- Consolidated Laws - Business Corporation
ARTICLE 6
SHAREHOLDERS
Section 601. By-laws.
602. Meetings of shareholders.
603. Special meeting for election of directors.
604. Fixing record date.
605. Notice of meetings of shareholders.
606. Waivers of notice.
607. List of shareholders at meetings.
608. Quorum of shareholders.
609. Proxies.
610. Selection of inspectors at shareholders` meetings.
611. Duties of inspectors at shareholders` meetings.
612. Qualification of voters.
613. Limitations on right to vote.
614. Vote of shareholders.
615. Written consent of shareholders, subscribers or
incorporators without a meeting.
616. Greater requirement as to quorum and vote of shareholders.
617. Voting by class or classes of shares.
618. Cumulative voting.
619. Powers of supreme court respecting elections.
620. Agreements as to voting; provision in certificate of
incorporation as to control of directors.
621. Voting trust agreements.
622. Preemptive rights.
623. Procedure to enforce shareholder`s right to receive payment
for shares.
624. Books and records; right of inspection, prima facie
evidence.
625. Infant shareholders and bondholders.
626. Shareholders` derivative action brought in the right of the
corporation to procure a judgment in its favor.
627. Security for expenses in shareholders` derivative action
brought in the right of the corporation to procure a
judgment in its favor.
628. Liability of subscribers and shareholders.
629. Certain transfers or assignments by shareholders or
subscribers; effect.
630. Liability of shareholders for wages due to laborers,
servants or employees.
S 601. By-laws.
(a) The initial by-laws of a corporation shall be adopted by its
incorporator or incorporators at the organization meeting. Thereafter,
subject to section 613 (Limitations on right to vote), by-laws may be
adopted, amended or repealed by a majority of the votes cast by the
shares at the time entitled to vote in the election of any directors.
When so provided in the certificate of incorporation or a by-law adopted
by the shareholders, by-laws may also be adopted, amended or repealed by
the board by such vote as may be therein specified, which may be greater
than the vote otherwise prescribed by this chapter, but any by-law
adopted by the board may be amended or repealed by the shareholders
entitled to vote thereon as herein provided. Any reference in this
chapter to a "by-law adopted by the shareholders" shall include a by-law
adopted by the incorporator or incorporators.
(b) The by-laws may contain any provision relating to the business of
the corporation, the conduct of its affairs, its rights or powers or the
rights or powers of its shareholders, directors or officers, not
inconsistent with this chapter or any other statute of this state or the
certificate of incorporation.
S 602. Meetings of shareholders.
(a) Meetings of shareholders may be held at such place, within or
without this state, as may be fixed by or under the by-laws, or if not
so fixed, at the office of the corporation in this state.
(b) A meeting of shareholders shall be held annually for the election
of directors and the transaction of other business on a date fixed by or
under the by-laws. A failure to hold the annual meeting on the date so
fixed or to elect a sufficient number of directors to conduct the
business of the corporation shall not work a forfeiture or give cause
for dissolution of the corporation, except as provided in paragraph (c)
of section 1104 (Petition in case of deadlock among directors or
shareholders).
(c) Special meetings of the shareholders may be called by the board
and by such person or persons as may be so authorized by the certificate
of incorporation or the by-laws. At any such special meeting only such
business may be transacted which is related to the purpose or purposes
set forth in the notice required by section 605 (Notice of meetings of
shareholders).
(d) Except as otherwise required by this chapter, the by-laws may
designate reasonable procedures for the calling and conduct of a meeting
of shareholders, including but not limited to specifying: (i) who may
call and who may conduct the meeting, (ii) the means by which the order
of business to be conducted shall be established, (iii) the procedures
and requirements for the nomination of directors, (iv) the procedures
with respect to the making of shareholder proposals, and (v) the
procedures to be established for the adjournment of any meeting of
shareholders. No amendment of the by-laws pertaining to the election of
directors or the procedures for the calling and conduct of a meeting of
shareholders shall affect the election of directors or the procedures
for the calling or conduct in respect of any meeting of shareholders
unless adequate notice thereof is given to the shareholders in a manner
reasonably calculated to provide shareholders with sufficient time to
respond thereto prior to such meeting.
S 603. Special meeting for election of directors.
(a) If, for a period of one month after the date fixed by or under the
by-laws for the annual meeting of shareholders, or if no date has been
so fixed, for a period of thirteen months after the formation of the
corporation or the last annual meeting, there is a failure to elect a
sufficient number of directors to conduct the business of the
corporation, the board shall call a special meeting for the election of
directors. If such special meeting is not called by the board within two
weeks after the expiration of such period or if it is so called but
there is a failure to elect such directors for a period of two months
after the expiration of such period, holders of ten percent of the votes
of the shares entitled to vote in an election of directors may, in
writing, demand the call of a special meeting for the election of
directors specifying the date and month thereof, which shall not be less
than sixty nor more than ninety days from the date of such written
demand. The secretary of the corporation upon receiving the written
demand shall promptly give notice of such meeting, or if he fails to do
so within five business days thereafter, any shareholder signing such
demand may give such notice. The meeting shall be held at the place
fixed in the by-laws or, if not so fixed, at the office of the
corporation.
(b) At any such special meeting called on demand of shareholders,
notwithstanding section 608 (Quorum of shareholders), the shareholders
attending, in person or by proxy, and entitled to vote in an election of
directors shall constitute a quorum for the purpose of electing
directors, but not for the transaction of any other business.
S 604. Fixing record date.
(a) For the purpose of determining the shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment thereof,
or to express consent to or dissent from any proposal without a meeting,
or for the purpose of determining shareholders entitled to receive
payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the by-laws may provide for fixing or, in
the absence of such provision, the board may fix, in advance, a date as
the record date for any such determination of shareholders. Such date
shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action.
(b) If no record date is fixed:
(1) The record date for the determination of shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close
of business on the day next preceding the day on which notice is given,
or, if no notice is given, the day on which the meeting is held.
(2) The record date for determining shareholders for any purpose other
than that specified in subparagraph (1) shall be at the close of
business on the day on which the resolution of the board relating
thereto is adopted.
(c) When a determination of shareholders of record entitled to notice
of or to vote at any meeting of shareholders has been made as provided
in this section, such determination shall apply to any adjournment
thereof, unless the board fixes a new record date under this section for
the adjourned meeting.
S 605. Notice of meetings of shareholders.
(a) Whenever under the provisions of this chapter shareholders are
required or permitted to take any action at a meeting, notice shall be
given stating the place, date and hour of the meeting and, unless it is
the annual meeting, indicating that it is being issued by or at the
direction of the person or persons calling the meeting. Notice of a
special meeting shall also state the purpose or purposes for which the
meeting is called. Notice of any meeting of shareholders may be written
or electronic. If, at any meeting, action is proposed to be taken which
would, if taken, entitle shareholders fulfilling the requirements of
section 623 (Procedure to enforce shareholder`s right to receive payment
for shares) to receive payment for their shares, the notice of such
meeting shall include a statement of that purpose and to that effect and
shall be accompanied by a copy of section 623 or an outline of its
material terms. Notice of any meeting shall be given not fewer than ten
nor more than sixty days before the date of the meeting, provided,
however, that such notice may be given by third class mail not fewer
than twenty-four nor more than sixty days before the date of the
meeting, to each shareholder entitled to vote at such meeting. If
mailed, such notice is given when deposited in the United States mail,
with postage thereon prepaid, directed to the shareholder at the
shareholder`s address as it appears on the record of shareholders, or,
if the shareholder shall have filed with the secretary of the
corporation a request that notices to the shareholder be mailed to some
other address, then directed to him at such other address. If
transmitted electronically, such notice is given when directed to the
shareholder`s electronic mail address as supplied by the shareholder to
the secretary of the corporation or as otherwise directed pursuant to
the shareholder`s authorization or instructions. An affidavit of the
secretary or other person giving the notice or of a transfer agent of
the corporation that the notice required by this section has been given
shall, in the absence of fraud, be prima facie evidence of the facts
therein stated.
