South Carolina Code of Laws
(Unannotated)
Current through the end of the 2007 Regular Session
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Title 33 - Corporations, Partnerships and Associations
This chapter may be cited as the South Carolina Nonprofit Corporation Act of 1994.
SECTION 33-31-102. Reservation of power to amend or repeal.
The General Assembly of South Carolina has power to amend or repeal all or any part of Chapter 31, Title 33 at any time, and all domestic and foreign corporations subject to Chapter 31 of this title are governed by the amendment or repeal.
(a) A document must satisfy the requirements of this section, and of any other section that adds to or varies these requirements, to be entitled to filing by the Secretary of State.
(b) This chapter must require or permit filing the document in the office of the Secretary of State.
(c) The document must contain the information required by this chapter. It may contain other information as well.
(d) The document must be in a medium and form as permitted by the Secretary of State.
(e) The document must be in the English language. However, a corporate name need not be in English if written in English letters or Arabic or Roman numerals, and the certificate of existence required of foreign corporations need not be in English if accompanied by a reasonably authenticated English translation.
(f) The document must be executed:
(1) by the presiding officer of its board of directors of a domestic or foreign corporation, its president, or by another of its officers;
(2) if directors have not been selected or the corporation has not been formed by an incorporator; or
(3) if the corporation is in the hands of a receiver, trustee, or other court-appointed fiduciary, by that fiduciary.
(g) The person executing a document shall sign it and state beneath or opposite the signature his or her name and the capacity in which he or she signs. The document may, but need not, contain:
(1) the corporate seal;
(2) an attestation by the Secretary or an assistant secretary; or
(3) an acknowledgement, verification, or proof.
(h) If the Secretary of State has prescribed a mandatory form for a document under Section 33-31-121, the document must be in or on the prescribed form.
(i) The document must be delivered to the office of the Secretary of State for filing and must be accompanied by one exact or conformed copy, except as provided in Sections 33-31-503 and 33-31-1509, the correct filing fee, and any franchise tax, license fee, or penalty required by this chapter or other law.
(a) The Secretary of State may prescribe and furnish on request forms for:
(1) an application for a certificate of existence;
(2) a foreign corporation's application for a certificate of authority to transact business in South Carolina;
(3) a foreign corporation's application for a certificate of withdrawal; and
(4) the notice of change of principal office. If the Secretary of State so requires, use of these forms is mandatory.
The Secretary of State through regulation may prescribe a mandatory form with regard to any other forms required or permitted by Chapter 31, Title 33 to be filed in his office. All mandatory forms must comply with the statutory requirements contained in Chapter 31.
(b) The Secretary of State may prescribe and furnish on request forms for other documents required or permitted to be filed by this chapter, but their use is not mandatory.
SECTION 33-31-122. Filing, service, and copying fees.
(a) The Secretary of State shall collect the following fees when the documents described in this subsection are delivered for filing:
(1) Articles of incorporation $25.00
(2) Application for use of indistinguishable name $10.00
(3) Application for reserved name $10.00
(4) Notice of transfer of reserved name $ 3.00
(5) Application for registered name $10.00
(6) Application for renewal of registered name $10.00
(7) Corporation's statement of change of registered agent or $10.00
registered office or both
(8) Agent's statement of change of registered office for each $ 2.00
affected corporation
(9) Agent's statement of resignation $ 3.00
(10) Amendment of articles of incorporation $10.00
(11) Restatement of articles of incorporation with amendments $10.00
(12) Articles of merger $10.00
(13) Articles of dissolution $10.00
(14) Articles of revocation of dissolution $10.00
(15) Certificate of administrative dissolution No Fee
(16) Application for reinstatement following administrative $25.00
dissolution
(17) Certificate of reinstatement No Fee
(18) Certificate of judicial dissolution No Fee
(19) Application for certificate of authority $10.00
(20) Application for amended certificate of authority $10.00
(21) Application for certificate of withdrawal $10.00
(22) Certificate of revocation of authority to transact business No Fee
(23) Notice of change of principle office $10.00
(24) Articles of correction $10.00
(25) Application for certificate of existence or authorization $10.00
(26) Notification by existing corporation $10.00
(27) Irrevocable election to be governed $25.00
(28) Any other document required or permitted to be filed by this $10.00
chapter
(b) The Secretary of State shall collect a fee of ten dollars each time process is served on him under Chapter 31 of this title. The party to a proceeding causing service of process is entitled to recover this fee as costs if he prevails in the proceeding.
(c) The Secretary of State shall collect the following fees for copying and certifying the copy of any filed document relating to a domestic or foreign corporation:
(1) for copying, one dollar for the first page and fifty cents for each additional page; and
(a) Except as provided in subsection (b), a document is effective:
(1) at the time of filing on the date it is filed, as evidenced by the Secretary of State's endorsement on the original document; or
(2) at the time specified in the document as its effective time on the date it is filed.
(b) A document may specify a delayed effective time and date and if it does so the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document is effective at the close of business on that date. A delayed effective date for a document may not be later than the ninetieth day after the date filed.
(a) A domestic or foreign corporation may correct a document filed by the Secretary of State if the document:
(1) contains an incorrect statement; or
(2) was defectively executed, attested, sealed, verified, or acknowledged.
(b) A document is corrected:
(1) by preparing articles of correction that:
(i) describe the document, including its filing date, or attach a copy of it to the articles;
(ii) specify the incorrect statement and the reason it is incorrect or the manner in which the execution was defective; and
(iii) correct the incorrect statement or defective execution; and
(2) by delivering the articles of correction to the Secretary of State.
(c) Articles of correction are effective on the effective date of the document they correct except as to persons relying on the uncorrected document and adversely affected by the correction. As to those persons, articles of correction are effective when filed.
SECTION 33-31-125. Filing duty of the Secretary of State.
(a) If a document delivered to the office of the Secretary of State for filing satisfies the requirements of Section 33-31-120, the Secretary of State shall file it.
(b) The Secretary of State files a document by stamping or otherwise endorsing "filed", together with his name and official title and date and time of receipt, on both the original and document copy, together with a further endorsement that the document is a true copy of the original document. After filing a document, except as provided in Sections 33-31-503 and 33-31-1510, the Secretary of State shall deliver the document copy to the domestic or foreign corporation or its representative and the document copy must be retained as part of the permanent records of the corporation.
(c) Upon refusing to file a document, the Secretary of State shall return it to the domestic or foreign corporation or its representative within five days after the document was delivered, together with a brief, written explanation of the reason or reasons for the refusal.
(d) The Secretary of State's duty to file documents under this section is ministerial. His filing or refusing to file a document does not:
(1) affect the validity or invalidity of the document in whole or in part;
(2) relate to the correctness or incorrectness of information contained in the document; or
(3) except as provided in Section 33-31-127, create a presumption that the document is valid or invalid or that information contained in the document is correct or incorrect.
SECTION 33-31-126. Appeal from Secretary of State's refusal to file document.
(a) If the Secretary of State refuses to file a document delivered for filing to the Secretary of State's office, the domestic or foreign corporation may appeal the refusal to the court of common pleas for Richland County. The appeal is commenced by petitioning the court to compel filing the document and by attaching to the petition the document and the Secretary of State's explanation of the refusal to file.
(b) The court may summarily order the Secretary of State to file the document or take other action the court considers appropriate.
(c) The court's final decision may be appealed as in other civil proceedings.
SECTION 33-31-127. Evidentiary effect of copy of filed document.
A certificate attached to a copy of a document filed by the Secretary of State, bearing his signature, which may be in facsimile, and the seal of this State, is conclusive evidence that the original document is on file with the Secretary of State and must be taken and received in all courts, public offices, official bodies, and in all proceedings as prima facie evidence of the facts therein stated.
(a) A person may apply to the Secretary of State to furnish a certificate of existence for a domestic corporation or certificate of authorization for a foreign corporation.
