the time at the which the director’s action is 7 required (e.g., a board vote) or when the director’s action 8 somehow consummates the transaction (Code section 490.862). 9 DIRECTOR’S CONFLICT OF INTEREST —— EXCUSED TRANSACTIONS 10 (SAFE HARBOR EXCEPTION). The bill excuses a director’s 11 conduct, and consequently validates the transaction, even if 12 there exists a conflicting interest transaction (Code section 13 490.861), sometimes referred to as “safe harbor”, in certain 14 circumstances. First, it may be excused if a majority of 15 qualified directors (but not less than two) vote to approve 16 the transaction or the action is approved by an authorized 17 committee in which all members are qualified directors (Code 18 section 490.862). The director who has the conflict must 19 disclose information regarding the conflict to the extent that 20 the information is not required to be protected under law or 21 some ethical rule of confidentiality (Code section 490.862). 22 The transaction is excused if the shareholders later ratify 23 the transaction according to specific procedural requirements 24 (Code section 490.863) after disclosure (but no provision for 25 limited disclosure). Finally, the transaction is excused if 26 the transaction is fair to the corporation, although neither 27 directors’ nor shareholders’ action was taken. The bill 28 provides that in any legal action attacking a director, the 29 plaintiff has the burden of proof (Code section 490.831). 30 DIRECTOR’S BUSINESS OPPORTUNITY (SAFE HARBOR EXCEPTION). 31 An analogous situation to a conflicting interest transaction 32 is when a director seeks a corporation’s permission prior to 33 the director’s action. The bill allows qualified directors 34 or shareholders to disclaim the corporation’s interest before 35 -65- LSB 5446HV (2) 84 da/nh 65/ 70

H.F. 2426 the director proceeds in taking advantage of the business 1 opportunity (see Code section 490.870). Instead of making a 2 “required disclosure” as provided for conflicts (Code sections 3 490.860 and 490.862), the director must provide the corporation 4 material facts concerning the business opportunity then 5 known. The qualified directors or shareholders disclaiming 6 the corporation’s interest must be done in the same manner 7 as if the matter concerned a director’s conflicting interest 8 transaction (Code sections 490.862 and 490.863). However, a 9 director’s decision not to use the procedures for disclaimer 10 does not create a negative inference or alter a burden of 11 proof in a subsequent action alleging an improper taking of a 12 corporate opportunity. 13 SHAREHOLDER APPRAISAL RIGHTS —— GENERAL RULE. A number of 14 corporate actions may trigger the right of a shareholder to 15 obtain an appraisal of the corporation and obtain fair payment 16 of shares, including mergers, share exchanges, disposition 17 of assets, amendments to the articles of incorporation, and 18 conversion of the corporation to another entity (Code section 19 490.1302). A corporation must pay shareholders the amount the 20 corporation estimates to be the fair value of the shares plus 21 interest (Code section 490.1324). 22 SHAREHOLDER APPRAISAL RIGHTS —— LIMITATION ON THE GENERAL 23 RULE (MARKET-OUT EXCEPTION). The general rule is limited in 24 the case where there are at least 2,000 shareholders and the 25 market value of the shares equals at least $20 million (the 26 so-called “market-out” exception), presumably because the true 27 value for the shares can be obtained on the market. However, 28 the amount does not include shares held by the corporation’s 29 subsidiaries, senior executives, directors, and beneficial 30 shareholders owning more than 10 percent of the shares. 31 “Beneficial ownership” refers to the control of shares by a 32 person who does not own them including the power to vote, or to 33 direct the voting of the shares (Code section 490.1302). 34 SHAREHOLDER APPRAISAL RIGHTS —— NEW MARKET-OUT EXCEPTIONS. 35 -66- LSB 5446HV (2) 84 da/nh 66/ 70

H.F. 2426 The bill provides two new categories under the market-out 1 exception: (1) when the shares are classified as a covered 2 security regulated by the United States securities exchange 3 commission under the federal Securities Act of 1933, and (2) 4 when the shares are issued by an open-end management investment 5 company registered by the securities and exchange commission 6 under the federal Investment Company Act of 1940 (Code section 7 490.1302). 8 SHAREHOLDER APPRAISAL RIGHTS —— LIMITATIONS ON THE 9 MARKET-OUT EXCEPTIONS. The bill eliminates a provision 10 which allows shareholder appraisal rights notwithstanding 11 the market-out exception in cases where the corporation’s 12 shares or assets are being acquired or converted, whether by 13 merger, share exchange, or otherwise (Code section 490.1302). 14 Instead, the bill allows such rights in cases where the 15 corporate action involves an interested transaction, which is a 16 corporate action, other than a merger, involving an interested 17 person in which the shares or assets of the corporation are 18 being acquired or converted. A person is “interested” if 19 the person is a beneficial owner of 20 percent or more of 20 the corporation’s voting shares, controlled the appointment 21 or election of 25 percent or more of the directors, or was a 22 senior executive or director of the corporation entitled to 23 receive certain financial benefits (Code section 490.1301). 24 SHAREHOLDER APPRAISAL RIGHTS —— NOTICE. A corporation must 25 notify shareholders of their appraisal rights when a corporate 26 action is submitted to a vote at a shareholder meeting (Code 27 section 490.1320). The bill provides for notice when approval 28 is performed by written consent in lieu of a meeting (Code 29 section 490.704). A shareholder must provide notice of an 30 intent to exercise appraisal rights before the corporate action 31 (vote) is taken (Code section 490.1321). In order to remain 32 eligible to exercise those rights, the shareholder must not 33 vote on the matter. A shareholder who plans on asserting 34 appraisal rights cannot likewise exercise rights after signing 35 -67- LSB 5446HV (2) 84 da/nh 67/ 70