(b) When a meeting is adjourned to another time or place, it shall not
be necessary, unless the by-laws require otherwise, to give any notice
of the adjourned meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that
might have been transacted on the original date of the meeting. However,
if after the adjournment the board fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given to
each shareholder of record on the new record date entitled to notice
under paragraph (a).
S 606. Waivers of notice.
Notice of meeting need not be given to any shareholder who submits a
waiver of notice whether before or after the meeting. Waiver of notice
may be written or electronic. If written, the waiver must be executed by
the shareholder or the shareholder`s authorized officer, director,
employee or agent by signing such waiver or causing his or her signature
to be affixed to such waiver by any reasonable means, including, but not
limited to, facsimile signature. If electronic, the transmission of the
waiver must either set forth or be submitted with information from which
it can reasonably be determined that the transmission was authorized by
the shareholder. The attendance of any shareholder at a meeting, in
person or by proxy, without protesting prior to the conclusion of the
meeting the lack of notice of such meeting, shall constitute a waiver of
notice by such shareholder.
S 607. List of shareholders at meetings.
A list of shareholders as of the record date, certified by the
corporate officer responsible for its preparation or by a transfer
agent, shall be produced at any meeting of shareholders upon the request
thereat or prior thereto of any shareholder. If the right to vote at any
meeting is challenged, the inspectors of election, or person presiding
thereat, shall require such list of shareholders to be produced as
evidence of the right of the persons challenged to vote at such meeting,
and all persons who appear from such list to be shareholders entitled to
vote thereat may vote at such meeting.
S 608. Quorum of shareholders.
(a) The holders of a majority of the votes of shares entitled to vote
thereat shall constitute a quorum at a meeting of shareholders for the
transaction of any business, provided that when a specified item of
business is required to be voted on by a particular class or series of
shares, voting as a class, the holders of a majority of the votes of
shares of such class or series shall constitute a quorum for the
transaction of such specified item of business.
(b) The certificate of incorporation or by-laws may provide for any
lesser quorum not less than one-third of the votes of shares entitled to
vote, and the certificate of incorporation may, under section 616
(Greater requirement as to quorum and vote of shareholders), provide for
a greater quorum.
(c) When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders.
(d) The shareholders present may adjourn the meeting despite the
absence of a quorum.
S 609. Proxies.
(a) Every shareholder entitled to vote at a meeting of shareholders or
to express consent or dissent without a meeting may authorize another
person or persons to act for him by proxy.
(b) No proxy shall be valid after the expiration of eleven months from
the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the shareholder executing it,
except as otherwise provided in this section.
(c) The authority of the holder of a proxy to act shall not be revoked
by the incompetence or death of the shareholder who executed the proxy
unless, before the authority is exercised, written notice of an
adjudication of such incompetence or of such death is received by the
corporate officer responsible for maintaining the list of shareholders.
(d) Except when other provision shall have been made by written
agreement between the parties, the record holder of shares which he
holds as pledgee or otherwise as security or which belong to another,
shall issue to the pledgor or to such owner of such shares, upon demand
therefor and payment of necessary expenses thereof, a proxy to vote or
take other action thereon.
(e) A shareholder shall not sell his vote or issue a proxy to vote to
any person for any sum of money or anything of value, except as
authorized in this section and section 620 (Agreements as to voting;
provision in certificate of incorporation as to control of directors);
provided, however, that this paragraph shall not apply to votes, proxies
or consents given by holders of preferred shares in connection with a
proxy or consent solicitation made available on identical terms to all
holders of shares of the same class or series and remaining open for
acceptance for at least twenty business days.
(f) A proxy which is entitled "irrevocable proxy" and which states
that it is irrevocable, is irrevocable when it is held by any of the
following or a nominee of any of the following:
(1) A pledgee;
(2) A person who has purchased or agreed to purchase the shares;
(3) A creditor or creditors of the corporation who extend or continue
credit to the corporation in consideration of the proxy if the proxy
states that it was given in consideration of such extension or
continuation of credit, the amount thereof, and the name of the person
extending or continuing credit;
(4) A person who has contracted to perform services as an officer of
the corporation, if a proxy is required by the contract of employment,
if the proxy states that it was given in consideration of such contract
of employment, the name of the employee and the period of employment
contracted for;
(5) A person designated by or under an agreement under paragraph (a)
of section 620.
(g) Notwithstanding a provision in a proxy, stating that it is
irrevocable, the proxy becomes revocable after the pledge is redeemed,
or the debt of the corporation is paid, or the period of employment
provided for in the contract of employment has terminated, or the
agreement under paragraph (a) of section 620 has terminated; and, in a
case provided for in subparagraphs (f) (3) or (4), becomes revocable
three years after the date of the proxy or at the end of the period, if
any, specified therein, whichever period is less, unless the period of
irrevocability is renewed from time to time by the execution of a new
irrevocable proxy as provided in this section. This paragraph does not
affect the duration of a proxy under paragraph (b).
(h) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the existence
of the provision unless the existence of the proxy and its
irrevocability is noted conspicuously on the face or back of the
certificate representing such shares.
(i) Without limiting the manner in which a shareholder may authorize
another person or persons to act for him as proxy pursuant to paragraph
(a) of this section, the following shall constitute a valid means by
which a shareholder may grant such authority.
(1) A shareholder may execute a writing authorizing another person or
persons to act from him as proxy. Execution may be accomplished by the
shareholder or the shareholder`s authorized officer, director, employee
or agent signing such writing or causing his or her signature to be
affixed to such writing by any reasonable means including, but not
limited to, by facsimile signature.
(2) A shareholder may authorize another person or persons to act for
the shareholder as proxy by transmitting or authorizing the transmission
of a telegram, cablegram or other means of electronic transmission to
the person who will be the holder of the proxy or to a proxy
solicitation firm, proxy support service organization or like agent duly
authorized by the person who will be the holder of the proxy to receive
such transmission, provided that any such telegram, cablegram or other
means of electronic transmission must either set forth or be submitted
with information from which it can be reasonably determined that the
telegram, cablegram or other electronic transmission was authorized by
the shareholder. If it is determined that such telegrams, cablegrams or
other electronic transmissions are valid, the inspectors or, if there
are no inspectors, such other persons making that determination shall
specify the nature of the information upon which they relied.
(j) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to
paragraph (i) of this section may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the
original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
S 610. Selection of inspectors at shareholders` meetings.
(a) The board of directors shall appoint one or more inspectors to act
at the meeting or any adjournment thereof and make a written report
thereof. The board of directors may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate has been appointed, or if such persons are unable
to act at a meeting of shareholders, the person presiding at the meeting
shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his
ability.
(b) Unless otherwise provided in the certificate of incorporation or
by-laws, paragraph (a) of this section shall not apply to a corporation
that does not have a class of voting stock that is listed on a national
securities exchange or authorized for quotation on an interdealer
quotation system of a registered national securities association.
Notwithstanding the foregoing, any corporation may take the actions set
forth in paragraph (a) of this section.
S 611. Duties of inspectors at shareholders` meetings.