(b) The certificate of existence or authorization sets forth:
(1) the domestic corporation's corporate name or the foreign corporation's corporate name used in this State;
(2) that (i) the domestic corporation is duly incorporated under the law of this State, the date of its incorporation, and the period of its duration if less than perpetual; or (ii) that the foreign corporation is authorized to transact business in this State;
(3) that all fees, taxes, and penalties owed to the Secretary of State have been paid;
(4) that the Secretary of State has not mailed notice to the corporation pursuant to either Section 33-31-1421 or 33-31-1531 that the corporation is subject to being dissolved or its authority revoked;
(5) that articles of dissolution have not been filed; and
(6) other facts of record in the office of the Secretary of State that may be requested by the applicant.
(c) Subject to any qualification stated in the certificate, a certificate of existence or authorization issued by the Secretary of State may be relied upon as conclusive evidence that the domestic or foreign corporation is in existence or is authorized to transact business in this State.
SECTION 33-31-129. Penalty for signing false document
(a) A person commits an offense if he signs a document he knows is false in any material respect, including an omission of a material fact necessary in order to make the statements made in light of the circumstances under which they were made, not misleading, with intent that the document be delivered to the Secretary of State for filing.
(b) An offense under this section is a misdemeanor punishable by a fine of not to exceed five hundred dollars.
(c) A person who violates subsection (a) is liable to any person who is damaged by the violation.
(1) "Approved by the members" or "approval by the members" means approved or ratified by the members entitled to vote on the issue through either:
(a) the affirmative vote of a majority of the votes of the members represented and voting at a duly held meeting at which a quorum is present or the affirmative vote of the greater proportion including the votes of any required proportion of the members of any class as the articles, bylaws, or this chapter may provide for specified types of member action; or
(b) a written ballot or written consent in conformity with this chapter.
(2) "Articles of incorporation" or "articles" include amended and restated articles of incorporation and articles of merger.
(3) "Board" or "board of directors" means the individual or individuals vested with overall management of the affairs of the domestic or foreign corporation, irrespective of the name by which the individual or individuals are designated, except that no individual or group of individuals is the board of directors because of powers delegated to that individual or group pursuant to Section 33-31-801(c).
(4) "Bylaws" means the code or codes of rules, other than the articles, adopted pursuant to this chapter for the regulation or management of the affairs of the corporation irrespective of the name or names by which the rules are designated.
(5) "Class" refers to a group of memberships which have the same rights with respect to voting, dissolution, redemption, and transfer. For the purpose of this section, rights are considered the same if they are determined by a formula applied uniformly.
(6) "Conspicuous" means so written that a reasonable person against whom the writing is to operate should have noticed it. For example, printing in italics or boldface or contrasting color or typing in capitals or underlined is conspicuous.
(7) "Corporation" means public benefit, mutual benefit, and religious corporation.
(8) "Delegates" means those persons elected or appointed to vote in a representative assembly for the election of a director or directors or on other matters.
(9) "Deliver" includes mail.
(10) "Directors" means natural persons, designated in the charter or bylaws or elected by the incorporators, and their successors and natural persons elected or appointed to act as members of the board, irrespective of the names or titles by which these persons are described.
(11) "Distribution" means the direct or indirect transfer of assets or any part of the income or profit of a corporation to its members, directors, or officers. The term does not include:
(a) the payment of compensation in a reasonable amount to its members, directors, or officers for services rendered;
(b) conferring benefits on its members in conformity with its purposes; or
(c) repayment of debt obligations in the normal and ordinary course of conducting activities.
(12) "Domestic corporation" means a corporation.
(13) "Effective date of notice" is defined in Section 33-31-141.
(14) "Employee" includes an officer but not a director. A director may accept duties that make him also an employee.
(15) "Entity" includes corporation and foreign corporation; business corporation and foreign business corporation; profit and nonprofit unincorporated association; corporation sole; business trust, estate partnership, trust, and two or more persons having a joint or common economic interest; and state, United States, and foreign government.
(16) "File", "filed", or "filing" means filed in the office of the Secretary of State.
(17) "Foreign corporation" means a corporation organized under a law other than the law of this State which would be a nonprofit corporation if formed under the laws of this State.
(18) "Governmental subdivision" includes authority, county, district, and municipality.
(19) "Includes" denotes a partial definition.
(20) "Individual" includes the estate of an incompetent individual.
(21) "Internal Revenue Code" means the Internal Revenue Code of 1986, or any future federal tax code or succeeding statute of like tenor and effect, and any reference to a section of the Internal Revenue Code also shall mean the corresponding section of any future federal tax code.
(22) "Means" denotes a complete definition.
(23)(a) "Member" means a person entitled, pursuant to a domestic or foreign corporation's articles or bylaws, without regard to what a person is called in the articles or bylaws, to vote on more than one occasion for the election of a director or directors or any other matter which under the terms of this chapter requires approval by the members.
(b) A person is not a member by virtue of any of the following:
(A) any rights the person has as a delegate;
(B) any rights the person has to designate or appoint a director or directors; or
(C) any rights the person has as a director.
(24) "Membership" refers to the rights and obligations a member has pursuant to a corporation's articles, bylaws, and this chapter.
(25) "Mutual benefit corporation" means a domestic corporation which either is formed as a mutual benefit corporation pursuant to Sections 33-31-201 through 33-31-207, is designated a mutual benefit corporation by a statute, or does not come within the definition of public benefit or religious corporation.
(26) "Notice" is defined in Section 33-31-141.
(27) "Person" includes any individual or entity.
(28) "Principal office" means the office, in or out of this State, so designated in the articles of incorporation, application for certificate of authority, or in a notice of change of principal office filed pursuant to either Section 33-31-505 or 33-31-1515 where the principal office of a domestic or foreign corporation is located.
(29) "Proceeding" includes civil suit and criminal, administrative, and investigatory action.
(30) "Public benefit corporation" means a domestic corporation which is formed as a public benefit corporation pursuant to Sections 33-31-201 through 33-31-207 or is required to be a public benefit corporation pursuant to Section 33-31-1707.
(31) "Record date" means the date established under Sections 33-31-601 through 33-31-640 or Sections 33-31-701 through 33-31-730 on which a corporation determines the identity of its members and their membership rights for the purposes of this chapter. The determinations must be made as of the time of close of transactions on the record date unless another time for doing so is specified at the time the record date is fixed.
(32) "Religious corporation" means a domestic corporation which is formed as a religious corporation pursuant to Sections 33-31-201 through 33-31-207 or is required to be a religious corporation pursuant to Section 33-31-1707.
(33) "Secretary" means the corporate officer to whom the board of directors has delegated responsibility under Section 33-31-840(b) for custody of the minutes of the directors' and members' meetings and for authenticating the records of the corporation.
(34) "State", when referring to a part of the United States, includes a state and commonwealth, and their agencies and governmental subdivisions, and a territory, and insular possession, and their agencies and governmental subdivisions of the United States.
(35) "United States" includes district, authority, bureau, commission, department, and any other agency of the United States.
(36) "Vote" includes authorization by written ballot and written consent.
(37) "Voting power" means the total number of votes entitled to be cast on the issue at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event which has not occurred at the time. Where a class is entitled to vote as a class for directors, the determination of voting power of the class must be based on the percentage of the number of directors the class is entitled to elect out of the total number of authorized directors.
(b) Notice may be communicated in person; by telephone, telegraph, teletype, facsimile transmission (FAX), or other form of wire or wireless communication; or by mail or private carrier. If these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where published; or by radio, television, or other form of public broadcast communications.
(c) Oral notice is permissible if reasonable under the circumstances and is effective when communicated if communicated in a comprehensible manner. Oral notice also includes notice through broadcast transmission.
(d) Written notice, if in a comprehensible form, is effective at the earliest or the following:
(1) when received;
(2) five days after its deposit in the United States mail, if mailed correctly addressed and with first class postage affixed;
(3) on the date shown on the return receipt, if sent by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee;
(4) fifteen days after its deposit in the United States mail, if mailed correctly addressed and with other than first class, registered, or certified postage affixed.
(e) Written notice is correctly addressed to a member of a domestic or foreign corporation if addressed to the member's address shown in the corporation's current list of members.