H.F. 2426 a consent in favor of the proposal (Code section 490.1321). 1 If a corporate action requiring appraisal rights becomes 2 effective, the corporation must deliver a written appraisal 3 notice and form (Code section 490.1322). The bill provides for 4 the contents of the notice, including information regarding 5 an announcement to shareholders made prior to the date the 6 corporate action became effective and requires a shareholder 7 asserting appraisal rights to certify beneficial ownership. 8 The bill provides for perfecting shareholder appraisal rights 9 by signing and returning the form (Code section 490.1323). The 10 bill provides an estimated (prepaid) payment to shareholders 11 exercising their appraisal rights after the form’s due date 12 (Code section 490.1324). The bill provides for a financial 13 statement required to accompany the payment (Code section 14 490.1620), and allows the corporation to substitute another 15 document in lieu of a financial statement if it is unavailable. 16 SHAREHOLDER APPRAISAL RIGHTS —— COURT COSTS. As part of 17 a shareholder appraisal rights proceeding, the court must 18 determine the court costs of the proceeding, and may assess 19 such costs against the corporation or shareholders demanding 20 appraisal (Code section 490.1331). The bill amends the 21 provision to eliminate a court’s discretion to assess fees 22 associated with attorneys and experts. 23 SHAREHOLDER RIGHTS —— LIMITATION ON OTHER REMEDIES. The 24 bill provides that a corporate action triggering a right to 25 appraisal (Code section 490.1302) cannot be enjoined, set 26 aside, or rescinded by a shareholder after the shareholder 27 has approved the corporate action (Code section 490.1340). 28 However, this limitation does not apply to four situations: 29 (1) where the process of approving the corporate action was 30 flawed (e.g., unauthorized in the corporation’s articles of 31 incorporation), (2) the corporate action was procured by fraud, 32 (3) the corporate action was an interested transaction in the 33 same manner as a director’s conflicting interest transaction 34 (Code section 490.860), or (4) the transaction was approved, 35 -68- LSB 5446HV (2) 84 da/nh 68/ 70

H.F. 2426 but without a meeting (Code section 490.704) and by less 1 than unanimous consent and the challenge is brought by a 2 nonconsenting director. 3 JUDICIAL DISSOLUTION —— LIMITATION ON ACTIONS. A court may 4 dissolve a corporation in a proceeding brought by shareholders 5 on a number of grounds, including the directors are deadlocked, 6 the directors are acting fraudulently, the shareholders 7 are deadlocked, or there is waste of corporate assets (Code 8 section 490.1430). The bill adds a new ground, that the 9 corporation has abandoned its business and failed to liquidate 10 and distribute its assets and dissolve. The bill also 11 provides that the right of a shareholder to bring the action 12 does not apply to a corporation listed on the New York stock 13 exchange, the American stock exchange, an exchange owned or 14 controlled by NASDAQ, or listed on a system owned or controlled 15 by the national association of security dealers (NASD). 16 Alternatively, it does not apply to a corporation having 300 17 or more shareholders holding shares valued at $20 million 18 or more, again excluding shares held by the corporation’s 19 subsidiaries, senior executives, directors, and beneficial 20 shareholders owning more than 10 percent of the shares (Code 21 section 490.1302). 22 FOREIGN CORPORATIONS —— TRANSFER OF AUTHORITY. The bill 23 provides for the conversion of a foreign business corporation 24 authorized to do business in this state into a domestic 25 corporation by applying to the secretary of state (Code section 26 490.1523). 27 REPLACEMENT OF FUTURE REPEALED PROVISIONS. In 2011, the 28 general assembly enacted SF 325 (2011 Iowa Acts, chapter 29 2), carving out a special provision which provided for the 30 staggered terms of directors of public corporations and 31 providing for the repeal of the Act on December 31, 2014. This 32 bill amends one of those provisions, Code section 490.805, 33 subsection 2, and consequently the bill provides that the 34 provision of this Act amending that Code section prevails over 35 -69- LSB 5446HV (2) 84 da/nh 69/ 70