(a) The inspectors shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do
such acts as are proper to conduct the election or vote with fairness to
all shareholders. On request of the person presiding at the meeting or
any shareholder entitled to vote thereat, the inspectors shall make a
report in writing of any challenge, question or matter determined by
them and execute a certificate of any fact found by them. Any report or
certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
(b) In determining the validity and counting of proxies, ballots and
consents, the inspectors shall be limited to an examination of the
proxies, any envelopes submitted with those proxies and consents, any
information provided in accordance with section 609 (Proxies), ballots
and the regular books and records of the corporation, except that the
inspectors may consider other reliable information for the limited
purpose of reconciling proxies, ballots and consents submitted by or on
behalf of banks, brokers, their nominees or similar persons which
represent more votes than the holder of a proxy is authorized by the
record owner to cast or more votes than the stockholder holds of record.
If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to paragraph (a) of this section shall specify
the precise information considered by them including the person or
persons from whom they obtained the information, when the information
was obtained, the means by which the information was obtained and the
basis for the inspectors` belief that such information is reliable.
(c) The date and time (which need not be a particular time of day) of
the opening and the closing of the polls for each matter upon which the
shareholders will vote at a meeting shall be announced by the person
presiding at the meeting at the beginning of the meeting and, if no date
and time is so announced, the polls shall close at the end of the
meeting, including any adjournment thereof. No ballot, proxies or
consents, nor any revocation thereof or changes thereto, shall be
accepted by the inspectors after the closing of polls in accordance with
section 605 (Notice of meetings of shareholders) unless the supreme
court at a special term held within the judicial district where the
office of the corporation is located upon application by a shareholder
shall determine otherwise.
(d) Unless otherwise provided in the certificate of incorporation or
by-laws, paragraphs (a) and (c) of this section shall not apply to a
corporation that does not have a class of voting stock that is listed on
a national securities exchange or authorized for quotation on an
interdealer quotation system of a registered national securities
association. Notwithstanding the foregoing, any corporation may take
the actions set forth in paragraphs (a) and (c) of this section.
S 612. Qualification of voters.
(a) Every shareholder of record shall be entitled at every meeting of
shareholders to one vote for every share standing in his name on the
record of shareholders, unless otherwise provided in the certificate of
incorporation.
(b) Treasury shares and shares held by another domestic or foreign
corporation of any type or kind, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held by
the corporation, shall not be shares entitled to vote or to be counted
in determining the total number of outstanding shares.
(c) Shares held by an administrator, executor, guardian, conservator,
committee, or other fiduciary, except a trustee, may be voted by him,
either in person or by proxy, without transfer of such shares into his
name. Shares held by a trustee may be voted by him, either in person or
by proxy, only after the shares have been transferred into his name as
trustee or into the name of his nominee.
(d) Shares held by or under the control of a receiver may be voted by
him without the transfer thereof into his name if authority so to do is
contained in an order of the court by which such receiver was appointed.
(e) A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledgee, or a nominee of the pledgee.
(f) Redeemable shares which have been called for redemption shall not
be deemed to be outstanding shares for the purpose of voting or
determining the total number of shares entitled to vote on any matter on
and after the date on which written notice of redemption has been sent
to holders thereof and a sum sufficient to redeem such shares has been
deposited with a bank or trust company with irrevocable instruction and
authority to pay the redemption price to the holders of the shares upon
surrender of certificates therefor.
(g) Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer, agent or
proxy as the by-laws of such corporation may provide, or, in the absence
of such provision, as the board of such corporation may determine.
(h) If shares are registered on the record of shareholders of a
corporation in the name of two or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants by
the entirety or otherwise, or if two or more persons have the same
fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given written notice to the contrary and is
furnished with a copy of the instrument or order appointing them or
creating the relationship wherein it is so provided, their acts with
respect to voting shall have the following effect:
(1) If only one votes, the vote shall be accepted by the corporation
as the vote of all;
(2) If more than one vote, the act of the majority so voting shall be
accepted by the corporation as the vote of all;
(3) If more than one vote, but the vote is equally divided on any
particular matter, the vote shall be accepted by the corporation as a
proportionate vote of the shares; unless the corporation has evidence,
on the record of shareholders or otherwise, that the shares are held in
a fiduciary capacity. Nothing in this paragraph shall alter any
requirement that the exercise of fiduciary powers be by act of a
majority, contained in any law applicable to such exercise of powers
(including section 10-10.7 of the estates, powers and trusts law);
(4) When shares as to which the vote is equally divided are registered
on the record of shareholders of a corporation in the name of, or have
passed by operation of law or by virtue of any deed of trust or other
instrument to two or more fiduciaries, any court having jurisdiction of
their accounts, upon petition by any of such fiduciaries or by any party
in interest, may direct the voting of such shares for the best interest
of the beneficiaries. This subparagraph shall not apply in any case
where the instrument or order of the court appointing fiduciaries shall
otherwise direct how such shares shall be voted; and
(5) If the instrument or order furnished to the secretary of a
corporation shows that a tenancy is held in unequal interests, a
majority or equal division for the purposes of this paragraph shall be a
majority or equal division in interest.
(i) Notwithstanding the foregoing paragraphs, a corporation shall be
protected in treating the persons in whose names shares stand on the
record of shareholders as the owners thereof for all purposes.
S 613. Limitations on right to vote.
The certificate of incorporation may provide, except as limited by
section 501 (Authorized shares), either absolutely or conditionally,
that the holders of any designated class or series of shares shall not
be entitled to vote, or it may otherwise limit or define the respective
voting powers of the several classes or series of shares, and, except as
otherwise provided in this chapter, such provisions of such certificate
shall prevail, according to their tenor, in all elections and in all
proceedings, over the provisions of this chapter which authorizes any
action by the shareholders.
S 614. Vote of shareholders.
(a) Directors shall, except as otherwise required by this chapter or
by the certificate of incorporation as permitted by this chapter, be
elected by a plurality of the votes cast at a meeting of shareholders by
the holders of shares entitled to vote in the election.
(b) Whenever any corporate action, other than the election of
directors, is to be taken under this chapter by vote of the
shareholders, it shall, except as otherwise required by this chapter or
by the certificate of incorporation as permitted by this chapter or by
the specific provisions of a by-law adopted by the shareholders, be
authorized by a majority of the votes cast in favor of or against such
action at a meeting of shareholders by the holders of shares entitled to
vote thereon. Except as otherwise provided in the certificate of
incorporation or the specific provision of a by-law adopted by the
shareholders, an abstention shall not constitute a vote cast.
S 615. Written consent of shareholders, subscribers or incorporators
without a meeting.
(a) Whenever under this chapter shareholders are required or permitted
to take any action by vote, such action may be taken without a meeting
on written consent, setting forth the action so taken, signed by the
holders of all outstanding shares entitled to vote thereon or, if the
certificate of incorporation so permits, signed by the holders of
outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.li;.
In addition, this paragraph shall not be construed to alter or modify
the provisions of any section or any provision in a certificate of
incorporation not inconsistent with this chapter under which the written
consent of the holders of less than all outstanding shares is sufficient
for corporate action.
(b) No written consent shall be effective to take the corporate action
referred to therein unless, within sixty days of the earliest dated
consent delivered in the manner required by this paragraph to the
corporation, written consents signed by a sufficient number of holders
to take action are delivered to the corporation by delivery to its
registered office in this state, its principal place of business, or an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of shareholders are recorded. Delivery made to a
corporation`s registered office shall be by hand or by certified or
registered mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
shareholders who have not consented in writing.
(d) Written consent thus given by the holders of such number of shares
as is required under paragraph (a) of this section shall have the same
effect as a valid vote of holders of such number of shares, and any
certificate with respect to the authorization or taking of any such
action which is to be delivered to the department of state shall recite
that written consent has been given in accordance with this section and
that written notice has been given as and to the extent required by this
section.