(f) A written notice or report delivered as part of a newsletter, magazine or other publication regularly sent to members constitutes a written notice or report if addressed or delivered to the member's address shown in the corporation's current list of members, or in the case of members who are residents of the same household and who have the same address in the corporation's current list of members, if addressed or delivered to one of such members, at the address appearing on the current list of members.
(g) Written notice is correctly addressed to a domestic or foreign corporation, authorized to transact business in this State, other than in its capacity as a member, if addressed to its registered agent or to its secretary at its principal office shown in its most recent Notice of Change of Principal Office and if none has been filed, in its articles of incorporation or application for certificate of authority.
(h) If Section 33-31-705(b) or any other provision of this chapter prescribes notice requirements for particular circumstances, those requirements govern. If articles or bylaws prescribe notice requirements, not inconsistent with this section or other provisions of this chapter, those requirements govern.
Except where otherwise determined by a court of competent jurisdiction, a corporation that is a private foundation as defined in Section 509(a) of the Internal Revenue Code:
(a) shall distribute such amounts for each taxable year at such time and in such manner as not to subject the corporation to tax under Section 4942 of the Internal Revenue Code;
(b) may not engage in any act of self-dealing as defined in Section 4941(d) of the Internal Revenue Code;
(c) may not retain any excess business holdings as defined in Section 4943(c) of the Internal Revenue Code;
(d) may not make any taxable expenditures as defined in Section 4944 of the Internal Revenue Code;
(e) may not make any taxable expenditures as defined in Section 4945(d) of the Internal Revenue Code.
SECTION 33-31-151. Express amendment excluding application of Section 33-31-150.
A corporation may amend its articles of incorporation expressly to include the application of Section 33-31-150, or any portion of that section.
SECTION 33-31-152. Rights of State are not impaired.
Nothing in Sections 33-31-150, 33-31-151, 62-7-405(f), and 62-7-405(g) impairs the rights and powers of the courts or the Attorney General of this State with respect to a corporation.
SECTION 33-31-155. Authority to dispose of assets from a dissolved nonprofit corporation or eleemosynary organization.
(A) Persons serving as directors or trustees at the time of dissolution of a nonprofit corporation or eleemosynary organization created pursuant to Section 33-31-10 and located in Florence County for the public good other than religious purposes are invested with the authority to dispose of any remaining assets of the corporation by resolution pursuant to the requirements of this section.
(B) The corporation's charter does not have to be reinstated for the disposition of such assets.
(C) The directors or trustees must call a special meeting for the limited purpose of disposing of the corporate assets remaining after dissolution. Notwithstanding any other provision of law, a quorum shall not be required for the conducting of the special meeting. Notice of such meeting must be published in a newspaper of general circulation, in the county in which the organization was perfected, for a period of one week prior to the meeting date.
(D) The assets may only be disposed of if a majority of the directors or trustees present and voting cast a favorable majority for such disposition. The assets must be distributed in such a manner to ensure their continued use for public and civic purposes.
(E) If persons serving as directors or trustees at the time of dissolution are deceased or have not taken action to dispose of assets of a dissolved nonprofit eleemosynary organization within five years of dissolution, any remaining assets escheat to the general fund of the State.
(a) If for any reason it is impractical or impossible for a corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, in the manner prescribed by its articles, bylaws, or this chapter, then upon petition of a director, officer, delegate, member, or the Attorney General, the court of common pleas for the county in which the principal office designated on the last filed notice of change of principal office, articles, or application for authority to transact business is located, or if none within South Carolina, then the Richland County Court of Common Pleas, may order that such a meeting be called or that a written ballot or other form of obtaining the vote of members, delegates, or directors be authored, in such a manner as the court finds fair and equitable under the circumstances.
(b) The court, in an order issued pursuant to this section, shall provide for a method of notice reasonably designed to give actual notice to all persons who would be entitled to notice of a meeting held pursuant to the articles, bylaws, and this chapter, whether or not the method results in actual notice to all such persons or conforms to the notice requirements that would otherwise apply. In a proceeding under this section, the court may determine who the members or directors are.
(c) The order issued pursuant to this section may dispense with any requirement relating to the holding of or voting at meetings or obtaining votes, including any requirement as to quorums or as to the number or percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or this chapter.
(d) Whenever practical, any order issued pursuant to this section shall limit the subject matter of meetings or other forms of consent authorized to items, including amendments to the articles or bylaws, the resolution of which will or may enable the corporation to continue managing its affairs without further resort to this section. However, an order under this section may also authorize the obtaining of whatever votes and approvals are necessary for the dissolution, merger, or sale of assets.
(e) Any meeting or other method of obtaining the vote of members, delegates, or directors conducted pursuant to an order issued under this section and that complies with all the provisions of such order, is a valid meeting or vote, as the case may be, and has the same force and effect as if it complied with every requirement imposed by the articles, bylaws, and this chapter.
(a) The Attorney General must be given notice of the commencement of any proceeding that this chapter authorizes the Attorney General to bring but that has been commenced by another person.
(b) Whenever a provision of this chapter requires that notice be given to the Attorney General before or after commencing a proceeding or permits the Attorney General to commence a proceeding:
(1) if no proceeding has been commenced, the Attorney General may take appropriate action including, but not limited to, seeking injunctive relief;
(2) if a proceeding has been commenced by a person other than the Attorney General, the Attorney General, as of right, may intervene in the proceeding.
SECTION 33-31-171. Investigation by Attorney General authorized.
The Attorney General, or any of his assistants or representatives when authorized by the Attorney General, may make investigations into the organization, conduct, and management of a nonprofit corporation, domestic or foreign, operating in this State. Every such corporation shall permit the Attorney General or any of his authorized assistants or representatives to examine and take copies of all its books, accounts, records, minutes, letters, memoranda, documents, checks, vouchers, telegrams, articles, bylaws, and any and all other records of any such corporation as often as the Attorney General may deem it necessary to show or tend to show that the corporation has been, or is, engaged in acts or conduct in violation of its charter rights and privileges or in violation of any law of this State.
SECTION 33-31-172. Requesting permission to make examinations.
A written request must be made to the president or another officer of the nonprofit corporation at the time the Attorney General or his assistants or representatives desire to examine the affairs of the corporation, and it is the duty of the officer or his agent to immediately permit the Attorney General, or his authorized assistants or representatives, to inspect and examine any of the documents of the corporation.
SECTION 33-31-173. Use of information is restricted.
The Attorney General, or his authorized assistants or representatives, may not make public or use any document, copy, or other information derived in the course of an examination authorized by Sections 33-31-170 through 33-31-175, except in a judicial proceeding to which the State is a party or in a suit by the State to revoke the certificate of authority or cause the articles of the corporation to be forfeited or to collect penalties for a violation of the laws of this State or for the information of any officer of this State charged with the enforcement of its laws.
SECTION 33-31-174. Forfeiture of right to operate for refusing examination.
A foreign nonprofit corporation operating in this State under certificate of authority granted under the laws of this State, or any officer or agent thereof, or any domestic nonprofit corporation which fails or refuses to permit the Attorney General or his authorized assistants or representatives to examine or take copies of any of its documents as provided in Sections 33-31-170 through 33-31-175, whether they be situated within or without this State, shall forfeit its right to operate in this State and its articles of incorporation or certificate of authority shall be canceled or forfeited.
The provisions of Sections 33-31-170 through 33-31-175 are cumulative of all other laws now in force in this State and may not be construed as repealing any other means afforded by law for securing testimony or inquiring into the affairs of domestic or foreign nonprofit corporations.
SECTION 33-31-180. Religious corporations; Constitutional protections.
If religious doctrine governing the affairs of a religious corporation is inconsistent with the provisions of this chapter on the same subject, the religious doctrine controls to the extent required by the Constitution of the United States or the Constitution of South Carolina, or both.
One or more persons may act as the incorporator or incorporators of a corporation by delivering articles of incorporation to the Secretary of State for filing.
(1) a corporate name for the corporation that satisfies the requirements of Section 33-31-401;
(2) one of the following statements:
(i) This corporation is a public benefit corporation.
(ii) This corporation is a mutual benefit corporation.