(e) When there are no shareholders of record, such action may be taken
on the written consent signed by a majority in interest of the
subscribers for shares whose subscriptions have been accepted or their
successors in interest or, if no subscription has been accepted, on the
written consent signed by the incorporator or a majority of the
incorporators. When there are two or more incorporators, if any dies or
is for any reason unable to act, the other or others may act. If there
is no incorporator able to act, any person for whom an incorporator was
acting as agent may act in his stead, or if such other person also dies
or is for any reason unable to act, his legal representative may act.
S 616. Greater requirement as to quorum and vote of shareholders.
(a) The certificate of incorporation may contain provisions specifying
either or both of the following:
(1) That the proportion of votes of shares, or the proportion of votes
of shares of any class or series thereof, the holders of which shall be
present in person or by proxy at any meeting of shareholders, including
a special meeting for election of directors under section 603 (Special
meeting for election of directors), in order to constitute a quorum for
the transaction of any business or of any specified item of business,
including amendments to the certificate of incorporation, shall be
greater than the proportion prescribed by this chapter in the absence of
such provision.
(2) That the proportion of votes of shares, or votes of shares of a
particular class or series of shares, that shall be necessary at any
meeting of shareholders for the transaction of any business or of any
specified item of business, including amendments to the certificate of
incorporation, shall be greater than the proportion prescribed by this
chapter in the absence of such provision.
(b) An amendment of the certificate of incorporation which changes or
strikes out a provision permitted by this section, shall be authorized
at a meeting of shareholders by two-thirds of the votes of the shares
entitled to vote thereon, or of such greater proportion of votes of
shares, or votes of shares of a particular class or series of shares, as
may be provided specifically in the certificate of incorporation for
changing or striking out a provision permitted by this section.
(c) If the certificate of incorporation of any corporation contains a
provision authorized by this section, the existence of such provision
shall be noted conspicuously on the face or back of every certificate
for shares issued by such corporation, except that this requirement
shall not apply to any corporation having any class of any equity
security registered pursuant to Section twelve of the Securities
Exchange Act of 1934, as amended.
S 617. Voting by class or classes of shares.
(a) The certificate of incorporation may contain provisions specifying
that any class or classes of shares or of any series thereof shall vote
as a class in connection with the transaction of any business or of any
specified item of business at a meeting of shareholders, including
amendments to the certificate of incorporation.
(b) Where voting as a class is provided in the certificate of
incorporation, it shall be by the proportionate vote so provided or, if
no proportionate vote is provided, in the election of directors, by a
plurality of the votes cast at such meeting by the holders of shares of
such class entitled to vote in the election, or for any other corporate
action, by a majority of the votes cast at such meeting by the holders
of shares of such class entitled to vote thereon.
(c) Such voting by class shall be in addition to any other vote,
including vote by class, required by this chapter and by the certificate
of incorporation as permitted by this chapter.
S 618. Cumulative voting.
The certificate of incorporation of any corporation may provide that
in all elections of directors of such corporation each shareholder shall
be entitled to as many votes as shall equal the number of votes which,
except for such provisions as to cumulative voting, he would be entitled
to cast for the election of directors with respect to his shares
multiplied by the number of directors to be elected, and that he may
cast all of such votes for a single director or may distribute them
among the number to be voted for, or any two or more of them, as he may
see fit, which right, when exercised, shall be termed cumulative voting.
S 619. Powers of supreme court respecting elections.
Upon the petition of any shareholder aggrieved by an election, and
upon notice to the persons declared elected thereat, the corporation and
such other persons as the court may direct, the supreme court at a
special term held within the judicial district where the office of the
corporation is located shall forthwith hear the proofs and allegations
of the parties, and confirm the election, order a new election, or take
such other action as justice may require.
S 620. Agreements as to voting; provision in certificate of
incorporation as to control of directors.
(a) An agreement between two or more shareholders, if in writing and
signed by the parties thereto, may provide that in exercising any voting
rights, the shares held by them shall be voted as therein provided, or
as they may agree, or as determined in accordance with a procedure
agreed upon by them.
(b) A provision in the certificate of incorporation otherwise
prohibited by law because it improperly restricts the board in its
management of the business of the corporation, or improperly transfers
to one or more shareholders or to one or more persons or corporations to
be selected by him or them, all or any part of such management otherwise
within the authority of the board under this chapter, shall nevertheless
be valid:
(1) If all the incorporators or holders of record of all outstanding
shares, whether or not having voting power, have authorized such
provision in the certificate of incorporation or an amendment thereof;
and
(2) If, subsequent to the adoption of such provision, shares are
transferred or issued only to persons who had knowledge or notice
thereof or consented in writing to such provision.
(c) A provision authorized by paragraph (b) shall be valid only so
long as no shares of the corporation are listed on a national securities
exchange or regularly quoted in an over-the-counter market by one or
more members of a national or affiliated securities association.
(d) (1) Except as provided in paragraph (e), an amendment to strike
out a provision authorized by paragraph (b) shall be authorized at a
meeting of shareholders by (A) (i) for any corporation in existence on
the effective date of subparagraph (2) of this paragraph, two-thirds of
the votes of the shares entitled to vote thereon and (ii) for any
corporation in existence on the effective date of this clause the
certificate of incorporation of which expressly provides such and for
any corporation incorporated after the effective date of subparagraph
(2) of this paragraph, a majority of the votes of the shares entitled to
vote thereon or (B) in either case, by such greater proportion of votes
of shares as may be required by the certificate of incorporation for
that purpose.
(2) Any corporation may adopt an amendment of the certificate of
incorporation in accordance with the applicable clause or subclause of
subparagraph (1) of this paragraph to provide that any further amendment
of the certificate of incorporation that strikes out a provision
authorized by paragraph (b) of this section shall be authorized at a
meeting of the shareholders by a specified proportion of votes of the
shares, or votes of a particular class or series of shares, entitled to
vote thereon, provided that such proportion may not be less than a
majority.
(e) Alternatively, if a provision authorized by paragraph (b) shall
have ceased to be valid under this section, the board may authorize a
certificate of amendment under section 805 (Certificate of amendment;
contents) striking out such provision. Such certificate shall set forth
the event by reason of which the provision ceased to be valid.
(f) The effect of any such provision authorized by paragraph (b) shall
be to relieve the directors and impose upon the shareholders authorizing
the same or consenting thereto the liability for managerial acts or
omissions that is imposed on directors by this chapter to the extent
that and so long as the discretion or powers of the board in its
management of corporate affairs is controlled by any such provision.
(g) If the certificate of incorporation of any corporation contains a
provision authorized by paragraph (b), the existence of such provision
shall be noted conspicuously on the face or back of every certificate
for shares issued by such corporation.
S 621. Voting trust agreements.
(a) Any shareholder or shareholders, under an agreement in writing,
may transfer his or their shares to a voting trustee or trustees for the
purpose of conferring the right to vote thereon for a period not
exceeding ten years upon the terms and conditions therein stated. The
certificates for shares so transferred shall be surrendered and
cancelled and new certificates therefor issued to such trustee or
trustees stating that they are issued under such agreement, and in the
entry of such ownership in the record of the corporation that fact shall
also be noted, and such trustee or trustees may vote the shares so
transferred during the term of such agreement.
(b) The trustee or trustees shall keep available for inspection by
holders of voting trust certificates at his or their office or at a
place designated in such agreement or of which the holders of voting
trust certificates have been notified in writing, correct and complete
books and records of account relating to the trust, and a record
containing the names and addresses of all persons who are holders of
voting trust certificates and the number and class of shares represented
by the certificates held by them and the dates when they became the
owners thereof. The record may be in written form or any other form
capable of being converted into written form within a reasonable time.
(c) A duplicate of every such agreement shall be filed in the office
of the corporation and it and the record of voting trust certificate
holders shall be subject to the same right of inspection by a
shareholder of record or a holder of a voting trust certificate, in
person or by agent or attorney, as are the records of the corporation
under section 624 (Books and records; right of inspection, prima facie
evidence). The shareholder or holder of a voting trust certificate
shall be entitled to the remedies provided in that section.
(d) At any time within six months before the expiration of such voting
trust agreement as originally fixed or as extended one or more times
under this paragraph, one or more holders of voting trust certificates
may, by agreement in writing, extend the duration of such voting trust
agreement, nominating the same or substitute trustee or trustees, for an
additional period not exceeding ten years. Such extension agreement
shall not affect the rights or obligations of persons not parties
thereto and shall in every respect comply with and be subject to all
the provisions of this section applicable to the original voting trust
agreement.
S 622. Preemptive rights.
(a) As used in this section, the term:
(1) "Unlimited dividend rights" means the right without limitation as
to amount either to all or to a share of the balance of current or
liquidating dividends after the payment of dividends on any shares
entitled to a preference.
(2) "Equity shares" means shares of any class, whether or not
preferred as to dividends or assets, which have unlimited dividend
rights.
(3) "Voting rights" means the right to vote for the election of one or
more directors, excluding a right so to vote which is dependent on the
happening of an event specified in the certificate of incorporation
which would change the voting rights of any class of shares.
(4) "Voting shares" means shares of any class which have voting
rights, but does not include bonds on which voting rights are conferred
under section 518 (Corporate bonds).
(5) "Preemptive right" means the right to purchase shares or other
securities to be issued or subjected to rights or options to purchase,
as such right is defined in this section.
(b) (1) With respect to any corporation incorporated prior to the
effective date of subparagraph (2) of this paragraph, except as
otherwise provided in the certificate of incorporation, and except as
provided in this section, the holders of equity shares of any class, in
case of the proposed issuance by the corporation of, or the proposed
granting by the corporation of rights or options to purchase, its equity
shares of any class or any shares or other securities convertible into
or carrying rights or options to purchase its equity shares of any
class, shall, if the issuance of the equity shares proposed to be issued
or issuable upon exercise of such rights or options or upon conversion
of such other securities would adversely affect the unlimited dividend
rights of such holders, have the right during a reasonable time and on
reasonable conditions, both to be fixed by the board, to purchase such
shares or other securities in such proportions as shall be determined as
provided in this section.
(2) With respect to any corporation incorporated on or after the
effective date of this subparagraph, the holders of such shares shall
not have any preemptive right, except as otherwise expressly provided in
the certificate of incorporation.
(c) Except as otherwise provided in the certificate of incorporation,
and except as provided in this section, the holders of voting shares of
any class having any preemptive right under this paragraph on the date
immediately prior to the effective date of subparagraph (2) of paragraph
(b) of this section, in case of the proposed issuance by the corporation
of, or the proposed granting by the corporation of rights or options to
purchase, its voting shares of any class or any shares or other
securities convertible into or carrying rights or options to purchase
its voting shares of any class, shall, if the issuance of the voting
shares proposed to be issued or issuable upon exercise of such rights or
options or upon conversion of such other securities would adversely
affect the voting rights of such holders, have the right during a
reasonable time and on reasonable conditions, both to be fixed by the
board, to purchase such shares or other securities in such proportions
as shall be determined as provided in this section.
(d) The preemptive right provided for in paragraphs (b) and (c) shall
entitle shareholders having such rights to purchase the shares or other
securities to be offered or optioned for sale as nearly as practicable
in such proportions as would, if such preemptive right were exercised,
preserve the relative unlimited dividend rights and voting rights of
such holders and at a price or prices not less favorable than the price
or prices at which such shares or other securities are proposed to be
offered for sale to others, without deduction of such reasonable
expenses of and compensation for the sale, underwriting or purchase of
such shares or other securities by underwriters or dealers as may
lawfully be paid by the corporation. In case each of the shares
entitling the holders thereof to preemptive rights does not confer the
same unlimited dividend right or voting right, the board shall apportion
the shares or other securities to be offered or optioned for sale among
the shareholders having preemptive rights to purchase them in such
proportions as in the opinion of the board shall preserve as far as
practicable the relative unlimited dividend rights and voting rights of
the holders at the time of such offering. The apportionment made by the
board shall, in the absence of fraud or bad faith, be binding upon all
shareholders.
(e) Unless otherwise provided in the certificate of incorporation,
shares or other securities offered for sale or subjected to rights or
options to purchase shall not be subject to preemptive rights under
paragraph (b) or (c) of this section if they:
(1) Are to be issued by the board to effect a merger or consolidation
or offered or subjected to rights or options for consideration other
than cash;
(2) Are to be issued or subjected to rights or options under paragraph
(d) of section 505 (Rights and options to purchase shares; issue of
rights and options to directors, officers and employees);
(3) Are to be issued to satisfy conversion or option rights
theretofore granted by the corporation;
(4) Are treasury shares;
(5) Are part of the shares or other securities of the corporation
authorized in its original certificate of incorporation and are issued,
sold or optioned within two years from the date of filing such
certificate; or
(6) Are to be issued under a plan of reorganization approved in a
proceeding under any applicable act of congress relating to
reorganization of corporations.
(f) Shareholders of record entitled to preemptive rights on the record
date fixed by the board under section 604 (Fixing record date), or, if
no record date is fixed, then on the record date determined under
section 604, and no others shall be entitled to the right defined in
this section.
(g) The board shall cause to be given to each shareholder entitled to
purchase shares or other securities in accordance with this section, a
notice directed to him in the manner provided in section 605 (Notice of
meetings of shareholders) setting forth the time within which and the
terms and conditions upon which the shareholder may purchase such shares
or other securities and also the apportionment made of the right to
purchase among the shareholders entitled to preemptive rights. Such
notice shall be given personally or by mail at least fifteen days prior
to the expiration of the period during which the shareholder shall have
the right to purchase. All shareholders entitled to preemptive rights to
whom notice shall have been given as aforesaid shall be deemed
conclusively to have had a reasonable time in which to exercise their
preemptive rights.
(h) Shares or other securities which have been offered to shareholders
having preemptive rights to purchase and which have not been purchased
by them within the time fixed by the board may thereafter, for a period
of not exceeding one year following the expiration of the time during
which shareholders might have exercised such preemptive rights, be
issued, sold or subjected to rights or options to any other person or
persons at a price, without deduction of such reasonable expenses of and
compensation for the sale, underwriting or purchase of such shares by
underwriters or dealers as may lawfully be paid by the corporation, not
less than that at which they were offered to such shareholders. Any such
shares or other securities not so issued, sold or subjected to rights or
options to others during such one year period shall thereafter again be
subject to the preemptive rights of shareholders.
(i) Except as otherwise provided in the certificate of incorporation
and except as provided in this section, no holder of any shares of any
class shall as such holder have any preemptive right to purchase any
other shares or securities of any class which at any time may be sold or
offered for sale by the corporation. Unless otherwise provided in the
certificate of incorporation, holders of bonds on which voting rights
are conferred under section 518 shall have no preemptive rights.
S 623. Procedure to enforce shareholder`s right to receive payment for
shares.