(iii) This corporation is a religious corporation;
(3) the street address of the corporation's initial registered office with zip code and the name of its initial registered agent at that office;
(4) the name, address, and zip code of each incorporator;
(5) whether or not the corporation will have members;
(6) provisions not inconsistent with law regarding the distribution of assets on dissolution; and
(7) the address, including zip code, of the proposed principal office for the corporation which may be either within or outside South Carolina.
(b) Unless the articles provide otherwise, no director of the corporation is personally liable for monetary damages for breach of any duty to the corporation or members. However, this provision shall not eliminate or limit the liability of a director:
(1) for any breach of the director's duty of loyalty to the corporation or its members;
(2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
(3) for any transaction from which a director derived an improper personal benefit; or
(4) under Sections 33-31-831 through 33-31-833.
This provision shall not eliminate or limit the liability of a director for an act or omission occurring before the date when the provision becomes effective.
(c) The articles of incorporation may set forth:
(1) the purpose for which the corporation is organized which may be, either alone or in combination with other purposes, the transaction of any lawful activity;
(2) the names, addresses, and zip codes of the individuals who are to serve as the initial directors;
(3) provisions not inconsistent with law regarding:
(i) managing and regulating the affairs of the corporation;
(ii) defining, limiting, and regulating the powers of the corporation, its board of directors, and members, or any class of members; and
(iii) the characteristics, qualifications, rights, limitations, and obligations attaching to each or any class of members;
(4) any provision that under this chapter is required or permitted to be set forth in the bylaws.
(d) Each incorporator and director named in the articles must sign the articles.
(e) The articles of incorporation need not set forth any of the corporate powers enumerated in this chapter.
(a) Unless a delayed effective date is specified, the corporate existence begins when the articles of incorporation are filed.
(b) The Secretary of State's filing of the articles of incorporation is conclusive proof that the incorporators satisfied all conditions precedent to incorporation except in a proceeding by the State to cancel or revoke the incorporation or involuntarily dissolve the corporation.
SECTION 33-31-204. Liability for preincorporation transactions.
All persons purporting to act as or on behalf of a corporation, knowing there was no incorporation under this chapter, are jointly and severally liable for all liabilities created while so acting except for any liability to any person who knew or reasonably should have known that there was no incorporation.
(1) if initial directors are named in the articles of incorporation, the initial directors shall hold an organizational meeting, at the call of a majority of the directors, to complete the organization of the corporation by appointing officers, adopting bylaws, and carrying on any other business brought before the meeting;
(2) if initial directors are not named in the articles, the incorporator or incorporators shall hold an organizational meeting at a call of a majority of the incorporators:
(i) to elect directors and complete the organization of the corporation; or
(ii) to elect a board of directors who shall complete the organization of the corporation.
(b) Action required or permitted by this chapter to be taken by incorporators at an organizational meeting may be taken without a meeting if the action taken is evidenced by one or more written consents describing the action taken and signed by each incorporator.
(c) An organizational meeting may be held in or out of this State in accordance with Section 33-31-821.
(a) The incorporators or board of directors of a corporation shall adopt bylaws for the corporation.
(b) The bylaws may contain any provision for regulating and managing the affairs of the corporation that is not inconsistent with law or the articles of incorporation.
(a) Unless the articles provide otherwise, the directors of a corporation may adopt, amend, or repeal bylaws to be effective only in an emergency defined in subsection (d). The emergency bylaws, which are subject to amendment or repeal by the members, may provide special procedures necessary for managing the corporation during the emergency, including:
(1) how to call a meeting of the board;
(2) quorum requirements for the meeting; and
(3) designation of additional or substitute directors.
(b) All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.
(c) Corporate action taken in good faith in accordance with the emergency bylaws:
(1) binds the corporation; and
(2) may not be used to impose liability on a corporate director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.
(e) A corporate director, officer, employee, or agent is not liable for deviation from normal procedures if the conduct was authorized by emergency bylaws adopted as provided in this section.
(a) Every corporation incorporated under this chapter has the purpose of engaging in any lawful activity unless a more limited purpose is set forth in the articles of incorporation.
(b) A corporation engaging in an activity that is subject to regulation under another statute of this State may incorporate under this chapter only if incorporation under this chapter is not prohibited by the other statute. The corporation is subject to all limitations of the other statute.
Unless its articles of incorporation provide otherwise, every corporation has perpetual duration and succession in its corporate name and has the same powers as an individual to do all things necessary or convenient to carry out its affairs including, without limitation, power:
(1) to sue and be sued, complain, and defend in its corporate name;
(2) to have a corporate seal, which may be altered at will, and to use it, or a facsimile of it, by impressing or affixing or in any other manner reproducing it;
(3) to make and amend bylaws not inconsistent with its articles of incorporation or with the laws of this State for regulating and managing the affairs of the corporation;
(4) to purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property or any legal or equitable interest in property, wherever located;
(5) to sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property;
(6) to purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use, sell, mortgage, lend, pledge, or otherwise dispose of, and deal in and with, shares or other interest in or obligations of any entity;
(7) to make contracts and guaranties, incur liabilities, borrow money, issue notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income;
(8) to lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment, except as limited by Section 33-31-832;
(9) to be a promoter, partner, trustee, member, associate, or manager of any partnership, joint venture, trust, or other entity. When acting as a trustee of a trust in which it has a beneficial interest, the corporation is not conducting a trust business with regard to that trust for purposes of Section 34-21-10;
(10) to conduct its activities, locate offices, and exercise the powers granted by this chapter within or without this State;
(11) to elect or appoint directors, officers, employees, and agents of the corporation, define their duties, and fix their compensation;
(12) to pay pensions and establish pension plans, pension trusts, and other benefit and incentive plans for any or all of its current or former directors, officers, employees, and agents;
(13) to make donations not inconsistent with law for the public welfare or for charitable, religious, scientific, or educational purposes and for other purposes that further the corporate interest;
(14) to accept gifts, devises, and bequests subject to any conditions or limitations, contained in the gift, devise, or bequest so long as the conditions or limitations are not contrary to this chapter or the purposes for which the corporation is organized;
(15) to impose dues, assessments, and admission and transfer fees upon its members;
(16) to establish conditions for admission of members, admit members, and issue memberships;
(17) to carry on a business;
(18) to do all things necessary or convenient, not inconsistent with law, to further the activities and affairs of the corporation.
(a) In anticipation of or during an emergency defined in subsection (d), the board of directors of a corporation may:
(1) modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and
(2) relocate the principal office, designate alternative principal offices or regional offices, or authorize the officer to do so.
(b) During an emergency defined in subsection (d), unless emergency bylaws provide otherwise:
(1) notice of a meeting of the board of directors need be given only to those directors it is practicable to reach and may be given in any practicable manner, including by publication and radio; and
(2) one or more officers of the corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum.
(c) Corporate action taken in good faith during an emergency under this section to further the ordinary affairs of the corporation:
(1) binds the corporation; and
(2) may not be used to impose liability on a corporate director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the corporation's directors cannot readily be assembled because of some catastrophic event.
(e) Corporate action taken in good faith under this section to further the affairs of the corporation during an emergency binds the corporation. A corporate director, officer, employee, or agent is not liable for deviation from normal procedures if the conduct was authorized by emergency powers provided in this chapter.
(a) Except as provided in subsection (b), the validity of corporate action may not be challenged on the ground that the corporation lacks or lacked power to act.
(b) A corporation's power to act may be challenged in a proceeding against the corporation to enjoin an act where a third party has not acquired rights. The proceeding may be brought by the Attorney General, a director, or by a member or members in a derivative proceeding.
(c) A corporation's power to act may be challenged in a proceeding against an incumbent or former director, officer, employee, or agent of the corporation. The proceeding may be brought by a director, the corporation, directly, derivatively, or through a receiver, a trustee, or other legal representative, or in the case of a public benefit corporation, by the Attorney General.
SECTION 33-31-305. Powers of corporations created by legislative authority before 1900.
All charitable, social, and religious corporations validly created by legislative authority before 1900, or validly created before 1900 by the act of a city, county government, or other political subdivision, in addition to the powers theretofore granted them, have all the powers enumerated in Section 33-31-302, "Powers of Corporation".