(a) A shareholder intending to enforce his right under a section of
this chapter to receive payment for his shares if the proposed corporate
action referred to therein is taken shall file with the corporation,
before the meeting of shareholders at which the action is submitted to a
vote, or at such meeting but before the vote, written objection to the
action. The objection shall include a notice of his election to dissent,
his name and residence address, the number and classes of shares as to
which he dissents and a demand for payment of the fair value of his
shares if the action is taken. Such objection is not required from any
shareholder to whom the corporation did not give notice of such meeting
in accordance with this chapter or where the proposed action is
authorized by written consent of shareholders without a meeting.
(b) Within ten days after the shareholders` authorization date, which
term as used in this section means the date on which the shareholders`
vote authorizing such action was taken, or the date on which such
consent without a meeting was obtained from the requisite shareholders,
the corporation shall give written notice of such authorization or
consent by registered mail to each shareholder who filed written
objection or from whom written objection was not required, excepting any
shareholder who voted for or consented in writing to the proposed action
and who thereby is deemed to have elected not to enforce his right to
receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any
shareholder from whom written objection was not required and who elects
to dissent shall file with the corporation a written notice of such
election, stating his name and residence address, the number and classes
of shares as to which he dissents and a demand for payment of the fair
value of his shares. Any shareholder who elects to dissent from a merger
under section 905 (Merger of subsidiary corporation) or paragraph (c) of
section 907 (Merger or consolidation of domestic and foreign
corporations) or from a share exchange under paragraph (g) of section
913 (Share exchanges) shall file a written notice of such election to
dissent within twenty days after the giving to him of a copy of the plan
of merger or exchange or an outline of the material features thereof
under section 905 or 913.
(d) A shareholder may not dissent as to less than all of the shares,
as to which he has a right to dissent, held by him of record, that he
owns beneficially. A nominee or fiduciary may not dissent on behalf of
any beneficial owner as to less than all of the shares of such owner, as
to which such nominee or fiduciary has a right to dissent, held of
record by such nominee or fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall
cease to have any of the rights of a shareholder except the right to be
paid the fair value of his shares and any other rights under this
section. A notice of election may be withdrawn by the shareholder at any
time prior to his acceptance in writing of an offer made by the
corporation, as provided in paragraph (g), but in no case later than
sixty days from the date of consummation of the corporate action except
that if the corporation fails to make a timely offer, as provided in
paragraph (g), the time for withdrawing a notice of election shall be
extended until sixty days from the date an offer is made. Upon
expiration of such time, withdrawal of a notice of election shall
require the written consent of the corporation. In order to be
effective, withdrawal of a notice of election must be accompanied by the
return to the corporation of any advance payment made to the shareholder
as provided in paragraph (g). If a notice of election is withdrawn, or
the corporate action is rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenters` rights, he shall not
have the right to receive payment for his shares and he shall be
reinstated to all his rights as a shareholder as of the consummation of
the corporate action, including any intervening preemptive rights and
the right to payment of any intervening dividend or other distribution
or, if any such rights have expired or any such dividend or distribution
other than in cash has been completed, in lieu thereof, at the election
of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been
taken in the interim.
(f) At the time of filing the notice of election to dissent or within
one month thereafter the shareholder of shares represented by
certificates shall submit the certificates representing his shares to
the corporation, or to its transfer agent, which shall forthwith note
conspicuously thereon that a notice of election has been filed and shall
return the certificates to the shareholder or other person who submitted
them on his behalf. Any shareholder of shares represented by
certificates who fails to submit his certificates for such notation as
herein specified shall, at the option of the corporation exercised by
written notice to him within forty-five days from the date of filing of
such notice of election to dissent, lose his dissenter`s rights unless a
court, for good cause shown, shall otherwise direct. Upon transfer of a
certificate bearing such notation, each new certificate issued therefor
shall bear a similar notation together with the name of the original
dissenting holder of the shares and a transferee shall acquire no rights
in the corporation except those which the original dissenting
shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within
which shareholders may file their notices of election to dissent, or
within fifteen days after the proposed corporate action is consummated,
whichever is later (but in no case later than ninety days from the
shareholders` authorization date), the corporation or, in the case of a
merger or consolidation, the surviving or new corporation, shall make a
written offer by registered mail to each shareholder who has filed such
notice of election to pay for his shares at a specified price which the
corporation considers to be their fair value. Such offer shall be
accompanied by a statement setting forth the aggregate number of shares
with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate
action has been consummated, such offer shall also be accompanied by (1)
advance payment to each such shareholder who has submitted the
certificates representing his shares to the corporation, as provided in
paragraph (f), of an amount equal to eighty percent of the amount of
such offer, or (2) as to each shareholder who has not yet submitted his
certificates a statement that advance payment to him of an amount equal
to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the
corporate action has not been consummated at the time of the making of
the offer, such advance payment or statement as to advance payment shall
be sent to each shareholder entitled thereto forthwith upon consummation
of the corporate action. Every advance payment or statement as to
advance payment shall include advice to the shareholder to the effect
that acceptance of such payment does not constitute a waiver of any
dissenters` rights. If the corporate action has not been consummated
upon the expiration of the ninety day period after the shareholders`
authorization date, the offer may be conditioned upon the consummation
of such action. Such offer shall be made at the same price per share to
all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet
of the corporation whose shares the dissenting shareholder holds as of
the latest available date, which shall not be earlier than twelve months
before the making of such offer, and a profit and loss statement or
statements for not less than a twelve month period ended on the date of
such balance sheet or, if the corporation was not in existence
throughout such twelve month period, for the portion thereof during
which it was in existence. Notwithstanding the foregoing, the
corporation shall not be required to furnish a balance sheet or profit
and loss statement or statements to any shareholder to whom such balance
sheet or profit and loss statement or statements were previously
furnished, nor if in connection with obtaining the shareholders`
authorization for or consent to the proposed corporate action the
shareholders were furnished with a proxy or information statement, which
included financial statements, pursuant to Regulation 14A or Regulation
14C of the United States Securities and Exchange Commission. If within
thirty days after the making of such offer, the corporation making the
offer and any shareholder agree upon the price to be paid for his
shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate
action, whichever is later, upon the surrender of the certificates for
any such shares represented by certificates.
(h) The following procedure shall apply if the corporation fails to
make such offer within such period of fifteen days, or if it makes the
offer and any dissenting shareholder or shareholders fail to agree with
it within the period of thirty days thereafter upon the price to be paid
for their shares:
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a
special proceeding in the supreme court in the judicial district in
which the office of the corporation is located to determine the rights
of dissenting shareholders and to fix the fair value of their shares.
If, in the case of merger or consolidation, the surviving or new
corporation is a foreign corporation without an office in this state,
such proceeding shall be brought in the county where the office of the
domestic corporation, whose shares are to be valued, was located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such
proceeding for the same purpose not later than thirty days after the
expiration of such twenty day period. If such proceeding is not
instituted within such thirty day period, all dissenter`s rights shall
be lost unless the supreme court, for good cause shown, shall otherwise
direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be
paid for their shares, shall be made parties to such proceeding, which
shall have the effect of an action quasi in rem against their shares.
The corporation shall serve a copy of the petition in such proceeding
upon each dissenting shareholder who is a resident of this state in the
manner provided by law for the service of a summons, and upon each
nonresident dissenting shareholder either by registered mail and
publication, or in such other manner as is permitted by law. The
jurisdiction of the court shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination,
is entitled to receive payment for his shares. If the corporation does
not request any such determination or if the court finds that any
dissenting shareholder is so entitled, it shall proceed to fix the value
of the shares, which, for the purposes of this section, shall be the
fair value as of the close of business on the day prior to the
shareholders` authorization date. In fixing the fair value of the
shares, the court shall consider the nature of the transaction giving
rise to the shareholder`s right to receive payment for shares and its
effects on the corporation and its shareholders, the concepts and
methods then customary in the relevant securities and financial markets
for determining fair value of shares of a corporation engaging in a
similar transaction under comparable circumstances and all other
relevant factors. The court shall determine the fair value of the shares
without a jury and without referral to an appraiser or referee. Upon
application by the corporation or by any shareholder who is a party to
the proceeding, the court may, in its discretion, permit pretrial
disclosure, including, but not limited to, disclosure of any expert`s
reports relating to the fair value of the shares whether or not intended
for use at the trial in the proceeding and notwithstanding subdivision
(d) of section 3101 of the civil practice law and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to
the proceeding and is entitled thereto for the value of his shares so
determined.
(6) The final order shall include an allowance for interest at such
rate as the court finds to be equitable, from the date the corporate
action was consummated to the date of payment. In determining the rate
of interest, the court shall consider all relevant factors, including
the rate of interest which the corporation would have had to pay to
borrow money during the pendency of the proceeding. If the court finds
that the refusal of any shareholder to accept the corporate offer of
payment for his shares was arbitrary, vexatious or otherwise not in good
faith, no interest shall be allowed to him.
(7) Each party to such proceeding shall bear its own costs and
expenses, including the fees and expenses of its counsel and of any
experts employed by it. Notwithstanding the foregoing, the court may, in
its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by the corporation against any or all of the
dissenting shareholders who are parties to the proceeding, including any
who have withdrawn their notices of election as provided in paragraph
(e), if the court finds that their refusal to accept the corporate offer
was arbitrary, vexatious or otherwise not in good faith. The court may,
in its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by any or all of the dissenting shareholders
who are parties to the proceeding against the corporation if the court
finds any of the following: (A) that the fair value of the shares as
determined materially exceeds the amount which the corporation offered
to pay; (B) that no offer or required advance payment was made by the
corporation; (C) that the corporation failed to institute the special
proceeding within the period specified therefor; or (D) that the action
of the corporation in complying with its obligations as provided in this
section was arbitrary, vexatious or otherwise not in good faith. In
making any determination as provided in clause (A), the court may
consider the dollar amount or the percentage, or both, by which the fair
value of the shares as determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to
be due him, upon surrender of the certificates for any such shares
represented by certificates.
(i) Shares acquired by the corporation upon the payment of the agreed
value therefor or of the amount due under the final order, as provided
in this section, shall become treasury shares or be cancelled as
provided in section 515 (Reacquired shares), except that, in the case of
a merger or consolidation, they may be held and disposed of as the plan
of merger or consolidation may otherwise provide.
(j) No payment shall be made to a dissenting shareholder under this
section at a time when the corporation is insolvent or when such payment
would make it insolvent. In such event, the dissenting shareholder
shall, at his option:
(1) Withdraw his notice of election, which shall in such event be
deemed withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it
is liquidated, be subordinated to the rights of creditors of the
corporation, but have rights superior to the non-dissenting
shareholders, and if it is not liquidated, retain his right to be paid
for his shares, which right the corporation shall be obliged to satisfy
when the restrictions of this paragraph do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation
within thirty days after the corporation has given him written notice
that payment for his shares cannot be made because of the restrictions
of this paragraph. If the dissenting shareholder fails to exercise such
option as provided, the corporation shall exercise the option by written
notice given to him within twenty days after the expiration of such
period of thirty days.
(k) The enforcement by a shareholder of his right to receive payment
for his shares in the manner provided herein shall exclude the
enforcement by such shareholder of any other right to which he might
otherwise be entitled by virtue of share ownership, except as provided
in paragraph (e), and except that this section shall not exclude the
right of such shareholder to bring or maintain an appropriate action to
obtain relief on the ground that such corporate action will be or is
unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice
to be given by a corporation to a shareholder under this section shall
be given in the manner provided in section 605 (Notice of meetings of
shareholders).
(m) This section shall not apply to foreign corporations except as
provided in subparagraph (e) (2) of section 907 (Merger or consolidation
of domestic and foreign corporations).
S 624. Books and records; right of inspection, prima facie evidence.
(a) Each corporation shall keep correct and complete books and records
of account and shall keep minutes of the proceedings of its
shareholders, board and executive committee, if any, and shall keep at
the office of the corporation in this state or at the office of its
transfer agent or registrar in this state, a record containing the names
and addresses of all shareholders, the number and class of shares held
by each and the dates when they respectively became the owners of record
thereof. Any of the foregoing books, minutes or records may be in
written form or in any other form capable of being converted into
written form within a reasonable time.
(b) Any person who shall have been a shareholder of record of a
corporation upon at least five days` written demand shall have the right
to examine in person or by agent or attorney, during usual business
hours, its minutes of the proceedings of its shareholders and record of
shareholders and to make extracts therefrom for any purpose reasonably
related to such person`s interest as a shareholder. Holders of voting
trust certificates representing shares of the corporation shall be
regarded as shareholders for the purpose of this section. Any such
agent or attorney shall be authorized in a writing that satisfies the
requirements of a writing under paragraph (b) of section 609 (Proxies).
A corporation requested to provide information pursuant to this
paragraph shall make available such information in written form and in
any other format in which such information is maintained by the
corporation and shall not be required to provide such information in any
other format. If a request made pursuant to this paragraph includes a
request to furnish information regarding beneficial owners, the
corporation shall make available such information in its possession
regarding beneficial owners as is provided to the corporation by a
registered broker or dealer or a bank, association or other entity that
exercises fiduciary powers in connection with the forwarding of
information to such owners. The corporation shall not be required to
obtain information about beneficial owners not in its possession.
(c) An inspection authorized by paragraph (b) may be denied to such
shareholder or other person upon his refusal to furnish to the
corporation, its transfer agent or registrar an affidavit that such
inspection is not desired for a purpose which is in the interest of a
business or object other than the business of the corporation and that
he has not within five years sold or offered for sale any list of
shareholders of any corporation of any type or kind, whether or not
formed under the laws of this state, or aided or abetted any person in
procuring any such record of shareholders for any such purpose.
(d) Upon refusal by the corporation or by an officer or agent of the
corporation to permit an inspection of the minutes of the proceedings of
its shareholders or of the record of shareholders as herein provided,
the person making the demand for inspection may apply to the supreme
court in the judicial district where the office of the corporation is
located, upon such notice as the court may direct, for an order
directing the corporation, its officer or agent to show cause why an
order should not be granted permitting such inspection by the applicant.
Upon the return day of the order to show cause, the court shall hear the
parties summarily, by affidavit or otherwise, and if it appears that the
applicant is qualified and entitled to such inspection, the court shall
grant an order compelling such inspection and awarding such further
relief as to the court may seem just and proper.
(e) Upon the written request of any shareholder, the corporation shall
give or mail to such shareholder an annual balance sheet and profit and
loss statement for the preceding fiscal year, and, if any interim
balance sheet or profit and loss statement has been distributed to its
shareholders or otherwise made available to the public, the most recent
such interim balance sheet or profit and loss statement. The corporation
shall be allowed a reasonable time to prepare such annual balance sheet
and profit and loss statement.
(f) Nothing herein contained shall impair the power of courts to
compel the production for examination of the books and records of a
corporation.
(g) The books and records specified in paragraph (a) shall be prima
facie evidence of the facts therein stated in favor of the plaintiff in
any action or special proceeding against such corporation or any of its
officers, directors or shareholders.
S 625. Infant shareholders and bondholders.