(a) A corporate name may not contain language stating or implying that the corporation is organized for a purpose other than that permitted by Section 33-31-301 and its articles of incorporation.
(b) Except as authorized by subsections (c) and (d), a corporate name must be distinguishable upon the records of the Secretary of State from the name appearing upon the records of the Secretary of State of any other nonprofit or business corporation, professional corporation, or limited partnership incorporated in, formed in, or authorized to do business in South Carolina, or a name reserved, registered, or otherwise filed upon the records of the Secretary of State.
(c) A corporation may apply to the Secretary of State for authorization to use a name that is not distinguishable upon the Secretary of State's records from one or more of the names described in subsection (b). The Secretary of State shall authorize use of the name applied for if:
(1) the other corporation consents to the use in writing and submits an undertaking in form satisfactory to the Secretary of State to change its name to a name that is distinguishable upon the records of the Secretary of State from the name of the applying corporation; or
(2) the applicant delivers to the Secretary of State a certified copy of a final judgment of a court of competent jurisdiction establishing the applicant's right to use the name applied for in this State.
(d) A corporation may use the name, including the fictitious name, of another domestic or foreign business or nonprofit corporation that is used in this State if the other corporation is incorporated or authorized to do business in this State and the proposed user corporation has:
(1) merged with the other corporation;
(2) been formed by reorganization of the other corporation; or
(3) acquired all or substantially all of the assets, including the corporate name, of the other corporation.
(e) Except for allowing foreign corporations to file for a certificate of authority under a fictitious name as provided in Section 33-31-1506, this chapter does not control the use of fictitious names.
(f) A corporation that converts to a nonprofit corporation pursuant to Section 33-10-110 may continue to use the same name that it used prior to the conversion.
(a) A person may reserve the exclusive use of a corporate name including the corporate name of a foreign corporation or its corporate name with any change required by Section 33-31-1506, by delivering an application to the Secretary of State for filing which shall set forth the name and address of the applicant and the name proposed to be reserved. Upon finding that the corporate name applied for is available, the Secretary of State shall reserve the name for the applicant's exclusive use for a nonrenewable one hundred twenty-day period.
(b) The owner of a reserved corporate name may transfer the reservation to another person by delivering to the Secretary of State a signed notice of the transfer that states the name and address of the transferee.
SECTION 33-31-403. Registered name of a foreign corporation.
(a) A foreign corporation may register its corporate name, or its corporate name with any change required by Section 33-31-1506, if the name is distinguishable upon the records of the Secretary of State from the name appearing upon the records of the Secretary of State of any other nonprofit or business corporation, professional corporation, or limited partnership incorporated in, formed in, or authorized to do business in this State, or a name reserved or registered upon the records of the Secretary of State.
(b) A foreign corporation registers its corporate name, or its corporate name with any change required by Section 33-31-1506, by delivering to the Secretary of State an application:
(1) setting forth its corporate name, or its corporate name with any change required by Section 33-31-1506, the state or country and date of its incorporation, a statement that the foreign corporation is not, and has not done business in South Carolina, and a brief description of the nature of the activities in which it is engaged; and
(2) accompanied by a certificate of existence, or a document of similar import, from the state or country of incorporation current within sixty days of delivery, duly authenticated by the official having custody of the corporation records in the state or country under whose law it is incorporated.
(c) The name is registered for the applicant's exclusive use upon the effective date of the application.
(d) A foreign corporation whose registration is effective may renew it for successive years by delivering to the Secretary of State for filing a renewal application, which complies with the requirements of subsection (b), between October first and December thirty-first of the preceding year. The renewal application renews the registration for the following calendar year.
(e) A foreign corporation whose registration is effective may qualify thereafter as a foreign corporation under that name or consent in writing to the use of that name by a corporation thereafter incorporated under this chapter or by another foreign corporation thereafter authorized to transact business in this State. The registration terminates when the domestic corporation is incorporated or the foreign corporation qualifies or consents to the qualification of another foreign corporation under the registered name.
SECTION 33-31-404. Name change filing requirement when real property owned.
(a) When either a domestic or foreign nonprofit corporation which owns real property in South Carolina changes its corporate name by amendment of its articles, by merger, or reorganization, the newly named, surviving, acquiring, or reorganized corporation must file a notice of that name change in the office of the register of deeds of the county in this State in which the real property is situate. If there is no such office in that county, a notice of name change must be filed with the clerk of court of the county in which that real property is situate.
(b) The filing must be:
(1) by affidavit executed in accordance with the provisions of Section 33-31-120 and containing the old and new names of the corporation, which affidavit also may describe the real property owned by that corporation; or,
(2) by filing a certified copy of the amended articles or articles of merger; or
(3) by a duly recorded deed of conveyance to the newly named, surviving, acquiring, or reorganized corporation.
(c) the affidavit or filed articles must be duly indexed in the index of deeds.
(d) The purpose of this section is to establish record notice under Chapter 7, Title 30. Failure to make the required filing of a corporate name change will not affect the legality, force, effect, or enforceability as between the parties of any conveyance or other transaction involving the real estate owned by the affected corporation that is made subsequent to the change in name.
ARTICLE 5.
OFFICE AND AGENTS
SECTION 33-31-501. Registered office and registered agent.
Each corporation must continuously maintain in this State:
(1) a registered office with the same address as that of the registered agent; and
(2) a registered agent, who may be:
(i) an individual who resides in this State and whose office is identical with the registered office;
(ii) a domestic business or nonprofit corporation whose office is identical with the registered office; or
(iii) a foreign business or nonprofit corporation authorized to transact business in this State whose office is identical with the registered office.
SECTION 33-31-502. Change of registered office or registered agent.
(a) A corporation may change its registered office or registered agent by delivering to the Secretary of State for filing a statement of change that sets forth:
(1) the name of the corporation;
(2) the street address, with zip code, of its current registered office;
(3) if the current registered office is to be changed, the street address, including zip code, of the new registered office;
(4) the name of its current registered agent;
(5) if the current registered agent is to be changed, the name of the new registered agent and the new agent's written consent, either on the statement or attached to it, to the appointment; and
(6) that after the change or changes are made, the street addresses of its registered office and the office of its registered agent which will be identical.
(b) If the street address of a registered agent's office is changed, the registered agent may change the street address of the registered office of any corporation for which the registered agent is the registered agent by notifying the corporation in writing of the change and by signing, either manually or in facsimile, and delivering to the Secretary of State for filing a statement that complies with the requirements of subsection (a) and recites that the corporation has been notified of the change.
SECTION 33-31-503. Resignation of registered agent.
(a) A registered agent may resign as registered agent by signing and delivering to the Secretary of State the original and two exact or conformed copies of a statement of resignation. The statement may include a statement that the registered office is discontinued also.
(b) After filing the statement the Secretary of State shall mail one copy to the registered office, if not discontinued, and the other copy to the corporation at its principal office as shown in its articles or most recently filed notice of change of principal office.
(c) The agency appointment is terminated, and the registered office discontinued if so provided, on the thirty-first day after the date on which the statement was filed.
Except as otherwise specifically provided in this chapter, service of process on a nonprofit corporation must be in accord with the applicable provisions of Title 15.
SECTION 33-31-505. Notice of Change of Principal Office.
If a corporation changes the location of its principal office, the corporation within thirty days shall file a Notice of Change of Principal Office with the Secretary of State. The Notice of Change of Principal Office shall set forth:
(a) The name of the corporation; and
(b) The current street address with zip code of the corporation's principal office and the former principal office address.
Except as provided in its articles or bylaws, a corporation may admit members for no consideration or for such consideration as is determined by the board.
. TYPES OF MEMBERSHIPS - MEMBERS' RIGHTS AND OBLIGATIONS
SECTION 33-31-610. Differences in rights and obligations of members.
All members have the same rights and obligations with respect to voting, dissolution, redemption, and transfer, unless the articles or bylaws establish classes of membership with different rights or obligations. All members have the same rights and obligations with respect to any other matters, except as set forth in or authorized by the articles or bylaws.