(a) A corporation may treat an infant who holds shares or bonds of
such corporation as having capacity to receive and to empower others to
receive dividends, interest, principal and other payments and
distributions, to vote or express consent or dissent, in person or by
proxy, and to make elections and exercise rights relating to such shares
or bonds, unless, in the case of shares, the corporate officer
responsible for maintaining the list of shareholders or the transfer
agent of the corporation or, in the case of bonds, the treasurer or
paying officer or agent has received written notice that such holder is
an infant.
(b) An infant holder of shares or bonds of a corporation who has
received or empowered others to receive payments or distributions, voted
or expressed consent or dissent, or made an election or exercised a
right relating thereto, shall have no right thereafter to disaffirm or
avoid, as against the corporation, any such act on his part, unless
prior to such receipt, vote, consent, dissent, election or exercise, as
to shares, the corporate officer responsible for maintaining the list of
shareholders or its transfer agent or, in the case of bonds, the
treasurer or paying officer had received written notice that such holder
was an infant.
(c) This section does not limit any other statute which authorizes any
corporation to deal with an infant or limits the right of an infant to
disaffirm his acts.
S 626. Shareholders` derivative action brought in the right of the
corporation to procure a judgment in its favor.
(a) An action may be brought in the right of a domestic or foreign
corporation to procure a judgment in its favor, by a holder of shares or
of voting trust certificates of the corporation or of a beneficial
interest in such shares or certificates.
(b) In any such action, it shall be made to appear that the plaintiff
is such a holder at the time of bringing the action and that he was such
a holder at the time of the transaction of which he complains, or that
his shares or his interest therein devolved upon him by operation of
law.
(c) In any such action, the complaint shall set forth with
particularity the efforts of the plaintiff to secure the initiation of
such action by the board or the reasons for not making such effort.
(d) Such action shall not be discontinued, compromised or settled,
without the approval of the court having jurisdiction of the action. If
the court shall determine that the interests of the shareholders or any
class or classes thereof will be substantially affected by such
discontinuance, compromise, or settlement, the court, in its discretion,
may direct that notice, by publication or otherwise, shall be given to
the shareholders or class or classes thereof whose interests it
determines will be so affected; if notice is so directed to be given,
the court may determine which one or more of the parties to the action
shall bear the expense of giving the same, in such amount as the court
shall determine and find to be reasonable in the circumstances, and the
amount of such expense shall be awarded as special costs of the action
and recoverable in the same manner as statutory taxable costs.
(e) If the action on behalf of the corporation was successful, in
whole or in part, or if anything was received by the plaintiff or
plaintiffs or a claimant or claimants as the result of a judgment,
compromise or settlement of an action or claim, the court may award the
plaintiff or plaintiffs, claimant or claimants, reasonable expenses,
including reasonable attorney`s fees, and shall direct him or them to
account to the corporation for the remainder of the proceeds so received
by him or them. This paragraph shall not apply to any judgment rendered
for the benefit of injured shareholders only and limited to a recovery
of the loss or damage sustained by them.
S 627. Security for expenses in shareholders` derivative action brought
in the right of the corporation to procure a judgment in its
favor.
In any action specified in section 626 (Shareholders` derivative
action brought in the right of the corporation to procure a judgment in
its favor), unless the plaintiff or plaintiffs hold five percent or more
of any class of the outstanding shares or hold voting trust certificates
or a beneficial interest in shares representing five percent or more of
any class of such shares, or the shares, voting trust certificates and
beneficial interest of such plaintiff or plaintiffs have a fair value in
excess of fifty thousand dollars, the corporation in whose right such
action is brought shall be entitled at any stage of the proceedings
before final judgment to require the plaintiff or plaintiffs to give
security for the reasonable expenses, including attorney`s fees, which
may be incurred by it in connection with such action and by the other
parties defendant in connection therewith for which the corporation may
become liable under this chapter, under any contract or otherwise under
law, to which the corporation shall have recourse in such amount as the
court having jurisdiction of such action shall determine upon the
termination of such action. The amount of such security may thereafter
from time to time be increased or decreased in the discretion of the
court having jurisdiction of such action upon showing that the security
provided has or may become inadequate or excessive.
S 628. Liability of subscribers and shareholders.
(a) A holder of or subscriber for shares of a corporation shall be
under no obligation to the corporation for payment for such shares other
than the obligation to pay the unpaid portion of his subscription which
in no event shall be less than the amount of the consideration for which
such shares could be issued lawfully.
(b) Any person becoming an assignee or transferee of shares or of a
subscription for shares in good faith and without knowledge or notice
that the full consideration therefor has not been paid shall not be
personally liable for any unpaid portion of such consideration, but the
transferor shall remain liable therefor.
(c) No person holding shares in any corporation as collateral security
shall be personally liable as a shareholder but the person pledging such
shares shall be considered the holder thereof and shall be so liable.
No executor, administrator, guardian, trustee or other fiduciary shall
be personally liable as a shareholder, but the estate and funds in the
hands of such executor, administrator, guardian, trustee or other
fiduciary shall be liable.
S 629. Certain transfers or assignments by shareholders or subscribers;
effect.
Any transfer or assignment by a shareholder of his shares, or by a
subscriber for shares of his interest in the corporation, shall not
relieve him of any liability as a shareholder or subscriber if at the
time of such transfer or assignment the aggregate of the corporation`s
property, exclusive of any property which it may have conveyed,
transferred, concealed, removed, or permitted to be concealed or
removed, with intent to defraud, hinder or delay its creditors, is not
at a fair valuation sufficient in amount to pay its debts, or if such
condition is imminent.
S 630. Liability of shareholders for wages due to laborers, servants or
employees.
(a) The ten largest shareholders, as determined by the fair value of
their beneficial interest as of the beginning of the period during which
the unpaid services referred to in this section are performed, of every
corporation (other than an investment company registered as such under
an act of congress entitled "Investment Company Act of 1940"), no shares
of which are listed on a national securities exchange or regularly
quoted in an over-the-counter market by one or more members of a
national or an affiliated securities association, shall jointly and
severally be personally liable for all debts, wages or salaries due and
owing to any of its laborers, servants or employees other than
contractors, for services performed by them for such corporation. Before
such laborer, servant or employee shall charge such shareholder for such
services, he shall give notice in writing to such shareholder that he
intends to hold him liable under this section. Such notice shall be
given within one hundred and eighty days after termination of such
services, except that if, within such period, the laborer, servant or
employee demands an examination of the record of shareholders under
paragraph (b) of section 624 (Books and records; right of inspection,
prima facie evidence), such notice may be given within sixty days after
he has been given the opportunity to examine the record of shareholders.
An action to enforce such liability shall be commenced within ninety
days after the return of an execution unsatisfied against the
corporation upon a judgment recovered against it for such services.
(b) For the purposes of this section, wages or salaries shall mean all
compensation and benefits payable by an employer to or for the account
of the employee for personal services rendered by such employee. These
shall specifically include but not be limited to salaries, overtime,
vacation, holiday and severance pay; employer contributions to or
payments of insurance or welfare benefits; employer contributions to
pension or annuity funds; and any other moneys properly due or payable
for services rendered by such employee.
(c) A shareholder who has paid more than his pro rata share under this
section shall be entitled to contribution pro rata from the other
shareholders liable under this section with respect to the excess so
paid, over and above his pro rata share, and may sue them jointly or
severally or any number of them to recover the amount due from them.
Such recovery may be had in a separate action. As used in this
paragraph, "pro rata" means in proportion to beneficial share interest.
Before a shareholder may claim contribution from other shareholders
under this paragraph, he shall, unless they have been given notice by a
laborer, servant or employee under paragraph (a), give them notice in
writing that he intends to hold them so liable to him. Such notice shall
be given by him within twenty days after the date that notice was given
to him by a laborer, servant or employee under paragraph (a).