(a) Except as set forth in or authorized by the articles or bylaws, no member of a mutual benefit corporation may transfer a membership or any right arising therefrom.
(b) No member of a public benefit or religious corporation may transfer a membership or any right arising therefrom.
(c) Where transfer rights have been provided, no restriction on them is binding with respect to a member holding a membership issued before the adoption of the restriction unless the restriction is approved by the members and the affected member.
SECTION 33-31-612. Member's liability to third parties.
A member of a corporation is not, as such, personally liable for the acts, debts, liabilities, or obligations of the corporation.
(b) The resignation of a member does not relieve the member from any obligations the member may have to the corporation as a result of obligations incurred or commitments made before resignation.
SECTION 33-31-621. Termination, expulsion, and suspension.
(a) No member of a public benefit or mutual benefit corporation may be expelled or suspended, and no membership or memberships in such corporations may be terminated or suspended except pursuant to a procedure that is fair and reasonable and is carried out in good faith.
(b) A procedure is fair and reasonable when either:
(1) the articles or bylaws set forth a procedure that provides:
(i) not less than fifteen days prior written notice of the expulsion, suspension, or termination and the reasons therefore; and
(ii) an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension, or termination by a person or persons authorized to decide that the proposed expulsion, termination, or suspension not take place; or
(2) it is fair and reasonable taking into consideration all of the relevant facts and circumstances.
(c) Any written notice given by mail must be given by first class or certified mail sent to the last address of the member shown on the corporation's records.
(d) A proceeding challenging an expulsion, suspension, or termination, including a proceeding in which defective notice is alleged, must be commenced within one year after the effective date of the expulsion, suspension, or termination.
(e) A member who has been expelled or suspended may be liable to the corporation for dues, assessments, or fees as a result of obligations incurred or commitments made before expulsion or suspension.
(a) A public benefit or religious corporation may not purchase any of its memberships or any right arising therefrom.
(b) A mutual benefit corporation may purchase the membership of a member who resigns or whose membership is terminated for the amount and pursuant to the conditions set forth in or authorized by its articles or bylaws. No payment shall be made in violation of Article 13.
Derivative suits may be maintained on behalf of South Carolina corporations in federal and state court in accordance with the applicable rules of civil procedure.
(a) A corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws.
(b) A corporation with members may hold regular membership meetings at the times stated in or fixed in accordance with the bylaws.
(c) Annual and regular membership meetings may be held in or out of this State at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual and regular meetings must be held at the corporation's principal office.
(d) At the annual meeting:
(1) The president and chief financial officer shall report on the activities and financial condition of the corporation; and
(2) Unless this chapter or the articles of incorporation or bylaws require otherwise, notice of an annual meeting need not include a description of the purpose for which the meeting is called.
(e) At regular meetings, the members shall consider and act upon matters as raised consistent with provisions of the articles of incorporation or bylaws and, in addition, with the notice requirements of this chapter.
(f) The failure to hold an annual or regular meeting at a time stated in or fixed in accordance with a corporation's bylaws does not affect the validity of a corporate action.
(a) A corporation with members shall hold a special meeting of members:
(1) on call of its board or the person or persons authorized to do so by the articles or bylaws; or
(2) except as provided in the articles or bylaws of a religious corporation, if the holders of at least five percent of the voting power of any corporation sign, date, and deliver to any corporate officer one or more written demands for the meeting describing the purpose or purposes for which it is to be held.
(b) The close of business on the thirtieth day before delivery of the demand or demands for a special meeting to any corporate officer is the record date for the purpose of determining whether the five percent requirement of subsection (a) has been met.
(c) If a notice for a special meeting demanded under subsection (a)(2) is not given pursuant to Section 33-31-705 within thirty days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection (d), a person signing the demand or demands may set the time and place of the meeting and give notice pursuant to Section 33-31-705.
(d) Special meetings of members may be held in or out of this State at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings must be held at the corporation's principal office.
(e) Only those matters that are within the purpose or purposes described in the meeting notice required by Section 33-31-705 may be conducted at a special meeting of members.
(a) The court of common pleas of the county where a corporation's principal office in this State or, if none in this State, its registered office, is located may summarily order a meeting to be held:
(1) on application of a member or other person entitled to participate in an annual or regular meeting, and in the case of a public benefit corporation, the Attorney General, if an annual meeting was not held within the earlier of six months after the end of the corporation's fiscal year or fifteen months after its last annual meeting; or
(2) on application of a member or other person entitled to participate in a regular meeting, and in the case of a public benefit corporation, the Attorney General, if a regular meeting is not held within forty days after the date it was required to be held; or
(3) on application of a member who signed a demand for a special meeting valid under Section 33-31-702, a person or persons entitled to call a special meeting and, in the case of a public benefit corporation, the Attorney General, if:
(i) notice of the special meeting was not given within thirty days after the date the demand was delivered to a corporate officer; or
(ii) the special meeting was not held in accordance with the notice.
(b) The court may fix the time and place of the meeting, specify a record date for determining members entitled to notice of and to vote at the meeting, prescribe the form and content of the meeting notice, fix the quorum required for specific matters to be considered at the meeting, or direct that the votes represented at the meeting constitute a quorum for action on those matters, and enter other orders necessary to accomplish the purpose or purposes of the meeting.
(c) If the court orders a meeting, it may also order the corporation to pay the member's costs, including reasonable counsel fees, incurred to obtain the order.
(a) Unless limited or prohibited by the articles or bylaws, action required or permitted by this chapter to be approved by the members may be approved without a meeting of members if the action is approved by members holding at least eighty percent of the voting power. The action must be evidenced by one or more written consents describing the action taken, signed by those members representing at least eighty percent of the voting power, and delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) If not otherwise determined under Section 33-31-703 or 33-31-707, the record date for determining members entitled to take action without a meeting is the date the first member signs the consent under subsection (a).
(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document filed with the Secretary of State.
(d) Written notice of member approval pursuant to this section must be given to all members who have not signed the written consent. If written notice is required, member approval pursuant to this section is effective ten days after the written notice is given.
(a) A corporation shall give notice consistent with its bylaws of meetings of members in a fair and reasonable manner.
(b) Any notice that conforms to the requirements of subsection (c) is fair and reasonable, but other means of giving notice also may be fair and reasonable when all the circumstances are considered. However, notice of matters referred to in subsection (c)(2) must be given as provided in subsection (c).
(c) Notice is fair and reasonable if:
(1) the corporation notifies its members of the place, date, and time of each annual, regular, and special meeting of members no fewer than ten or if notice is mailed by other than first class or registered mail, thirty, nor more than sixty days before the meeting date;
(2) notice of an annual or regular meeting includes a description of any matter that must be approved by the members under Section 33-31-831, 33-31-856, 33-31-1003, 33-31-1021, 33-31-1104, 33-31-1202, 33-31-1401, or 33-31-1402; and
(3) notice of a special meeting includes a description of the matter for which the meeting is called.
(d) Unless the bylaws require otherwise, if an annual, regular, or special meeting of members is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place, if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under Section 33-31-707, however, notice of the adjourned meeting must be given under this section to the members of record as of the new record date.
(e) When giving notice of an annual, regular, or special meeting of members, a corporation shall give notice of a matter a member intends to raise at the meeting if:
(1) requested in writing to do so by a person entitled to call a special meeting; and
(2) the request is received by the secretary or president of the corporation at least ten days before the corporation gives notice of the meeting.
(a) A member may waive any notice required by this chapter, the articles, or bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the member entitled to the notice, and be delivered to the corporation for inclusion in the minutes or filing with the corporate records.
(b) A member's attendance at a meeting:
(1) waives objection to lack of notice or defective notice of the meeting, unless the member at the beginning of the meeting objects to holding the meeting or transacting business at the meeting;
(2) waives objection to consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the member objects to considering the matter when it is presented.
SECTION 33-31-707. Record date; determining members entitled to notice and vote.
(a) The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to notice of a member's meeting. If the bylaws do not fix or provide for fixing a record date, the board may fix a future date as a record date. If no record date is fixed, members at the close of business on the business day preceding the day on which notice is given or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held are entitled to notice of the meeting.
(b) The bylaws of a corporation may fix or provide the manner of fixing a date as the record date for determining the members entitled to vote at a member's meeting. If the bylaws do not fix or provide for fixing a record date, the board may fix a future date as a record date. If no record date is fixed, members on the date of the meeting who are otherwise eligible to vote are entitled to vote at the meeting.
(c) The bylaws may fix or provide the manner for determining a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. If the bylaws do not fix or provide for fixing a record date, the board may fix in advance a record date. If no record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or the sixtieth day before the date of such other action, whichever is later, are entitled to exercise such rights.
(d) A record date fixed under this section may not be more than seventy days before the meeting or action requiring a determination of members occurs.
(e) A determination of members entitled to notice of or to vote at a membership meeting is effective for any adjournment of the meeting unless the board fixes a new date for determining the right to notice or the right to vote, which it must do if the meeting is adjourned to a date more than one hundred twenty days after the record date for determining members entitled to notice of the original meeting.
(f) If a court orders a meeting adjourned to a date more than one hundred twenty days after the date fixed for the original meeting, it may provide that the original record date for notice or voting continues in effect or it may fix a new record date for notice or voting.
SECTION 33-31-708. Action by written or electronic ballot.
(a) Unless prohibited or limited by the articles or bylaws, any action that may be taken at any annual, regular, or special meeting of members may be taken without a meeting if the corporation delivers a written or electronic ballot to every member entitled to vote on the matter.
(b) A written or electronic ballot shall:
(1) set forth each proposed action; and
(2) provide an opportunity to vote for or against each proposed action.
(c) Approval by written or electronic ballot pursuant to this section is valid only when the number of votes cast by ballot equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve the matter at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.
(d) All solicitations for votes by written or electronic ballot shall:
(1) indicate the number of responses needed to meet the quorum requirements;
(2) state the percentage of approvals necessary to approve each matter other than election of directors; and
(3) specify the time by which a ballot must be received by the corporation in order to be counted.
(e) Except as otherwise provided in the articles or bylaws, a written or electronic ballot may not be revoked.
(a) After fixing a record date for a notice of a meeting, a corporation shall prepare an alphabetical list of the names of all its members who are entitled to notice of the meeting and shall list the members by classification of membership, if any. The list must show the address and number of votes each member is entitled to vote at the meeting. The corporation shall prepare on a current basis through the time of the membership meeting a list of members, if any, who are entitled to vote at the meeting but not entitled to notice of the meeting. This list must be prepared on the same basis and be part of the list of members.
(b) The list of members must be available for inspection by any member for the purpose of communication with other members concerning the meeting, beginning the day after notice is given of the meeting for which the list was prepared and continuing through the meeting, at the corporation's principal office or at a reasonable place identified in the meeting notice in the city where the meeting will be held. A member, a member's agent, or member's attorney is entitled on written demand to inspect and, subject to the limitations of Sections 33-31-1602(c) and 33-31-1605, to copy the list, at a reasonable time and at the member's expense, during the period it is available for inspection.
(c) The corporation shall make the list of members available at the meeting, and any member, a member's agent, or member's attorney is entitled to inspect the list at any time during the meeting or any adjournment.
(d) If the corporation refuses to allow a member, a member's agent, or member's attorney to inspect the list of members before or at the meeting, or copy the list as permitted by subsection (b), the court of common pleas of the county where a corporation's principal office in this State or, if none in this State, its registered office, is located, on application of the member, may summarily order the inspection or copying at the corporation's expense and may postpone the meeting for which the list was prepared until the inspection or copying is complete and may order the corporation to pay the member's costs, including reasonable counsel fees, incurred to obtain the order.
(e) Unless a written demand to inspect and copy a membership list has been made under subsection (b) before the membership meeting and a corporation improperly refuses to comply with the demand, refusal or failure to comply with this section does not affect the validity of action taken at the meeting.
(f) The articles or bylaws of a religious corporation may limit or abolish the rights of a member under this section.
(g) A member may inspect and copy the membership list only if (i) his demand is made in good faith and for a proper purpose; (ii) he describes with reasonable particularity his purpose; and (iii) the list is directly connected with his purpose.
(a) Unless the articles or bylaws provide otherwise, each member is entitled to one vote on each matter voted on by the members.
(b) Unless the articles or bylaws provide otherwise, if a membership stands of record in the names of two or more persons, their acts with respect to voting have the following effect:
(1) if only one votes, the act binds all; and
(2) if more than one votes, the vote must be divided on a pro rata basis.
(a) Unless this chapter, the articles, or bylaws provide for a higher or lower quorum, ten percent of the votes entitled to be cast on a matter must be represented at a meeting of members to constitute a quorum on that matter.
(b) A bylaw amendment to change the quorum for a member action may be approved by the members and, if required, be approved as provided in Section 33-31-1030.
(c) An amendment to the articles of incorporation or bylaws that adds, changes, or deletes a greater quorum must be adopted under the quorum then in effect or proposed to be adopted, whichever is greater.
(a) Unless this chapter, the articles, or the bylaws require a greater vote or voting by class, if a quorum is present, the affirmative vote of the votes represented and voting, which affirmative votes also constitute a majority of the required quorum, is the act of the members.
(b) A bylaw amendment to increase or decrease the vote required for a member action must be approved by the members and, if required, be approved as required in Section 33-31-1030.
(c) An amendment of the articles of incorporation or bylaws adding, changing, or deleting a voting requirement must be adopted by the same vote and classes of members required to take action under the voting requirements then in effect or proposed to be adopted, whichever is greater.
(a) Unless the articles or bylaws prohibit or limit proxy voting, a member may appoint a proxy to vote or otherwise act for the member by signing an appointment form either personally or by an attorney-in-fact.
(b) An appointment of a proxy is effective when received by the secretary or other officer or agent authorized to tabulate votes. An appointment is valid for eleven months unless a different period is expressly provided in the appointment form. However, no proxy is valid for more than three years from its date of execution.
(c) An appointment of a proxy is revocable by the member.
(d) The death or incapacity of the member appointing a proxy does not affect the right of the corporation to accept the proxy's authority unless notice of the death or incapacity is received by the secretary or other officer or agent authorized to tabulate votes before the proxy exercises authority under the appointment.
(e) Appointment of a proxy is revoked by the person appointing the proxy:
(1) attending any meeting and voting in person; or
(2) signing and delivering to the secretary or other officer or agent authorized to tabulate proxy votes either a writing stating that the appointment of the proxy is revoked or a subsequent appointment form.
(f) Subject to Section 33-31-727 and any express limitation on the proxy's authority appearing on the face of the appointment form, a corporation is entitled to accept the proxy's vote or other action as that of the member making the appointment.
SECTION 33-31-725. Cumulative voting for directors.
(a) If the articles provide for cumulative voting by members, members may so vote by multiplying the number of votes the members are entitled to cast by the number of directors for whom they are entitled to vote, and cast the product for a single candidate or distribute the product among two or more candidates.
(b) Cumulative voting is not authorized at a particular meeting unless:
(1) the meeting notice or statement accompanying the notice states that cumulative voting will take place; or
(2) a member gives notice during the meeting and before the vote is taken of the member's intent to cumulate votes and, if one member gives this notice, all other members participating in the election are entitled to cumulate their votes without giving further notice.
(c) A director elected by cumulative voting may be removed by the members without cause if the requirements of Section 33-31-808 are met unless the votes cast against removal, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively at an election at which the same total number of votes were cast or, if such action is taken by written ballot, all memberships entitled to vote were voted and the entire number of directors authorized at the time of the director's most recent election were then being elected.
(d) Members may not cumulatively vote if the directors and members are identical.
SECTION 33-31-726. Other methods of electing directors.
A corporation may provide in its articles or bylaws for election of directors by members or delegates:
(1) on the basis of chapter or other organizational unit;
(2) by region or other geographic unit;
(3) by preferential voting; or
(4) by any other reasonable method.
SECTION 33-31-727. Corporation's acceptance of votes.
(a) If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a member, the corporation if acting in good faith is entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the member.
(b) If the name signed on a vote, consent, waiver, or proxy appointment does not correspond to the record name of a member, the corporation if acting in good faith is nevertheless entitled to accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the member if:
(1) the member is an entity and the name signed purports to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an attorney-in-fact of the member and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the member has been presented with respect to the vote, consent, waiver, or proxy appointment;
(3) two or more persons hold the membership as cotenants or fiduciaries and the name signed purports to be the name of at least one of the coholders and the person signing appears to be acting on behalf of all the coholders; and
(4) in the case of a mutual benefit corporation:
(i) the name signed purports to be that of an administrator, executor, guardian, or conservator representing the member and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment;
(ii) the name signed purports to be that of a receiver or trustee in bankruptcy of the member and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the vote, consent, waiver, or proxy appointment.
(c) The corporation is entitled to reject a vote, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the member.
(d) The corporation and its officer or agent who accepts or rejects a vote, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section are not liable in damages to the member for the consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a vote, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.
(a) Two or more members may provide for the manner in which they will vote by signing an agreement for that purpose. The agreements may be valid for ten years. For public benefit corporations the agreements must have a reasonable purpose not inconsistent with the corporation's public or charitable purposes.
(b) A voting agreement created under this section is specifically enforceable.
ARTICLE 8.
DIRECTORS AND OFFICERS
SUBARTICLE A.
. BOARD OF DIRECTORS
SECTION 33-31-801. Requirement for and duties of board.
(a) Each corporation must have a board of directors.
(b) Except as provided in this chapter or subsection (c), all corporate powers must be exercised by or under the authority of and the affairs of the corporation managed under the direction of its board.
(c) The articles may authorize a person or persons to exercise some or all of the powers which would otherwise be exercised by a board. To the extent so authorized, the person or persons shall have the duties and responsibilities of the directors, and the directors shall be relieved to that extent from the duties and responsibilities.
(a) A board of directors must consist of three or more directors, with the number specified in or fixed in accordance with the articles or bylaws.
(b) The number of directors may be increased or decreased, but to no fewer than three, by amendment to or in the manner prescribed in the articles or bylaws.
SECTION 33-31-804. Election, designation, and appointment of directors.
(a) If the corporation has members entitled to vote for directors, all the directors, except the initial directors, must be elected at the first annual meeting of members, and at each annual meeting thereafter, unless the articles or bylaws provide some other time or method of election, or provide that some of the directors are appointed by some other person or designated.
(b) If the corporation does not have members entitled to vote for directors, all the directors, except the initial directors, must be elected, appointed, or designated as provided in the articles or bylaws. If no method of designation or appointment is set forth in the articles or bylaws, the directors, other than the initial directors, must be elected by the board.
(a) The articles or bylaws may specify the terms of directors. Except for designated or appointed directors, the terms of directors may not exceed five years. In the absence of a term specified in the articles or bylaws, the term of each director is one year. Directors may be elected for successive terms.
(b) A decrease in the number of directors or term of office does not shorten an incumbent director's term.
(c) Except as provided in the articles or bylaws:
(1) the term of a director filling a vacancy in the office of a director elected by members expires at the next election of directors by members; and
(2) the term of a director filling another vacancy expires at the end of the unexpired term that such director is filling.
(d) Despite the expiration of a director's term, the director continues to serve until the director's successor is elected, designated or appointed, and qualifies, or until there is a decrease in the number of directors.
The articles or bylaws may provide for staggering the terms of directors by dividing the total number of directors into groups. The terms of office of the several groups need not be uniform.
(a) A director may resign at any time by delivering written notice to the board of directors, its presiding officer, or to the president or secretary.
(b) A resignation is effective when the notice is effective unless the notice specifies a later effective date. If a resignation is made effective at a later date, the board may fill the pending vacancy before the effective date if the board provides that the successor does not take office until the effective date.
SECTION 33-31-808. Removal of directors elected by members or directors.
(a) The members may remove one or more directors elected by them without cause.
(b) If a director is elected by a class, chapter, or other organizational unit or by region or other geographic grouping, the director may be removed only by the members of that class, chapter, unit, or grouping.
(c) Except as provided in subsection (i), a director may be removed under subsection (a) or (b) only if the number of votes cast to remove the director would be sufficient to elect the director at a meeting to elect directors
(d) If cumulative voting is authorized, a director may not be removed if the number of votes, or if the director was elected by a class, chapter, unit or grouping of members, the number of votes of that class, chapter, unit or grouping, sufficient to elect the director under cumulative voting is voted against the director's removal.
(e) A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the director.
(f) In computing whether a director is protected from removal under subsections (b) through (d), it should be assumed that the votes against removal are cast in an election for the number of directors of the class to which the director to be removed belonged on the date of that director's election.
(g) An entire board of directors may be removed under subsections (a) through (e).
(h) A director elected by the board may be removed without cause by the vote of two-thirds of the directors then in office or such greater number as is set forth in the articles or bylaws. However, a director elected by the board to fill the vacancy of a director elected by the members may be removed without cause by the members, but not the board.
(i) If, at the beginning of a director's term, the articles or bylaws provide that the director may be removed for reasons set forth in the articles or bylaws, the board may remove the director for such reasons. The director may be removed only if a majority of the directors then in office vote for the removal.
(j) The articles or bylaws of a religious corporation may:
(1) limit the application of this section; and
(2) set forth the vote and procedures by which the board or any person may remove with or without cause a director elected by the members or the board.
(k) For purposes of this section, "members" refers to members entitled to vote for directors.
SECTION 33-31-809. Removal of designated or appointed directors.
(a) A designated director may be removed by an amendment to the articles or bylaws deleting or changing the designation.
(b) Appointed directors:
(1) Except as otherwise provided in the articles or bylaws, an appointed director may be removed without cause by the person appointing the director.
(2) The person removing the director shall do so by giving written notice of the removal to the director and either the presiding officer of the board or the corporation's president or secretary.
(3) A removal is effective when the notice is effective unless the notice specifies a future effective date.
SECTION 33-31-810. Removal of directors by judicial proceeding.
(a) The circuit court of the county where a corporation's principal office in this State, or, if none in this State, its registered office, is located may remove any director of the corporation from office in a proceeding commenced either by the corporation, its members holding at least five percent of the voting power of any class to elect directors, or the Attorney General in the case of a public benefit corporation, if the court finds that:
(1) the director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation, or a final judgment has been entered finding that the director has violated a duty set forth in Sections 33-31-830 through 33-31-833; and
(2) removal is in the best interest of the corporation.
(b) The court that removes a director may bar the director from serving on the board for a period prescribed by the court.
(c) If members or the Attorney General commence a proceeding under subsection (a), the corporation must be made a party defendant.
(d) If a public benefit corporation or its members commence a proceeding under subsection (a), they shall give the Attorney General written notice of the proceeding.
(e) The articles or bylaws of a religious corporation may limit or prohibit the application of this section.
(a) Unless the articles or bylaws provide otherwise, and except as provided in subsections (b) and (c), if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors:
(1) the members, if any, may fill the vacancy; if the vacant office was held by a director elected by a class, chapter, or other organizational unit or by region or other geographic grouping, only members of the class, chapter, unit, or grouping are entitled to vote to fill the vacancy if it is filled by the members;
(2) the board of directors may fill the vacancy; or
(3) if the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
(b) Unless the articles or bylaws provide otherwise, if a vacant office was held by an appointed director, only the person who appointed the director may fill the vacancy.
(c) If a vacant office was held by a designated director, the vacancy must be filled as provided in the articles or bylaws. In the absence of an applicable article or bylaw provision, the vacancy may not be filled by the board.
(d) A vacancy that will occur at a specific later date, by reason of a resignation effective at a later date under Section 33-31-807(b) or otherwise, may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs.
(a) If the date, time, and place of a directors' meeting is fixed by the bylaws or the board, the meeting is a regular meeting. All other meetings are special meetings.
(b) A board of directors may hold regular or special meetings in or out of this State.
(c) Unless the articles or bylaws provide otherwise, a board may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other simultaneously during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
(a) Unless the articles or bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes filed with the corporate records reflecting the action taken.
(b) Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.
(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document.
